Session 1

Quantitative Analysis and

Techniques in Management
 AGENDA FOR 1ST SESSION

• Personal Introductions (Mine or Students ???)

• Appoint CR

• Course Outline

• Expected Class Conduct

• Introduction to Managerial Decision Modelling,

• Introduction to Linear Programming Modelling

 What is Decision Modeling?
A scientific approach to managerial
decision making

• The development of a (mathematical) model

of a real-world scenario

• The model provides insight into the solution of

the managerial problem
 Types of Decision Models
• Deterministic Models
Where all the input data value are known with
complete certainty

• Probabilistic Models
Where some input data values are uncertain
Quantitative vs. Qualitative Data
The modeling process begins with data

• Quantitative Data
Numerical factors such as costs and revenues

• Qualitative Data
Factors that effect the environment which are
difficult to quantify
 Spreadsheets in Decision Making
• Computers are used to create and solve
models

• Spreadsheets are a convenient alternative

to specialized software

• Microsoft Excel has extensive modeling

capability via the use “add-ins”
 Steps in Decision Modeling
1. Formulation
Translating a problem scenario from
words to a mathematical model
2. Solution
Solving the model to obtain the optimal
solution
3. Interpretation and Sensitivity Analysis
Analyzing results and implementing a
solution
Steps in
Modeling
 Possible Problems in
Developing Decision Models
Defining the Problem

• Conflicting viewpoints

• Impact on other departments

• Beginning assumptions

• Solution outdated
 Possible Problems in
Developing Decision Models
Developing a Model
• Fitting the textbook models
• Understanding the model

Acquiring Input Data

• Using accounting data

• Validity of data
 Possible Problems in
Developing Decision Models
Developing a Solution
• Hard to understand mathematics

• Limitations of only one answer

Testing the Solution

Analyzing the Results

Implementation