Quantitative approach to MNGT-translating business to a mathematical model ELIMINATION, SUBSTITUTION, MATRIX, GAUSS-JORDAN ELIMINATION Equation of a line a.

point slope form y-y1 = m(x-x1) b. slope intercept form y=mx + b (where m = y2-y1/x2-x1) c. general equation of a line ax+by+c=0 GAUSS-JORDAN ELIMINATION Example: 4x+2y=60 2x+4y=48 4x+2y=60 2x+4y=48 0.5 4 0.5 3 0.5 1 0 1

R1/4 15 48 15 18 15 6 12 6 -2 (R1+R2) R2/3 -0.5 (R2+R1) x=12 y=6

1 2 1 0 1 0 1 0

DECISION THEORY -the choice of model depends upon the characteristics of the decision (ex. Significance, time and cost, complexity) -decisions that are more complex when a data describing the variables are incomplete/uncertain, the degree of certainty is classified into: a. certainty b. risk c. uncertainty ELEMENTS OF DECISION MAKING 1. Doing all feasible alternatives that must be considered in the decision 2. Listing the future events affecting demands that may occur

3. Construct a table which indicates the relationships between pairs of decision elements. This table may also shows the payoffs expressed in profits/any other measures of benefits which would result from each possible combination of decision alternatives and state of nature Ex. State of Nature (demand) increasing stable decreasing Investment Medium 250000 500000 -100000

Large 600000 400000 -260000

Small 200000 150000 120000

NON-PROBABILITY CRITERIA a. Maximax- carries the highest possible payoffs (all under increasing) b. Maximin- choosing the best of the worst ( 120000) c. Minimax regret criterion- considers the result of wrong alternatives (large value in each nature minus each value in the row/nature, ex. 600-600,600-250,600-200) increasing 0 stable 100 decreasing 380 350 kasi pinakamababa sa pinakamatataas 350 0 220 400 350 0

d. Probability criteria- to determine unexpected value, we must consider the probabilities for each possible outcomes EV = XiPi Xi specific alternative measure in peso Pi probability EV is the payoffs (0.3x600000=180000, 180000 is the payoff) Expected Value with Perfect Information- Summation of highest probabilities minus summation of payoffs of each nature 180+300+12=492K Ex. 492-394(394 is summation of payoffs in increasing)=98 492-365= 127 492-162=330 98+127+330=555k opportunity profit DECISION TREE ANALYSIS -a technique to aid the decision makers in identifying the outcome for each decision alternative assessing probability associated with each outcome assigning cashflow in the form of payoffs and cost and keeping the sequence of outcomes and decision in the proper chronological order

BREAK EVEN ANALYSIS- algebraic and/or graphic model for describing relationship between cost and revenue for different volumes of production FC fixed cost VC variable cost Q quantity output/units TR total revenue TC total cost PR profit PS selling price PR = TR-TC TC= FC +TVC TVC = VC x Q PR = TR [FC + (VC)(Q)]

Assumptions 1. All cost and volume are known 2. Cost-volume relationship are equal 3. All output can be sold Advantage 1. Simple and easy to visualize 2. Focuses upon profitability 3. Uses algebraic and/or graphical display