Introduction

• What is Simulation and Optimization Methods? 
• The Simulation and Optimization Methods approach

Decision Theory

A) Decision Environments – risk & uncertainty, Payoff table, Regret table.

B) Decision making under uncertainty

• Types of decision-making environment 
• Decision making under uncertainty 
  
• Maximax o Maximin 
• Equally likely (laplace) 
• Criterion of realism (Hurwicz Criterion) 
• Minimax 
• Decision Making Under Risks 
  
• Expected Monetary Value (EMV) 
• Expected Opportunity Loss (EOL) 
• Expected value of perfect information (EVPI)
•  Decision Tree 
  
• Solving multi-stage decision making problem using tree diagram 
• Revised probabilities 
• Expected value of sample information (EVSI) 
  

Linear Programming (LP) 

• Requirements of a LP problem 
• Formulation of LP problems 
• Graphical solution to a LP problem (two variables) 
• Feasible solution and iso-profit lines method 
• Solving minimization problems
• Special cases in LP 
• The Dual in LP 
• How to set up initial simplex tableau 
• Solving maximization problems only 
• Simplex solution procedures 
• Interpretation of simplex solution 
• Special cases in LP 
• Sensitivity analysis - shadow prices 

Transportation and Assignment Models

• Setting up a transportation problem (transportation table)
• Developing a starting solution (Least Cost Method)
  
• The unbalance transportation problem 
• Finding optimal solution (MODI method) 
• minimization problem only 
• Degeneracy and alternative optimal solutions 
• Approach of the assignment model 
• Dummy rows and dummy columns 
• Maximization and minimization assignment problems
  

Inventory Control Models 

• Importance of inventory control 
• The inventory decision 
• The economic order quantity (EOQ) and the reorder point(ROP) 
• Production run model/ economic batch quantity(EBQ)
• Quantity discounts

Project Management – PERT/CPM

• The framework of PERT/ CPM analysis 
• Network diagram and critical path method 
• Total and free slacks 
• Project crashing
  

Simulation

• The simulation process 
• Advantages and disadvantages of simulation 
• Monte carlo simulation 
• Simulation model for an inventory policy 
• Simulation model for a queueing problem