Managers are quick to claim that quantitative analysts talk to them in a jargon

Question

Managers are quick to claim that quantitative analysts talk to them in a jargon that does not sound like English. List FIVE terms from Chapter 1 of the text book (Quantitative Analysis for Management, Render et al.) that might not be understood by a Manager. Then EXPLAIN in non-technical terms what each of Five terms means with suitable example where needed.

1) Sensititvity analysis with example

2) Algorithm with example

3) Break even point with example

4) Probabilistic model with example

5) Deterministtic model with example

Explanation / Answer

Answer:

Sensitivity analysis: effect on the outcome on changing the independent variable input is the sensitivity analysis.Basically what -if analysis.

Example: change in the net income of the company on changing the no of units sold

Algorithm: In layman terms it is defining a well defined procedure of a given work that how it will be executed.

Example: one of the basic example of algorithm is Receipe for cooking a dish where receipe is an algorithm to make it

Break even point: At this point a company is neither in loss nor in profit. After this point increase in sales will lead to profits

Example: Sales price * units sold = Fixed costs + variable costs.

Probabilistic model: Though this model you are able to take in to consideration the effect of various probable random events to determine the most likely outcome.

Example: Tossing a coin and finding the probability of getting a tail or head is the basic example of this

Detreministic model: Through this model you can calculate the output of the event with certainity with out any randomness involved in it. It is an exact formula for this model which will give correct ouput

Example: Converting kelvin in to degree celsius is one such example. Kelvin = celsius + 273.15

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