MT 340: Quantitative Methods

MT 340: Quantitative Methods Dr. Caulk scaulk@regis.edu Quantitative Decision Making 7th ed by Lapin and Whisler

Goals of this course • Apply mathematical models to situations of decision making • Construct decision trees • Calculate optimal payoffs and strategies • Formulate and use forecasting methods • Formulate and solve linear optimization problems • Perform sensitivity analysis

Grade Breakdown • Three exams – 20% each • Homework – 35% • Attendance- 5%

Quantitative methods are research techniques that are used to gather quantitative data - information dealing with numbers and anything that is measurable. <http://en.wikipedia.org/wiki/Quantitative_methods>

Motivation • Controlling inventories • Waiting lines • Mail delivery systems • Reservation systems • Schedules • Locating warehouses, fire-stations • Improve Investing • Distribution of Goods

Models and Decision Making • Learn to select the alternatives that best satisfy the decision maker’s goals. • Identify goals • Identify alternatives • Yardsticks for comparison • Cost • Profit

Mathematical Models • Express the problem mathematically • Variables • Constants (or parameters) • Use formulas to link variables and constants

Inventory Problem • Total annual cost = ordering cost + holding cost + procurement cost • Objective Minimize: Total annual cost =(A/Q)k+hc(Q/2)+Ac Where A = annual number of items demanded k = cost of placing an order h = annual cost per dollar value for holding items in inventory c = unit cost of procuring an item Q = order quantity

MT 340: Quantitative Methods