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Welcome to MA 6600!
9 March 2007 Next week, for our last class, you will probably not find much use in bringing your computers. However, if you have a pocket calculator (or two) I would encourage you to bring it along. You'll find it helpful during our activity. 8 March 2007 I heard a story on the news recently about a website called Prosper.com. This is a website where you can borrow or lend relatively small amounts of money to other people over the Internet. In other words, it cuts out the banks as middlemen. At first glance it seems like a phenomenal system for scammers and con artists to rip off innocent people. (I read a book last summer called The Sociopath Next Door, and it has changed the way I look at potential business partners in person and on the Internet.) But the concept is totally fascinating to me, and it fits beautifully with a theory I have outlined about technology and the redesign of business processes. I am not suggesting that you should borrow or lend real money using this site. In fact, they cannot lend money to people in South Dakota yet. But I do think you may find it interesting to read about the system and think through some of the advantages and disadvantages of this approach. Update: I spent a good share of the evening researching this site and the business model, and wanted to share with you this report that was created by students in the B School at Stanford University. If you spend some time on the site you can find a lot of analytical models that have been built around the data generated from this marketplace. And if you are interested, they will let you download all of the data on all of their past loans in an Excel spreadsheet so that you can do your own analysis of the statistics in order to develop forecasts and projections for the future.
6 March 2007 In preparing for our class this week I stumbled upon an Excel ToolPak Add In with queuing (also spelled "queueing") functions from the B School at the University of Alberta. If you look at it now it may not make much sense, but after our class on Wednesday you should have enough background on queuing theory to use these tools. This ToolPak Add In works much like the Solver Add In, in that you have to install it before you can use the tools. http://www.bus.ualberta.ca/aingolfsson/QTP/download.htm 3 March 2007 Microsoft offers a 60-day free trial of MS Project for download from their website. If you are interested in learning more about how MS Project works and what it can do to make you a more effective project manager I recommend that you try it. 28 February 2007 The quarter has gone quickly, and we now have only two classes left. This is the right time to be making sure that my records accurately reflect the grades that you have earned on your assignments. Sometimes I return papers without recording the grades, and sometimes people forget to turn in assignments. Things are much simpler if we can have everything reconciled and completed by the last night of class. That way you already know what your grade will be when you walk out the door. As we reach the end of the course, I'd also invite you to take a moment to review the objectives for the course that we discussed on the first night. With the exception of queues (Objective 9) which we will discuss next week, I think that we've done a reasonably good job of covering these objectives. I am very impressed with the progress that the class has made in formulating problems, discussing analytical approaches, and mastering new techniques. I hope that you feel that the course has helped you meet these objectives, and that it has given you some tools that will make you a more effective manager. Objectives of the Course: 1. Observe the role of probability in an uncertain
environment. 27 February 2007 One of the issues that has consumed a great deal of our City Council's time and energy over the past year or so is an expansion to the Civic Center. Some people want the expansion, some people don't. On the one hand, there are people who claim that the expansion is an investment that will pay for itself by bringing in larger conventions and stimulating economic development. On the other hand, there are people who think that we should not spend $23M dollars of public money to make the Civic Center larger when there are so many other things that our community needs. For example, it looks like we will need to spend $82M on our storm water system by next year in order to meet federal environmental standards, and since the City has "no money" to pay for this project they will likely try to raise fees (taxes) in the near future. One of the things that I think an MBA education should reinforce is your ability to differentiate between intuitive decision making and quantitative analysis. As you read these articles, look for hints in the words that people use that can tell whether they are simply defending a personal opinion, or whether they are explaining their analysis of a mathematical problem. Then ask yourself, "which approach do I want people to use when they are spending my money?" The same question is relevant whether you are talking about politicians spending your tax dollars, or a management team spending your capital in a business. For me personally, the answer is "both." It is possible (but rare) to find people who do only a quantitative analysis. It is, however, very common to find people who do only an intuitive analysis. Unless these people have a phenomenal track record for making great gut-level decisions, I tend to scrutinize their arguments very closely. Can you see ways that the quantitative methods we have discussed in this class might be useful for the City Council in their discussion of the Civic Center project? If you were involved in the process, how could you use an EMV model to help bring both sides together to decide what is best for the community? 