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Quantitative approach to MNGT-translating business to a mathematical model ELIMINATION, SUBSTITUTION, MATRIX, GAUSS-JORDAN ELIMINATION Equation of a line

a. point slope form y-y1 = m(x-x1) b. slope intercept form y=mx + b (where m = y2-y1/x2-x1) c. general equation of a line ax+by+c=0 GAUSS-JORDAN ELIMINATION Example: 4x+2y=60 2x+4y=48 4x+2y=60 2x+4y=48 0.5 4 0.5 3 0.5 1 0 1

R1/4 15 48 15 18 15 6 12 6 -2 (R1+R2) R2/3 -0.5 (R2+R1) x=12 y=6

1 2 1 0 1 0 1 0

DECISION THEORY -the choice of model depends upon the characteristics of the decision (ex. Significance, time and cost, complexity) -decisions that are more complex when a data describing the variables are incomplete/uncertain, the degree of certainty is classified into: a. certainty b. risk c. uncertainty ELEMENTS OF DECISION MAKING 1. Doing all feasible alternatives that must be considered in the decision 2. Listing the future events affecting demands that may occur

Construct a table which indicates the relationships between pairs of decision elements.600-200) increasing 0 stable 100 decreasing 380 350 kasi pinakamababa sa pinakamatataas 350 0 220 400 350 0 d. 492-394(394 is summation of payoffs in increasing)=98 492-365= 127 492-162=330 98+127+330=555k – opportunity profit DECISION TREE ANALYSIS -a technique to aid the decision makers in identifying the outcome for each decision alternative assessing probability associated with each outcome assigning cashflow in the form of payoffs and cost and keeping the sequence of outcomes and decision in the proper chronological order . This table may also shows the payoffs expressed in profits/any other measures of benefits which would result from each possible combination of decision alternatives and state of nature Ex.3x600000=180000.choosing the best of the worst ( 120000) c. ex.Summation of highest probabilities minus summation of payoffs of each nature 180+300+12=492K Ex. Maximin. 180000 is the payoff) Expected Value with Perfect Information. Minimax regret criterion. State of Nature (demand) increasing stable decreasing Investment Medium 250000 500000 -100000 Large 600000 400000 -260000 Small 200000 150000 120000 NON-PROBABILITY CRITERIA a.3. Maximax. 600-600.considers the result of wrong alternatives (large value in each nature minus each value in the row/nature.carries the highest possible payoffs (all under increasing) b.600-250. we must consider the probabilities for each possible outcomes EV = ΣXiPi Xi specific alternative measure in peso Pi probability EV is the payoffs (0. Probability criteria.to determine unexpected value.

Cost-volume relationship are equal 3. Simple and easy to visualize 2. All output can be sold Advantage 1. Focuses upon profitability 3.algebraic and/or graphic model for describing relationship between cost and revenue for different volumes of production FC fixed cost VC variable cost Q quantity output/units TR total revenue TC total cost PR profit PS selling price PR = TR-TC TC= FC +TVC TVC = VC x Q PR = TR – [FC + (VC)(Q)] Assumptions 1. Uses algebraic and/or graphical display . All cost and volume are known 2.BREAK EVEN ANALYSIS.