type
Post
Created date
Oct 23, 2022 03:36 AM
category
Business
tags
Decision Making
status
Published
Language
From
School
summary
slug
password
Author
Priority
Featured
Featured
Cover
Origin
Type
URL
Youtube
Youtube
icon

1. Binary Variables & Logical Conditions

notion image

2. Big M — Fix cost problem

We use big m when there is a need to consider a fixed cost. Let’s say product A needs a production set-up cost. So, when we produce A, we not only need the unit cost, but also the set-up cost. In another word, the total cost of product A = unit cost + set-up cost.
The Big M is a constraint where . =1 , when we produce A; it is like a trigger.
notion image
To determine the value of M — an upper bound on x — we can make use of our constraints from the constraints by getting potential upper bounds on our x value, then we select the one that we can use.
 
FIT3158 Note - W6 North-WestFIT3158 Note - W9 Decision Analysis & Decision Trees – Risk and Uncertainty