Introduction to Quantitative Analysis

Quantitative Tools in Management

Jimmy D. Bucar
PhD-HRM Student
 Introduction
Mathematical tools have been used for
thousands of years.
QA can be applied to a wide variety of
problems.
One must understand the specific
applicability of the technique, its
limitations, and its assumptions.

What is Quantitative Analysis?

 What is Quantitative Analysis?

Quantitative Meaningful
Raw Data
Analysis Information

Quantitative analysis is a scientific approach to

managerial decision making in which raw data are
processed and manipulated to produce meaningful
information.
In decision making, both qualitative and quantitative
factors must be considered.

Steps in QA
The Quantitative Analysis Approach

Defining the Problem

Developing a Model

Acquiring Input Data

Developing a Solution

Testing the Solution

Analyzing the Results

Implementing the Results

 1. Defining The Problem

Develop a clear and concise statement that gives

direction and meaning to subsequent steps.
This may be the most important and difficult step
It is essential to go beyond symptoms and identify true
causes
May be necessary to concentrate on only a few of the
problems selecting the right problems is very
important
Specific and measurable objectives may have to be
developed
 2. Developing a Model
Quantitative analysis models are realistic, solvable, and
understandable mathematical representations of a
situation. $ Sales

$ Advertising

There are different types of models:

Scale Schematic
models models
 3. Acquiring Input Data
Input data must be accurate GIGO rule:

Garbage In

Process
Garbage
Out

Data may come from a variety of sources such as

company reports, company documents, interviews,
on-site direct measurement, or statistical sampling.
 4. Developing A Solution

The best solution to a problem is found by

manipulating the model variables until a solution is
found that is practical and can be implemented.
Common techniques are:
Solving equations.
Trial & error
Complete Enumeration
Using an Algorithm
The input data and model determine the accuracy of
the solution.
 5. Testing the Solution
Both input data and the model should be tested for
accuracy before analysis and implementation.
New data can be collected to test the model.
Results should be logical, consistent, and represent the
real situation.

6. Analyzing the Results

Understanding actions implied by the solution and their
implications, as well as conducting a sensitivity analysis
(a change to input values or the model) to evaluate the
impact of a change in model parameters.
 7. Implementing the Results

Implementation incorporates the solution into

the company.
Implementation can be very difficult.
People may be resistant to changes.
Many quantitative analysis efforts have failed
because a good, workable solution was not
properly implemented.
Changes occur over time, so even successful
implementations must be monitored to
determine if modifications are necessary.
 How to Develop a QA Model?
Profit = Revenue Expenses
Profit = Revenue (Fixed cost + Variable cost)
Profit = (Selling price per unit)(number of units sold) [Fixed
cost + (Variable costs per unit)(Number of units sold)]
Profit = sX [f + vX]
Profit = sX f vX
Breakeven Quantity = F/(P-V)
Breakeven point occurs when Revenue = Expenses

Fixed cost
BEP =
(Selling price per unit) (Variable cost per unit)
Thank you for Listening!
Have a Great Day!