Business 600 - Quantitative Analysis

Decision Tree Analysis:
1. Determine all possible alternatives and risks associated with situation
2. Calculate the monetary consequences of each alternatives
3. Determine uncertainty associated with alternative
4. Combine the first three steps into a tree diagram
5. Determine the best alternative and non monetary aspects of problem
Must be able to determine Sunk Cost- Cost that has no affect on decision.
Must Determine Expected Money Value by multiplying dollar vale by probability to determine mutually exclusive alternatives.

Cash Flow Analysis:
1. Define the value of investment
2. Calculate the magnitude of the benefits
3. Determine the timing of the benefits
4. Quantify the uncertainty of benefits
5. Do the benefits justify the wait?
Depreciation and financing costs are not relevant in cash flow analysis.

Net Present Value:
We use the Table to determine how much a dollar is worth in the future with interest or how much a dollar is worth in the past.

Probability Theory:
Calculating the EMV.
Normal Curve
Cumulative Distribution Functions


Regression Analysis and Forecasting:
Y axis is the Fixed Cost.
X is independent variable, or # of units produced
The Slope is the Contribution Margin Per Unit
We use that graph to determine the profitability of the plant.
The R^2 tells us the percentage of data of the regression equation is correct. The Higher the R^2, the more we can rely on our data.