by: Janni Boydon

From previous meeting

Deadline of Self Work Sampling Activity is next

meeting

Lecture meeting today

As usual, we have a quiz
Btw, this is Lecture #10 already!
We are near the end of IE 3

Janni Boydons Self Work Sampling Results

Necessary Stuff (Breakdown)
Activity

# of Observations

Percentage

Hours per day

Sleeping

73

34.76%

8.34

Preparing

3.33%

0.80

Travelling

17

8.10%

1.94

Eating

10

4.76%

1.14

Work (Breakdown)

Leisure (Breakdown)
Activity

# of Observations

Percentage

Hours per day

Activity

# of Observations

Percentage

Hours per day

Socialize

19

9.05%

2.17

Lectures

15

7.14%

1.71

Facebook

17

8.10%

1.94

Check

11

5.24%

1.26

Exercise

3.33%

0.80

Class

11

5.24%

1.26

Chill

1.90%

0.46

Meeting

13

6.19%

1.49

Thesis

2.86%

0.69

Overall, I think I am productive. I work just the right amount (44.8 hours a week). My only problem is Im
not doing my thesis :( Travelling 2 hrs a day is a hassle. Maybe I socialize/Facebook too much?

SOMEONE IN THE CLASS ASKED:

Is it right for the government to invest in the private sector?
In my opinion, yes. Thats how Singapore and Japan achieved industrialization and
development anyway. However, we should fix the monopoly and bureaucratcapitalism behind. Private sector operates while government regulates.
Revenue sources of the government (2012 revenues: Php 1.36 trillion):
TAX REVENUES (88%)

NON-TAX REVENUES (12%)

BIR Effort (68%)

Bureau of Treasury

Income Tax

Sale of Government Bonds and Securities

Sales Tax (E-VAT)

Public-Private Partnership

Excise Tax (Sin Tax)

BOC Effort (20%)

Tariffs and Duties

Government-Owned & Controlled Corporation

Dividends (if profitable) from e.g. PAGCOR, LRTA, MIAA,
MWSS, NPC, PEZA, PNOC, PNR, SEC, SSS, Landbank, DBP

MANY IN THE CLASS ASKED:

How to stockmarket?

Paano po mag-stock market. Gusto ko actually kaso takot ako kasi

wala pa akong masyadong alam. I read on it naman mej.
Speaking of stocks, penge pong tips

Where to learn stocks? Doing the minimal effort thingy.

Any tips on how to start investing @ the stock market? Do you really
have to have a large amount of money?

STOCK MARKET FAQ

How to open an account?
What is the stock market?

Why invest in the stock

market?
How do you earn in the stock
market?
Why do prices change?

Most popular: colfinancial.com (EIP: 5k / Regular: 25k),

second most popular: bpitrade.com (Php 10k)
It is a market where companies sell stocks (company
ownership e.g. JFC, AC, ALI, PGOLD, MBT) to the public for a
price. It is just like a market (palengke) where some people
buy and some people sell.
Because you want to earn!
Buy low, sell high. Its like buying mangoes when in season
(low price), preserve, then sell when theyre not in season
(high price). Buy when cheap, sell when in demand.
Supply and demand. If more people want a company (higher
demand, less supply), price goes up. Vice versa.
The pool of shares inside the market is fixed. Once theyre
released in the market through public offerings, the public
trade these shares within themselves.

STOCK MARKET FAQ

Are these price changes
computable?

Not really. There is no accurate predictor that can compute

all price changes.

Why?

Because it is primarily human emotions that evoke the

change in excessive stock prices. FEAR (to sell) and GREED
(to buy).

How to try to predict if a

stock price will be going up or
down?

FUNDAMENTAL ANALYSIS: basis is the companys actual

value interpreted via balance sheets, news and current
events, state of the company based on its industry &
positioning, etc.
TECHNICAL ANALYSIS: basis is the companys price charts
interpreted via chart trends and patterns.

Is stock market timeconsuming?

If youre a trader (short-term), yes. It can be your day job (6-8

hrs per day). If youre an investor (long-term), just follow a
guide and it only takes a few minutes per week/month.

