QUEENCE COLLEGE

DEPARTMENT: MBA

COURSE: Quantitative Analysis

For Managerial Decision Making
INDIVIDUAL ASSIGNMENT
Name: Asegid H/meskel
ID: 0883/15
Instructor: Tolessa F. (PhD)
DATE: 21-03-2023
Individual assignment) 20%

Discuss the following questions briefly (15marks)

1. What is quantitative analysis? How do you think it’s related to managerial decision
Making?
2. Discuss briefly the history of quantitative method in decision making
3. Explain Linear programming (LP) and it importance for manager?
4. Discuss game theory and differentiate Pure Strategies and mixed Strategies
5. Discuss decision making and decision making under certainty, under risk and under
Uncertainty

6. WORKOUT- ROJECT PROBLEM/5 mark/

The project of building a backyard swimming pool consists of ten major activities. The
activities and their immediate predecessors are shown below:
Immediate
Task Task Time
Predecessors
A 12 -
B 7 A
C 8 B
D 11 -
E 8 D
F 12 E
G 5 C
H 10 C
I 12 F,G,H
J 8 I
Required:
a) Draw the relationship diagram using arrows & node
b) Determine the critical path and calculate the project completion period
.NB: How to submit and submission due date? Only soft copy through telegram No.
+251904738418 till march 20/2023 / _submission after due date is
unacceptable_______________________//////

Individual assignment –Answer

1. Quantitative analysis is a method used by businesses and other organizations to
analyze data and make informed decisions based on mathematically oriented techniques
such as statistical methods, mathematical modeling, and optimization.

** Quantitative analysis is related to managerial decision-making because it allows

decision makers to collect and analyze data in a structured and systematic manner, making
it possible to identify trends, patterns, correlations, and cause-and-effect relationships.
This helps decision makers to make more informed and precise decisions that are
grounded in data, rather than relying on subjective assessments or intuition alone.

For example, a business might use quantitative analysis to evaluate the impact of a
marketing campaign by analyzing data on customer behavior, conversion rates, and other
relevant metrics. Based on this analysis, the business could make decisions on how to
optimize its marketing strategy by focusing on specific segments, changing the messaging
or channels used, or adjusting the price points of products or services.

2. Quantitative methods in decision making can be traced back to the 17th century
with the development of Probability Theory by Blaise Pascal and Pierre de Fermat. John
Graunt's 1662 book, "Natural and Political Observations Made upon the Bills of Mortality,"
is also considered one of the first examples of quantitative analysis, as it used statistical
methods to analyze demographic data.

In the 20th century, the development of computers allowed researchers and organizations
to analyze large amounts of data more quickly and accurately using mathematical models
and statistical methods. Operations research, a field of study focusing on applying
mathematical and quantitative methods to solve complex decision-making problems,
emerged as a result.

The application of quantitative methods in decision making expanded rapidly after World
War II, particularly in the fields of business and management. In the 1950s and 1960s,
management science, which uses mathematical models and simulation to analyze complex
systems, became increasingly popular among businesses and governments. This led to the
development of software and tools specifically designed for quantitative analysis, such as
spreadsheets and statistical software.

Today, quantitative methods continue to play a vital role in decision making across a wide
range of industries and fields, including finance, healthcare, engineering, and public policy.
Data analytics, machine learning, and artificial intelligence have further advanced the use of
quantitative methods in decision making, enabling organizations to analyze large volumes
of data and make more accurate and informed decisions.

3. Linear Programming (LP) is a method used to optimize a linear objective function

subject to a set of linear constraints. It is a powerful tool for managers to make decisions
and achieve optimal outcomes in various fields.

## The importance of LP for managers includes:

1. Resource Allocation: LP helps managers allocate limited resources effectively and

efficiently. Managers can use LP to allocate resources such as equipment, staff, and
finances in a way that maximizes profit or minimizes cost.
2. Production Planning: LP can help managers optimize their production plan by
determining how much of each product to produce to maximize profits. LP can also
help identify the optimal mix of resources needed to produce specific quantities of
each product.
3. Inventory Management: LP can be used to determine optimal inventory levels and
reorder points to minimize inventory holding and ordering costs while still meeting
customer demand.
4. Marketing Strategies: LP can help managers optimize marketing strategies by
determining the optimal product mix to maximize profit or minimize cost while
meeting customer demand.
5. Supply Chain Management: LP can help managers optimize the supply chain by
determining the optimal transportation routes and quantities of goods to move
between different locations, taking into account costs such as transportation costs
and inventory holding costs.
In conclusion, LP is a powerful tool for managers to make decisions and achieve optimal
outcomes in various fields, from resource allocation to production planning and marketing
strategies.

4. Game theory is a branch of mathematics that deals with analyzing the strategic
interactions between different actors or entities. It is commonly used in economics,
political science, and psychology to study and analyze decision-making in competitive
situations.

## Pure strategies are choices made by a player that produce a single, specific, and certain
outcome. In game theory, a pure strategy is a set of actions, which is based on a complete
understanding of the rules and other player's strategies. It is a deterministic approach that
assumes that the player is certain about the outcome it desires and the behavior or action
required from the other player or players. In essence, a pure strategy is a fixed plan of
actions chosen to achieve a specific goal without taking into account the uncertainty of the
outcome.

