Indian Institute of Management Bangalore

PGP 2020 - 2022

Course Title: Decision Sciences II

Instructor (Section F): Dinesh Kumar Office Hrs: 15.30 – 16.30 Wednesdays
Office: B 206

Objective:

Data based decision making is becoming popular among the industry, especially in the age of ample
availability of data. The course will cover basics of predictive and prescriptive analytics models. This
course covers simple linear regression, multiple linear regression and optimization models. In many
business problems we try to deal with data on several variables. Regression models help us understand
the relationships among these variables. Predictive Analytics, one of the fast growing applications
among commercial organizations use regression models to understand the impact of explanatory
variables in various contexts. Optimization models are methods of arriving at optimal or near optimal
decisions for a given set of managerial objectives under various constraints. The objective of the course
is to acquaint students with the construction of mathematical models for managerial decision situations
and use computer software packages (SPSS, Solver/Lindo) to obtain solutions and interpret them. The
emphasis is on understanding the concepts and interpretation of the solution rather than on theoretical
details and derivations.

Reference Text:
[1] Aczel and Sounderpandian, Complete Business Statistics, Tata McGraw Hill, 7th Edition.
[2] Anderson, Sweeney, Williams and Martin, An Introduction to Management Science, 13 th Edition.

Readings will be assigned from the text and otherwise. Students are expected to assimilate the material
covered in class and to come prepared with assigned readings and cases for class discussion. Report
submissions and in-class presentations for two assigned cases will be required as per the schedule. The
cases are to be done in groups which will be formed randomly and communicated to you well in
advance. I strongly recommend that you check your Case Reports for originality on Turnitin before
submission. Both, a soft copy (Moodle) and hard copy are required to be submitted. On the day of the
submission, all groups need to come prepared to make a 15-20 minute presentation of the case in class.
I will choose 3-4 groups to make the presentation.

Evaluation:
Mid-Term 40 %
Case Assignment (2) 20 % (10% each)
End-Term 40 %

Cases submission/presentation:
Case I Session 10
Case 2 Session 20

Attendance:
Students are expected to attend at least 80% of the sessions. The penalty is one grade drop if a
student fails to achieve the attendance requirement.
Session Wise Plan (only a plan!)

Session Topic - Regression

1 Introduction to Quantitative Methods II & Introduction Simple Linear Regression

Introduction to Simple Linear Regression, scatter plots, Correlation coefficient,

ordinary least squares, parameter estimates, standard error of estimate

Case: Hytex Catalogs Company

2 Simple Linear Regression Diagnostics

Partitioning Sum of Squares, Coefficient of Determination, Significance Tests,

Regression Assumptions, Confidence and Prediction Intervals

Case: Hytex Catalogs Company

3, 4, 5 Multiple Linear Regression (MLR)

Introduction, Coefficient of Multiple Determination, Partial Slope, Part and Partial

correlation, Partitioning of Sum of Squares, Adjusted R Square, Standardized Beta,
Multi-collinearity, Dummy Variables & Interaction Variables, Residual Analysis

Case: Hytex Catalog Company

Case: Gender Discrimination

6 Stepwise Regression Model Building; Transformation and Variable Selection

Case – Package Pricing at Mission Hospital

7 HOS (Hands-on-Session) Case: Pricing of Players in the Indian Premier League

8 Multiple Linear Regression – Missing Variable Bias

Case: Colonial Broadcasting Company
9 Case: Pedigree Vs Grit Performance of Mutual Fund Managers

10 Assignment 1 Presentation
Session Topic – Optimization
11 Introduction to Optimization and Linear Programming

Introduction to Linear Programming; Feasible Region; Binding and Non-Binding

Constraints; Shadow Price and Reduced Cost

Case: Manvi Motors

12 LP – Graphical Method

Graphical method for solving LP; Sensitivity Analysis; Range of Optimality

Case: Manvi Motors

13, 14 LP Formulations

LP Formulations: Product Mix; Cutting Stock; Blending Problems; Multi-Stage

Problems; Primal Dual Relationships; Complementary Slackness Theorem

15 Integer Programming (IP): Pure Integer; Mixed Integer and Zero-One Programming

IP Formulations
16 Mixed Integer Programming Formulations
Case – Supply Chain Optimization at Madurai Aavin Milk Dairy

17 HOS (Hands-on-Session) Case: Linen Management at Apollo Hospital

18 IP Relaxation; Branch and Bound Method; Lower and Upper Bound

19 Goal Programming Models

20 Assignment 2 Presentation