How much can I earn per year? Pros: 90-100%. Full-time: 30-40%. Safe and easy: 10-15%.

SOMEONE IN THE CLASS ASKED:

For the retirement plan, what if the stock market crashes? Or what if
there is another global financial crisis?
We still have a lot of investment opportunities to choose from!
Usually, the best investment just switches between these three forms of value:

CURRENCY

COMMODITY

EQUITY

INVESTMENT OPPORTUNITIES IN REAL LIFE

Just like in the 10-Year Retirement Game, there are many many
opportunities for investment.
BUSINESS

BANK
Savings Account
Time Deposit

STOCKS

POOLED FUNDS

Franchise

Mutual Funds

Own Business

Unit Investment Trust Fund

Startup
Networking

Philippine Stock Market

(classifications of pooled funds)

BONDS

Money Market Funds

REAL ESTATE

Government Bonds

Bond Funds

YOURSELF

Corporate Bonds

Equity Funds

TRADING

Balanced Funds

Foreign Exchange
Physical Gold and Silver

INSURANCE

Diversify and build your investment plan.

Advisable Order: 1) Insurance, 2) Pooled Funds
or Stocks or Bonds, 3) Emergency Fund (3x
monthly expenses), 4) Others (Trading or Real
Estate or Business)

SOMEONE IN THE CLASS ASKED:

Do you think that the current economic environment of the
Philippines is indicative of how financially literate the majority of the
populace is? If policy maker ka sir, anong steps gagawin mo to make
the Philippines more economically progressive?
According to data: only 1% of Filipinos invest in the stockmarket! Whereas for example in
US, around 50% invest in it.

Of course the primary obstacle is POVERTY. But our current economic structure is also
telling. The country is naturally LEFT (government handles the economy). Our taxes are
high and we have low spendable income, hence we dont/cant invest.
Its still a long debate. But I honestly think that through all perspectives (left/right), the
primary step should be to break monopolies. If Im radical, I will decimate the oligarchs who
control the economy. If Im a reformist, I will incentivize SMEs, reduce taxes (so people will
invest, further supporting the market), create a healthy environment in urban and rural
areas for opening businesses (national transportation, farm-to-market roads, better
schools in provinces), and make anti-corruption / anti-bureaucrat capitalism reforms.

PRODUCTION SYSTEMS OPERATIONS RESEARCH

DIE/OR
INFORMATION SYSTEMS

has four tracks

ERGONOMICS

LECTURE MEETING
Operations Research

OPERATIONS RESEARCH
OPERATIONS

RESEARCH

Any significant
activity/function

Systematic investigation to
reach a conclusion

OPERATIONS RESEARCH
Systematic investigation to reach a conclusion on how
to best perform any significant activity/function
Mathematical approach that deals with optimization

OPTIMIZATION
determining how to perform a function in the most productive way (most
output from minimum input while achieving a desired result)

GETTING THE MOST OUT

OF ANYTHING

OPTIMIZATION EXAMPLE
Recall this Math 53 problem: Suppose you are a farmer building a farm
but you only have a 40-m perimeter fence material to enclose it with.
How do you maximize the farm area given this fence perimeter?

FARM

defining the problem

OPTIMAL FARM

What do we want to maximize?

FARM AREA
What factors can we change?
LENGTH AND WIDTH OF FARM
What are our limitations?
We cannot have an
infinitely big farm because PERIMETER IS ONLY 40m
we have limited resources

SQUARE FARM

BASIC COMPONENTS OF AN OPERATIONS

RESEARCH MODEL
DECISION
VARIABLE

OBJECTIVE
FUNCTION

CONSTRAINT

Factors that can be

changed and which we are
trying to determine the
right value

Mathematical expression of
the measure being
maximized and the
relationship of decision
variables

The limitations to how

much the factors can be
changed and the reason
why we need to
compromise some factors

In the farm example

In the farm example

In the farm example

L = length of farm
W = width of farm

Maximize Area = LW

2L + 2W 40
L0
W0

Answer #1 of the quiz:

What are the three basic components of an Operations Research

model? Define each.

