QUANTITATIVE TECHNIQUES

Prof. Preetvanti Singh

Faculty of Science
Dayalbagh Educational Institute,
Agra
India
 Course Objectives
Provide a formal quantitative approach to
problem solving;
Give an intuition for managerial situations
where a quantitative approach is
appropriate;
Introduce some widely used quantitative
models;
Provide with the concepts, methods and
tools for the application of logical and
quantitative analysis to managerial decision
making and problem solving
Module 1 Lesson: Intro to Quant 2
 Pedagogy

This course is divided in to five modules

Each module has 8 videos of 40 to 45
minutes duration and 3 lessons
Each video lesson is covered using a power
point presentation or using blackboard
In order to improve the understanding
problems are solved

Module 1 Lesson: Intro to Quant 3

MBM 106 Quantitative Techniques

MODULE 1: INTRODUCTION
Decision making environment and techniques,
Descriptive Statistics, Frequency distributions,
Graphical Techniques, Measures of Central tendency,
Measures of Dispersion

MODULE 2: PROBABILITY
Probability fundamentals, Discrete distributions,
Continuous Distributions, Hypothesis testing,
Significance tests: z test, t test, F test. etc.

MODULE 3: REGRESSION AND CORRELATION

Regression and Correlation, Rank correlation
coefficient
Module 1 Lesson: Intro to Quant 4
MBM 106 Quantitative Techniques

MODULE 4: LINEAR PROGRAMMING AND ITS

APPLICATION
Historical development and Phases of OR, Linear
Programming: Graphical method, Simplex algorithm,
Duality and its concept, Special types of L.P.P.:
Transportation problem, Assignment problem

MODULE 5: GAME THEORY AND QUEUING MODEL

Game Theory: Applications in business, Two person
zero sum games, Queuing System and Concepts:
Kendalls notation, Solution of queuing problems-
Single channel, Single stage, Finite and infinite
queues with Poisson arrival and exponential service
Module 1 Lesson: Intro to Quant 5
Suggested Reading
1. Fadil H Zuwaylif: APPLIED BUSINESS
STATISTICS
2. Rubin & Levin: STATISTICS FOR
MANAGEMENT
3. Hillier FS & Lieberman GJ: OPERATIONS
RESEARCH, HOLDEN-DAY
4. Wagner HM: PRINCIPLES OF OPERATIONS
RESEARCH WITH APPLICATIONS TO
MANAGERIAL DECISIONS

Module 1 Lesson: Intro to Quant 6

Module 1 : Introduction

Lecture 1: Introduction to Quantitative

Techniques
Lecture 2: Frequency Distribution
Lecture 3: Graphical Presentation of data
Lecture 4,5,6:Measures of Central
Tendency
Lecture 7,8: Measures of Dispersion

Module 1 Lesson: Intro to Quant 7

Lecture 1:
Introduction to Quantitative Techniques
Learning Goals
Understand the concept and importance of
Quantitative Techniques.
Discuss the distinguished approaches of
Quantitative Techniques
Understand the components of Quantitative
Techniques

Module 1 Lesson: Intro to Quant 8

Decision Making Environment
Today management activities have become
complex.
Managerial decision-making is a process by which
the management, when faced with a problem,
chooses a specific courses of action from a set of
possible options.
In making a decision, a manager attempts to choose
the most effective course of action in the given
circumstances in attaining the goals of the
organization.
The future is clouded with uncertainty and fast
changing, thus decision making cannot be made on
a trial-and-error basis or by using a thumb rule
approach
Thus there is a greater need forModule
applying scientific 9
1 Lesson: Intro to Quant
Quantitative Techniques
The application of the appropriate tools can
reduce an otherwise unwidely and complex
problem to one of the manageable dimensions.

Quantitative Technique is a scientific approach

to managerial decision making
The successful use of Quantitative Technique for
management would help the organization in
solving complex problems on time, with greater
accuracy and in the most economical way.
Module 1 Lesson: Intro to Quant 10
Definition
Quantitative techniques are those statistical and
programming techniques, which help decision-
makers solve complex problems, especially
those concerning business and industry
Quantitative techniques provide the decision-
makers with systematic and powerful means of
analysis, based on quantitative data, for
achieving pre-determined goals.
These techniques serve as supplement to the
judgment and intuition of the decision-makers.

