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Decision Making: Emgn0Ia - Engineering Management Ch2
Decision Making: Emgn0Ia - Engineering Management Ch2
Decision Making: Emgn0Ia - Engineering Management Ch2
• What is a problem?
- It is when there is a difference between an actual situation and
desired situation
Analyze the environment
Objective: Identify constraints.
• Internal – within the firm
KEY:
Rank alternatives from best to worst
Evaluate and Adopt Decision results
*evaluate whether or not the desired result is achieved
Implement Decision
It is used when:
The problem is fairly simple
The problem is familiar
The costs involved are not great
Immediate decisions are needed
Quantitative Models
1. Inventory models
2. Queuing Theory
3. Network Models
4. Forecasting
5. Regression Analysis
6. Simulation
7. Linear Programming
8. Sampling Theory
9. Statistical decision theory
Inventory models
1. Economic Order Quantity Model – calculate number of
items to be ordered ONE AT A TIME to minimize total
yearly cost
2. Production Order Quantity – economic order quantity
technique applied to Production Orders
3. Back order inventory model – used for planned
shortage
4. Quantity discount model – used to minimize total cost
when quantity discounts are offered
Queuing Theory
• Describes how to determine the number of service units
that will minimize both customer waiting time and cost of
service
Network Models
- Large complex tasks are broken into smaller segments
that can be managed independently
1. Program Evaluation Review Technique (PERT)- a
technique which enables engineer managers to
schedule, monitor and control large and complex
projects by employing THREE TIME estimates for each
activity
2. Critical Path Method (CPM) – network using only ONE
TIME factor per activity
Forecasting
• Collection of past and current information to make
predictions about the future
Regression Analysis
• Examines association between two or more variables
Simulation
• Is where a manager does a mathematical model of
system under consideration
Linear Programming
• Used to produce optimum solution within the bounds
imposed by constraints upon the decision.
Sampling Theory
• Where samples of populations are statistically determined
to be used for a number of processes, such as QA and
market research
Statistical Decision Theory
• Rational way of conceptualize, analyze and solve
problems involving limited, or partial information about the
decision environment
END OF CHAPTER 2
EMGN0IA – Engineering Management Ch2
EM Homework no. 2 – Decision Making
Handwritten, Short Bond paper, Bordered Red 0.50” all sides