Quantitative Technique

Quantitative Technique (for Management Decision)

Course Convener: Prasanna Ram Joshi

Books • Main Text Book – Quantitative Approaches to Mgmt • Levin, Rubin, Stinson, Gardner

• Reference Books – Operations Management • Barry, Render

– OM for Competitive Advantage • Chase, Jocobs, Aquilino

– QT in Mgmt • N D Vohra

– Business Statistics • Levine, krehbiel, Berenson

How we conduct course • • • • • • •

Regular Quiz/Class Tests 4.5 hrs per week (Sun-Tue-Thu) Use of Intenet/email Punctuality/attendance Class Discipline Participations Assignment/Cases – Correctness 70% & timeliness 30%

• Use of computer programs (ABPOM/Excel)

Course Objective • To conceptualize the knowledge and develop the skills to apply the quantitative (mathematical and statistical) tools and techniques in decision making.

Course Contents • Introduction : MS/OR • Probability Concepts Review: • Forecasting: Looking past behaviour as an indicator of what is to come • Decision Theory: how to make an sinsible decision under conditions of risk and uncertainty • Linear Programming: How to locate scarce resources optimally (Determining optimal combination of the resources) • Special Structured linear programming: Transportation and Assignment problem • Network Scheduling: How to simplify the compelxties involved in large projects (PERT/CPM)

• MANAGEMENT SCIENCE/ OPERATIONS RESEARCH – THE QUANTITATIVE APPROACH TO MANAGEMENT DECISION MAKING

• QUANTITATIVE TECHNIQUES/APPROACH: – Use of numerical datas, their processing, and interpretation of analysis for decision making – Specific task and knowledge required before using quantitative tools. – Specification of organizational goals – Knowledge about possible actions – Knowledge about possible likelihoods – Knowledge about expected payoffs.

• DECISION MAKING: – The selection of one course of action from two or more possible alternative courses of actions to meet the goal(purpose) of the organization. – Most managerial decisions are made with some uncertainty.

• STEPS IN DECISION MAKING (GENERAL): – – – –

Recognition of Problems and Opportunities Development of alternative courses of Actions Evaluation of Alternatives Selection and Implementation of chosen alternatives – Followup to Determine Effectiveness of Decision

SIX (6) STEPS IN MS/OR PROCESS PROCESS STEPS

PROCESS ACTIVITIES

PROCESS OUTPUT

Step 1: Observe the problem environment

Site visits Conferences Observation Research

Sufficient information and support to proceed

Step 2: Analyze and define the problem

Define use Define objectives Define limitations

Clear grasp of need for and nature of solution requested

Step 3: Develop a model

MS/OR tools Interrelationships Mathematical models Known solutions Research

Model that works under stated environmental cosntraints

Step 4: Select appropriate data input

Internal-external data Facts Opinions Computer data banks

Sufficient inputs to operate and test model

Step 5: Provide a solution and test its reasonableness

Testing Limitations Verification

Solutions that support current organizational objectives

Step 6: Implement the solution

Behavioral issues “Selling” the idea Management involvement Explanations

“Ownership” by management sufficient to support longer run operation of model

• Assignment 1: (Group) – Q.No.1 Explain the relationship between the MS/OR specialist and the overall manager? – Q.No.2 List down the major applications of MS/OR according to following functional fields: Accounting, Finance, Marketing, Production/Operations, Organizational Development, Human Resources – Q.No.3 What are the Opportunities and shortcomings of the quantitative approach?

Pre Test