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Intro Quantitative Analysis

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11 views

Intro Quantitative Analysis

Uploaded by

Criz Miller
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Quantitative Analysis

A scientific approach that uses quantitative


techniques as a tool in managerial decision
making.
starts with DATA (raw)
Data are manipulated or processed into
information that is valuable to people making
decisions.
the processing and manipulating of raw data
into meaningful information is the heart of
quantitative analysis.
What is Qualitative Analysis in relation to
Quantitative Analysis?

Generally speaking, quantitative analysis involves


looking at the hard data, the actual numbers.
Qualitative analysis is less tangible. It concerns
subjective characteristics and opinions – things that
cannot be expressed as a number.
Both qualitative and quantitative factors
must be considered.

In most cases, quantitative analysis will be and


aid to the decision-making process. The results
of quantitative analysis will be combined with
other qualitative information in making
decisions.
The Quantitative Analysis Approach
Consists of defining a problem, developing a
model, acquiring input data, developing a
solution, testing the solution, analyzing the
results, and implementing the results.

In most cases, one or more of these will be


modified to some extent before the final results
are implemented.
Defining the Problem

 to develop a clear and concise statement of the


problem. This statement will give direction and
meaning to the next steps.

Defining the problem is the most important and the


most difficult step.

It is essential to go beyond the symptoms of the


problem and identify the true causes.
Developing a Model

A model is a representation of a situation.

Models can be physical, scale, schematic and


mathematical models.

Quantitative analysis used mathematical model.

Mathematical model – a set of mathematical


relationships expressed in equations and inequalities that
computes sums, averages, or standard deviations.
Acquiring Input Data

Obtaining accurate data for the model is essential;


even if the model is perfect representation of reality,
improper data will result in misleading results.

Some sources in collecting data:


Reports and documents
Interviews with employees or other persons related to
the organization
Sampling and direct measurement
Developing a Solution

Involves solving the model (equation) for the best


decision.

Trial and Error – try all possible values for the


variables in the model to arrive at the best decision.
This is called complete enumeration.

The input data and model determine the accuracy of


the solution.
Testing the Solution

Before the solution can be analyzed and


implemented, it needs to be tested completely.
Because the solution depends on the input data and
the model, both require testing.
To Test the data – collect additional data from
different source and compare to the original data. If
there are significant differences, accurate input data
must be obtained again.
To test the model – can be checked to make sure that
it is logical and represents the real situation.
Analyzing the Results

Starts with determining the implications of the solution. A


solution to a problem will result in some kind of action or
change in the way an organization is operating. The
implications of these actions or changes must be determined
and analyzed before the results are implemented.

Sensitivity Analysis (postoptimality analysis) – the


sensitivity of the solution to the changes to the model and
input data .
- It determines how much the solution will change if
there were changes in the model or the input data.
- If the solution is sensitive to the changes, additional
testing should be performed to make sure that the model and
input data are accurate and valid.
Implementing the Results

 The process of incorporating the solution to into


the organization.

 After the solution has been implemented, it should


be closely monitored because there may be
numerous changes that call for modifications of the
original solution such as changing economy,
fluctuating demand and other environmental
factors.
Example: Mathematical model
Profit = Revenue – Expenses

*Wiro Company buys, sells and repairs old clocks and clock
parts. Bill sells rebuilt springs for a price per unit of P10.00.
The fixed cost of the equipment to build the springs is
P1,000. The variable cost per unit is P5.00 for spring material.
In this example:
S (selling price/unit) = 10
F (fixed cost) = 1,000
V (variable cost) =5

The number of springs sold is X, and profit model becomes:


Profit = P10X – P1,000 – P5X
If sales is zero (0), the company realize a P1,000 loss.

If sales are 1,000 units, how much is the profit?


Profit = P10 (1,000) – P1,000 – (P5)(1,000)
= P10,000 – P1,000 – P5,000
= P4,000

Break-even Point (BEP) model:


Number of units sold that will result in zero (0) profit?
The Role of computers and spreadsheet models in the
Quantitative Analysis Approach

Excel QM (Quantitative Management)


- works automatically within excel spreadsheet

- Excel QM makes using a spreadsheet even easier by


providing custom menus and solution procedures that
guide you through every step.
Coverage of the Subject:

1. Probability Concepts and Applications


2. Decision Analysis
3. Forecasting
4. Inventory Control Models
5. Network Models
6. Project Management

 To be discussed by group
 Class will be divided into 6 groups

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