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. Forecasting There are instances when engineer managers make decisions that will have implications 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 such, man- power and facilities must be procured before the start of operations. To make decisions on capacity more effective, the engineer manager must be provided with data on demand
requirements for the next 12 months. This type of information may be derived 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 maybe 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. Simulation Simulation is a model constructed to represent reality, on which conclusions about real- life problems can be used. It is a 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 alternatives 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 and demand limitations at plants, warehouse, or market areas are constraints upon the system. programming is very useful as a decision-making tool when supply and 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." A more elaborate explanation of decision theory is the decision making process presented at the beginning of this chapter. What has not been included in the discussion on the
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