The applicability and usage of computer-based models have increased dramatically in recent years, particularly in the design and operation of complex systems. The rise of analytics tools, friendly interfaces (such as spreadsheets), and large databases has made modeling far more accessible to managers. Information is a critical resource, and models play a key role in deploying this resource so that it can be used productively.
This course provides an introduction to both stylized economics models and computer-based optimization models in a wide variety of functional areas, including finance, operations, and marketing. Applications of these models include production planning, product mix, portfolio optimization, new product launch, project management, among others. We will cover the basic elements of modeling -- how to formulate a model and how to use and interpret the information a model produces. The aim of the course is to help students become intelligent consumers of optimization models and provide students tools for interpreting and analyzing model-based solutions.
Introduction to decision models: scale and complexity.
Linear programming formulation.
Demonstration of the spreadsheet optimization method.
Shelby Shelving case
Understanding the solver sensitivity report
Introduction to Game Theory: A Beautiful Mind
Cournot and Stackelberg competition
Cash flow matching LP, project funding example
Multi-period revenue management problem
Introduction to options
The schedule can be found on the Leiden University student website
Detailed table of contents can be found in blackboard.
Mode of instruction
The course has 6 lectures, individual assignments and a written exam
There are four assignments to be done individually, which requires calculations on all accounts (e.g., modeling). During many of the class sessions, you will be asked to present your results in class and may receive bonus points for the assignments, depending on your performance. There is an open-book exam for this course.
Your final grade will be determined according to the following components (see the table below). Your final score needs to be at least 5.5 (on a scale of 10) in order to pass the course. In addition, you need to have at least 50% of the points in each component to pass the course.
4 Individual Assignments 40%
Class Participation 20%
I recommend the following books (not mandatory), and will suggest readings throughout the class:
Winston and Albright, 2001, Practical Management Science: Spreadsheet Modeling and Applications, 2nd Edition (W&A).
John F. Barlow, 2005, Excel Models for Business and Operations Management, 2nd Edition.
Hal R. Varian, 2003, Intermediate Microeconomics: A Modern Approach, 6th Edition.
Signing up for classes and exams
You have to sign up for classes and examinations (including resits) in uSis. Check this link for more information and activity codes.
There is only limited capacity for external students. Please contact the programme coordinator
Computer Software We will use excel spreadsheets extensively throughout the course. More specifically, we will explore the extensive optimization capabilities built in the spreadsheet.