Introduction to quantitative

Techniques
 Quantitative Techniques
• QT can be considered as the scientific approach to managerial
decision making. This approach starts from raw data and after
manipulation or processing, information is produced which is
valuable for making decision.
• The main aim of quantitative analysis is the processing and
manipulating of raw data into meaningful information
• Quantitative techniques may be defined as those techniques
which provide the decision maker a systematic and
powerful means of analysis, based on quantitative data. It is
a scientific method employed for problem solving and decision
making by the management.
 Quantitative Techniques
• Quantitative Technique - It is a scientific method employed for
problem solving and decision making by the management. With the
help of quantitative techniques, the decision maker is able to explore
policies for attaining the predetermined objectives. In short,
quantitative techniques are inevitable in decision-making process.
 Classification of Quantitative Techniques
There are different types of quantitative techniques.
• We can classify them into three categories.
• 1. Mathematical Quantitative Techniques 2. Statistical Quantitative
Techniques 3. Programming Quantitative Technique
• Mathematical Quantitative Techniques A technique in which quantitative
data are used along with the principles of mathematics is known as
mathematical quantitative techniques.
• Examples – Permutations and Combinations, Set Theory , Matrix Algebra ,
Differentiation , Integration.
• Statistical Quantitative Techniques - Statistical techniques are those
techniques in which statistics are used . They include all the statistical
methods beginning from the collection of data till interpretation of the
collected data.
Examples for Statistical Quantitative
Techniques
• Examples : For Statistical Quantitative Techniques
• Measures of Central Tendency, Dispersion, Skewness and Kurtosis: Measure
of Central tendency is a method used for finding he average of a series
while measures of dispersion used for finding out the variability in a series.
Measures of Skewness measures asymmetry of a distribution while
measures of Kurtosis measures the flatness of peaked ness in a distribution.

• 3. Correlation and Regression Analysis: Correlation is used to study the

degree of relationship among two or more variables. On the other hand,
regression technique is used to estimate the value of one variable for a
given value of another.
Examples for Statistical Quantitative
Techniques
• 4. Index Numbers: Index numbers measure the fluctuations in various
Phenomena like price, production etc over a period of time, They are
described as economic barometers.

• 5. Time series Analysis: Time series analysis is a specific way of

analyzing a sequence of data points collected over an interval of
time.
Programming Quantitative Techniques
• Programming Quantitative Techniques –
• Programming Techniques Programming techniques are also called
operations research techniques. Programming techniques are model
building techniques used by decision makers in modern times.
Programming techniques involve:
Examples for Programming Quantitative
Techniques
• 1. Linear Programming: Linear programming technique is used in
finding a solution for optimizing a given objective under certain
constraints.
• 2.Queuing Theory: Queuing theory deals with mathematical study of
queues. It aims at minimizing cost of both servicing and waiting.
• 3. Game Theory: Game theory is used to determine the optimum
strategy in a competitive situation.
• 4. Decision Theory: This is concerned with making sound decisions
under conditions of certainty, risk and uncertainty
Examples for Programming Quantitative
Techniques
• 5. Inventory Theory: Inventory theory helps for optimizing the
inventory levels. It focuses on minimizing cost associated with holding
of inventories.
• 6. Network programming: It is a technique of planning, scheduling,
controlling, monitoring and co-ordinating large and complex projects
comprising of a number of activities and events. It serves as an
instrument in resource allocation and adjustment of time and cost up
to the optimum level. It includes CPM,PERT
 Application of Quantitative Techniques in
Economics
• Economics has changed a lot in the last 50 years . 50 years ago
Economics was about things like GDP , unemployment , allocation of
scarce resources.
• Economics is now a Quantitative subject. When we make a statement
we need evidence to back it up , it is all numerical.
• Unemployment increased by 1 million as GDP fell by 5 %. Crime has
increased by 10 % as income has fallen by 5% in the last decade.
• It pays to learn statistics in which ever career you choose.
• Let us say a comparison between Wages and having a Degree.
