MSL 5080, Methods of Analysis for Business Operations 1 Course Learning Outcomes for Unit I Upon completion of this unit, students should be able to: 1. Differentiate the steps of the quantitative analysis approach. 1.1 Apply quantitative analysis in a real-world situation. 1.2 Perform a break-even analysis. Reading Assignment Chapter 1: Introduction to Quantitative Analysis Unit Lesson Quantitative Analysis As good an opening as any to a postgraduate quantitative analysis course is to confirm that yes, mathematics is involved to improve situations and outcomes and also to stress that leadership has always been the foundation for quantitative analysis. The answer will not make you prosper, but leading the effort in deciding what quantitative analysis measurements mean and what to do after seeing these numbers may indeed benefit your organization. There will be a bit more discussion on what leaders may do with quantitative analysis after introducing some fundamentals. To quote the authors from the textbook, “Quantitative analysis is the scientific approach to managerial decision-making” (Render, Stair, Hanna, & Hale, 2015, p. 2). A scientific approach means calculating with numbers. Conversely, perhaps you have worked for leaders who used guesswork or a gut feeling to decide a numbers-based, quantitative issue. Perhaps the leader chose fortunately, and that is good; but pursuit of good fortune becomes hazardous if you are using hope and chance to gain a good outcome. You may have noticed this does not work well for most Las Vegas vacationers who enjoy themselves by gambling against high odds that favor the casinos. So, quantitative analysis can have a valuable place as a decision tool if you can make the analysis properly fit the situation. The use of quantitative analysis to keep track, measure, analyze totals, and forecast, is older than language itself. Sumerians, and other peoples in the Middle East, used it for grain and livestock categories. Exploration of mathematics theory (i.e., learning how to add, subtract, multiply, and divide) made quantitative analysis possible. Now, apply mathematics to estimate probability to see what might happen, determine averages and percentages to see how much might be involved, and address many specific situations. As you can imagine, just knowing a number (e.g., how much livestock a person has) may not mean much by itself. This is where mathematics helps: The purpose of quantitative analysis is to turn raw data into meaningful information. Formulas turn that data into something leaders can use along with considering qualitative factors such as weather and customer demand. In theory, good leadership should do the rest. Business Analytics The textbook covers the terms below that you are intended to recall throughout the course:  Business analytics uses (usually large amounts of) data to make better business decisions. There are three catego ...

1. MSL 5080, Methods of Analysis for Business Operations 1
Course Learning Outcomes for Unit I
Upon completion of this unit, students should be able to:
1. Differentiate the steps of the quantitative analysis approach.
1.1 Apply quantitative analysis in a real-world situation.
1.2 Perform a break-even analysis.
Reading Assignment
Chapter 1: Introduction to Quantitative Analysis
Unit Lesson
Quantitative Analysis
As good an opening as any to a postgraduate quantitative
analysis course is to confirm that yes, mathematics
is involved to improve situations and outcomes and also to
stress that leadership has always been the
foundation for quantitative analysis. The answer will not make
you prosper, but leading the effort in deciding
what quantitative analysis measurements mean and what to do
after seeing these numbers may indeed

2. benefit your organization. There will be a bit more discussion
on what leaders may do with quantitative
analysis after introducing some fundamentals.
To quote the authors from the textbook, “Quantitative analysis
is the scientific approach to managerial
decision-making” (Render, Stair, Hanna, & Hale, 2015, p. 2). A
scientific approach means calculating with
numbers. Conversely, perhaps you have worked for leaders who
used guesswork or a gut feeling to decide a
numbers-based, quantitative issue. Perhaps the leader chose
fortunately, and that is good; but pursuit of
good fortune becomes hazardous if you are using hope and
chance to gain a good outcome. You may have
noticed this does not work well for most Las Vegas vacationers
who enjoy themselves by gambling against
high odds that favor the casinos. So, quantitative analysis can
have a valuable place as a decision tool if you
can make the analysis properly fit the situation.
The use of quantitative analysis to keep track, measure, analyze
totals, and forecast, is older than language
itself. Sumerians, and other peoples in the Middle East, used it
for grain and livestock categories. Exploration
of mathematics theory (i.e., learning how to add, subtract,
multiply, and divide) made quantitative analysis
possible. Now, apply mathematics to estimate probability to see
what might happen, determine averages and
percentages to see how much might be involved, and address
many specific situations. As you can imagine,
just knowing a number (e.g., how much livestock a person has)
may not mean much by itself. This is where
mathematics helps: The purpose of quantitative analysis is to
turn raw data into meaningful information.
Formulas turn that data into something leaders can use along
with considering qualitative factors such as

3. weather and customer demand. In theory, good leadership
should do the rest.
Business Analytics
The textbook covers the terms below that you are intended to
recall throughout the course:
make better business decisions. There are
three categories:
o Descriptive analytics describes/measures how things were and
are now.
o Predictive analytics uses past patterns to forecast.
o Prescriptive analytics calculates new and better ways (optimal
ways) to operate.
UNIT I STUDY GUIDE
Introduction to Quantitative Analysis
MSL 5080, Methods of Analysis for Business Operations 2
UNIT x STUDY GUIDE
Title
Quantitative analysis formulas will involve one of these
categories of analysis each time.

