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Quantitative Methods For Decision Makers 6th Edition Wisniewski Solutions Manual
Quantitative Methods For Decision Makers 6th Edition Wisniewski Solutions Manual
CHAPTER 2
This chapter introduces some of the necessary terminology and reviews some of the basic
techniques the student is assumed to have at the start of a typical QM course. Inevitably,
students’ numerical ability will be varied and I tend to use this material as self -study for
students rather than formally teach it in a class context. I find it helpful to encourage students to work
on this material in small self-support groups so that they can assist one another in the basics. I
do tend, however, to have a tutorial focused on a number of the end-of-chapter exercises to
ensure students have the basic skills required.
In particular, I try to ensure that students are comfortable with, and competent in, dealing with
proportions, percentages, fractions and decimals. I also ensure they can formulate simple
models using symbols and can accurately draw simple graphs. I tend to encourage students to
draw the first few graphs by hand to check whether they understand the principles of co-
ordinates and can extract information directly from the graph they have produced. The simple
break-even model introduced in this chapter is easy for students to grasp and useful in
highlighting the necessary principles.
Other concepts that I try to ensure they understand from the beginning are the difference
between real and money terms and the concept of a simple index.
The Cap Gemini Ernst and Young (CGEY) case on pp. 42-43 should help students appreciate that
these basic Tools of the Trade are of practical use.
As I mention in the text itself, there is another text I have written for Financial Times
Management: Foundation Quantitative Methods for Business (1996, ISBN 0273607650) which
is aimed primarily at the student at the undergraduate (or equivalent) level for those with little,
or no, real experience of business or management. In that text I have a much expanded Tools of
the Trade chapter which includes self-assessment tasks for the student to complete to help them
assess their numerical ability in a number of key areas. Students who are less comfortable with
quantitative data and basic arithmetic could be encouraged to use this as remedial material.
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© Mik Wisniewski 2016
Solutions
1. With the original equations the break-even solution was derived as:
Q = 15000
Taking each part in turn, the new break-even level is derived as follows:
C = 51750 + 6.99Q
giving:
F=R−C
= 9.99Q − (51750 + 6.99Q) = −51750 + 3Q
Break-even occurs when F = 0
F = −51750 + 3Q = 0
or 3Q = 51750
or Q = 17250 as the new break-even level of output.
Students should be encouraged to understand why Q has increased as overheads increase: as
the firm’s costs have increased but its selling price has not, it needs to sell more to achieve
the same profit levels. We could also derive the new solution by determining that the
change in fixed costs is £6750 (51750 − 45000). Since each item sold generates a profit of
£3, the company must sell an extra 2250 units (6750 ⁄ 3) to generate the same profit it had
before the overhead increase. The student should realise that this increase of 2250 units will
apply at any level of production not just at break-even. If they’re not sure, get them to
calculate profit, F, before and after the overhead increase for two or three arbitrary
production levels.
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© Mik Wisniewski 2016
Mik Wisniewski, Quantitative Methods for Decision Makers, 6e, Instructor’s Manual
2. Although the use of logarithms is introduced in this chapter they are not used again
extensively until Chapter 15 and the tutor may wish to delay their coverage until then.
This exercise is simply to give students some practice at the use of logarithmic calculations.
Table 2X2 shows the relevant calculations. The amount at the start of each year is shown in
the second column, followed by the interest earned on that amount at 8 per ce nt. These two
added together then give the amount at the end of the year. So, at the start of year 1 £15000
is invested, earns £12000 interest and the savings fund has a value of £16200 at the end of
year 1. The value of the fund at the end of a year is then the value of the fund at the start of
the following year. So, by the end of the 10-year period the fund is worth £32384. The
logarithms of the Amount at end figures are shown in the final column (base 10).
Fig. 2X2 shows the graph of both the actual monetary series and its log equivalent. Note
that this graph uses both the Y axes to show both series together (this type of graph is
discussed in more detail in Chapter 3). From the graph we see that the actual monetary
value of the fund is not only increasing each year, it is increasing by an ever-increasing
amount (thanks to the principle of compound interest). This can be related back directly to
12
© Mik Wisniewski 2016
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Fig. 281.
Jagd des Moschustieres in China. Kopie der phantastischen Zeichnung, die sich auf den Papieren
findet, in die die einzelnen Moschusbeutel gewickelt werden.
[Stark verkleinert. Original 14,5 : 18,5 cm Bildgröße.]
Fig. 282.
Schnüren der Fardelen des Ceylonzimts in Colombo.
[Ts c h i r c h , Indische Heil- und Nutzpflanzen.]
Die Sammlung von Drogenpackungen im Museum des pharmazeutischen Institutes der Universität
Bern.
[Ts c h i r c h phot.]
Tafel XXXI
Die Sammlung von Drogenpackungen im Museum des pharmazeutischen Institutes der Universität
Bern.
[Ts c h i r c h phot.]
1) Kisten, Chests.
2) Ballen,
Seronen (Serons), Packen, Säcke, Körbe, Matten, Fardelen,
Gonges, Bales, Packages, Bags, Robbins, Cases, Baskets.
Fig. 289.
Originalverpackungen von Drogen.
[W e i g e l phot.]