Module 1 Lesson: Intro to Quant 11

 Evolution
In 19th century, Frederick W. Taylor proposed an
application of a scientific method to an
operations management problem-productivity
As the new developments in these techniques
were found successful, they were later adopted
by the industrial sector in managerial decision-
making and resource allocation.
At present, in any organization, whether a
manufacturing or service industry, Quantitative
Techniques are used by managers in making
decisions scientifically.
Module 1 Lesson: Intro to Quant 12
Approach of Quantitative Technique
Starts with raw data, which is processed and
analyzed into information

Then models are developed to solve the

problem for effective managerial decision-
making

Module 1 Lesson: Intro to Quant 13

Role of Quantitative Techniques in
Management
Provide a tool for scientific analysis and solution
of various management problems
Enable proper deployment of resources
Assist in choosing optimum strategy
Through various techniques, management can
know the reactions of integrated business
systems

Module 1 Lesson: Intro to Quant 14

Scope of Quantitative Techniques
Finance and Accounting: Cash flow analysis, Capital
budgeting, Dividend and Portfolio management, Financial
planning.
Marketing Management: Selection of product mix, Sales
resources allocation and Assignments.
Production Management: Facilities planning, Manufacturing,
Aggregate planning, Inventory control, Quality control, Work
scheduling, Job sequencing, Maintenance and Project
planning and scheduling.
Personnel Management: Manpower planning, Resource
allocation, Staffing, Scheduling of training programmes.
General Management: Decision Support System and
Management of Information Systems, MIS, Organizational
design and control, Software Process Management and
Knowledge Management.
Module 1 Lesson: Intro to Quant 15
Classification of Quantitative Techniques
1. Statistical Techniques:
Are used in conducting the statistics inquiry
concerning a certain phenomenon;
Includes the methods beginning from the
collection of data till the task of
interpretation of collected data
2. Operations Research:
Used by decision makers to optimize the
solution;
Includes linear programming, transportation
programming, game theory, and so on
Module 1 Lesson: Intro to Quant 16
 Organization of the Course

Quantitativ
e
Techniques

Operations
Statistics
Research

Descriptive Inductive
Module 1 Lesson: Intro to Quant 17
Overview of Statistics
Statistics
Means numerical information expressed in
quantitative terms
Is a discipline, which scientifically deals with
data

Module 1 Lesson: Intro to Quant 18

Definition
Statistics is the science of estimates and
probabilities
- Boddington

The science of Statistics is the method of

judging collective, natural or social phenomena
from the results obtained by the analysis or
enumeration or collection of estimates
- W. I. King

Module 1 Lesson: Intro to Quant 19

Characteristics
Statistics are the aggregates of facts: It means a single figure
is not statistics. For example, national income of a country for
a single year is not statistics but the same for two or more
years is statistics
Statistics are affected by a number of factors: For example,
sale of a product depends on a number of factors such as its
price, quality, competition and so on.
Statistics must be reasonably accurate: Wrong figures, if
analysed, will lead to erroneous conclusions. Hence, it is
necessary that conclusions must be based on accurate figures
Statistics must be collected in a systematic manner for a pre-
determined goal: If data are collected in a haphazard manner,
they will not be reliable and will lead to misleading
conclusions
Statistics should be placed in relation to each other: If one
collects data unrelated to each other, then such data will be
confusing and will not lead to any logical conclusions.
Data should be comparable over time and
Module over
1 Lesson: Introspace
to Quant 20
Example 1: Can the following information be regarded as
statistics?
(i) The height of a person is 160 cms.
(ii) The height of Ram is 165 cms and of Shyam is 155 cms.
(iii) Ram is taller than Shyam.
(iv) Ram is taller than Shyam by 10 cms.
(v) The height of Ram is 165 cms and weight of Shyam is 55 kgs.

