**MANAGEMENT SCIENCE**

**ECONOMICS 115**

**Spring 2014**

**DONALD WITTMAN**

**CHECK HERE DAILY FOR FAST
BREAKING NEWS**

For the May 23 midterm you need to know chapters 17A-21B,
22B (not 21C, 22A, 23, 24). You need to know #7 review
questions, except for problem 4.

** **

ANSWER KEY TO MOST RECENT HOMEWORK
ANSWER KEY TO MOST RECENT
EXAM

**INTRODUCTION**

This course translates real economic
problems faced by industry and government into mathematical
formulae that can be solved by a computer program. To give
substance to this statement, consider the following example.
Ralston-Purina makes chicken feed. Chicken feed can be made
with a variety of inputs (e.g., wheat, corn, bone meal, soy
meal, etc.). Ralston-Purina wants to provide chicken feed that
satisfies certain requirements (e.g., so much protein,
calcium, and calories per day per chicken) at lowest cost. The
right combination of inputs means millions of dollars more in
profits to the company. In this course, we show how
Ralston-Purina solves this complicated optimization problem.

Students need only modest computer skills
to take this course. LINGO, the computer program used in this
course, is very easy to use. Mathematical knowledge beyond
algebra is not required. However this course makes extreme use
of mathematical thinking. If you liked doing word problems in
mathematics, you will like this course. The homework problem
sets are an exercise in mental gymnastics. You need to
understand the logic; memorization won’t work. If you have a
hard time with word problems, you will have a hard time with
this course.

There is no book for this course. The
lecture notes for this course are available at the Campus Book
store. Homework assignments (the questions are at the back of
the reader) count for 10% of the grade. I do not allow
homework assignments turned in late. There are no makeup
exams. Nor are exams allowed to be taken early (a legitimate
excuse will allow a midterm not to count, but you will have to
do all the review questions, not just the assigned questions
from the relevant chapters for that test). Tell your parents
not to book that flight for you to Costa Rica until you check
your exam schedule. The syllabus is optimistic. Not all topics
will be covered and the time schedule is only approximate.
There will be 5 homework assignments, 4 midterms and a
non-comprehensive final. Bring bluebooks to all exams.

**NOTES
ARE AVAILABLE IN THE BOOK STORE.**

Because the Bookstore almost always prints
too few copies at the beginning of the quarter, I am making
the first __l____ectures__ and
__homework assignments __ available in PDF.

Mathematics is not
a spectator sport. One can follow the logic in the notes without
being able to do the material on one’s own when it comes to test
time. A good way to study is to first try to redo the problems
already covered in the notes. That is why after lecture 8, the
answers are on the following page rather than on the same page
as the questions. Try to write out the answer first on your own
when studying. Then cover all of the review questions.

**ARTICLES
ON MANAGEMENT SCIENCE**

You can read non-technical articles on
management science in *Interfaces.
*To read it on line, go to the following address http://ucelinks.cdlib.org:8888/sfx_ucsc/a-z/default__ __and type in: Interfaces

**DETAILS**

**
Lingo:** The free student version of
Lingo can be downloaded off the web. Type in the following: http://www.lindo.com/ Then hit **downloads** on the top
bar. Next hit __Download
Lingo. __Lingo can only be used on windows or
Linux. So if you have a Mac, you will have to go to the PC
side (if you have a PC emulator). You will want to download
the 64-bit size version if you have a newer computer. The
trial version is free. The trial version has certain limits,
but I will not ask you to go beyond them.

Lingo is also
available on the PC machines in the labs.

1) Open the "Class Folders" folder on the desktop

2) Open "Economics" folder

3) Open "Econ 115" folder

4) Double-click on
"Lingo 13"

C**lass meets:** MWF
9:30-10:40AM SocSci 2 Classroom 71

**Contact:**
You can contact me by email: __wittman@ucsc.edu__
or by phone: 459-4445

My
office hours are MWF 11:00-12:00 in 407 Engineering 2 and by
appointment.

**Webpage:
** http://www.ic.ucsc.edu/%7Ewittman/ECON115/econ115.intro.html

Check Webpage daily for last minute changes

Sections

Wednesday 03:30PM-04:40PM Earth and Marine Sciences B214
Jacopo Magnani

Wednesday
5:00PM-6:10PM Soscial Sciences 1 room 145
Jacopo Magnani

OTHER SECTIONS
TO BE DETERMINED LATER

**GRADING**

Any disputes about a grade on a homework or exam must be
brought to the Section Leader’s attention by the next class
period after the homework or exam is returned to the student.
I have the option of reviewing the whole exam and determining
whether the grade should be lowered.

Cheating results in an automatic F and a visit to
the provost.

Grade: Midterms
16% each, final 26%, homework total 10%.

