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Paper 1.4: Quantitative Methods

# Paper 1.4: Quantitative Methods

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Semester 1, MBA - Project Management -Alagappa University- Quantitative Methods Coursware
Semester 1, MBA - Project Management -Alagappa University- Quantitative Methods Coursware

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06/30/2013

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Paper 1.4: QUANTITATIVE METHODS
Unit – 1
Basic Mathematical concepts : Nature of quantitative analysis inthe practice of management – problem definition – Models and their development – Concept of trade off – Notion of constants – Variables andfunction – Linear and Non-linear – Simple examples.Graphical representation of functions and their application – Concepts of slope and its relevance – Plotting graphs of functions.Use of functional relationships to understand elasticity of demands.Productive function – Costs of operating a system – Measuring the level of activity of a system in terms of volume – Value and other parameters – Relationship between costs and level of activity – Costs and Profits – Relevanceof marginal average and total costs. Importance of “relevant costs” for decisions-making – Break-even analysis and its uses.
Unit – 2
Introduction to the linear programming – Concepts of optimisation – Formulation of different types of linear programming – Duality and Sensitivityanalysis for decision-making.
Unit – 3
Solving LP using graphical and simplex method (only simple problems) – Interpreting the solution for decision-making – Other types of linear  programming – Transportation – Formulation and solving methods.
Unit – 4
Introduction to the notion of probability – Concepts of events – Probability of events – Joint, conditional and marginal probabilities.
Unit – 5
Introduction to simulation as an aid to decision-making.Illustration through simple examples of discrete event simulation. Emphasis to be on identifying system parameter, variables, measures of performance etc.

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Unit – 6
Introduction to Decision Theory: Pay-off and Loss tables – Expected value of pay-off – Expected value of perfect Formation – DecisionTree approach to choose optimal course of action – Criteria for decision – Mini-max, Maxi-max, Minimising Maximal Regret and their applications.
Course Material Prepared by :Dr.M.SELVAM, M.Com., M.B.A., Ph.D.,

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LESSON 1
MATHEMATICAL MODELLING FOR MANAGEMENT DECISIONMAKING
Mathematics is the science of magnitude and number, and of alltheir relationships. Mathematics is being applied in almost all fields.Management is no exception. In fact there is a kind of mathematicism, that is,everything can be described in terms of mathematical terms i.e., numbers andsymbols. True.
1.1 MEASUREMENT AND MATHEMATICS
Yes, the world is moving towards becoming more and morequantitative. To be quantitative is to be more precise and pointed in what is being said or done. Measurement is fundamental aspect of being quantitative. Tomeasure means, to express the physical, biological, psychological, sociologicaland other observed phenomena in terms of numbers or symbols such that the phenomena measured bear the same relationship as do the used numbers or symbols have, inter se in terms of magnitude and other relations.The world of business has many phenomena and all these have to be measured for their management and manipulation. And recourse tomathematics is needed in the pursuit of such measurement. Hence the need for mathematics for management. There is a saying: one's knowledge is one-third if one can only speak on a topic, two-third if one can write in words and 100% if one can express in numbers. Mathematics the queen of sciences, thus has king'ssize applications in all walks of life.
1.2 MATHEMATICAL OPERATIONS
We know the basic mathematical operations, namely, addition,subtraction, multiplication and division. But many higher order manipulativemechanisms are available. We have differentiation, integration, programming,simulating, networking, gaming and other techniques which help in businessoptimisation, i.e., maximising revenue/sales/profit or minimising losses/costs/inputs, subject to constraints and conditions.