25 February 2007 CNN-Money.com has released their rankings of the top 50 MBA programs for 2007. In particular, I am interested in the ranking of business schools (B schools) according to starting salaries for their graduates. The NAU on-campus program did not make the list this year, but I think that we are heading in the right direction. It is worth noting, however, that the average starting salary for graduates from the top 50 B schools is $82,500. The graduates of the top few schools have average starting salaries that are over $100,000. To qualify you for those jobs, a few of the more affordable B schools charge about $40,000 in tuition. Most, however, charge upwards of $90,000. Note: On Tuesday morning I was notified that the link to the MBA programs is broken. It looks like CNN is having server problems, so I'm going to leave the link for now and wait to see whether the problem gets resolved. As a consolation prize, I ran across this article that talks about the best ways to invest $5000. 22 February 2007 I suspect that many of you have people in your lives who would like to see for themselves what you are doing on Tuesday and Wednesday evenings. I am considering structuring our last class, on March 14, in a way that would allow us to have a handful of guests. If you have someone - a friend, family member, or colleague - that you would like to bring to class with you, please let me know and I'll see whether we can make it work. 21 February 2007 I first became acquainted with Ben Stein from his roles in The Wonder Years and Ferris Bueller's Day Off. He is quite funny and very bright. Admirably, he has used his celebrity to draw attention to the economic problems that our country is facing, and the poor management of personal finances that has become an epidemic among our citizens. He now writes a regular column for Yahoo! Finance, and I think that today's column is really relevant to our class. You can read it here: http://finance.yahoo.com/expert/article/yourlife/24513 These are the two things that I think are most important in this article: 1) accumulating wealth begins with learning the rules and following the instructions, and 2) a big part of making money is choosing to get yourself into a career and an industry that are highly lucrative. If one of your personal and professional goals is to become wealthy (and I personally believe that it is a worthwhile goal), then this MBA program is a great way to get a jump-start on learning the rules. In particular, I think that the techniques that we discuss in this Quantitative Methods class are really the key to understanding how you analyze business opportunities. But on top of absorbing the material that you are exposed to in your classes, you also have to make the choice to apply those rules to your real life. And, you may also need to take some risks to guide your career into an industry that permits you to earn more money. 20 February 2007 Michael is headed to Tucson this week to do some training for one of his clients. The presentation that he put together is built around our Deal or No Deal game and the decision analysis tools that we discussed last month. I encourage you to take a look at his PowerPoint slides and the Deal or No Deal spreadsheet. 19 February 2007 In my Google News Alert this morning there was an article that might interest you. It is a case study written by a vendor (Smart Software) that describes how they helped a client (Haynes International) reduce inventory costs by improving forecasts. To provide a bit of context: Haynes International makes exotic metal alloys that are used to make chemical plants and other useful things. They make their products in big batches, so they need to make continual decisions about 1) what alloy to make, 2) how much of it to make, and 3) what dimensions it should be. What drives their decisions is customer demand, but once a customer places an order it can take them four months to retool their plants and produce it. So by having good forecasts they can anticipate their customers' needs and respond more quickly. And by having the right inventory, they can do this even better. The downside is that having stale inventory costs them a lot of money. So it translates into significant savings and increased profits for Haynes if improving their forecasts allows them to optimize their inventory decisions. Additionally, Haynes is preparing for an IPO, and efficient use of capital will be an important consideration of many investors. Here is the link: http://www.smartcorp.com/haynes_international.asp 14 February 2007 Thanks for your enthusiasm during our inventory activity tonight, and for welcoming Joanie from XS Direct Discounts into the class. I hope that it helped you think a bit differently about the reasons you want to have inventory and the challenges that it creates for your organization. I'm