APPROACHES IN SOLVING PROBLEMS

In decision-making, the manager is faced with problems which may either be simple or complex. To provide him with some guide, he must be familiar with the following approaches: 1.qualitative evaluation 2.quantitative evaluation

QUALITATIVE EVALUATION

This term refers to evaluation of alternatives using intuition and subjective judgment. Stevenson states that managers tend to use the qualitative approach when: 1.The problem is fairly simple. 2.The problem is familiar. 3.The cost involved are not great. 4.Immediate decisions are needed.

An example of an evaluation using the qualitative approach is as follows:

A factory operates on three shifts with the following schedules: First shift Second shift Third shift 6:00 A.M. to 2:00 P.M. 2:00 P.M. to 10:00 P.M. 10:00 P.M. to 6:00 A.M.

Each shift consists of 200 workers manning 200 machines. On September 16, 2005, the operations went on smoothly until the factory manager was notified at 1:00 P.M. that five of the workers assigned to the second shift could not report for work because of injuries sustained in traffic accident while they were on their way to the factory. Because of the time constraints, the manager made an instant decision on who among the first shift workers would work overtime to man the five machines.

QUANTITATIVE EVALUATION

This term refers to evaluation of alternatives using the measurements of quantity. Quantitative evaluation is an assessment process that answers the question, "How much did we do?.

QUANTITATIVE MODELS FOR DECISION MAKING

The types of quantitative techniques which may be useful in decision-making are as follows:

1. inventory models
2. queuing theory 3. network models 4. forecasting 5. regression analysis 6. simulation 7. linear programming

8. sampling theory
9. statistical decision

INVENTORY MODELS

Inventory models consist of several types and are all designed to help the manager make decisions regarding inventory. These are as follows: 1. Economic order quantity model used to calculate the number of items that should be ordered at one time to minimize the total yearly cost of placing orders and carrying the items in inventory. 2. Production order quantity model an economic order quantity technique applied to production orders. 3. Back order inventory model or Quantity discount model an inventory model used to minimize the total cost when quantity discounts are offered by suppliers.

QUEUING THEORY

The queuing theory is one that describes how to determine the number of service units that will minimize both customer waiting time and cost of service. The queuing theory is applicable to companies where waiting lines are a common situation. Examples are cars waiting for service at a car service center, ships and barges waiting at the harbor for loading and unloading by dockworkers, programs to be run in a computer system hat processes jobs, and others.

NETWORK MODELS

These are models where large complex tasks are broken into smaller segment that can managed independently. The two most prominent network models are: 1. The Program Evaluation Review Technique (PERT) a technique which enables engineer managers to schedule, monitor, and control large and complex projects by employing three time estimates for each activity. 2. The Critical Path Method (CPM) this is a network technique using only one time factor per activity that enables engineer managers to schedule, monitor, and control large and complex projects.

PERT CHART

FORECASTING There are instances when engineer managers make decision that will have implication in the future. A manufacturing firm, for example, must put up a capacity which is sufficient to produce the demand requirements of customers within the next 12 months. As much, manpower and facilities must be produced before the start of the operations. To make decisions on capacity more effective, the engineer manager must be provided with the data on demand requirements for the next 12 months. His type of information may be described through forecasting.

Forecasting may be defined as the collection of past and current information to make predictions about the future.

REGRESSION ANALYSIS

The regression model is a forecasting method that examines the association between two or more variables. It uses data from previous periods to predict future events. Regression analysis may be simple or multiple depending on the number of independent variables present. When one independent variable is involved, it is called simple regression; when two or more independent variables are involved, it is called multiple regression. Application: x= raw material and equipment expenditure consumption y=budget allotted to the workers by the company

SIMULATION

Simulation is a model constructed to represent reality, on which conclusions about the real-life problems can be used. It is highly sophisticated tool by means of which the decision maker develops a mathematical model of the system under consideration. Simulation does not guarantee an optimum solution, but it can evaluate the alterative fed into the process by the decision-maker.

LINEAR PROGRAMMING

Linear programming is a quantitative technique that is used to produce an optimum solution within the bounds imposed by constraints upon the decision. Linear programming is very useful as a decision-making tool when supply an demand limitations at plants, warehouse, or market areas are constraints upon the system.

SAMPLING THEORY

Sampling theory is a quantitative technique where samples of populations are statistically determined to be used for a number of processes, such as quality control and marketing research. When data gathering is expensive, sampling provides an alternative. Sampling , in effect, saves time and money.

STATISTICAL DECISION THEORY

Decision theory refers to the rational way to conceptualize analyze, and solve problems in situations involving limited, or partial information about the decision environment.

Created by : Raymund Xavier C. Naboya July 2012