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Introduction to
Quantitative Analysis
To accompany
Quantitative Analysis for Management, Eleventh Edition,
by Render, Stair, and Hanna
Power Point slides created by Brian Peterson
Learning Objectives
After completing this chapter, students will be able to:
1. Describe the quantitative analysis approach
2. Understand the application of quantitative
analysis in a real situation
3. Describe the use of modeling in quantitative
analysis
4. Use computers and spreadsheet models to
perform quantitative analysis
5. Discuss possible problems in using
quantitative analysis
6. Perform a break-even analysis
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
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Chapter Outline
1.1
1.2
1.3
1.4
Introduction
What Is Quantitative Analysis?
The Quantitative Analysis Approach
How to Develop a Quantitative Analysis
Model
1.5 The Role of Computers and Spreadsheet
Models in the Quantitative Analysis
Approach
1.6 Possible Problems in the Quantitative
Analysis Approach
1.7 Implementation Not Just the Final Step
1-3
Introduction
Mathematical tools have been used for
thousands of years.
Quantitative analysis can be applied to
a wide variety of problems.
Its not enough to just know the
mathematics of a technique.
One must understand the specific
applicability of the technique, its
limitations, and its assumptions.
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1-5
Raw Data
Quantitative
Analysis
Meaningful
Information
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Interest rates
Inventory levels
Demand
Labor cost
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Developing a Model
Acquiring Input Data
Developing a Solution
Figure 1.1
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step.
It is essential to go beyond symptoms and
identify true causes.
It may be necessary to concentrate on only a
few of the problems selecting the right
problems is very important
Specific and measurable objectives may have
to be developed.
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Developing a Model
$ Sales
$ Advertising
Schematic
models
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Developing a Model
Models generally contain variables
(controllable and uncontrollable) and
parameters.
Controllable variables are the decision
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Developing a Solution
The best (optimal) solution to a problem is
found by manipulating the model variables
until a solution is found that is practical
and can be implemented.
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an organization.
The impact of actions or changes needs to be
studied and understood before
implementation.
tested.
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Profits = sX f vX
If sales = 0, profits = -f = $1,000.
If sales = 1,000, profits = [(10)(1,000) 1,000 (5)(1,000)]
= $4,000
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or
0 = (s v)X f
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based on probabilities.
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decision support
system for use in
POM and QM
courses
This is the main
menu of
quantitative
models
Program 1.1
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Program 1.2
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Program 1.3A
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Program 1.3B
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Program 1.4
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departments.
Beginning assumptions may lead to a
particular conclusion.
The solution may be outdated.
Developing a model
Managers perception may not fit a textbook
model.
There is a trade-off between complexity and
ease of understanding.
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quantitative problems.
The validity of the data may be suspect.
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Implementation
Not Just the Final Step
There may be an institutional lack of
commitment and resistance to change.
Management may fear the use of formal
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Implementation
Not Just the Final Step
There may be a lack of commitment
by quantitative analysts.
Analysts should be involved with the
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Copyright
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