Application of Quantitative Techniques
• Share price movements up and down can we predict this . Watch the
shares move hourly , daily , monthly , years . Then see the trend.
• Global warming how temperatures are fluctuating in the world today .
Many people around the world are worried about this today.
• Share prices , Government Bonds usually move in opposite directions
, say we also include Gold , we can then think what is the correct
portfolio for investment . Trends will help in this.
Application of Quantitative Techniques
• Other areas where Quantitative techniques could be used is survey
about household expenditure . Inequality and dispersion in living
standards .
• Survey students about what you have studied , what you are going to
study in the future . This is again data which be analysed using
Quantitative Techniques.
 Quantitative Techniques in Business and
Industry.
• Quantitative analysis is the process of collecting and
evaluating measurable and verifiable data such as revenues,
market share, and wages in order to understand the
behavior and performance of a business. In the past,
business owners and company directors relied heavily on
their experience and instinct when making decisions.
However, with data technology, quantitative analysis is now
considered a better approach to making informed decisions.
 Quantitative Techniques in Business and
Industry.
• Business owners are often forced to make decisions under
conditions of uncertainty. Luckily, quantitative techniques
enable them to make the best estimates and thus minimize
the risks associated with a particular decision. Ideally,
quantitative models provide company owners with a better
understanding of information to enable them to make the
best possible decisions.
 Quantitative Techniques in Business and
Industry.
• Industrial management deals with a series of problems, starting right from the
purchase of raw materials till the dispatch of final products. The management is
ultimately interested in overall understanding of the methods, of optimizing
profits. Therefore, to take decision on scientific basis, operations research team has
to think about various alternative methods, to produce goods and obtaining
returns in each case.
• Not only this, the operations research study should also suggest possible changes
in the overall structure like installation of a new machine or introduction to
automation, etc., for optimizing the results. Many industries have gained
immensely by applying operations research in various tasks. For example,
operations research can be used in the fields of manufacturing and production,
blending and product mix, inventory management, for forecasting demand, sale
and purchase, for repair and maintenance jobs, for scheduling and sequencing
planning, and also for scheduling and control of projects.
•
 Quantitative Techniques in Business and
Industry.
• Business and Society :
• Businesses and society can directly be benefited from operations research. For
example, hospitals, clinics etc. Operations research methods can be applied
directly to solve administrative problems such as minimizing the waiting time of
outdoor patients.
• Similarly, the business of transport can also be benefited by
applying simulation methods. Such methods, can help to regulate train arrivals and
their running timings. Queuing theory, can be applied to minimize congestion and
passengers waiting time.
• These methods are increasingly being applied in L.I.C.(Life Insurance Corporation
) workplaces. It helps in deciding the premium rates of various policies. Industries
such as petroleum, paper, chemical, metal processing, aircraft, rubber, mining and
textile have been extremely benefited by its use.
•
 Quantitative Techniques in Business and
Industry.
• Project Management
• One area where quantitative analysis is considered an indispensable
tool is in project management. As mentioned earlier, quantitative
methods are used to find the best ways of allocating resources,
especially if these resources are scarce. Projects are then scheduled
based on the availability of certain resources.
• Production Planning
• Quantitative analysis also helps individuals to make informed
product-planning decisions. Let’s say a company finds it challenging to
estimate the size and location of a new production facility. Quantitative
analysis can be employed to assess different proposals for costs,
timing, and location. With effective product planning and scheduling,
companies will be more able to meet their customers’ needs while
maximizing their profits.
 Quantitative Techniques in Business and
Industry.
• Marketing
• Every business needs a proper marketing strategy. However, setting a
budget for the marketing department can be tricky, especially if its
objectives are not set. With the right quantitative method, marketers
can easily set the required budget and allocate media purchases. The
decisions can be based on data obtained from marketing campaigns.
• Finance
• The accounting department of a business also relies heavily on
quantitative analysis. Accounting personnel uses different quantitative
data and methods, such as the discounted cash flow model, to estimate
the value of an investment. Products can also be evaluated based on
the costs of producing them and the profits they generate.
