IDE 458
INTRODUCTION TO
QUANTITATIVE
METHODS AND
CONSTRUCTION
MANAGEMENT
RIM HAFNAOUI
Topics
Introduction
Definition
Classification of Quantitative Methods
Scope of Quantitative Methods
Introduction
Managerial activities have become complex and it is
necessary to make right decisions to avoid heavy losses.
Whether it is a manufacturing unit, or a service organization,
the resources have to be utilized to its maximum in an
efficient manner. The future is clouded with uncertainty and
fast changing and decision making – a crucial activity. In
such situation there is a greater need for applying scientific
methods to decision making to increase the probability of
coming up with a good decisions. Quantitative technique is
a scientific approach to managerial decision –making. The
successful use of Quantitative Technique for management
would help the organization in solving complex problems
on time, with greater accuracy and in the most economical
way.
Definition
Quantitative technique is the scientific way to managerial
decision-making, while emotion and guess work are not
part of the scientific management approach. This
approach starts with data. Like raw material for a factory,
this data is manipulated or processed into information
that is valuable to people making decision. This
processing and manipulating of raw data into meaningful
information is the heart of scientific management
analysis.
Classification of
Quantitative Methods
1. Linear programming Models: When decision
making pertains to profits, cost etc. and these
parameters have a linear relationship of several
variables, the model is known as Linear
Programming Model having constraints or
limitations on various resources also as linear
function of the decision variables or parameters.
2. Sequencing Models: Instead of assigning the
jobs in a definite activity system, when we have to
determine in what sequence the activities should
be performed out of given resources in the most
cost\time effective manner, the models are called
Sequencing Models.
3. Waiting Line or queuing Models: These models
are used to establish a trade-off between the cost
waiting of customer and that of providing service
following a queue system. In this case,
we have to describe various components of the
system such as traffic intensity, average waiting
time of the customer in the queue, average
queue length, etc.
4. Games Models: These models are formulated
and utilized to describe the behavior of two or
more opponents or players who are performing
the functions to achieve certain objectives or
goals and in the bargain, would gain or loose in
the business process. Such models are very
effectively used for optimizing strategies of the
players with respect to anticipated strategies of
the competing players.
5. Dynamic programming Models: These models
are the offshoots of the mathematical
programming for optimizing the multistage
decision processes. The problems are solved by
first dividing the problem into sub-problems or
stages and solving them sequentially till the
original problem has been solved.
6. Inventory models: These models are
primarily meant for working out optimal
level of stocking and ordering of items for
a given situation. Main objective is to
optimize the cost under conflicting
requirements of ordering, holding and
shortages.
7. Replacement models: These models are
utilized when we have to decide the
replacement policy for an equipment for
one reason or the other. The deterioration
of efficiency of the equipment with use
and time is the reason for such
replacement whether partial or full.
8. Simulation models: these models are utilized
when we want to evaluate the merits of
alternate course of action by experimenting
with a mathematical mode of the problem and
the variables in the problems are random. Thus
repetitions of the process by using simulation
models provide an indication of the merit of the
alternate course of action with respect to the
decision variables.
9. Network models: these are basically project
management models utilized in planning,
monitoring and controlling various projects
where utilization of human and non-human
resources has to be optimized with reference to
the time and cost available for the project.
CPM\PERT (Critical Path Method), (Program
Evaluation and Review Technique) as basic
network model help in identification of
important bottleneck or potential trouble areas.
10. Decision analysis model: these models
are used for selection of optimal strategy
of operation given the possible payoffs
and their associated probability of
occurrence. The models are used for
decision making process under
uncertainty or risk conditions
Scope of Quantitative
Techniques
The scope and areas of application of scientific management
are very wide in engineering and management studies.
Today there are a number of quantitative software packages
are available to solve the problem using computers. This
helps the analyst and researchers to take accurate and timely
decisions
1. Finance and Accounting: Cash flow analysis, capital
budgeting, financial planning, dividend and portfolio
management.
2. Marketing Management: Selection of product mix, sales
resources allocation and assignment, market research
decision, pricing and competitive decision..
3. Production Management: Facilitates planning,
manufacturing, aggregate planning, inventory control,
quality control, work scheduling, maintenance and project
planning and scheduling, job sequencing.
Scope of Quantitative
Techniques
4. Personnel management: Man power planning, resource
allocation, staffing, scheduling of training programs,
recruitment policy and job evaluation.
5. General management: Decision support systems and
management of information systems, organizational design
and control, software process management and knowledge
management.
6. Research and development: Determination of areas of
thrust for research and development, selection criteria for
specific project, analysis for alternative design and reliability.
7. Defense: Optimum level of force deployment, optimum
weaponry systems transportation cost, assignment
suitability.
Developmentof
Quantitative Methods
Since World War II, under the labels of
Operations Research, Management Science
and Systems Analysis, quantitative methods
have been extended so that they can now be,
at times, part of the mainstream of executive
decision-making. That is, quantitative methods
previously had been primarily used to provide
data of various sorts which executives then
integrated intuitively while performing their
functions of organizing, planning and
controlling.
Developmentof
Quantitative Methods
Recent developments in analytical
methodology and the advent of electronic
computers now permit quantitative methods
to be utilized to provide answers when
management asks "what would happen if" for
highly complex situations. In certain situations,
computers can be programmed with
mathematical procedures to choose the best
possible answer from all possible "what if's,"
thus mechanizing the rendering of decision.
Most decision situations still require capable
human judgments, and always will. However,
the trend is towards facilitating the exercise of
judgment by providing information of greater
pertinence and smaller volume.
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