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Chapter 1

Chapter 1. Introduction to Quantitative Analysis. What is ‘Quantitative Analysis’ and What Is It For?. Quantitative analysis refers to using a scientific approach for decision making. It helps make better or best decisions. Qualitative factors must also be considered.

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Chapter 1

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  1. Chapter 1 Introduction to Quantitative Analysis

  2. What is ‘Quantitative Analysis’ and What Is It For? • Quantitative analysis refers to using a scientific approach for decision making. • It helps make better or best decisions. • Qualitative factors must also be considered.

  3. How QA Approach Works on a Business Problem? • Define the problem • Select or develop a model • Acquiring data • Solving the model • Interpret and analyze the result • Implement the result

  4. Example: P.8-9 (1 of 3) • Given data: • Selling price: $8 / unit (s) • Fixed cost: $1,000 (f) • Variable cost: $3 / unit (v) • Problem: • How many units must be sold to get break even?

  5. Example: P.8-9 (2 of 3) • Select (or develop) the model to find the break even point (BEP), p.9:

  6. Example: P.8-9 (3 of 3) • Plug the given data in and solve the model: BEP = 1,000/(8-3) = 200 (units) • Interpret the result: - 200 units must be sold in order to get break even. - To have profit, more than 200 units must be sold. - If less than 200 units were sold, loss would occur.

  7. The Role of Computers • Solving the models • Doing sensitivity analysis and if-then analysis • Simulation

  8. Pitfalls of Quantitative Approaches • Over simplifying problem to fit a model • Overlooking other factors (especially qualitative factors) • Inaccurate or incomplete data.

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