1. Summarize statistical methods used in forecasting and the types of times seri

Question

1. Summarize statistical methods used in forecasting and the types of times series to which they are most appropriate

2. List the principal rules for examining a control chart to determine if the process is in control
3. Explain what a decision model is and list the three types of inputs common to decision models.
4. Explain the concept of risk analysis.
5. How do you compute return on investment?


6. List the three elements queuing systems have in common. Describe each element.


7. Explain optimization and optimal solution.

8. How can binary variables be used to model logistical conditions. Provide examples.

Explanation / Answer

8. Binary variables are extensively used in integer programming (IP) models to represent yes/no decisions (“Should we open a new restaurant in Coconut Grove?”), and logical conditions (“If it rains tomorrow, I will not go to the beach.”). Most people are familiar with the project selection problem in which each variable Xi is equal to 1 if project “i” is selected, and it’s equal to zero otherwise. To model the condition “if project 1 is selected, then project 2 must also be selected” one can write “X1 = X2?, and “if project 2 is selected, project 3 must not be selected” becomes “X2 + X3 = 1?. Even students who are learning about integer programming for the first time are usually capable of coming up with those two constraints after a few minutes (or hours). A little bit of trial-and-error typically gets you there. What if the logical condition is a tad more complicated? For instance: If it rains tomorrow or the Heat defeat the Spurs and grandma doesn’t come to visit on the weekend, then I’ll either go to South Beach and not drink a mojito or I’ll fly to Vegas. I’m sure it only took you about 7 seconds to figure out that the corresponding IP model is w + q – x = 0 z + w + q = y 1 + q = x + p y + p – q – z = 1 This assumes that the binary variables x, y, z, w, p, q are assigned the following meanings: x = whether it rains; y = whether Heat defeat Spurs; z = whether grandma comes to visit, etc.

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