FAQs ABOUT OPERATIONS RESEARCH

WHERE CAN WE
APPLY OR?

Almost ANYWHERE as long as these three can be

identified: decision variables, constraints, objective
function

HOW DO WE CONSTRUCT
AN OR MODEL?

From a real life problem/situation, we translate the

components and create a model made of
mathematical equations

WHAT IS THE GOAL OF OR?

To find a feasible and optimal solution to the model,

implement it in real life, and make the customer /
persons involved happy

In basic Operations Research, we only deal with Linear

Programming (only linear equations)

LINEAR PROGRAMMING EASY EXAMPLE

Suppose you have an exam tomorrow (12 hours left) and just like any other
student, you want to get the highest score possible. You want to determine the
number of hours you should study and the number of hours you should sleep such
that you will get an optimal exam score.
For simplicity and based on estimation, we assume that studying for one hour
adds 10 points to exam score while sleeping for one hour adds 3 points to exam
score (health is wealth). We also want that for each hour that we study, we should
have at least 1.5 hours of sleep. We also want to have at least 4 hours of sleep.

DECISION VARIABLE

OBJECTIVE FUNCTION

CONSTRAINT

Factors that can be changed

Measure being maximized

and relationship of variables

The limitations

A = hours of study
B = hours of sleep

Maximize Score = 10A + 3B

A + B 12
1.5A B 0
B4
A0

LINEAR PROGRAMMING SOLUTION

LINEAR PROGRAM
A = hours of study
B = hours of sleep

There are several approaches to solve a linear

program

Maximize Score = 10A + 3B

Simplex Algorithm: a manual computation of

systems of linear equations using matrices
(but this is very boring)

A + B 12
1.5A B 0
B4
A0

Excel Solver: a software add-on that easily

solves linear programs (you will have a takehome activity to try this)
Graphical Solution: the actual concept of
solving linear programs

LINEAR PROGRAMMING SOLUTION

A = hours of study
B = hours of sleep
Maximize Score = 10A + 3B
A + B 12
1.5A B 0
B4
A0
OPTIMAL SOLUTION
pts of intersection of 2 constraints:

A = 4.8 B = 7.2 Score = 69.6

GRAPHICAL SOLUTION
1. Create a 2-d graph because
we have 2 decision variables
2. Graph the constraints to get
the feasible region
1.5A B 0
A0
B4
A + B 12
3. Add the objective function in
the graph (it is just a slope
wherein points in the same line
have the same value)
Score = 10A + 3B
4. The optimal solution is the
slope with the highest value that
is within the feasible region

B = hours of sleep

LINEAR PROGRAM

A = hours of study

FEASIBLE REGION
Which constraints does the
optimal solution intersect?

ANOTHER EXAMPLE: PRODUCT-MIX

Suppose a burger stand sells two types of burgers, regular and cheese. In a regular
8-hour workday, a regular burger can be prepared for 5 minutes while a cheese
burger can be prepared for 10 minutes. The maximum daily demand for regular
burgers is 60 while that for cheese burgers is 40. If the profit of selling regular
burgers is Php 10 and that of selling cheese burgers is Php 15, determine the
optimal product-mix strategy for the burger stand. How many regular burgers and
how many cheese burgers should be prepared in order to maximize profit?

DECISION VARIABLE

OBJECTIVE FUNCTION

CONSTRAINT

Factors that can be changed

Measure being maximized

and relationship of variables

The limitations

R = regular burgers
C = cheese burgers

Maximize Profit = 10R + 15C

5R + 10C 480
R 0, R 60
C 0, C 40
Since linear programs are a hassle to solve, I will not require you to learn it manually i.e. they
will not be asked for in the exam. Just know how to formulate a linear program.

OTHER APPLICATIONS OF LINEAR PROGRAMMING

PRODUCTION PLANNING
How many and when to produce
which products?

CHEMICAL PRODUCTION YIELD

What percent of each chemical to
get the most yield?