 Quantitative Techniques in Business and
Industry.
• Purchase and Inventory
• One of the greatest challenges that businesses face is being
able to predict the demand for a product or service.
However, with quantitative techniques, companies can be
guided on just how many materials they need to purchase,
the level of inventory to maintain, and the costs they’re likely
to incur when shipping and storing finished goods.
 Application of Quantitative Analysis
• The Bottom Line
• Quantitative analysis is the use of mathematical and statistical
techniques to assess the performance of a business. Before the
advent of quantitative analysis, many company directors based
their decisions on experience and gut. Business owners can now
use quantitative methods to predict trends, determine the
allocation of resources, and manage projects.
• Quantitative techniques are also used to evaluate investments. In
such a way, organizations can determine the best assets to invest
in and the best time to do so. Some of the quantitative analysis
methods include regression analysis, linear programming, and
data mining.
 Limitations of Quantitative Research
• 1. Quantitative research is time consuming.
• 2. It is labour intensive.
• 3. Setting up a research model may be difficult.
• 4. It is also costly.
• 5. Dependence on Computers since the amount of Data handled is
huge.
 Statistics
• Statistics may be regarded as a body of methods for making wise
decisions in the face of uncertainty.
• Statistics may be defined as the science of collection , analysis
,interpretation , presentation of numerical data.
 Characteristics of Statistics
• Some of the important Charecteristics of Statistics are
• 1. . It consists of aggregates of facts:
• In the plural sense, statistics refers to data, but data to be called
statistics must consist of aggregate of certain facts.
• A single and isolated figures are not statistics for the simple
reason that such figures are unrelated and cannot be
compared.Suppose we say income of Mr. X is Rs 5 Lakhs per
annum it is not statistics . Similarly single figure relating to
birth , production ,sale , purchase , employment cannot be
statistics
 Characteristics of Statistics
• 2. Statistics are affected to a marked extent by Multiplicity of Causes –
• Facts and figures are affected to a great extent by a number of forces
operating together. For example statistics of production of rice are
affected by the rainfall , quality of soil , seeds , manure , method of
cultivation etc. It is very difficult to study separately the effect of
these forces on the production of rice. In experimental sciences like
Physics and Chemistry it is easier to isolate the effect of various forces
on a particular event. In statistics it is a diffucult task.
 Characteristics of Statistics
• 3.Statistics are Numerically expressed – All statistics are numerical
statement of facts ; they are expressed in numbers. Qualitative
statements like pattern of rainfall is changing in India due to Global
warming , wheat production is not sufficient for India , do not
constitute statistics. Such statements are vague and one cannot make
out anything from them. On the other hand a statement like Wheat
production in India has increased 95.8 Million tonnes in 2015 to
106.41 million tonnes in 2021
 Characteristics of Statistics
• 4. Statistics are Enumerated or Estimated according to reasonable
standards of accuracy – Facts and figures about any phenomenon can be
derived in two ways , viz; by actual counting and measurement or by
estimate.Estimates cannot be as precise and accurate as actual counts or
measurements. For example an estimate that 5 Lakh people witnessed the
Republic day parade does not mean exactly 5 Lakhs it may be a few
hundreds or thousands more or less. On the other hand if we count the
number of students in a class and say there are 60. This is 100 percent
accurate.The degree of accuracy desired largely depends upon the nature
and object of enquiry. For example in measuring heights of persons even
1cm is important whereas in measuring distance from Delhi to Mumbai
even fraction of a km can be ignored. Hence in Statistical studies ,
mathematical accuracy cannot be attained , however it is important to
attain reasonable standards of accuracy otherwise numbers may be
altogether misleading
 Characteristics of Statistics
• 5. Statistics are Collected in a Systematic manner – Before collecting
statistics , a suitable plan of data collection should be prepared and
the work carried out in a systematic manner. Data collected
haphazardly will lead to fallacious conclusions.
