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C723 Quantitative Analysis for Business Study Guide
Mean- Average
Median- Middle Number ( Order Numbers Low to High) (If no middle take the middle 2 numbers and average
them)
Mode- Most Common (Can be bi-modal)
Decision Making Model Steps
1. Identify the Problem
2. Establish Decision Criteria (What needs to be done to solve the problem)
3. Weigh Decision Criteria (What is most important, weights should add up to 1)
4. Generate Alternatives
5. Evaluate Alternatives (Rank the Alternatives)
6. Choose the Best Alternative
7. Implement the Decision
8. Evaluate the Decision
Risk- Measurable Uncertainty
Uncertainty - Unmeasurable risk. (Less Relevant to decision making process than risk)
Decision Models: Calculating Expected Values
Decision Tree- Strong/ Weak Sales shows how much would be made if 100% of sales were strong or weak.
Multiply the expected payout times the probability and then add them together. May be words and not
picture, so focus on Expected Profit/Payout and probability.
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Network Diagrams: Calculating Expected Completion Times
Expected Activity Time =
t=
A- Optimistic
M- Most Probable
P- Pessimistic
Expected Time should be close to Probable, but ABSOLUTELY between Optimistic and Pessimistic.
Network Diagrams: Interpreting Network Diagrams
Finding the Critical Path:
Paths- Step by Step Process to get to end step. The below graph has 4 paths. The path length is not the
number of steps/ activities, but the expected time or values associated with the paths.
Critical Path- The LONGEST Path (in time). Determines project completion, since the project cannot be
complete until the longest path is done.
Downloaded by madiba South Africa stuvia ()
C723 Quantitative Analysis for Business Study Guide
Mean- Average
Median- Middle Number ( Order Numbers Low to High) (If no middle take the middle 2 numbers and average
them)
Mode- Most Common (Can be bi-modal)
Decision Making Model Steps
1. Identify the Problem
2. Establish Decision Criteria (What needs to be done to solve the problem)
3. Weigh Decision Criteria (What is most important, weights should add up to 1)
4. Generate Alternatives
5. Evaluate Alternatives (Rank the Alternatives)
6. Choose the Best Alternative
7. Implement the Decision
8. Evaluate the Decision
Risk- Measurable Uncertainty
Uncertainty - Unmeasurable risk. (Less Relevant to decision making process than risk)
Decision Models: Calculating Expected Values
Decision Tree- Strong/ Weak Sales shows how much would be made if 100% of sales were strong or weak.
Multiply the expected payout times the probability and then add them together. May be words and not
picture, so focus on Expected Profit/Payout and probability.
Downloaded by madiba South Africa stuvia ()
, lOMoARcPSD|44532475
Network Diagrams: Calculating Expected Completion Times
Expected Activity Time =
t=
A- Optimistic
M- Most Probable
P- Pessimistic
Expected Time should be close to Probable, but ABSOLUTELY between Optimistic and Pessimistic.
Network Diagrams: Interpreting Network Diagrams
Finding the Critical Path:
Paths- Step by Step Process to get to end step. The below graph has 4 paths. The path length is not the
number of steps/ activities, but the expected time or values associated with the paths.
Critical Path- The LONGEST Path (in time). Determines project completion, since the project cannot be
complete until the longest path is done.
Downloaded by madiba South Africa stuvia ()
