Essentials of Management Chapter 6. Quantitative Techniques for Planning and Decision Making. Data-Based Decision Making. Decision are based on facts rather than impression or guesses. Data-driven management uses high quality information.
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Quantitative Techniques for Planning and Decision Making
Compares planned and actual progress on project. Can be complex; basic version is presented below.
Expected time = O + 4M + P
O = optimistic time
M = most probable time
P = pessimistic time
(Denominator is 6 because O counts for 1, M for four, and P for 1.)
Total time for three tasks = Completion time for project
Total Fixed Costs
BE = _______________________
Price per unit – Variable cost
EOQ = square root of 2DO
D = annual demand in units for product
O = fixed costs of handling the order
C = annual carrying cost per unit
Pareto Diagram: Often used to identify most important problems or cause that affect quality. Here are data on credit-card applications.