Passing > 60%:
B- > 70%; A- > 85%

BRING BLUEBOOKS

Class #1: MONDAY, MARCH 31

Lecture 1 … Introduction. Linear
Programming: The diet problem

Class #2: WEDNESDAY, APRIL 2

Lecture 2A ... LINGO

Lecture 2B … Production (pool
tables)

Lecture 2C … Distribution (Lego
sets)

Class #3: FRIDAY, APRIL 4

Lecture 3A … Paint Production

Lecture 3B … Cancer Treatment

**HOMEWORK ASSIGNMENT 1 **DUE: REVIEW QUESTIONS #1 at back of
book: problems 1 and 3. Always
read the beginning of the review questions for instructions on
how to answer problems. Except for doing Cramer’s rule and
drawing graphs, your homework should **not** be handwritten

Class #4: MONDAY, APRIL 7

Lecture 4A … Production: multiple
steps

Lecture 4B … Production:
different methods

Class #5: WEDNESDAY APRIL 9

Lecture 5A ... Mathematical
Background *
* means that probably will not cover this year

Lecture 5B … The General Linear
Model *

Lecture 5C … Pitfalls and Some
Remedies

Class #6: FRIDAY, APRIL 11

**EXAM #1**:
Covers lectures 1 – 5C (if lecture covered) and review
questions #1 (all problems).

Note well: Because coverage may
differ from expectations, please check before each exam
regarding the exact chapters and review questions that will be
covered on the exam.

Class #7: MONDAY, APRIL 14

Lecture 6 … Duality and
Sensitivity Analysis: Auto-Truck Assembly

Class #8: WEDNESDAY APRIL 16

Lecture 7 ... Duality and the Diet
problem

Class #9: FRIDAY, APRIL 18

Lecture 8A ... Simple Blending.

Lecture 8B … Mixing and Blending

Lecture 8C … Large Blending
Problem

**HOMEWORK ASSIGNMENT 2** DUE: REVIEW QUESTIONS #3: problem 4
and #4 problem 2

Class #10: MONDAY, APRIL
21

Lecture 9A ... Pattern Cutting:
paper

Lecture 9B ... Pattern Cutting:
suits

Lecture 9C ... Pattern Cutting:
variations

Class #11: WEDNESDAY, APRIL 23

Lecture 10A ... Transportation
Problem

Lecture 10B … Transhipment

Class #12: FRIDAY, APRIL 25

**EXAM #2:**
COVERS chapters 6-10B and problems from REVIEW QUESTIONS #2,
#3 and #4

Class #13: MONDAY, APRIL 28

Lecture 11 ... Scheduling Problem

Lecture 12 … Desegregation Plan

Class #14 WEDNESDAY, APRIL 30

Lecture 13 … Pipeline Networks

Class #15: FRIDAY, MAY 2

Lecture
14
... Comparative Advantage

Lecture 15 ... Rybzinsky and
Stolper-Samuelson

**HOMEWORK ASSIGNMENT 3** DUE. Review questions #5, problem 1
and review questions #6 problem
3

Class #16: MONDAY, MAY 5

Lecture 16 … Game Theory

Class #17: WEDNESDAY, MAY 7

Lecture 17A ... Lingo and
Non-Linear Programming

Lecture 17B … Price and
Production

Class #18: FRIDAY, MAY 9

**EXAM #3**
covering lectures 11 -16 and problems from review questions #5
and #6. You need
to know Lingo and duality, but you will not have to solve
using graphs

Class #19: MONDAY, MAY 12

Lecture 18A … Braess’ Paradox

Lecture 18B … Pigou-Downs Paradox

Lecture 19 … Traffic Flow

Class #20: WEDNESDAY, MAY 14

Lecture 20 … Supply, Demand and
Profit Maximization

Lecture 21A … Peak Load Pricing

Lecture 21B … Peak Load Pricing

Class #21: FRIDAY, MAY 16

Lecture 22A … Redundancy

Lecture 22B … Airline Overbooking

Lecture 23 … Least Squares

Lecture 24 … Finance

**HOMEWORK ASSIGNMENT 4** DUE
Review questions #7: problems 3, 8, and 9.

Class #22: MONDAY, MAY 19

Lecture 25A … Integer
Programming; Branch and Bound Technique.

Lecture 25B … Job Shop Scheduling

Lecture 25C… Fixed Charge Problem

Class #23: WEDNESDAY, MAY 21

Lecture 26A …Warehouse Choice

Lecture 26B … Exclusivity and
Contingency

Lecture 27A … Loan Packaging

Class #24: FRIDAY, MAY 23

**EXAM #4:**
Covering chapters 17-24 (if covered in class) and problems
from review questions #7

No school: MEMORIAL DAY, MONDAY,
MAY 26

Class #25: WEDNESDAY, MAY 28

Lecture 27B … Minimum Batch Size

Lecture 28A … Staff Scheduling

Lecture 28B … Bank Assignment
Problem

Class #27: FRIDAY,MAY 30

Lecture 29A … Airline Crew
Assignment

Lecture 29B … Airline Hubs

Lecture 30 … Plane Assignments

HOMEWORK ASSIGNMENT 5 DUE: Review
questions #8: problems
2,6 and 9.

Class #28: MONDAY, JUNE 2

Lecture 31 … Matching Partners

Lecture 32 … Either or
Constraints

Class #29: WEDNESDAY, JUNE 4

Lecture 33 … Map Color Problem

Lecture 34 … Ranking Teams*

Class #30: FRIDAY, JUNE 6

Lecture 36 … Traveling Salesman

Lecture 37 … Game Show and other
problems

**NOTES
ARE AVAILABLE IN THE BOOK STORE.**

**LIBRARY
OF TRAVELING SALESMAN PROBLEMS**