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WGU - C723
Quantitative Analysis For Business - C723
| Term | Definition |
|---|---|
| critical path | The longest path through the network diagram, indicating the shortest amount of time in which a project can be completed. |
| critical path of a project | the early start, early finish, late start, and late finish |
| Critical Path node diagram | contain the task identifier or label, the task duration, early start, early finish, late start, and late finish. |
| Metacognitive Five Skills | -Assess the task -Evaluate your strengths and weaknesses -Plan an approach -Apply strategies and monitor your performance -Reflect and adjust if needed |
| Cost Slope= | (Crash Cost-Normal Cost)/(Normal Duration-Crash Duration) |
| Linear programming (LP) | A mathematical technique that can be used identify the value of a variable, such as maximizing the profit of an operation, for a given set of constraints. |
| Feasible region | In a linear programming graph, (blank) describes the area that satisfies all of the constraints |
| corner point | In the process of graphing constraints, there will be vertices where lines will intersect in the feasible region. |
| problem constraint | One particular type of constraint that is used to apply the concept to a particular situation |
| linear inequality | Linear programming is made up of a number of elements that together form the concept and the structure of linear programming. One of these elements is a constraint. A constraint is a (_____) |
| Non-negative Constraint | One particular type of constraint requires the constraint to be greater than or equal to 0 |
| Objective function | the outcome decision to be made that is governed by the constraints. This is the linear function (equal sign) representing cost, profit, or some other quantity to be maximized or minimized subject to the constraints in the LP problem. |
| binding Constraint | the intercept of the second and third constraint. |
| Sensitivity analysis | Determine how sensitive the optimal solution is to change. |
| Dual price/ shadow price | The new “optimal” value that results in changing either of the right-hand side values of the constraints (two constraints in this example) |
| Minimization and maximization | Determine whether the lp is meant to lower or raise a variable |
| The By Changing Cells box | The Solver window that references the decision variables. |
| Carrying costs | expenses necessary to hold the inventory, such as obsolescence, building costs, theft, spoilage, insurance, and utilities for the warehouse. |
| Economic Order Quantity Formula | EOQ = √((2 · Annual Demand · cost to place an order)/annual holding cost per unit) |
| Economic Production Quantity Formula | EPQ = √((2 · Demand · Fixed Setup Cost · Rate of Production)/(Holding Cost Per Unit · (Rate Of The Product - Demand For The Product))) |
| Reorder point (RP) | the inventory level at which a reorder will be initiated. It seeks to optimize the ordering so that not too much material is on hand or on order at any one time. It considers the lead-time to get the ordered materials and the usage levels in production. T |
| Annual Holding Cost formula | Average inventory level * holding cost per unit per year |
| Annual Ordering Cost Formula | Annual demand / order quantity * cost per order |
| Total Inventory Cost formula | Holding cost + ordering cost |
| Shortage costs (also called stock¬out costs) | pertain to costs resulting from not having an item on the shelf for sale, generally the unrealized profit per unit. |
| Ordering costs (also called setup costs) | represent the cost of replenishing inventory, including receiving logistics. |
| Inventory Turns formula | (Cost of goods Sold (COGS)/Average Inventory) |
| Inventory Days Coverage formula | (Average Inventory/Cost of Goods Sold(COGS))×365=(365/Inventory Turns) |
| SKUs | Stock keeping units |
| Demand (D) | How many items will be needed? This is usually done on an annual basis. In other words, how many will be needed in the next year? This is more often a forecast than a rock solid number. |
| Cost of the item (P) | This seems very obvious because it is what purchasing departments focus on. Actually, in terms of how much to order, which determines how much to keep in stock, the purchase price of the item has no bearing unless volume discounts are involved. |
| Ordering costs (O): | How much does it cost to place an order? Most people do not consider this, but in business there are never zero costs for employee time and processing transactions even in a highly automated setting. |
| Holding costs (H) | The more inventory on hand, the higher the holding costs. The holding cost is the amount of cost to hold one unit of an item in the warehouse for year. Holding costs represent the amount of money a company spends to keep a certain level of inventory in st |
| Setup costs (S) | For any fabricated or assembled item, the factory has to set up to run the item. This could include changing fixtures in various machines, setting up the speed of the equipment for the particular item, and ensuring that the right software is loaded into a |
| Rate of production (R): | How many of the items can be produced in a day? A week? A month? Or year? Hundreds if not thousands of paper clips can be produced in an hour. On the other hand, it takes up to four hours to assemble an automobile engine. |
| Quality costs | If goods and items are inspected at arrival into the warehouse, the inspection costs must be accounted for. If defects are found, the disposition of the defectives goods must be determined, and the costs associated must also be accounted for. |
| Sorted and rework: Defective goods categories | The defects are repairable, the cost to repair are not outrageous, and it is worth doing the repairs to keep production and order fulfillment going. |
| Reject and return: Defective goods categories | If the defect rate reaches a certain threshold, many companies will simply reject the entire shipment and send it back to the supplier. |
| Scrap: Defective goods categories | The goods are unusable and cannot be reworked. The defective items simply have to be scrapped (i.e., discarded, destroyed, or sold for pennies on the dollar for the materials in the item). |
