Chapter 1 - Introduction

The body of knowledge involving quantitative approaches to decision making is referred to as: (3)

It had its early roots in World War II and is flourishing in business and industry, in part, to: (2)

The 7 steps of Problem Solving (The First 5 Steps are the Process of Decision Making)

Decision-Making Process: Structuring the Problem: (3)

Decision-Making Process: Analyzing the Problem: (2)

Problems in which the objective is to find the best solution with respect to one criterion are referred to as:

Problems that involve more than one criterion are referred to as:

Based largely on the manager’s judgement and experience; Includes the manager’s intuitive “feel” for the problem; Is more of an art than a science.

Analyst will concentrate on the quantitative facts or data associated with the problem; Analyst will develop mathematical expressions that describe the objectives, constraints, and other relationships that exist in the problem; Analyst will use one or more quantitative methods to make a recommendation.

Potential Reasons for a Quantitative Analysis Approach to Decision Making: (4)

Quantitative Analysis Process: (4)

Are representations of real objects or situations:

Three Forms of Models: (3)

Physical replicas (Scalar Representations) of real objects:

Physical in form, but do not physically resemble the object being modeled:

Represent real world problems through a system of mathematical formulas and expressions based on key assumptions, estimates, or statistical analyses:

Generally, experimenting with models (compared to experimenting with the real situation): (3)

The more closely the model represents the real situation, the accurate the conclusions and predictions will be.

A mathematical expression that describes the problem’s objective, such as maximizing profit or minimizing cost. Consider a simple production problem: Suppose x denotes the number of units produced and sold each week, and the firm’s objective is to maximize total weekly profit. With a profit of $10 per unit, the ——— ——– is 10x.

A set of restrictions or limitations, such as product capacities. To continue our example: - A production capacity ———- would be necessary if, for instance, 5 hours are required to produce each unit and only 40 hours are available per week. The production capacity ———- is given by 5x <_ 40. - The value of 5x is the total time required to produce x units; the symbol indicates that the production time required must be less than or equal to the 40 hours available.

Environmental factors that are not under the control of the decision maker. In the preceding mathematical model, the profit per unit ($10), the production time per unit (5 hours), and the production capacity (40 hours) are environmental factors not under the control of the manager or decision maker.

Controllable inputs; decision alternatives specified by the decision maker, such as the number of units of a product to produce. In the preceding mathematical model, the production quantity x is the controllable input to the model.

If all uncontrollable inputs to the model are known and cannot vary:

If any uncontrollable are uncertain and subject to variation: Are often more difficult to analyze: In our simple production example, if the number of hours of production per unit could vary from 3 to 6 hours depending on the quality of the raw material, the model would be ———-.