SOLUTION MANUAL FOR l 7 l 7
QUANTITATIVE ANALYSIS FOR MANAGEMENT, 14TH EDITION RENDER l7 l7 l7 l7 l7 l7
CHAPTER 1-15 l7
CHAPTER 1 l7
Introductionto Quantitative Analysis l7 l7 l7
TEACHING SUGGESTIONS l7
Teaching Suggestion l 7 l 7 1.1: l 7 Importance of Qualitative Factors. l 7 l 7 l 7
Section 1.1 gives students an overview of quantitative analysis. In this section, a number of
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
qualitative factors, including federal legislation and new technology, are discussed. Students
l7 l7 l7 l7 l7 l7 l7 l7 l 7 l7 l7
can be asked to discuss other qualitative factors that could have an impact on quantitative
l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
analysis. Waiting lines and project planning can be used as examples.
l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
Teaching l 7 Suggestion l 7 1.2: l 7 Discussing l 7 Other l 7 Quantitative Analysis l 7 l 7 Problems.
Section 1.2 covers an application of the quantitative
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 analysis approach. l 7
Students can be asked to describe other problems or
l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 areas that could l 7 l 7
benefit from quantitative analysis.
l 7 l 7 l 7 l7
Teaching Suggestion l 7 l 7 1.3: l 7 Discussing Conflicting l 7 l 7 Viewpoints.
Possible problems in the QA approach are presented in this chapter. A discussion
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
of conflicting
l 7 viewpoints
l7 within the organization can help students l 7 l 7 l 7 l 7 l 7 l 7 l 7
l understand this problem. For example, how many people should staff a
7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l registration desk at a university? Students will want more staff to reduce waiting time,
7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
while university administrators
l7 willl7 want less staff to save money. A l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
discussion of these types of conflicting viewpoints will help students understand some
l 7 l 7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l 7
of the problems of using quantitative analysis.
l 7 l 7 l 7 l 7 l 7 l7 l 7
Teaching Suggestion l 7 l 7 1.4: l 7 Difficulty of l 7 l 7 Getting Input l 7 l 7 Data.
A major problem in quantitative analysis is getting proper input data. Students
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
can be asked to explain how they would get the information they need to
l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
determine inventory ordering or carrying costs. Role-playing with students assuming the
l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7
parts of the analyst who needs inventory costs and the instructor playing the
l7 l7 l7 l7 l7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l part 7 of a veteran inventory manager
l 7 can be fun and interesting.
l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7
l Students
7 quickly learn that getting good data can be the
l most
7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
l difficult part of using quantitative analysis.
7 l 7 l7 l7 l7 l 7
Teaching Suggestion l 7 l 7 1.5: l 7 Dealing with l 7 l 7 Resistance to l 7 l 7 Change.
,Resistance to change is discussed in this chapter. Students can be asked to explain how they
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
would introduce a new system or change within the organization. People resisting new
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
approaches can be a major stumbling block to the successful implementation of quantitative
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
analysis. Students can be asked why some people may be afraid of a new
l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
inventory control or forecasting system.
l 7 l 7 l7 l7 l7
SOLUTIONS TO DISCUSSION QUESTIONS AND PROBLEMS l7 l7 l7 l7 l7
1-1. Quantitative analysis involves the use of mathematical equations or relationships in
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
analyzing
l7 a particular problem. In most cases, the l results
7 of l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l quantitative analysis will be one or more numbers that can be used
7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l by managers and decision makers in making better decisions. Calculating
7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
l rates of return, financial ratios from a balance sheet and profit and
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
loss statement, determining the number of units that must be produced
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7
in order to break even, and many similar techniques are examples of quantitative analysis.
l 7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
Qualitative analysis involves the investigation of factors in a decision-making problem
l7 l7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7
l that cannot be quantified or stated in mathematical terms. The state of the
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
economy, current or pending legislation, perceptions about a potential client, and similar
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
situations reveal the use of qualitative analysis. In most decision-making
l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l problems, both quantitative and qualitative analysis are used. In this book,
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
however, we emphasize the techniques and approaches of quantitative analysis.
l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7
1-2. Quantitative analysis is the scientific approach to managerial decision making.
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
This type of analysis is a logical and rational approach to making decisions. Emotions,
l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
guesswork, and whim are not part of the quantitative analysis approach.
l7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l A number of organizations support the use of the scientific approach: the Institute for
7 l 7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l 7 l7
Operation Research and Management Science (INFORMS), Decision Sciences Institute, and
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
Academy of Management.
l7 l7 l7
1-3. The three categories of business analytics are descriptive, predictive, and prescriptive.
