Q1, What is Quantitative Analysis Approach? Explain in detail.

Quantitative analysis is a scientific approach to managerial decision making whereby raw data
are processed and manipulated resulting in meaningful information

Raw Data  Quantitative Analysis  Meaningful Information

Quantitative Approach:

Qualitative analysis means looking at the intangibles. The factors about a company that are not
purely numbers driven can be just as important as crunching the numbers.
1 Defining the Problem

Need to develop a clear and concise statement that gives direction and meaning to the following
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 Mode

Quantitative analysis models are realistic, solvable, and understandable mathematical

representations of a situation

 Models generally contain variables (controllable and uncontrollable) and parameters

 Controllable variables are generally the decision variables and are generally unknown
 Parameters are known quantities that are a part of the problem

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 (optimal) 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 and error – trying various approaches and picking the best result

– Complete enumeration – trying all possible values

– Using an algorithm – a series of repeating steps to reach a solution

5.Testing the Solution

Both input data and the model should be tested for accuracy before the solution can be analyzed
and implemented

6. Analyzing the Results

Determine the implications of the solution

– Implementing results often requires change in an organization

– The impact of actions or changes needs to be studied and understood before

implementation

7.Implementing the Results

Implementation incorporates the solution into the company Implementation can be very difficult
People can resist changes

 Implementation can be very difficult

 People can resist changes
 Many quantitative analysis efforts have failed because a good, workable solution was not
properly implemented

Q2, How to develop a Quantitative Analysis Model ? Write the Advantages and
Disadvantages of mathematical model.

An important part of the quantitative analysis approach

Let’s look at a simple mathematical model of profit

Profit = Revenue – Expenses

Expenses can be represented as the sum of fixed and variable costs and variable costs are the
product of unit costs times the number of units

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 ] or Profit = sX – f – vX
Where s = selling price per unit

v = variable cost per unit

f = fixed cost

X = number of units sold

Advantages of Mathematical Modeling:

1.Models can accurately represent reality

2.Models can help a decision maker formulate problems

3.Models can give us insight and information

4.Models can give us insight and information

5.Models can save time and money in decision making and problem solving

6.A model may be the only way to solve large or complex problems in a timely fashion

Disadvantages of Mathematical Modeling:

1.Conflicting viewpoints

2. Financial and sales people have different view about the inventory Impact on other
departments

3. Inventory is tied with cash flows and production Beginning assumptions

4. Problem implies solution, e.g. inventory is too low

 Q3. What is meant by Descriptive Analysis? Explain the classification of Descriptive
Analysis.

Descriptive analysis is an important first step for conducting statistical analyses. It gives you an
idea of the distribution of your data, helps you detect outliers and typos, and enable you identify
associations among variables, thus preparing you for conducting further statistical analyses.

 Descriptive Statistics

◦ Most often describes the sample and their scores on various measures.

 Means, standard deviations, percentages, correlations

There are four major types of descriptive statistics:

 Measures of Central Tendency. * Mean, Median, and Mode. ...
 Measures of Frequency: * Count, Percent, Frequency. ...
 Measures of Dispersion or Variation. * Range, Variance, Standard Deviation. ...
 Measures of Position. * Percentile Ranks, Quartile Ranks.

Measure of Central Tendency

Central tendency refers to the idea that there is one number that best summarizes the entire set of
measurements, a number that is in some way “central” to the set.

Mean / Average
Mean or Average is a central tendency of the data i.e. a number around which a whole data is
spread out. In a way, it is a single number which can estimate the value of whole data set.

Median

Simply said, the median is the middle value in a data set. As you might guess, in order to
calculate the middle, you need:

– first listing the data in a numerical order

– second, locating the value in the middle of the list.
Example 5:

The middle number in the below set is 26 as there are 4 numbers above it and 4 numbers below:

21, 22, 24, 24, 26, 27, 28, 29, 31.

Mode
Mode is the term appearing maximum time in data set i.e. term that has highest frequency.

In this data set, mode is 67 because it has more than rest of the values, i.e. twice.

Measure of Spread / Dispersion

Measure of Spread refers to the idea of variability within your data.

Standard deviation
Standard deviation is the measurement of average distance between each quantity and mean.
That is, how data is spread out from mean. A low standard deviation indicates that the data
points tend to be close to the mean of the data set, while a high standard deviation indicates that
the data points are spread out over a wider range of values.

Variance
Variance is a square of average distance between each quantity and mean. That is it is square of
standard deviation.

Range

Range is one of the simplest techniques of descriptive statistics. It is the difference between
lowest and highest value.

Range is 99–12 = 87
Measures of Position

Percentile
Percentile is a way to represent position of a values in data set. To calculate percentile, values in
data set should always be in ascending order.

Quartiles
In statistics and probability, quartiles are values that divide your data into quarters provided data
is sorted in an ascending order.

Interquartile range (IQR) = Q3 - Q1 = 85 - 41 = 44

Skewness
Skewness is a measure of the asymmetry of the probability distribution of a real-valued random
variable about its mean. The skewness value can be positive or negative, or undefined.

