Chapter 1. Introduction
What is Quantitative Management?
Quantitative Management is the use of mathematical models to solve business problems.
A synonymous term used in place of quantitative management is management science or operations research.
What is a Model?
A model is a representation or an approximation of a real situation. The representation could be mathematical expressions (equations and inequalities) or a series of interrelated cells in a spreadsheet.
Types of Models
Descriptive Model – describes a situation
Example: Profit = Revenue – Cost
Optimization Model – suggests a desirable course of action
Example determine a situation that presents the best profit by either increasing revenue or decreasing cost)
7-Step Modeling Process
Problem Definition
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(what is the objective of the task?)
Data Collection
Model Formulation
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Model Verification
Selection of an Alternative
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Presentation (Interpretation) of Results
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Implementation of the Model
In this course we will only covered the items with asterisks. To gain the full benefit of a management science modeling approach, all 7 steps must be fully implemented.
In very complex problems, we can use heuristics methods to locate good solutions. H heuristic is a solution method that is guided by common sense, intuition, and trial and error to achieve a good, but probably not optimal solution.
Why Study Quantitative Management
1.
Improve your logical/thinking skills
2.
Improving your problem-solving skills
3.
Help you develop your intuition – ability to see through the essence of a problem almost immediately
4.
Become comfortable modeling with spreadsheet

What Should You Expect Out Of The Course
1.
Learn how to build Spreadsheet model in Excel
2.
How to formulate a business problem situation
3.
Learn how to answer what-if questions (sensitivity analysis)
4.
How to find optimal solutions with the help of the Excel Solver and other spreadsheet tools