• 6. Statistics are collected for a predetermined purpose – The purpose
of collecting data must be decided in advance .The purpose should be
specific and well defined .For example if the objective is to collect
data on prices, it would not serve any useful purpose unless one
knows whether he wants to collect data on Wholesale or Retail prices
and what are the relevant commodities .
 Characteristics of Statistics
• 7. Statistics should be placed in relation to each other – If numerical
facts are called statistics they should be comparable. Statistical data
are often compared period wise or region wise. For example the
population of India at a particular point of time may be compared
with earlier years or with other countries like USA , UK , China.
 Functions - Statistics
• The Functions Performed by Statistics are given as under:
• Functions of Statistics:
• 1. To Present Facts in Definite Form:
• We can represent the things in their true form with the help of
figures. Without a statistical study, our ideas would be vague and
indefinite. The facts are to be given in a definite form. If the results
are given in numbers, then they are more convincing than if the
results are expressed on the basis of quality. The statements like,
there is lot of unemployment in India or population is increasing at a
faster rate are not in the definite form. The statements should be in
definite form like the population in 2004 would be 15% more as
compared to 1990.
 Functions - Statistics
• 2. Precision to the Facts:
• The statistics are presented in a definite form so they also help in
condensing the data into important figures. So statistical methods
present meaningful information. In other words statistics helps in
simplifying complex data to simple-to make them understandable.
• The data may be presented in the form of a graph, diagram or
through an average, or coefficients etc.
• 3. Comparisons:
• After simplifying the data, it can be correlated as well as compared.
The relationship between the two groups is best represented by
certain mathematical quantities like average or coefficients etc.
Comparison is one of the main functions of statistics as the absolute
figures convey a very less meaning.
 Functions - Statistics
• 4. Formulation and Testing of Hypothesis:
• These statistical methods help us in formulating and testing the hypothesis
or a new theory. With the help of statistical techniques, we can know the
effect of imposing tax on the exports of tea on the consumption of tea in
other countries. The other example could be to study whether credit
squeeze is effective in checking inflation or not.
• 5. Forecasting:
• Statistics is not only concerned with the above functions, but it also predicts
the future course of action of the phenomena. We can make future policies
on the basis of estimates made with the help of Statistics. We can predict
the demand for goods in 2005 if we know the population in 2004 on the
basis of growth rate of population in past. Similarly a businessman can
exploit the market situation in a successful manner if he knows about the
trends in the market. The statistics help in shaping future policies.
 Functions - Statistics
• 6. Policy Making:
• With help of statistics we can frame favourable policies. How much food is
required to be imported in 2007? It depends on the food-production in
2007 and the demand for food in 2007. Without knowing these factors we
cannot estimate the amount of imports. On the basis of forecast the
government forms the policies about food grains, housing etc. But if the
forecasting is not correct, then the whole set up will be affected.
• 7. It Enlarges Knowledge:
• Whipple rightly remarks that “Statistics enables one to enlarge his horizon”.
So when a person goes through various procedures of statistics, it widens
his knowledge pattern. It also widens his thinking and reasoning power. It
also helps him to reach to a rational conclusion.
 Functions - Statistics
• 8. To Measure Uncertainty: Future is uncertain, but
statistics help the various authorities in all the phenomenon of
the world to make correct estimation by taking and analyzing
the various data of the part. So the uncertainty could be
decreased. As we have to make a forecast we have also to create
trend behaviors of the past, for which we use techniques like
regression, interpolation and time series analysis.
 Limitations of Statistics
• 1. Qualitative Aspect Ignored:
• The statistical methods don’t study the nature of phenomenon
which cannot be expressed in quantitative terms.
• Such phenomena cannot be a part of the study of statistics.
These include health, riches, intelligence etc. It needs
conversion of qualitative data into quantitative data.
• So experiments are being undertaken to measure the reactions
of a man through data. Now a days statistics is used in all the
aspects of the life as well as universal activities.