In a perfect normal distribution, the tails on either side of the curve are exact mirror images of

each other.
Kurtosis

The exact interpretation of the measure of Kurtosis used to be disputed, but is now settled. Its
about existence of outliers. Kurtosis is a measure of whether the data are heavy-tailed (profusion
of outliers) or light-tailed (lack of outliers) relative to a normal distribution.

Correlation
Correlation is a statistical technique that can show whether and how strongly pairs of variables
are related.

If r is close to 0, it means there is no relationship between the variables. If r is positive, it means

that as one variable gets larger the other gets larger. If r is negative it means that as one gets
larger, the other gets smaller (often called an “inverse” correlation).
 Q4, List and Explain the probability and non-probability sampling technique. What are
the advantages and disadvantages of each technique?

Types of Probability Sampling

 Simple random sampling is a completely random method of selecting subjects. These can
include assigning numbers to all subjects and then using a random number generator to
choose random numbers. Classic ball and urn experiments are another example of this process
(assuming the balls are sufficiently mixed). The members whose numbers are chosen are
included in the sample.
 Stratified Random Sampling involves splitting subjects into mutually exclusive groups and
then using simple random sampling to choose members from groups.
 Systematic Sampling means that you choose every “nth” participant from a complete list. For
example, you could choose every 10th person listed.
 Cluster Random Sampling is a way to randomly select participants from a list that is too
large for simple random sampling. For example, if you wanted to choose 1000 participants
from the entire population of the U.S., it is likely impossible to get a complete list of
everyone. Instead, the researcher randomly selects areas (i.e. cities or counties) and randomly
selects from within those boundaries.
 Multi-Stage Random sampling uses a combination of techniques.

Advantages and Disadvantages

Each probability sampling method has its own unique advantages and disadvantages.
Advantages
 Cluster sampling: convenience and ease of use.
 Simple random sampling: creates samples that are highly representative of the population.
 Systematic sampling: creates samples that are highly representative of the population,
without the need for a random number generator.

Disadvantages
 Cluster sampling: might not work well if unit members are not homogeneous (i.e. if they are
different from each other).
 Simple random sampling: tedious and time consuming, especially when creating larger
samples.
 Systematic sampling: not as random as simple random sampling,
Q5, Why scaling is important for measuring? What are the four generic scale available to
the researcher for developing the measurement tool?

Each scale of measurement represents a particular property or set of properties of the abstract
number system. The mathematical properties of the numbers we are going to analyze
are important because they determine statistical techniques to be used.

Four types of scales

Measurement scales are grouped into four different types.
Nominal
The most basic measurement scale is really the absence of a scale, because the values used are
simple categories or names, rather than quantities of a variable. For this reason it is referred to as
a nominal scale, where people are grouped qualitatively, for example by gender or political
party. The nominal scale can also represent variables such as zip code or eye color, where
multiple categories are present.

Ordinal
The dominant feature of the ordinal scale is order, where values do have an inherent ordering
that cannot be removed without losing meaning. Common examples of ordinal scales include
ranks (e.g., first, second, third, etc.), the multi-point rating scales seen in surveys (e.g., strongly
disagree, disagree, etc.), and level of educational attainment.

Interval
Interval scales include ordered values where the distances, or intervals, between them are
meaningful. Whereas an ordinal scale describes one category only as greater than, less than, or
equal to another, with an interval scale the difference between categories is quantified in scale
points that have a consistent meaning across the scale. With interval scales we can finally use
means, standard deviations, and related parametric statistical tests.

Ratio
The ratio scale is an interval scale with a meaningful absolute zero, or a point at which there is an
absence of the variable measured. Whereas an interval scale describes differences between scale
values in scale points, a ratio scale can compare values by ratios. A simple example is time,
where 1 hour is equivalent to 2/3 hours + 1/3 hours.
 Q6, What are the types of questions asked in a questionnaire?

Here are the types of survey questions you should be using to get more survey responses:

1. Open-ended questions
2. Closed-ended questions
3. Rating questions
4. Likert scale questions
5. Multiple choice questions
6. Picture choice questions
7. Demographic questions

Multiple choice questions

Multiple choice questions are the most popular survey question type. They allow your
respondents to select one or more options from a list of answers that you define.
Rating scales

In rating scale questions (sometimes referred to as ordinal questions), the question displays a
scale of answer options from any range (0 to 100, 1 to 10, etc.). The respondent selects the
number that most accurately represents their response.
Likert scales

Chances are you’ve seen this question type before. Likert scale questions are the “do you agree
or disagree” questions you often see in surveys, and are used to gauge respondents’ opinions and
feelings.
Open-ended questions

Open-ended survey questions require respondents to type their answer into a comment box and
don’t provide specific pre-set answer options.
Demographic questions

Use demographic survey questions if you’re interested in gathering information about a

respondent’s background or income level. When properly used, these types of questions in a
questionnaire allow you to gain better insights on your target audience. Demographic questions
are powerful tools to segment your audience based on who they are and what they do, allowing
you to take an even deeper dive in on your data.
Closed-Ended Questions

