MPM 631: DECISIONS THEORY AND PROJECT RISK MANAGEMENT

Credit Hours: 3
Pre-requisite: Under graduate strong background in Statistics, Math’s and or bridging
courses in this program.
Course Description:
This course aims at providing students with concepts of decision making using decision criteria,
linear programming, queuing, inventory management, and simulations models.
Course objectives:
By successfully completing this course, students will be able to
 Analyze unstructured situations,
 Develop models of situations,
 Explore alternative solutions through formalized approaches, and do sensitivity analysis
to gain insight into why the chosen solution makes sense.
 They will be better able to evaluate and prioritize alternatives, allocate resources, assess
risks, and justify and defend decisions.

Course Contents

Unit-One: Introduction To Decision Theory

1.1. Introduction
1.2. Decision Making and Problem Solving
1.3. Quantitative and Qualitative analysis for decision making
1.4. Types of decision making
1.5. Decision making Models (Optimization Vs Satisficing)
1.6. Decision Making Conditions
1.7. Approaches to decision making
1.8. Decision Making Strategies
1.9. Models and Modeling
1.10. Classification of Models
1.11. Benefits and Risk of Using Models
Unit Two: Linear Programming/LPP
2.1. Formulation of LPP
2.2. Graphical method for two variables
2.3. Solution- BFS. Optimal , degenerate, non degenerate solutions
2.4. Simplex method
2.5. Big ‘m’ method
2.6. Degeneracy and cycling in LPP
2.7. Primal and dual LPP
Unit Three: Transportation Model
3.1. Formulation
3.2. Method of finding BFS
3.2.1. North-West corner method
3.2.2. Matrix minima method
3.2.3. Vogel’s approximation method
3.2.4. Towards optimality Moody method
3.2.5. Loops
3.3. Unbalanced TPP
3.4. Maximization TPP
Unit-Four: Assignment Model
4.1. Formulation
4.2. Hungarian algorithm
4.3. Unbalanced AP
4.4. Traveling sales man problem
Unit-Five: Decision Theory
5. Decision Making Environment
5.1.1. Decision under Insufficient Information
5.1.2. Decision Under Risk
5.1.3. Sensitivity Analysis
5.2. Decision With Additional Information
5.3. Decision Tree
5.4. Game theory
5.4.1. Game Pure strategy –mixed strategy –pay –off
5.4.2. Saddle point –two person zero sum game
 5.4.3. Mini max principle
5.4.4. Solving two person zero sum game without saddle point
5.5. Graphical method
Unit-Six: Inventory Models
6.1. Purchasing model without shortage
6.2. Purchasing model with shortage
6.3. Manufacturing model without shortage
6.4. Manufacturing model with shortage
Unit-Seven: Networks and Project Management
7.1. Introduction
7.2. Network Diagrams
7.1.1. Basic Components of Network Diagram
7.1.2. Rules for drawing a network
7.1.3. Convention for Drawing Networks
7.1.4. Common Errors in Drawing Networks
7.3. Types Of Network Models
7.3.1. The Shortest Route Problem
7.3.2. Minimum Spanning Tree Model
7.3.3. The Maximal Flow Problem
7.4. Planning Tools
7.4.1. Gantt chart
7.4.2. Critical Path Method
7.4.3. Project Evaluation and Review Technique (PERT)
7.5. Time – cost Trade Offs – Crashing
Unit Eight: Simulation
8.1. Definition merits and demerits
8.2. Random numbers
8.3. Pseudo random numbers
8.4. Application of simulation
8.5. Monte Carlo method
8.6. Distribution function method
Method of Teaching-Learning
A combination of the following major methods of delivery will be used
 Lecture (for practically) all courses
 Individual & or group Assignment /projects / term papers,
 Class presentation and discussion by students.
 Case analysis depending on the nature of the course.

Assessment Scheme:
 Individual Assignment-------------------------------10%
 Group Assignment-------------------------------------20%
 Mid-exam-----------------------------------------------20%
 Final exam----------------------------------------------50%
 Total--------------------------------------------………100%
Text
 Management Science, Anderson Sweeny, Revised Thirteenth edition.
References
 Kagsadale, managerial decision modeling, revised edition, 2008, south west publishers.
 Linear Programming Problem. G. G.Hardy Addison- Wesley
 Operations Research. Richard Schums Outene Series Mcgraw-Hill
 Operations Research. O. Kanti Swarup. Mammohan. P.K Gupta
 Kothari C. R., Quantitative Techniques, 3rd revised edition, (2005), New Delhi: Vikas
Publishing House Ltd.
 Sharam, J. K., (2004), Business Statistics, Delhi: Baba Barkha Nath printers
 Agrwal, D. R., (2008), Business Statistics. Delhi: Vrinda Publications Ltd.
 Bowerman, O’Connel and Hand, Business Statistics in Practice, 2nd edition, Boston:
McGraw-Hill Irwin.