 Limitations of Statistics
• 2. It does not deal with individual items:
• It is clear from the definition given by Prof. Horace Sacrist, “By
statistics we mean aggregates of facts…. and placed in relation to
each other”, that statistics deals with only aggregates of facts or
items and it does not recognize any individual item. Thus,
individual terms as death of 6 persons in a accident, 85% results
of a class of a school in a particular year, will not amount to
statistics as they are not placed in a group of similar items. It
does not deal with the individual items, however, important
they may be.
 Limitations of Statistics
• 3. It does not depict entire story of phenomenon:
• When any phenomena happens, that is due to many causes, but
all these causes can not be expressed in terms of data. So we
cannot reach at the correct conclusions. Development of a group
depends upon many social factors like, parents’ economic
condition, education, culture, region, administration by
government etc. But all these factors cannot be placed in data.
So we analyze only that data we find quantitatively and not
qualitatively. So results or conclusion are not 100% correct
because many aspects are ignore
 Limitations of Statistics
• 4. It is liable to be miscued:
• As W.I. King points out, “One of the short-comings of statistics
is that do not bear on their face the label of their quality.” So we
can say that we can check the data and procedures of its
approaching to conclusions. But these data may have been
collected by inexperienced persons or they may have been
dishonest or biased. As it is a delicate science and can be easily
misused by an unscrupulous person. So data must be used with
a caution. Otherwise results may prove to be disastrous.
 Limitations of Statistics
• As far as two fundamental laws are concerned with statistics:
• (i) Law of inertia of large numbers and
• (ii) Law of statistical regularity, are not as good as their science laws.
• They are based on probability. So these results will not always be as good as of scientific
laws. On the basis of probability or interpolation, we can only estimate the production of
paddy in 2008 but cannot make a claim that it would be exactly 100 %. Here only
approximations are made.

• The Law of Inertia of Large Numbers' is a corollary of the law of statistical regularity. It
states that other things being equal larger the size of sample more accurate the
results are likely to be.
• Based on the mathematical theory of probability Law of Statistical Regularity states that if a
sample is taken at random from a population it is likely to possess the
characteristics as that of the population. A sample selected in this manner would be
representative of the population.
 Limitations of Statistics
• 6. Results are true only on average:
• As discussed above, here the results are interpolated for which time series
or regression or probability can be used. These are not absolutely true. If
average of two sections of students in statistics is same, it does not mean
that all the 50 students is section A has got same marks as in B. There may
be much variation between the two. So we get average results.
• 7. To Many methods to study problems:
• In this subject we use so many methods to find a single result. Variation can
be found by quartile deviation, mean deviation or standard deviations and
results vary in each case.
• It must not be assumed that the statistics is the only method to use in
research, neither should this method of considered the best attack for the
problem.” —Croxten and Cowden
 Limitations of Statistics
• 8. Statistical results are not always beyond doubt:
• “Statistics deals only with measurable aspects of things and
therefore, can seldom give the complete solution to problem.
They provide a basis for judgement but not the whole
judgment.” —Prof. L.R. Connor
 Statistics in Business and Management
• With more competition and size of businesses increasing , problems of
business enterprises are becoming more complex and they are using more
and more of statistics in decision making. The employment of statistical
measures
th
in the solution of business problems belongs exclusively to the
20 century.
• When business firms were small the owner used to act as store manager ,
accountant , purchaser , salesman etc and he used to directly speak to the
customers and he knew exactly what they wanted from him .With growth
of business firms it has almost become impossible for the owners to make
personal contacts with the lakhs of customers . So now a Manager is
appointed to oversee these operations. With very little contact with
customers the future operations is more uncertain for these businesses.
Decision making has to be done to take care of uncertainty by careful
evaluation and application of statistical methods.
 Statistics in Business and Management
• In recent years it has become increasingly evident that statistics and
statistical methods have provided the businessman with one of the
most valuable tools for decision making.
• Statistics are useful in Production , Purchase , Sales , Finance ,
Accounting , Quality Control , Market and product research.
 Distrust of Statistics
• Distrust of stats means lack of confidence in statistics.