| Obsolescence or spoilage costs: | Some inventory is perishable. This applies to fruits, vegetables, and other food products. If the goods are no longer fit for use or consumption, they are sold for deep discount or discarded. The costs accumulate and inflate the cost of goods sold and thu |
| Electronics: Perishable Examples | Old models of cell phones and computers are worth less or become completely worthless in very short order. They have the same behavior as fruits and vegetables albeit the “spoilage” time is longer for cell phones than for tomatoes. |
| Logo items: Perishable Example | There are peripheral products that accompany blockbuster movies and sports teams. The movie studios and teams have very strict regulations on how long the goods can be sold to the public for. After this period ends, the product becomes unsalable. Either t |
| Slow and obsolete: Perishable Example | Customers and consumers may just not want the goods. In such cases, they can behave just like the logo goods in the previous point. |
| Annual Holding Cost formula | Average inventory level * holding cost per unit per year |
| Annual Ordering Cost formula | Annual demand / order quantity * cost per order |
| Total Inventory Cost | Holding cost + ordering cost |
| Orders per year formula | Demand/EOQ |
| Average Inventory formula | EOQ/2 |
| total cost of carrying and ordering formula | (EOQ/2)H + (D/EOQ)S |
| cause and effect | relationships are analyzed to determine if there is a relationship between one event and another. |
| subjective Analysis | Reasoning that is heavily influenced by personal experiences, such as upbringing and past employment. Uses likes and dislikes, past experiences, personal opinions, and interpretations to determine an outcome. |
| objective analysis | Focuses on facts and figures, eliminating any emphasis on opinions, emotions, and feelings. Objective data is not impacted by someone’s personal opinion or prejudice. |
| quantitative analysis | applies mathematical computations and statistical modeling to a business scenario or problem in order to determine the results and to identify business alternatives and consequences. It generates numerical data that are reported and interpreted through re |
| alternative hypothesis | A statement written that there is a relationship between the variables. |
| expected monetary value (EMV) analysis: | a specific quantitative analysis technique that utilizes mathematical calculations to determine the average of all potential alternatives being considered to solve a problem. |
| Quantitative Models | Are used extensively in business for a variety of applications, such as cost, revenue, profit, production volume, inventory, waiting line analysis, simulation, forecasting, and more. can accurately represent reality and provide insight and information to |
| hypothesis | is a declarative statement predicting the relationship between the dependent and independent variables. |
| null hypothesis | A statement, written to state that there is not a relationship between the variables. |
| reorder point (ROP) formula | ((daily demand * lead time) + safety stock) |
| Safety Stock | ensures that a business will not run out of inventory when the demand is unusually high. |
| Stockout | When a business runs out of inventory stock |
| work breakdown structure (WBS) | a common tool used to help break down and manage a project’s deliverables and their supporting tasks. |
| estimated time to complete a task formula (Te=) | (o+4m+p)/6 (O: optimistic time M:most likely time P: pessimistic time) |
| Qualitative analysis | based on subjective factors such as opinions, thoughts, and judgments. Subjective reasoning is heavily influenced by personal experiences, such as upbringing and past employment. |
| triangulation | A qualitative technique that ensures that the research accurately reflects the situation. |
| concise analysis | strips away extra words to state the main point, clear proof, and real meaning |
| strategic initiative | a high-level, coordinated plan deployed by an organization to bridge the gap between its daily operations and its long-term vision |
| standard deviation formula | Calculate the mean of the data set. Subtract the mean from each value in the data set. Square the deviations. Add the squares of the deviations. Divide by the number of values. (Note that if the data do not represent the entire population, but instead |
| Nonlinear equation | an algebraic or differential equation where the variables or their derivatives have powers other than one, are multiplied together, or appear inside special functions like sines or cosines. Such as exponents 2+, XY |
| Linear Equation | an algebraic statement for a straight line where any variable has an exponent of 1 |
| expected monetary value formula | Multiply the value of each state of nature by its probability of occurrence, then add the values together. Subtract the cost estimate from the revenue estimate |
| cyclical basis | Repeating an action, process, or financial pattern at regular or irregular intervals that follow a recurring economic, seasonal, or operational cycle |
| Fixed-Outcome Scenario: | We often have to make decisions with multiple alternatives to choose from, and in some cases we know the outcomes of each of the alternatives. We are simply choosing the best outcome because there is no risk. |
| Uncertain Outcome Scenario: | We do not know which option will be best, there is no guarantee of an investment return. If we are optimistic about the investment, we will choose the option (perhaps bet on) the most potentially favorable positive outcome. |
| Maximax | Most Optimistic |
| Maximin | Less Optimistic |
| Minimax | Less Pessimistic |
| Minimin | Most Pessimistic |
| Outcome Scenario with Risk | Sometimes, alternatives that are available or presented, the probabilities are known. While the specific outcome results are unknown, we can use probability to make more of an educated selection. |
| Risk Taker: | If you are a risk taker, you would tend to only look at the upside of each alternative. |
| Risk Averter: | If you are risk averse, you would tend to focus on the possibility of losses. |
| state of nature | an actual future event or condition that occurs completely outside the control of the decision-maker |
| payoff table | best used when there is one decision to be made. |
| decision tree | more likely to be used when there is a sequence of decisions to be made |
Created by:
Jesuisbanan