4. The Steps of the Quantitative Analysis Approach
Most literature (including the textbook) addressing quantitative
analysis describes seven steps that are used
to keep the analysis methodical and efficient (Render et al.,
2015), which include the following:
1. Define the problem: This takes some effort and leadership to
be sure the right problem is being
analyzed. Otherwise, later on, the formula will provide
information for a different problem than the one
your group is working on. Also, the problem has to be
quantifiable with specific and measurable
things to model with math formulas. If the problem is not
quantifiable yet, these measurable
objectives that help solve the problems have to be developed
first. Note that the textbook offers
improving healthcare delivery as an example and suggests
analyzing objectives such as reducing
hospitalization days or increasing the physician-to-patient ratio
as the definition of improvement.
Doing these things may improve health care, but the leader has
to decide that after he or she sees
the quantitative analysis of these things.
2. Develop a model: This formula should model the process that
is the problem. If so, its mathematical
answer will be the solution for a leader to consider. You can see
from the textbook that some of the
model’s usual parts include:
aning a decision can be made to set
this variable as a certain number,
and uncontrollable, which changes to an unknown extent as

5. other numbers are input into the
model.
items set in the controllable variable.
input data cannot be had, it may be an
issue with the model or the problem definition.
3. Acquire input data: Of course, you need accurate data or the
model’s answer will be “way off” and not
help us. One number to acquire seems easy and it is. But
businesses may need thousands of data
input into the model. Often, you can use the area under parts of
graph curves and other statistics,
especially if you are working on probability models that keep
cutting fractions to infinity.
4. Develop a solution: This can be solving the model’s equation
or using trial and error to input numbers
to rule out unrealistic solutions and determine the best (optimal)
one. Definition: an algorithm is a
series of math steps repeated, often many times, to find an
optimal solution.
5. Test the solution: Are the solutions consistent when checking
with data from another source? Does
it all make sense? A firm cannot make negative products, so an
answer of “–100 coats per month”
means the model or calculation needs to be re-checked and
maybe go back to the “Develop a
Model” step.
6. Analyze the results: What does the solution mean to the
person who asked for the quantitative

6. analysis? The analysts are not functioning as the superiors of
the clients who asked for this, but
analysts owe them some situational awareness. Perhaps, some
sensitivity analysis is in order to see
how much the solution changes when you change the model or
data inputted. Or, if you are not
getting a solution they can use, it may be time to go back to
redevelop the model.
7. Implement the results: Here is where leadership is directly
involved. Humans lead, and so there
should be no surprise at encountering human reactions to cold
and hard numbers. However,
humanity is indeed why a scientific approach, such as
quantitative analysis, has value. The model
solution may imply a new expense that leaders or staff do not
want to commit to, there may be social
implications that entrenched leaders did not want to address, or
natural inertia of not expending
energy may form a resistance to change. Conversely, analysts
may not be committed themselves,
and “crunched the numbers because it’s their job.” A better
performance can be had by caring about
what you do and what it means—at least to understand
something about the problem, model, and
solutions reached. With this approach, the people, and not
machines, will continue to make decisions.
How to Develop a Quantitative Analysis Model
You are ready to develop a model! Look at a model like one in
the textbook. Notice that the authors chose a
reasonably simple model that must be relevant to many
businesses. In the step, “Develop a Model,” there is
an item that addresses a problem with sales. The model often is:

7. Profit = Revenue – Expenses
MSL 5080, Methods of Analysis for Business Operations 3
UNIT x STUDY GUIDE
Title
As you know from working in sales almost anywhere, expenses
are often a combination of a fixed cost of
doing business, and a variable cost that changes with how much
business is done, or you will see here, how
many units sold:
Expenses = (Fixed cost + Variable cost)
The variable cost really means:
Variable cost = (Variable cost per unit) (Number of units sold)
Remember that terms grouped next to each other in parentheses
means they are multiplied.
So, the variable cost of a day’s sales of one type and size of
coffee might be ($1 per large cup) (35 cups in a
day) = Variable cost of $35 for that day for the business to sell