## Mixed strategies are choices made by a player that involve a randomizing element. A
mixed strategy is defined as a probability distribution that assigns probabilities to all
possible actions in response to the behavior of the other player. In other words, a mixed
strategy is a strategy that involves playing different actions with certain probabilities so
that the other player is unable to predict the player's action.

Mixed-strategy equilibrium is a concept common in the study of game theory, where each
player randomizes their play with a specific probability distribution. When each player
correctly assumes the strategy chosen by the other and cannot improve their payoff by
switching to a different strategy, the result is said to be a mixed-strategy Nash equilibrium.

** To differentiate, pure strategy involves deterministic decision-making where a player

makes a fixed decision, while mixed strategy involves randomness and probability
distribution in decision making. Pure strategy aims to achieve specific outcomes, while
mixed strategy aims to 'obfuscate' or confuse the other player's choice by introducing
randomness.

5. Decision-making is the process of choosing between different alternatives or

courses of action in order to achieve a specific goal. It is an essential aspect of business and
management, where managers make decisions on a regular basis to achieve optimal
outcomes. There are different types of decision-making under different levels of risk,
uncertainty, and certainty.

A. Decision-making under Certainty: Decision-making under certainty is a situation

where the decision-maker has complete information about the alternatives, the
probabilities of occurrence, and the consequences of each alternative. This means
that the decision-maker knows exactly what will happen when a particular choice is
made. In such cases, the best option can be determined through a simple calculation
of expected outcome. For example, determining the price that will drive the highest
demand for a product.
B. Decision-making under Risk: Decision-making under risk occurs when the
outcome of a decision is not certain but can be estimated based on probability
calculations. In other words, the decision-maker has incomplete information about
alternatives, the probability of occurrence, and the consequences of each
alternative. In this instance, a decision tree or expected utility approach can be
employed to estimate the expected value of each alternative. Example: Investing
money in the stock market for long-term gains.
C. Decision-making under Uncertainty: Decision-making under uncertainty is a
situation where the decision maker has little or no knowledge about the
alternatives, the probabilities of occurrence or the consequences of each alternative.
In this case, the decision maker tries to make informed guesses based on intuition or
feedback from market trends, experts or other sources. In this situation, scenario
planning and sensitivity analysis can be used to analyze the possible outcomes of
different alternatives. Example: Introducing a new product in the market with
unknown demand and unknown competition.
In conclusion, decision-making is crucial in business and management. The level of
information plays a key role in the type of decision-making process used. Decision-making
under certainty relies on complete information about the outcomes of alternatives, while
decision-making under risk relies on probability estimates of outcomes. Uncertain
decision-making relies on intuition, scenario planning and feedback for analysis.

6.

Immediate
Task Task Time
Predecessors
A 12 -
B 7 A
C 8 B
D 11 -
E 8 D
F 12 E
G 5 C
H 10 C
I 12 F,G,H
J 8 I

A. The project involves building a backyard swimming pool and consists of ten activities A,
B, C, D, E, F, G, H, I, and J. The immediate predecessors of an activity are activities that must
be completed before it can start. The network diagram is as follows:

Activity A has no immediate predecessors and takes 12 units of time to complete. Activity B
is dependent on A and can only start once A is completed. It takes 7 units of time to
complete. Activity C is dependent on B and takes 8 units of time to complete. Activity D has
no immediate predecessors and takes 11 units of time to complete. Activity E depends on D
and takes 8 units of time to complete. Activity F depends on E and takes 12 units of time to
complete. Activity G depends on C and takes 5 units of time to complete. Activity H also
depends on C and takes 10 units of time to complete. Activity I is dependent on F, G, and H
and takes 12 units of time to complete. Finally, Activity J depends on I and takes 8 units of
time to complete.
This network diagram provides a visual representation of the activities that need to be
completed and their dependencies. It can be used to identify the critical path of the project,
which is the path of activities that must be completed on schedule to ensure timely
completion of the project.

The critical path of a project is the sequence of activities that must be completed on time in
order to ensure that the project is completed on schedule. The critical path is determined
by identifying the activities with zero slack (i.e., activities that cannot be delayed without
delaying the completion of the project).

Using the information provided:

Activity A has no immediate predecessors and takes 12 units of time to complete. Activity B
is dependent on A and takes 7 units of time to complete. Activity C is dependent on B and
takes 8 units of time to complete. Activity D has no immediate predecessors and takes 11
units of time to complete. Activity E depends on D and takes 8 units of time to complete.
Activity F depends on E and takes 12 units of time to complete. Activity G depends on C and
takes 5 units of time to complete. Activity H also depends on C and takes 10 units of time to
complete. Activity I is dependent on F, G, and H and takes 12 units of time to complete.
Finally, Activity J depends on I and takes 8 units of time to complete.

B. The critical path for this project is: A → B → C → G → H → I → J

The activities on the critical path are A, B, C, G, H, I, and J, which have a total duration of

12 + 7 + 8 + 5 + 10 + 12 + 8 = 62 units of time.

Therefore, the project completion period is 62 units of time.