QUANTITATIVE METHODS (Operations Research) –
various applications of mathematics in business or any
complex system.
OPERATIONS RESEARCH- specifically, the discipline of
applying quantitative methods oriented to planning.
NETWORK MODELS involve project scheduling
techniques that are designed to aid the planning and
control of large-scale projects having many interrelated
activities.
Uses of Network Analysis:
1. Planning
2. Measuring progress to schedule
3. Evaluating changes to schedule
4. Forecasting future progress
5. Predicting and controlling costs
SAMPLE APPLICATIONS
1. Building construction
2. Book publishing
3. New product planning
4. Feasibility studies
5. Research and development projects
6. Auditing
PROJECT SCHEDULING TECHNIQUES
1. Gantt or Bar charts- a type of bar chart that
illustrates the scheduled start and finish of
elements of a project over time
2. Program Evaluation and Review Technique-
developed to aid managers in controlling large-
scale, complex problems.
Pert Diagram- a probabilistic diagram of the
interrelationship of a complex series of activities; a
free-form network showing each activity as a line
between events.
Events- discrete moments in time representing the
start or finish of an activity; they consume no
resources.
Activities- tasks to be accomplished; they consume
resources, (including time) and have a duration over
time
 Types of Activity
1. Series- an activity cannot be performed
unless another activity is undertaken.
2. Parallel- can be performed simultaneously.
 Critical Path- longest path through the network
Expected time(𝒕𝒆 )- the average time an
activity would require if it were repeated a large
number of times.
𝑡𝑒 = 𝑡𝑜 + 4𝑡𝑚 +𝑡𝑝
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Where;
𝑡𝑜 - optimistic time
𝑡𝑚 - most likely time
𝑡𝑝 – pessimistic time
Slack time- the amount of time that can be added
to an activity without increasing the total time
required on the critical path; the length of time an
activity can be delayed without forcing a delay for
the entire project.
3. Critical Path Method (CPM)- like PERT, it is a
network technique, but unlike PERT, it uses
deterministic time and cost estimates, its
advantages.
Crash time - time to complete an activity assuming
that all resources were devoted to the task
(overtime, extra crew, etc.)
LEARNING CURVES
-describe the efficiencies arising from experience,
because with experience comes increased
productivity. This productivity increases with
production size, but at a decreasing rate as
diagrammed below:
Experience
The time required to perform a given task becomes
progressively shorter, but this is applicable only to
the early stages of production or any new task.
The curve is expressed as a percentage of reduced
time (usually between 60% and 80%) to complete a
task of each doubling of cumulative production.
Hence, the time required is reduced by 20% to 40%
each time cumulative production is doubled.
Assumptions:
1. The cumulative average time per unit is reduced
by a certain percentage each time production
doubles.
2. Incremental unit time ( time to produce the last
unit) is reduced when production doubles.

PROBABILITY ANALYSIS
PROBABILITY is important to management
decision-making because of the unpredictability of
future events.

Decision-making under conditions of risk- occurs

when the probability distribution of the possible
future states of nature is known.

Decision-making under conditions of uncertainty-

occurs when the probability distribution of possible
future states of nature is not known and must be
subjectively determined.

The probability of an event varies from 0 to 1

a. 0 probability- the event cannot occur
b. Probability of 1 (or 100%) the event is certain to
occur

BASIC TERMS USED WITH PROBABILITY

1. Two events are mutually exclusive if they
cannot occur simultaneously.
2. The joint probability of two events is the
probability that both will occur.
3. The conditional probability of two events is the
probability that one will occur given that the
other has already occurred.
4. Two events are independent if the occurrence
of one has no effect on the probability of the
other.

Expected value
The expected value of an action is found by
multiplying the probability of each outcome by its
pay-off and summing the products.