8. that size of coffee that day.
The revenue part really means:
Revenue = (Selling price per unit) (Number of units sold)
So the Revenue of a day’s sales of one type and size of coffee
might be ($2 per large cup) (35 cups in a day)
= Revenue of $70 for that day for the business to sell that size
of coffee that day.
Then, it seems this is how the business did for large coffees that
day:
Profit = Revenue – Expenses
Profit = ($2 x 35) – ($1 x 35)
Profit = ($70) – ($35)
Profit = $35
The textbook uses the following letters to represent the
corresponding expenses:
f = fixed cost
v = variable cost per unit
s = selling price per unit
X = number of units sold
This works, as long as you keep track of what each letter stands
for. You can vary these variables to see what
profit results from changing the expenses that can be controlled,

9. including selling price, number of units sold,
and even variable cost per unit if you can go back and
renegotiate or coordinate for a change in that.
Breaking even is important for most businesses, and you can
model a simple break-even point where profit is
$0, the usual definition of breaking even:
$0 = sX – f – vX
Some math can help solve for X (the number of units sold), and
you will want to know in order to break even:
0 = (s – v)X – f
f = (s – v)X
X = f then X is the Break-Even Point (BEP)
s – v
BEP = f
s – v
If you experiment with some numbers for f, s, and v at this
point to find the coffee shop’s BEP for large
coffees, and set f = 50 as the business’s fixed cost for the day,
then assume the shop is selling only large
coffees to put a fixed cost against, and s = 2 and v = 1.

10. MSL 5080, Methods of Analysis for Business Operations 4
UNIT x STUDY GUIDE
Title
BEP = 50 / 2-1, = 50 / 1, = 50
It looks like they need to sell 50 coffees to cover the fixed cost
of building, utilities, salaries, and the cost of
the coffee if they are selling them at $2 each. If costs go up,
they may have to look at advertising to sell more
coffees, raise the price of large coffees, or try to reduce the
fixed cost.
Reference
Render, B., Stair, R. M., Jr., Hanna, M. E., & Hale, T. S.
(2015). Quantitative analysis for management (12th
ed.). Upper Saddle River, NJ: Pearson.
Suggested Reading
The links below will direct you to a PowerPoint view of the
Chapter 1 Presentation. This will summarize and
reinforce the information from this chapter in your textbook.

11. Click here to access a PowerPoint presentation for Chapter 1.
Click here to access the PDF view of the presentation.
Using the CSU Online Library, locate the article below in the
Business Source Complete database. This
article will outline a list of managerial resolutions for
businesses.
Davis, T. (2016). You can still go broke just breaking even.
Southeast Farm Press, 43(3), 6.
Learning Activities (Nongraded)
Nongraded Learning Activities are provided to aid students in
their course of study. You do not have to submit
them. If you have questions, contact your instructor for further
guidance and information.
Complete the “Self-Test” on pages 18–19 of the textbook. Use
the answer key (Appendix H) in the back of the
textbook in order to check your answers.
https://online.columbiasouthern.edu/bbcswebdav/xid-
78756606_1
https://online.columbiasouthern.edu/bbcswebdav/xid-
78756149_1
Motivated by his ambitions and previous work in coffee shops,
Angelo is moving to Barrow, Alaska, to open a shop he has
named Alaska Coffee. Angelo intends to sell coffee, espresso,
and a couple of food items. He has signed a lease for a shop on
one of the main streets and is moving in. His parents fronted

12. him the cost or actual items of furniture and utensils, and he
acquired some donated items, so he will not have to count these
items in his cash accounting. Angelo is nearly ready to start
selling coffee!
Angelo notes that he has the following fixed costs that he does
have to count:
· $1200/month for employees, totaled up, and
· $1500/month lease, insurance, state, and borough fees.
Angelo figured he would allocate these fixed costs to his
products in the same proportion that they provided revenue as
shown in this table:
ITEM
PRICE SOLD / UNIT
VARIABLE COST / UNIT
% REVENUE
Coffee
$2.00 / cup
$ 0.25 / cup
75%
Espresso
3.00 / small cup
0.50 / small cup
15%
Scones
4.00 / ea.
2.00 / ea.
5%
Bear Claws
1.50 / ea.
1.00 / ea.
5%

13. As you can see, local demand and the cost of acquiring supplies
and ingredients from a store in the Arctic drives Angelo’s
accounting. The coffee is the thing for him! However, the other
items are selling as well.
Angelo asks a visiting family member to prepare a report for
him that answers the questions below.
· With the way Angelo has the fixed cost proportioned out by
75%, 15%, 5%, and 5% for each of the four items for sale, what
is the break-even point of sales of each item for him in a
month?
· What would the total sales figure for the shop be at the break-
even point?
· What, if anything, should Angelo do to improve his business?
Prepare the report as instructed in a response of at least three
pages. Be sure to research at least two sources to support your
ideas and integrate the sources in APA-formatted citations and
matching reference lists. Additionally, use Times New Roman
12pt. double-spaced font.