Marginal Analysis
This technique is also known as ‘marginal costing’. The profits are considered maximum at the point where marginal revenues and marginal costs are equal. Modern analysis is the ‘Break-Even Point’ which tells the management the point of production where there is no profit and no loss.
Co-Effectiveness Analysis
This analysis may be used for choosing among alternatives to identify a preferred choice when objectives are far less specific than those expressed by such clear quantities as sales, costs or profits. Social objective may be to reduce pollution of air and water which lacks precision.
Operations Research
This is a scientific method of analysis of decision problems to provide the executive the needed quantitative information in making these decisions. Further, some theories have also been propounded by eminent writers of management to analyse the problems and to take decisions. Sequencing theory helps the management to determine the sequence of particular operations. Queuing theory, Games theory, Reliability theory and Marketing theory are also important tools of operations research which can be used by the management to analyse the problems and take decisions.
Linear Programming
It is based on the assumption that there exists a linear relationship between variables and that the limits of variations can be ascertained. It involves maximisation or maximisation of a linear function of various primary variables known as objective function subject to a set of some real or assumed restrictions known as constraints.
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