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
Descriptive analytics provides an indication of how things were performed in the past.
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
Predictive analytics uses past data to forecast what will happen in the future. Prescriptive
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
analytics uses optimization and other models to present better ways for a
l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
company to operate to reach goals and objectives.
l 7 l 7 l7 l7 l7 l7 l7 l7
1-4. Quantitative analysis is a step-by-step process that allows decision makers to investigate
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
problems using quantitative techniques. The steps of the quantitative analysis process include
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
defining
l7 the problem, developing a model, l acquiring
7 input data, l 7 l 7 l 7 l 7 l 7 l 7 l 7
l developing
7 a solution, testing the solution, analyzing the results, and l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
implementing the results. In every case, the analysis begins with defining the
l 7 l 7 l 7 l 7 l 7 l7 l7 l7 l 7 l 7 l 7 l 7
problem. The problem could be too many stockouts, too many bad
l 7 l 7 debts, l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7
l or 7 determining the products
l 7 to produce that will result in the l 7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7
l maximum profit for the organization. After the problems have been defined, the
7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7
l next step is to develop one or more models. These models could
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l be inventory control models, models that describe the debt situation in the
7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
organization, and so on. Once the models have been developed, the next step
l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
is to acquire input data. In the inventory problem, for example, such factors as the
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l7
annual demand, the ordering cost, and the carrying cost would be input data
l7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7
that are used by the model developed in the preceding step. In determining
l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
l the products to produce in order to maximize profits, the input data could
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
be such things as the profitability for all the different products, the amount of
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7 l 7
l time7 that is available at the
l 7 various production departments
l 7 that l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
,l 7 produce the
l 7 l 7 products, l 7 and l 7 the l 7 amount l 7 of l 7 time l 7 it l 7 takes l 7 for l 7 each
l 7 product to
l 7
, be l produced
7 l 7 in each production department. The next step
l 7 l 7 l 7 l 7 l 7 l 7 l 7 is
l 7 developing l 7 the solution. This requires
l7 l 7 manipulation of the
l7 l 7 l 7 model
l 7 in orderl 7 to determine the best l 7
QUANTITATIVE ANALYSIS FOR MANAGEMENT, 14TH EDITION RENDER l7 l7 l7 l7 l7 l7
CHAPTER 1-15 l7
CHAPTER 1 l7
Introductionto Quantitative Analysis l7 l7 l7
TEACHING SUGGESTIONS l7
Teaching Suggestion l 7 l 7 1.1: l 7 Importance of Qualitative Factors. l 7 l 7 l 7
Section 1.1 gives students an overview of quantitative analysis. In this section, a number of
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
qualitative factors, including federal legislation and new technology, are discussed. Students
l7 l7 l7 l7 l7 l7 l7 l7 l 7 l7 l7
can be asked to discuss other qualitative factors that could have an impact on quantitative
l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
analysis. Waiting lines and project planning can be used as examples.
l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
Teaching l 7 Suggestion l 7 1.2: l 7 Discussing l 7 Other l 7 Quantitative Analysis l 7 l 7 Problems.
Section 1.2 covers an application of the quantitative
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 analysis approach. l 7
Students can be asked to describe other problems or
l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 areas that could l 7 l 7
benefit from quantitative analysis.
l 7 l 7 l 7 l7
Teaching Suggestion l 7 l 7 1.3: l 7 Discussing Conflicting l 7 l 7 Viewpoints.
Possible problems in the QA approach are presented in this chapter. A discussion
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
of conflicting
l 7 viewpoints
l7 within the organization can help students l 7 l 7 l 7 l 7 l 7 l 7 l 7
l understand this problem. For example, how many people should staff a
7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l registration desk at a university? Students will want more staff to reduce waiting time,
7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
while university administrators
l7 willl7 want less staff to save money. A l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
discussion of these types of conflicting viewpoints will help students understand some
l 7 l 7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l 7
of the problems of using quantitative analysis.
l 7 l 7 l 7 l 7 l 7 l7 l 7
Teaching Suggestion l 7 l 7 1.4: l 7 Difficulty of l 7 l 7 Getting Input l 7 l 7 Data.
A major problem in quantitative analysis is getting proper input data. Students
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
can be asked to explain how they would get the information they need to
l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
determine inventory ordering or carrying costs. Role-playing with students assuming the
l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7
parts of the analyst who needs inventory costs and the instructor playing the
l7 l7 l7 l7 l7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l part 7 of a veteran inventory manager
l 7 can be fun and interesting.
l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7
l Students
7 quickly learn that getting good data can be the
l most
7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
l difficult part of using quantitative analysis.
7 l 7 l7 l7 l7 l 7
Teaching Suggestion l 7 l 7 1.5: l 7 Dealing with l 7 l 7 Resistance to l 7 l 7 Change.
,Resistance to change is discussed in this chapter. Students can be asked to explain how they
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
would introduce a new system or change within the organization. People resisting new
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
approaches can be a major stumbling block to the successful implementation of quantitative
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
analysis. Students can be asked why some people may be afraid of a new
l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
inventory control or forecasting system.
l 7 l 7 l7 l7 l7
SOLUTIONS TO DISCUSSION QUESTIONS AND PROBLEMS l7 l7 l7 l7 l7
1-1. Quantitative analysis involves the use of mathematical equations or relationships in
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
analyzing
l7 a particular problem. In most cases, the l results
7 of l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l quantitative analysis will be one or more numbers that can be used
7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l by managers and decision makers in making better decisions. Calculating
7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
l rates of return, financial ratios from a balance sheet and profit and
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
loss statement, determining the number of units that must be produced
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7
in order to break even, and many similar techniques are examples of quantitative analysis.
l 7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
Qualitative analysis involves the investigation of factors in a decision-making problem
l7 l7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7
l that cannot be quantified or stated in mathematical terms. The state of the
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
economy, current or pending legislation, perceptions about a potential client, and similar
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
situations reveal the use of qualitative analysis. In most decision-making
l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l problems, both quantitative and qualitative analysis are used. In this book,
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
however, we emphasize the techniques and approaches of quantitative analysis.
l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7
1-2. Quantitative analysis is the scientific approach to managerial decision making.
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
This type of analysis is a logical and rational approach to making decisions. Emotions,
l 7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
guesswork, and whim are not part of the quantitative analysis approach.
l7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l A number of organizations support the use of the scientific approach: the Institute for
7 l 7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l 7 l7
Operation Research and Management Science (INFORMS), Decision Sciences Institute, and
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
Academy of Management.
l7 l7 l7
1-3. The three categories of business analytics are descriptive, predictive, and prescriptive.
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
Descriptive analytics provides an indication of how things were performed in the past.
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
Predictive analytics uses past data to forecast what will happen in the future. Prescriptive
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
analytics uses optimization and other models to present better ways for a
l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
company to operate to reach goals and objectives.
l 7 l 7 l7 l7 l7 l7 l7 l7
1-4. Quantitative analysis is a step-by-step process that allows decision makers to investigate
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
problems using quantitative techniques. The steps of the quantitative analysis process include
l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7 l7
defining
l7 the problem, developing a model, l acquiring
7 input data, l 7 l 7 l 7 l 7 l 7 l 7 l 7
l developing
7 a solution, testing the solution, analyzing the results, and l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
implementing the results. In every case, the analysis begins with defining the
l 7 l 7 l 7 l 7 l 7 l7 l7 l7 l 7 l 7 l 7 l 7
problem. The problem could be too many stockouts, too many bad
l 7 l 7 debts, l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7
l or 7 determining the products
l 7 to produce that will result in the l 7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7
l maximum profit for the organization. After the problems have been defined, the
7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7
l next step is to develop one or more models. These models could
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
l be inventory control models, models that describe the debt situation in the
7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
organization, and so on. Once the models have been developed, the next step
l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
is to acquire input data. In the inventory problem, for example, such factors as the
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7 l7 l7 l7 l7 l7 l7 l7
annual demand, the ordering cost, and the carrying cost would be input data
l7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l 7
that are used by the model developed in the preceding step. In determining
l 7 l 7 l 7 l7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
l the products to produce in order to maximize profits, the input data could
7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7 l 7 l 7 l 7
be such things as the profitability for all the different products, the amount of
l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7 l7 l 7
l time7 that is available at the
l 7 various production departments
l 7 that l 7 l 7 l 7 l 7 l 7 l 7 l 7 l 7
,l 7 produce the
l 7 l 7 products, l 7 and l 7 the l 7 amount l 7 of l 7 time l 7 it l 7 takes l 7 for l 7 each
l 7 product to
l 7
, be l produced
7 l 7 in each production department. The next step
l 7 l 7 l 7 l 7 l 7 l 7 l 7 is
l 7 developing l 7 the solution. This requires
l7 l 7 manipulation of the
l7 l 7 l 7 model
l 7 in orderl 7 to determine the best l 7