glad that Joanie was able to join us because I would argue that XS Direct Discounts is really a business that is built on other companies' inventory problems. I encourage you to stop in and look around their store when you have some time. There was one more point that I wanted to make tonight, but I ran out of time. The question I had hoped to ask was, "Can you store labor in inventory?" Most people answer, "No," out of hand. But the fact is that companies do it all the time. For instance, manufacturing companies may assemble parts into subassemblies that can then be placed into products. Those subassemblies are made by combining parts and labor. So, those subassemblies sitting in inventory contain labor. In order to accurately account for the costs and value of your inventory you need to include the "stored" labor in your numbers. I have discovered that my DVD for our first class is corrupted. I do not recall who asked for DVDs from the first week, but if you have one that works I would like to borrow it to burn another copy. 7 February 2007 I was tempted to assign a biography for The Oracle of Delphi, but decided that it would be a bit too heavy on history, and too light on the foundations of quantitative analysis. Nevertheless, you may find this article from Wikipedia provides some interesting background for tonight's discussion. 6 February 2007 As of 7:00 AM, I have received emails from four members of the Digirati. Only 17 more hours to go! I am always looking for ways to make processes more "systematic" and less "intuitive." I tend to view intuition and judgment as the result of a complicated series of small decisions (a la "Blink" by Malcolm Gladwell), and it is interesting to try to unravel the process and break it into little pieces. Ram Charan is a former professor from the Harvard Business School who writes for Yahoo! Finance. This recent article discusses the need for managers to go beyond their intuition when making decisions about people. 1 February 2007 Thanks again to Dr. Griffin for sharing his experience with us last night. I have included an outline of the topics he discussed in the version of the handout that I posted to the site. Just as a little experiment to see how many of you are checking in to look at the website throughout the week, I'll give five points of extra credit to anyone who sends me an email with the word "Digirati" in the subject line between now and February 6th at midnight Mountain Time. 31 January 2007 There was a fascinating story about Quantitative Analysis on Good Morning America this morning. It was about a new book called Geek Logik that provides mathematical formulas for all kinds of common decisions. 29 January 2007 Here is a short article from the Rapid City Journal that should provide food for thought about statistics, probabilities, and forecasting. Why would Sonic be willing to invest where Burger King has given up? Which one made the right decision? 24 January 2007 I have added the handouts for tonight to the website. I also added the Deal or No Deal spreadsheet, and a copy of tonight's quiz. Don't forget that the activity should be completed and turned in next week. 20 January 2007 Last night a friend told Ruth and I that we should check out www.despair.com. It is a site that sells demotivational merchandise such as posters and coffee mugs with catchy demotivational quotes. I am very impressed, and suspect that some of you will be, as well. 19 January 2007 To better illustrate the difference between probabilities that are mutually exclusive, and those that are not mutually exclusive, I have created a spreadsheet in Excel. This sheet uses our example with the deck of cards, and allows you to choose up to three criteria. It will then display a matrix of all of the cards that match the criteria which you have specified. It will also count the matching cards, and show you the probability of choosing one of them. The criteria can be either suits or card numbers. So, for instance, you can specify "S" for Criteria #1 to see the probabilities of drawing a spade. And you can specify "J" for Criteria #2 to see the probability of drawing either a spade or a jack. I hope that this is helpful.
For those who missed the Week 2 Quiz, please download it, print it out, complete it, and turn it in to me during our next class. If you would like to have a DVD of a class, please drop me an email to let me know. Unless you ask for other arrangements I will just bring the DVD to class for you the following week. 7 January 2007 A student with a keen eye for detail pointed out to me that the schedule I prepared was wrong. I accidentally scheduled our classes to occur during all of the Tuesdays in February and March, rather than on Wednesdays. I have corrected the mistake, and I believe that the schedule is now accurate. Thank you for catching the error! 3 January 2007
This course can help you hone your skills in understanding quantitative problems, developing models to describe them, and using common tools (math and computers) to identify solutions. If you knew all of this stuff before you enrolled then this class would not be a good use of your time. If you don’t know all of this stuff, and you allow yourself to have a negative attitude toward math or computers, or if you doubt your own abilities, then you are undermining your own potential.
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