Closed-ended questions limit the answers of the respondents to response options provided on the
questionnaire.
Dichotomous or two-point questions (e.g. Yes or No, Unsatisfied or Satisfied)
Q7, What are the Graphical method Technique?
Graphical methods in Statistics
This section covers:
Dot plots
Histograms
Box-whisker plots
Scatter plots
Bar charts
Pie charts
Dot Plots
The simplest method of conveying as much information as possible is to show all of the data and
this can be conveniently carried out using a Dot plot.
Histograms

The patterns may be revealed in a large data set of a numerically continuous variable by forming
a histogram. This is constructed by first dividing up the range of the variable into several non-
overlapping and equal intervals (also called “classes” or “bins”),

Box-Whisker Plot

If the number of points is large, a Dot plot can be replaced by a box-whisker plot which is more
compact than the corresponding histogram
Scatterplots

When one wishes to show a relationship between two continuous variables, a scatterplot can be
employed. Figure 4 shows a scatterplot of birthweight by maternal age.
Bar Charts and Pie Charts

Bar charts and pie charts can be used to display categorical data.
The heights of bars in a bar chart represent the frequencies (or relative frequencies) in each
group. Note that in a bar chart, there is a gap between each bar. This is unlike a histogram, where
there are no gaps between the bars, reflecting the continuous nature of the underlying variable.
For evaluating and choosing among alternatives

Considers all the possible alternatives and possible outcomes

Q8, Explain the five steps of Decision making in Decision Analysis?

Five Steps in Decision Making

1. Clearly define the problem

2. List all possible alternatives
3. Identify all possible outcomes for each alternative
4. Identify the payoff for each alternative & outcome combination
5. Use a decision modeling technique to choose an alternative

The first step is to define the

problem.

Step 1. The problem that John Thompson identifies is whether to expand his product line
by manufacturing and marketing a new product, backyard storage sheds.

Second step is to generate the alternatives that are available to him. In decision theory,
an alternative is defined as a course of action or a strategy that the decision maker can
choose.

The second step is to list

alternatives.

Step 2. John decides that his alternatives are to construct

(1) a large new plant to manufacture

the storage sheds,

(2) a small plant, or

(3) no plant at all (i.e., he has the option of not developing

the new product line).

One of the biggest mistakes that decision makers make is to leave out some important
alternatives.
Although a particular alternative may seem to be inappropriate or of little value, it might
turn out to be the best choice.
The next step involves identifying the possible outcomes of the various alternatives. A
common mistake is to forget about some of the possible outcomes. Optimistic decision
makers tend to ignore bad outcomes, whereas pessimistic managers may discount a
favorable outcome. If you don’t consider all possibilities, you will not be making a
logical decision, and the results may be undesirable.

The third step is to identify

possible outcomes.

Step 3. Thompson determines that there are only two possible outcomes: the
market for the storage sheds could be favorable, meaning that there is a high
demand for the product, or it could be unfavorable, meaning that there is a
low demand for the sheds.

Once the alternatives and states of nature have been identified, the next step
is to express the payoff resulting from each possible combination of
alternatives and outcomes. In decision theory, we call such payoffs or profits
conditional values. Not every decision, of course, can be
based on money alone—any appropriate means of measuring benefit is
acceptable.

The fourth step is to list payoffs.

Step 4. Because Thompson wants to maximize his profits, he can use profit to
evaluate each
consequence.

John Thompson has already evaluated the potential profits associated with the
various outcomes.

With a favorable market, he thinks a large facility would result in a net profit of
$200,000 to his firm. This $200,000 is a conditional value because Thompson’s
receiving the money is conditional upon both his building a large factory and
having a good market. The conditional value if the market is unfavorable would be
a $180,000 net loss. A small plant would result in a net profit of $100,000 in a
favorable market, but a net loss of $20,000 would occur if the market
was unfavorable. Finally, doing nothing would result in $0 profit in either market.
The easiest way to present these values is by constructing a decision table,
sometimes called a payoff table.
Use a decision modeling technique to choose an alternative

Steps 5 . The last steps are to select a decision theory model and apply it to the data to
help make the decision. Selecting the model depends on the environment in which you’re
operating and the amount of risk and uncertainty involved.

Q9 What is regression analysis and why do we use Regression Analysis?

Regression analysis is a powerful statistical method that allows you to examine the relationship
between two or more variables of interest.

Regression analysis is a reliable method of identifying which variables have impact on a topic of
interest. The process of performing a regression allows you to confidently determine which
factors matter most, which factors can be ignored, and how these factors influence each other.

In order to understand regression analysis fully, it’s essential to comprehend the following terms:

 Dependent Variable: This is the main factor that you’re trying to understand or predict.
 Independent Variables: These are the factors that you hypothesize have an impact on
your dependent variable.

Why we use it:

Regression analysis is also used to understand which among the independent variables are
related to the dependent variable, and to explore the forms of these relationships. In restricted
circumstances, regression analysis can be used to infer causal relationships between the
independent and dependent variables

NUMERICS:

Problem Related to Sampling

Problem Related to Conditional Probability
Problem Related to Regression Analysis