Department

Management (MGO)Course Code

MGOC10H3Professor

Vinh QuanChapter

1This

**preview**shows half of the first page. to view the full**2 pages of the document.**Chapter 1 Introduction

1.1 Problem Solving and Decision Making

problem solving the process of identifying a difference between the actual and the desired state of affairs and then

taking action to resolve the difference

for problems important enough to justify the time and effort of careful analysis, the problem-solving process involves

the following 7 steps:

1. identify and define the problem

2. determine the set of alternative solutions

3. determine the criterion or criteria that will be used to evaluate the alternatives

4. evaluate the alternatives

5. choose an alternative

6. implement the selected alternative

7. evaluate the results to determine whether a satisfactory solution has been obtained

decision making the process of defining the problem, identifying the alternatives, determining the criteria, evaluating

the alternatives, and choosing an alternative

single-criterion decision problem problem in which objective is to find “best” solution with respect to just 1 criterion

multi-criteria decision problem a problem that involves more than one criterion; the objective is to find the “best”

solution, taking into account all the criteria

decision the alternative selected

1.2 Quantitative Analysis and Decision Making

the analysis phase of the decision-making process may take two basic forms: qualitative and quantitative

qualitative analysis is based primarily on the manager’s judgment and experience; it includes the manager’s intuitive

“feel” for the problem and is more an art than a science

if the manager has had experience with similar problems or if the problem is relatively simple, heavy emphasis may be

placed upon a qualitative analysis

however, if the manager has had little experience with similar problems, or if the problem is sufficiently complex, then

a quantitative analysis of the problem can be especially important consideration in the manager’s final decision

when using quantitative approach, an analyst will concentrate on quantitative facts or data associated with problem and

develop mathematical expressions that describe objectives, constraints, and other relationships that exist in problem

some of the reasons why a quantitative approach might be used in the decision-making process:

1. the problem is complex, and the manager cannot develop a good solution without the aid of quantitative analysis

2. the problem is especially important, and manager desires a thorough analysis before attempting to make a decision

3. the problem is new, and the manager has no previous experience from which to draw

4. the problem is repetitive, and the manager saves time and effort by relying on quantitative procedures to make

routine decision recommendations

1.3 Quantitative Analysis

Model Development

model a representation of a real object or situation

iconic model a physical replica, or representation, of a real object

analog model although physical in form, an analog model does not have a physical appearance similar to the real

object or situation it represents

mathematical model mathematical symbols and expressions used to represent a real situation

constraints restrictions or limitation imposed on a problem

objective function a mathematical expression that describes the problem’s objective

uncontrollable inputs the environmental factors or inputs that cannot be controlled by the decision maker

controllable inputs the inputs that are controlled or determined by the decision maker

decision variable another term for controllable input

deterministic model a model in which all uncontrollable inputs are known and cannot vary

###### You're Reading a Preview

Unlock to view full version