Ryan Angelica T. Allanic.

TFr 1:00-2:30

1. Quantitative Models - real-life decisions are modeled automatically under certain assumptions in
order to achieve a deterministic solution.

2. Simulation - a technique for experimenting with mathematical/ logical models using a computer

3. Probability Analysis - commonly used in planning, as well as in decision-making under uncertainty.

4. Decision Making under Certainty - for each decision alternative, there is only one event, and therefore
only one outcome. The event has a 100% chance of occurrence.

5. Decision Making under Conditions of Risk - the probability distribution of the possible future states of
nature is known.

6. Decision Making under Conditions of Uncertainty - the probability distribution of the possible future
states of nature is not known and must be determined subjectively.

7. Probability Distribution - specifies the values of variables and their respective probabilities.

8. Probability - a mathematical expression of doubt or assurance about the occurrence of chance event.
It's value varies from 0 to 1 or 100%.

9. Objective Probability - calculated from either logic or actual experience.

10. Subjective Probability - estimates of the likelihood of future events are based on judgement and past
experiences.

11. Mutually exclusive - if two events cannot occur simultaneously.

12. Joint Probability - both events will occur.

13. Conditional Probability - one event will occur given that the other event has already occurrences.

14. Independent Events - the occurrence of one has no effect on the other event.

15. Dependent Events - the occurrence of one has an effect on the other event.

16. Pay off - the value assigned to the different outcomes from a decision.

17. Expected Value - calculated by multiplying the probability of the outcomes to their pay off and
summing their products. It represents the long-term average pay-off from repeated trials.

18. Payoff (Decision Table) - presents the outcome (pay-off) of specific decisions when certain states of
nature (events which are not controllable by decision maker) occur. It is a helpful tool for identifying the
best solution given several decision alternatives and future conditions that involve risks.
19. Expected Value of Perfect Information - the difference between the expected value without perfect
information and the result if the best action is taken given perfect information.

20. Perfect Information - the knowledge that a future state of nature will occur with certainty.

21. Decision Tree - a graphic representation of the decision points, the alternative courses of action
available to the decision maker, and the possible outcomes from each alternative, as well as the relative
probabilities and the expected values of each event.

22. Steps in Preparing Decision Tree

A. Identify the decision points and the chance points.

B. Determine the events that may result from chance points.

C. Estimate the outcomes of each event, as well as their estimated probabilities.

D. Compute the expected values of the outcomes.

E. Evaluate the results and choose the best course of action.

23. Gantt Chart - shows the different activities or tasks in a project, as well as their estimated start and
completion times.

24. Program Evaluation and Review Technique (PERT) - a networking technique used for planning and
controlling the activities in a project.

25. PERT Diagram - an arrow diagram on a network showing the interrelationships and interdependence
of the various activities of a project.

26. Event - represents a specified accomplishment at a particular instant in time.

27. Branch - represents the activities in a project.

28. Activity - task to be accomplished.

29. Series - an activity cannot be performed unless it's predecessor activity is finished.

30. Parallel - activities that can be performed simultaneously.

31. Path - a series of activities from start to finish.

32. Critical Path - the longest path through the network.

33. Slack Time - the length of time by which a particular activity can slip without having any delaying
effect on the event.

34. Critical Path Method - network technique that uses deterministic time and cost estimates.
35. Crash Time - the time required to complete an activity assuming that all available resources are
devoted to such activity.

36. Crashing the Network - determining the minimum cost for completing the project in minimum time
so that an optimum trade-off between time and cost is achieved.

37. Linear Programming - a quantitative technique used to find the optimal solution to short-term
resource allocation problems.

38. Steps in Formulating a Linear Program

A. Identify the decision variables.

B. Express the objective and constraint functions in terms of the decision variables identified in Step 1.

39. Graphical Method - limited to problems with only two variables.

40. Simplex Method - applicable even when there are more than two variables.

41. Shadow Price - the amount by which the value of the optimal solution of the objective function in a
linear programming problem will change if a one-unit change is made in a binding constraint.

42. Queuing Theory - a study of random arrivals at a processing or servicing facility of limited capacity.

43. Application of Queuing Theory and Cost Involved

Queuing theory can be applied in movie ticket booths, even in expressway toll booths and such. Costs
involved are Facility Costs and Operating Costs, which is the cost of providing services and Waiting Costs,
which is the cost of idle resources waiting in line, including the income foregone in the case of waiting
customers.

44. Learning Curve - a mathematical expression of the phenomenon that incremental unit costs to
produce decrease as managers and labor gain experience from practice.

45. Sensitivity Analysis - the study of how the outcome of a decision process changes as one or more of
the assumptions change.