1. MM305 Quantitative Analysis for Management Dr. Bob Lockwood
Welcome
MM305
Quantitative Analysis for Management
Dr. Bob Lockwood

2. Seminar Outline Welcome! Syllabus Overview
Contact Information for Instructor
Seminar Rules and Format
Discussion

3. Syllabus Overview
All projects, discussion question posts, and seminar option 2 are
due at 11:59 PM ET on the Tuesday that concludes each unit.
Late projects will be accepted up to three units late with a 10% penalty per late unit, with the exception of Unit 9.

4. Instructor Contact Information
Professor Andy Hynds
Office hours: By appointment
In order to facilitate the tracking of assignments and all
correspondence with me, please be sure to include your
Course/section number and the unit number for the learning
activity you are inquiring about.
Your unit project MUST be saved and submitted to me using the following naming procedure: Firstname_lastname_unit #

5. Seminar Rules and Format
Please show up on time for all seminars, participate often in a respectful manner, stay on topic, and stay until the end. If you do come late, please take your “seat” quietly.
Social posts (Hi, Bye, rough day at work, my car broke down, etc.) will not help your participation grade.
It is important that you try to participate rather than just simply watching. I highly recommend having your textbook handy and Excel QM and/or QM for Windows open during seminar.
Usual format of seminar will involve discussing a concept and then working with the technology (Excel, Excel QM, PhStat2, or QM for Windows) applicable to that unit.

6. What is Quantitative Analysis (QA)?
The use of statistical techniques to understand quantitative data and to identify relationships between and among variables.
QA uses the scientific approach to managerial decision making.
The development of a (mathematical) model of a real world scenario
The model provides insight into the solution of the managerial problem
Deterministic Models
Where all the input data values are known with complete certainty
Probabilistic Models
Where some input data values are uncertain

7. What is Quantitative Analysis (QA)?
QA uses the scientific approach to managerial decision making.
Must consider both Quantitative and Qualitative factors.
Quantitative Data
Numerical factors such as expenses and revenues
Qualitative Data
Factors that effect the environment which are difficult to
quantify, e.g. weather, state laws, new technology, etc.
Raw Data
Quantitative
Analysis
Meaningful
Information

8. The Quantitative Analysis (QA) Approach
Steps in Modeling:
1. Formulation
Translating a problem scenario from words to a mathematical model
2. Solution
Solving the model to obtain the optimal solution
3. Interpretation and Sensitivity Analysis
Analyzing results and implementing a solution

9. The Quantitative Analysis (QA) Approach
Steps in
Modeling

10. Modeling in the Real World
Models are or can be:
complex
expensive
difficult to sell
used in the real world by real organizations to solve real problems

11. How to Develop a Quantitative Analysis Model
Profit = Revenue – Expenses
Revenue=
(selling price per unit)*(number of units sold)
Expenses= Fixed cost +
(variable cost per unit)*(number of units sold)
Profit = sX - (f + vX) = sX - f - vX, where
s = selling price per unit
f = fixed cost
v = variable cost per unit
X = number of units sold

12. Break-Even Point (BEP)
The BEP is the number of units sold that will result in $0 profit, so Revenue = Expenses
Profit = sX - (f + vX) = sX - f – vX
$0 = sX - f - vX
$0 = (s-v)X – f
X = f/(s-v)
BEP =
Excel QM
Breakeven Analysis
QM for Windows
Breakeven/Cost-Volume Analysis

13. Excel QM’s Main Menu of Quantitative Models in Excel 2007

14. QM for Windows

15. Example: Break-Even Point (BEP)
Let's say you manufacture widgets.  Each unit sells at $5.  It
costs you $2 to make each one, and the fixed costs for the
period are $750.  What is the break-even point in units and in
sales revenue?
First, identify what you know from the problem:
s = selling price per unit = $5
f = fixed cost = $750
v = variable cost per unit = $2
We need to know:
X = number of units sold
Recall, BEP = $0 = (s-v)X – f , therefore X = f/(s-v)
X = $750/($5-$2) = 250 units
break-even sales revenue = 250 * $5 = $1,250

16. Example: Break-Even Analysis in Excel QM

17. Questions?