Lecture 1: Quantitative Analysis

Definition of descriptive analytics

The study and consolidation of historical data

Definition of predictive analytics

Forecasting future outcomes based on patterns in the past data

Definition of prescriptive analytics

The use of optimization methods

What should we do with prescriptive analytics?

Provide decision recommendations using mathematical models

Models of prescriptive analytics

• Decision theory

• Optimization

• Simulation

• Queuing theory

• Game theory

Definition of quantitative analysis

A scientific approach to managerial decision making in which raw data are processed and manipulated to produce meaningful information

Definition of deterministic models

Mathematical models that do not involve risk or chance

• All of the values used in the model are known with complete certainty

Definition of probabilistic models

Mathematical models that involve risk or chance

• Values used in the model are estimated based on probabilities

Definition of algorithm

A series of repeating steps to reach a solution

Definition of complete enumeration

Trying all possible values

Common techniques for developing a solution?

• Solving equations

• Trial and error

• Complete enumeraiton

• Using an algorithm

Definition of trial and error

Trying various approaches and picking the best result

Process of developing a solution?

Manipulating the model to arrive at the best or optimal solution