Chapter Review Quantitative Analysis
Chapter SummaryMANA 6302 – Quantitative AnalysisCHAPTER ONEIn the first chapter, the author introduced three basic components of decision making. First is to think through all the alternatives, considering all possibilities other than those originally presented. The example given in the book demonstrates this by looking at the possibility of dividing the land into different sizes other than the initial 300 three-acre lots. The author explains, by having an assortment of larger lots along with original three-acre lot may increase the market value. With the more lucrative lots creating the impression of an upscale development a trickle-down effect could occur, increasing the value of the smaller lots. Next, assumptions are things thought to be true without any real proof. The example the author gives is that every lot will meet the septic percolation requirements. A proactive decision maker will challenge assumptions such as these to create a more accurate assessment. Finally, performance measures need to be carefully quantified on all foreseeable issues that will impact the success of the project.
CHAPTER TWOÂ Â Â Â Â Â Â Â This chapter explores the alternatives in the decision process and the methods used to manage those difficult situations. Sequential decisions can become difficult to manage quickly especially when there are multiple alternatives. To effectively handle these compounding decisions it is best to simplify the set of alternatives by following the decision rules. The decision maker will restrict the number of options to the ones that offer the most potential. The best way to approach a single decision quantity is to create a spreadsheet that calculates the performance. Once the information is graphed, the decision maker can quickly assess the best alternative. One does have to be careful not to get stuck in the local optimum. The author illustrated this by adding further information to the equation. Â A discount would be provided on the per unit price depending on the volume ordered. Once this is factored in, the best overall option, known as the global optimum is realized by ordering more of the inventory at a discounted price.