Solution:
Each of the above statement should be examined with reference
to the following conditions:
(a) Whether information is presented as aggregate of numerical
figures
(b) Whether numerical figures are homogeneous or comparable
(c) Whether numerical figures are affected by a multiplicity of
factors
On examination of the given information in the light of these
conditions we find that only the information given by statement
(ii) can be regarded as statistics. Module 1 Lesson: Intro to Quant 21
Types of Statistics

Module 1 Lesson: Intro to Quant 22

Types of data

Module 1 Lesson: Intro to Quant 23

Types of Data Sources

Module 1 Lesson: Intro to Quant 24

Types of Data
Numerical (Quantitative) and Categorical (Qualitative)
Classification based on the type of a random variable
Categorical random variables are
responses to a question yes/no,
or gender male/female
or result of student pass/fail
Numerical random variables are
Height of individuals
Income of individuals
Marks obtained
Numerical variables are of two types
Continuous: some sort of measurement height, weight
Discrete: exact measures number of children in a family
Module 1 Lesson: Intro to Quant 25
Types of Data
Classification based on measurement and types of
measurement
Nominal scale of data (Qualitative data type)
data on a nominal scale is of particular type that can be
classified into categories and given labels to describe them
Label describes the group of data
There is no order implied in groups
E.g. Types of vehicles for going to office, types of population
group, Yes/no
Can be used for identifying individuals
Codes can also be used for classification
e.g. STD code, bar codes

Module 1 Lesson: Intro to Quant 26

Types of Data
Ordinal Data
Is same as nominal data except that there is now order within
the groups into which the data is classified
E.g. Rating of hotels
Grades of students
Interval (Quantitative data type)
Can be measured on a numerical scale
Zero point does not mean absence of something
E.g. temperature, latitude, longitude
Ratio
Can be measured on a numerical scale
Zero point does not absence of what is being measured
E.g. price, height, weight, lenght Module 1 Lesson: Intro to Quant 27
Types of Data
Cross-sectional:
comprises values of a variable recorded over at the same point
or period of time for many individuals, organization, places,
etc.
E.g. No. of students admitted in MBA in an IIM in the year
2014, Population of Agra, Mathura, as per 2001 census
Temporal Data (or time series data)
Data about n individual, organization, place over a period of
time
E.g marks obtained by a student from I to XII, Total number of
MBA graduates for each of the last five years.
Spatial data
Data based on geographical location basis
Can also be cross-sectional data w.r.t places
Module 1 Lesson: Intro to Quant 28
Methodology

Collecting Presenting Summarizin Analyzing

Data Data g Data Data

Module 1 Lesson: Intro to Quant 29

Overview of Operations Research
The scientific method employed for problem
solving and decision-making by the
management

Module 1 Lesson: Intro to Quant 30

Definition
Operations Research can be characterised as the
application of scientific methods, techniques and
tools to problems involving the operations of
systems so as to provide those in control of
operations with optimum solutions to the problem.

Churchman, Ackoff, Arnoff

Module 1 Lesson: Intro to Quant 31

Features
System-Oriented
To evaluate any decision, one must identify all
possible interactions and determine their impact on
the organization as a whole
Scientific Approach
Define the problem clearly, determine the conditions
for observations, experiment is designed and
executed, results are analysed and the best is chosen.
Interdisciplinary Approach
OR study is performed by a team of scientists whose
individual members have been drawn from different
scientific and engineering disciplines
Module 1 Lesson: Intro to Quant 32
Features
Uncovering new problems
The solution of OR problem may uncover a number
of new problems. In order to derive maximum
benefit, each one of them must be solved.
Use of Computer
OR problems often require a computer to solve the
complex mathematical model

Module 1 Lesson: Intro to Quant 33

 Formulating the
Methodology problem

Defining decision
variables and
constraints

Developing a suitable
model

Acquiring the input

data

Solving the model

Validating the Model

Implementing the
results Module 1 Lesson: Intro to Quant 34
Career Opportunities
Statisticians work closely with other scientists
and researchers to develop new statistical
techniques, adapt existing techniques, design
experiments, and direct analyses of surveys and
retrospective studies.

Operations research analysts use sophisticated

computer software, such as databases and
statistical and modeling packages, to analyze
and solve problems.

Module 1 Lesson: Intro to Quant 35

Summary
Quantitative Technique is a scientific
technology to managerial decision making
Is broadly categorized into Statistical
Analysis and Operations Research
Statistics is a discipline which scientifically
deals with data
Operations research is a discipline which
helps in optimized decision-making
Quantitative Technique offers very good
career opportunities in Management areas.
Module 1 Lesson: Intro to Quant 36
Thank You

Module 1 Lesson: Intro to Quant 37