• Following are the main reasons for distrust of statistics :
(i) Figures are manipulated by dishonest persons to present
a wrong picture of the facts. (ii) People do not really know
about statistics. (iii) People have blind faith in statistics.
• Inappropriate comparison . Wrong inference drawn . Errors in
Data Collection will give wrong results.
 Distrust of Statistics
• To summarize we should understand that Statistics neither proves
anything or disproves anything. It is only a tool that is a method of
approach. Tools if used properly do wonders and if misused , prove
disastrous. The same is true with Statistical tools .If used properly
they help in making wise decisions and if misused, they can do more
harm than good. A few interesting examples will illustrate the point.
Medicines are used for curing people , but if a wrong medicine is
taken or if an excessive dose of a medicine is taken , a person may die.
We cannot blame the medicine for such a result. Similarly if a child
cuts his finger with a sharp knife , it is not the knife that is to blame
but the person who kept the knife at a place where the child could get
it.
 Primary Data
• Data that has been generated by the researcher
himself/herself, surveys, interviews, experiments, specially
designed for understanding and solving the research
problem at hand. Such Data are original in character.
• Examples of primary sources: Autobiographies and memoirs.
Diaries, personal letters, and correspondence. Interviews,
surveys, and fieldwork.
 Primary Data Sources
• A primary source provides direct or firsthand evidence about an
event, object, person, or work of art. Primary sources provide the
original materials on which other research is based and enable
students and other researchers to get as close as possible to what
actually happened during a particular event or time period. Published
materials can be viewed as primary resources if they come from the
time period that is being discussed, and were written or produced by
someone with firsthand experience of the event. Often primary
sources reflect the individual viewpoint of a participant or observer.
Primary sources can be written or non-written (sound, pictures,
artifacts, etc.). In scientific research, primary sources present original
thinking, report on discoveries, or share new information.
 Examples of Primary Source
• Examples of primary sources:
• Autobiographies and memoirs
• Diaries, personal letters, and correspondence
• Interviews, surveys, and fieldwork
• Internet communications on email, blogs, listservs, and newsgroups
• Photographs, drawings, and posters
• Works of art and literature
• Books, magazine and newspaper articles and ads published at the time
• Public opinion polls
• Speeches and oral histories
• Original documents (birth certificates, property deeds, trial transcripts)
 Examples of primary source
• Research data, such as census statistics
• Official and unofficial records of organizations and government
agencies
• Artifacts of all kinds, such as tools, coins, clothing, furniture, etc.
• Audio recordings, DVDs, and video recordings
• Government documents (reports, bills, proclamations, hearings, etc.)
• Patents
• Technical reports
• Scientific journal articles reporting experimental research results
 Secondary Data
• Data which are not originally collected but rather obtained from published
or unpublished sources are known as Secondary data. For example for the
office of the Registrar General and Census Commissioner , the census data
are primary whereas for all others it is Secondary.
• Suppose an investigator wants wants data about the spending habits of of
the students of Delhi University. If he collects the data himself or through
his agents adopting any suitable method such as contacting and
interviewing students or circulating a questionnaire , the data would
constitute primary data for him . On the other hand if the students union
has already made a similar survey and the investigator obtained data from
union office such data would constitute secondary data for him.
 Sources of Secondary Data
• Sources of secondary data include books, personal sources,
journals, newspapers, websitess, government records etc.
Secondary data are known to be readily available compared to
that of primary data. It requires very little research and needs for
manpower to use these sources.
• Secondary sources offer an analysis, interpretation or a
restatement of primary sources and are considered to be
persuasive. They often involve generalisation, synthesis,
interpretation, commentary or evaluation in an attempt to
convince the reader of the creator's argument. They often
attempt to describe or explain primary sources.
 Sources of Secondary Data
• Examples of secondary sources include:
• journal articles that comment on or analyze research
• textbooks
• dictionaries and encyclopedias
• books that interpret, analyze
• political commentary
• biographies
• dissertations
• newspaper editorial/opinion pieces
• criticism of literature, art works or music