Information Technology Concepts Chapter 1 and 2

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Modeling - Introduction

Creating a simplified version of reality

Working with this simplified version to

understand some part of a business problem

Benefits of Modeling:
Provides timely information Saves costs
o o

Relative to alternatives (e.g., surveys) By avoiding expensive errors

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in improved business intuition

Modeling a Problem
Real World Problem Problem Statement Modeling Problem Assumptio ns and Model Structures Analysi s Results and Conclusion s

Formul ation

Solution

Interpre tation

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Problem Solving Process (1/6)

Questions Answered: o What problems or opportunities are being faced? o Where does a gap exist between the current situation and the desired one? o What are the stated and unstated goals? Result: A description of the situation Identified (not

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Problem Solving Process (2/6)

Questions Answered: o What are the symptoms and causes? o What measures of effectiveness seem appropriate? o What actions are available? Result: Found and organized relevant data

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Problem Solving Process (3/6)

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Questions Answered: o Which is the most important problem? o Is this problem like others we have dealt with? o What are the consequences of a broad versus narrow problem statement?

Problem Solving Process (4/6)

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Questions Answered: o What decisions are open to us? o What solutions have been tried in similar situations? o How are the various candidate solutions

Problem Solving Process (5/6)

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Questions Answered: o How does this solution impact each of the criteria? o What factors within our control could improve the outcomes? o What factors outside

Problem Solving Process (6/6)

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Questions Answered: o What are the barriers to successful implementation? o Where will there be support and motivation, or resistance and conflict?

Influence Charts - Introduction

Useful

tool during the initial conceptual stage of model building the relationship between the various input variable available and the outcome which is being found through the model in taking an early decision on what parameters to include or exclude

Depicts

Helps

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Influence Charts How to Build

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Influence Charts Sample

Determine the price a company should set for its product so as to generate the highest possible profit
Price

Quantity Sold

Total Revenue

Profit Variable Cost Unit Cost

Total Cost

Fixed Cost

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