artificial intelligence (AI) A computer program that attempts to duplicate the thought processes of experienced decision makers

breakeven analysis A procedure for identifying the point at which revenues start covering costs

causal modeling A group of different techniques that determine causal relationships between different variables

critical path The longest path through a PERT network

decision tree A planning tool that extends the concept of a payoff matrix through a sequence of decisions

distribution model A model used to determine the optimal pattern of distribution across different carriers and routes

econometric model A causal model that predicts major economic shifts and their impact on the organization

economic indicator A key population statistic or index that reflects the economic well-being of a population

expected value When applied to alternative courses of action, the sum of all possible values of outcomes from that action multiplied by their respective probabilities

forecasting The process of developing assumptions or premises about the future that managers can use in planning or decision making

game theory A planning tool used to predict how competitors will respond to different actions the organization might take

inventory model A technique that helps managers decide how much inventory to maintain

just-in-time (JIT) An inventory management technique in which materials are scheduled to arrive in small batches as they are needed, eliminating the need for resources such as big reserves and warehouse space

linear programming A planning technique that determines the optimal combination of resources and activities

organizational simulation A model of a real-world situation that can be manipulated to discover how it functions

payoff matrix A decision-making tool that specifies the probable value of different alternatives depending on different possible outcomes associated with each

PERT A planning tool that uses a network to plan projects involving numerous activities and their interrelationships

probability The likelihood, expressed as a percentage, that a particular event will or will not occur

qualitative forecasting technique One of several techniques that rely on individual or group judgment rather than on mathematical analyses

queuing model A model used to optimize waiting lines in organizations

regression model An equation that uses one set of variables to predict another variable

revenue forecasting The prediction of future revenues from all sources

sales forecasting The prediction of future sales

technological forecasting The prediction of what future technologies are likely to emerge and when they are likely to be economically feasible

time-series analysis A forecasting technique that extends past information into the future through the calculation of a best-fit line