MAS

• Uses of quantitative techniques in business

  • Project Management
  • Production Planning and Scheduling
  • Purchasing and Inventory
  • Marketing
  • Financing
  • Research & Development
• Project Management


  • Used for optimizing the allocation of resources
• Production Planning and Scheduling

  • Determining the size & location of new production facilities is a complex issue
• Cost prediction techniques


  • Regression Analysis
  • Linear Regression
• Regression Analysis


  A statistical technique used to find the relations between two or more variables
• Linear Regression


  A method that studies the relationship between continuous variables
• Basic types of regression

  • Simple regression
  • Multiple regression
• Simple regression


  There is only one dependent and independent variable
• Multiple regression


  There are many independent variables influencing one variable
• Correlation


  Used in determining the behavior of an investment's return with a market index
• Correlation coefficient values


  • Exactly 1
  • Two assets move in opposite directions
  • Implies no linear relationship at all
• Correlation coefficient values


  • r=0.2
  • r=0.9
  • r=0
• Quantitative techniques


  The process of collecting and evaluating measurable and verifiable data such as revenues, market share, and wages in order to understand the behavior and performance of a business
• Quantitative techniques


  Give managers a better grasp of the problems so that they can make the best decisions based on the information available
• Correlation coefficient


  It shows the strength and direction of a relationship between two variables and is expressed numerically
• Correlation


  Play an important role in finance because they are used to forecast future trends and to manage the risks within a portfolio
• Methods in segregating mixed costs

  • Perfect positive correlation
  • Perfect negative correlation
  • Zero Correlation
• Correlation coefficient ranges between -1.0 and 1.0
• Experience curve, cost curve, efficiency curve, or productivity curve

  • Provides measurement and insight into all the above aspects of a company
• Learning curve theory


  As the quantity of a product produced doubles, the recurring cost per unit decreases at a fixed or constant percentage
• Learning curve theory is based on the simple idea that the time required to perform a task decreases as a worker gains experience
• Probability


  A measure of the likelihood of an event to occur
• Expected Value (EV)


  An anticipated value for an investment some point in the future
• Forecasting-Exponential smoothing


  A forecasting technique that uses a weighted moving average of past data as the basis for a forecast
• Stages of forecasting


  • Construction stage
  • Evaluation and Recommendation stage
• Decision Tree Diagram


  A diagrammatic representation of a problem and on it we show all possible courses of action that we can take in a particular situation and all possible outcomes for each possible course of action