# CPSP – Quantitative Techniques

PL2.05 QUANTITATIVE TECHNIQUES

Pl2.05.1 Introduction

This module is intended to equip the trainee with knowledge, skills and competencies in quantitative techniques for use in decision making in supply chain management.

PL2.05.2 General objectives

At the end of this module, the trainee should be able to

1. Apply equations, functions and probability theory to solve supply chain management problems
2. Describe the various methods of data collection and presentation
3. Apply correlation and regression analysis in supply chain management
4. Demonstrate the use of statistical tools in forecasting and decision making
5. Apply decision theory under conditions of risk and uncertainty
6. Use network analysis in supply chain project planning and management
7. Apply models  in inventory control and decision making

PL2.5.01 Overview of quantitative techniques

Competence

The trainee should have the ability to identify areas where quantitative techniques could be applied in business set-up

Content

Theory

1. Meaning of quantitative techniques
2. Development of quantitative techniques
3. Role of quantitative techniques
4. Types of quantitative techniques
5. Areas where quantitative techniques are applicable

Practice

1. Discussion of the role of quantitative techniques

PL2.5.02 Equations and functions

Competence

The trainee should have the ability to use equations, functions, graphs, matrices and differentiation to solve procurement and supply problems

Content

Theory

1. Equations and functions
2. Linear equations equations
3. Simultaneous equations
1. Linear equations
2. Multi variable functions
3. Matrices
4. matrix operations
5. Determinant of a matrix
• Inverse of a matrix
1. Basic differentiation problems
2. Marginal cost
3. Marginal revenue
• Break-even point

Practice

1. Computation of total cost, total revenue, marginal cost, marginal revenue and break-even point in a given case

PL2.5.03 Probability

Competence

The trainee should have the ability to apply probability knowledge to solve procurement and supply problems

Content

Theory

1. Venn diagram
2. Expected value, variance and coefficient of variation
3. Differences between continuous and discrete probability distributions
4. Probability theory in solving procurement and supply problems

Practice

1. Application of probability theory in solving procurement and supply problems

PL2.5.04 Correlation and regression analysis

Competence

The trainee should have the ability to carry out regression analysis and interpreted the results

Content

Theory

1. Scatter diagram
2. Measures of correlation
3. Moment correlation coefficients
4. Rank correlation coefficients
5. Simple linear regression models
6. Coefficient of determination

Practice

1. Application of scatter diagram to establish correlation between independent and dependent variables

PL2.5.05 Time series

Competence

The trainee should have the ability to compute forecasted time series values using moving averages, ordinary least square method and exponential smoothing.

Content

Theory

1. Meaning of time series
2. Components of time series
3. Forecasting time series
4. Moving average
5. Ordinary least square
• Exponential smoothing

Practice

1. Computation of a forecast using time series for a particular period for a firm in a given case

PL2.5.06 Linear programming

Competence

The trainee should have the ability to apply linear programing skills in solving problems in procurement and supply

Content

Theory

1. Decision variables, objective function and constraints
2. Use graphs to solve linear programing problems.
3. Application of linear programming in solving procurement and supply problems.

Practice

1. Use graphs to solve linear programming problems

PL2.5.07 Decision theory

Competence

The trainee should have the ability to apply the knowledge of game theory in negotiation process with suppliers.

Content

Theory

1. Decision making process and environment
2. Certainty
3. Risk
• Uncertainty
1. Competition
2. Decision making under uncertainty
3. Maximum
4. Maximax
• Minimax
1. Regret
2. Hurwicz decision rule
3. Laplace decision rule
4. Decision making under risk
5. Game theory and its limitations
6. Non zero sum,
7. Two persons, zero sum games,
• Dominance,
1. Value of the game,
3. Mixed strategies
• Limitation of game theory

Practice

1. Discussion on how game theory can be applied in supplier negotiation.

PL2.5.08 Network planning and analysis

Competence

The trainee should have the ability to apply network analysis in project planning.

Content

Theory

1. Basic concepts network, activity and event
2. Activity sequencing and network diagram
3. Critical path analysis
4. Float and its importance
5. Project Evaluation and Review Technique (PERT)

Practice

1. Drawing a project network diagram and using it to determine critical path and project duration in a given case

PL2.5.09 Inventory control models

Competence

The trainee should have the ability to apply Economic Order Quantity (EOQ) model in inventory management

Content

Theory

1. Inventory control models
2. Basic Economic Order Quantity (EOQ) model
3. Economic order quantity discount

Practice

1. Discussion of the application of EOQ model in inventory management

PL2.5.10 Emerging issues and trends I quantitative techniques

Competence

The trainee should have the ability to cope with emerging issues and trends in quantitative techniques.

Content

Theory

1. Emerging issues and trends in quantitative techniques.
2. Challenges and opportunities posed by the emerging trends and issues in quantitative techniques.
3. Coping with and adopting to the emerging issues and trends in quantitative techniques

Practice

1. Discussion of challenges and opportunities posed by the emerging issues and trends in quantitative techniques 1. Stephen Ochieng Odhiambo says: