Introduction to Quantitative Analysis - Dr. Bharatendra Rai

Vocabulary terms and definitions related to the principles and steps of Quantitative Analysis, including cost modeling and break-even calculations.

Quantitative Analysis

The process of using raw data to get useful information or insights that can be implemented for business benefits and decision-making.

Quantitative Variables

Information that can easily be converted into a number, such as height, length, weight, or the profit and loss of a company.

Qualitative Variables

Subjective factors that are not easily quantified, such as opinions, ratings, and other subjective data points.

Symptom

A sign of a situation that should not be confused with the actual problem, such as a headache in a medical diagnosis.

Defining a Problem

The first step in quantitative analysis, which involves understanding the situation and ensuring that symptoms are not confused with the real problem.

Developing a Model

The second step in quantitative analysis, often involving mathematical models that represent variables and can be manipulated to optimize parameters.

Decision Variable

Also called a controllable variable or independent variable, it is the factor in a model which we have control over, such as the number of TV ads.

Dependent Variable

A variable whose value is determined by other factors in the model, such as sales resulting from a specific number of TV ads.

Acquiring Data

The third step in quantitative analysis, focusing on obtaining high-quality data to ensure the reliability of the analysis results.

Garbage In, Garbage Out

A computer terminology signifying that if the quality of input data is poor, the resulting analysis or outcome will not be useful.

Developing a Solution

The fourth step in quantitative analysis, which can involve finding optimal values, trial and error methods, or complete enumeration.

Complete Enumeration

A method of finding a solution by trying every possible solution, similar to a 100-percent inspection.

Testing the Solution

The fifth step in quantitative analysis, where the developed solution is evaluated to see if it works as intended.

Analyzing the Solution

The sixth step in quantitative analysis, which determines how the solution responds to changes in the model or data.

Sensitivity Analysis

A method used to determine how robust a model is by changing model parameters slightly to see how significantly the solution changes.

Implementing the Solution

The final step in quantitative analysis where the solution is put into practice, which may involve managing personnel resistance to change.

Profit Equation

The mathematical representation of profit as revenue minus expenses, expressed as $P = s \times X - (F + v \times X)$.

Break-even Point (BEP)

The point where profit equals zero, calculated using the formula $X = \frac{F}{s - v}$ where $X$ is the number of items needed to break even.

Fixed Cost ($F$)

Costs that do not change based on volume or the number of units/students, such as building costs, furniture, or classroom technology.

Variable Cost ($v$)

Costs that change with every additional unit produced or student enrolled, such as the cost of printing classroom handouts and materials.

Parameters

The specific input values in a model, such as selling price ($s$), fixed cost ($F$), and variable cost ($v$), required to solve for variables like the break-even point.