Che514 V01 Notes 1
Che514 V01 Notes 1
Chapter 1
Learning Objectives
Describe the quantitative analysis approach
• Understand the application of quantitative analysis in a
real situation
• Describe the use of modeling in quantitative analysis
• Use computers and spreadsheet models to perform
quantitative analysis
• Discuss possible problems in using quantitative
analysis
• Perform a break-even analysis
Chapter Outline
1.1 Introduction
1.2 What Is Quantitative Analysis?
1.3 The Quantitative Analysis Approach
1.4 How to Develop a Quantitative Analysis Model
1.5 The Role of Computers and Spreadsheet Models in
the Quantitative Analysis Approach
1.6 Possible Problems in the Quantitative Analysis
Approach
1.7 Implementation — Not Just the Final Step
Introduction
Mathematical tools have been used for
thousands of years.
Quantitative analysis can be applied to a wide
variety of problems.
It’s not enough to just know the mathematics of a
technique.
One must understand the specific applicability of the
technique, its limitations, and its assumptions.
Developing a Model
Quantitative analysis models are realistic,
solvable, and understandable mathematical
representations of a situation.
Developing a Model
Models generally contain variables (controllable
and uncontrollable) and parameters.
Controllable variables are the decision variables and are
generally unknown.
How many items should be ordered for inventory?
Parameters are known quantities that are a part of the
model.
What is the holding cost of the inventory?
Implementation –
Not Just the Final Step