MATERIAL BLENDING
What percent of each material to get
the strongest product?

MACHINE PARTS PURCHASING

Which kind of parts to buy to build the
best machine?

INVESTMENT PORTFOLIO
MANAGEMENT
How much of each investment to
minimize risk and maximize profit?

SALES ASSORTMENT
How many to display of each item
(e.g. clothes) to maximize profits?

WAR PLANNING
How many tanks/infantry to produce and how
many resource-production units in order to win
the war? (this is actually the reason why OR was
invented during World War I)

Some OR problems can be solved by network models e.g. city layout, train route construction,
playoff scheduling, etc. We will see more of them in the activity next meeting.

Answer #2 of the quiz:

Give any real-life application of operations research. It is applicable

as long as there are scarce resources and something we want to
optimize. Be specific. If possible, determine the decision variables,
objective function, and constraints. No need to be mathematical,
just describe.

IMAGINE
The classroom is divided into two countries and there is
Php 1,000,000,000,000,000 in the middle.
COUNTRY A

COUNTRY B
x 10,000,000,000,000

Will Country A spend on military Should they just get Php Will Country B spend on military
to fight Country B and get the 500,000,000,000 each and to fight Country A and get the
whole Php 1,000,000,000,000? spend for its own in peace? whole Php 1,000,000,000,000?
But what if one country betrays, spends on
military, then destroys the other to
eventually get all money? Thats wise, right?

Then spend the whole Php

1,000,000,000,000 for the betterment of the
economy without spending on military?

WAIT, WHY NOT JUST BE ONE COUNTRY INSTEAD?

Why cant we be just one world who loves each other?

*Ideally, I think military is a waste of money

GAME THEORY
study of strategic decision making
study of mathematical models of games between intelligent rational
players who fully know what the other may do

COMPETITION VS
COOPERATION
applicable in current issues e.g. US, China,
revolutions, civil wars, etc.

GAME THEORY: GAME OF CHICKEN

Suppose you and an enemy is driving towards each other on a collision
course. Here is the game:

If you both do not swerve (both prideful), both of you will die in a car crash
If you swerve first and your enemy does not (you lose pride), you will be
called a chicken and get humiliated
If you do not swerve and your enemy does first (you win pride), you can call
him a chicken and humiliate him

WHAT WILL YOU DO?

GAME THEORY: PRISONERS DILEMMA

Suppose you and your partner committed a heinous crime and got caught by
the police and interrogated separately. You agreed that you both will not
Confess
confess to the crime. Here is the dilemma: You/Partner Not Confess
Not Confess

both 5 yrs

youre imprisoned
for a lifetime, him
free

Confess

youre free, hes

imprisoned for a
lifetime

both 30 yrs

If you and your partner both not confess (cooperate), each of you serves 5 year in prison
If you confess and your partner does not (you betray, he cooperates), you will be set free
and your partner will be imprisoned for a lifetime.
If you do not confess and your partner confesses (you cooperate, he betrays), you will be
imprisoned for a lifetime and your partner will be set free.
If you both confess (both betray each other), each of you serves 30 years in prison.

WHAT WILL YOU DO?

GAME THEORY: THE LIAR GAME OF IE 3

The quiz today has a special twist. You can only get a maximum score of 4
over 5. However, there is a way to get an overperfect score of 6 over 5. You
must win the Liar Game of IE 3. The rules are simple:
IE 3 QUIZ
_______
_______
_______
If you want an overperfect score of 6 over 5 for this quiz, just write 6 in item number 3.
If you are satisfied with a score of 4 over 5 for this quiz, write 4 in item number 3.
Heres the twist. If 50% or more of the class puts 6, everybody will only get a score of 2.
Writing any other figure will be considered as a score of 4 over 5.

WHAT WILL YOU DO?

Answer #3 of the quiz:

Write your answer on The Liar Game of IE 3.

LECTURE MEETING
Operations Research

END

Next meeting:
Next meeting (F) is an activity meeting

You need to prepare:

Submit the Self Work Sampling Activity