Topic 1: Introduction to Quantitative Analysis

What is Quantitative Analysis (QA)?QA is the scientific approach to

managerial decision making.
Quantitative Analysis involves the application of mathematical method to
develop a modeland then to develop a solution.
The techniques have been applied successfully in many areas such
as business,government, health care, education, bank and etc.
Quantitative Analysis also referred to as operations research,
quantitative method,management science and decision science.The
Quantitative Analysis ApproachDefining the problemDeveloping a
ModelAcquiring Input DataDeveloping a SolutionTesting a SolutionAnalyzing
the resultsImplementing the ResultsThe Advantages of using QA in problem
solving1.Problem is solved using scientific method; there is a logical and
systematic approach tosolving problem.2.Most solutions obtained are optimal
solution.3.Save time if the problem is repetitious.
The Advantages of Mathematical Modeling
1.Models can accurately represent reality. If properly formulated, a model can
be extremely accurate.
2.Models can help a decision maker formulate problems.
3.Models can give us insight and information.
4.Models can save time and money in decision making problem solving.
5.A model may be the only way to solve some large or complex problems in
a timely fashion.
6.A model can be used to communicate problems and solutions to others

Mathematical Models Categorized by RiskThere are two types of model:

1.Deterministic model all input variables are known and have constant values (not
involvedchance and risk).For example: the EOQ model in inventory control.
2.Stochastic model at least one input variable is uncertain and with value that
varies. Alsoknown a probabilistic models (involves chance and risk).For example:
simulation model using Monte Carlo method

Topic 2: Decision Theory

What is Decision Theory?is an analytical techniques to identify the optimal
decision with several alternativesand risk or uncertain pattern of future events.
What makes difference between good and bad decision?i.A good decision is one
that is based on logic, considers all available data and possiblealternatives, and
applied quantitative approach.ii.A bad decision is one of that is not based on logic,
does not use all available information,does not consider all alternatives and
does not employ appropriate quantitative techniques.
Types of Decision Making EnvironmentThe types of decisions people make depend
on how much knowledge or information they haveabout the situation.
Three decision making environments are:
1.Decision making under certaintyDM knows with certainty the consequence of
every alternatives or decision choice