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Basic Quantitative Techniques: 1 December 7, 2016

This document provides an introduction to quantitative techniques. It begins by defining quantitative techniques as statistical and programming methods that help decision makers analyze quantitative data objectively. It then outlines topics that will be covered, including definitions, evolution, classification, and the role and advantages/limitations of quantitative techniques in business management. Quantitative techniques are classified into statistical techniques for data collection and analysis, and programming techniques like linear programming. The document discusses how quantitative techniques help production, personnel, marketing, and financial management with tasks like resource allocation, scheduling, customer preferences, and risk analysis. Finally, limitations of quantitative techniques are noted, such as not accounting for intangible human factors.

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Sudhindra Deshmukh

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0% found this document useful (0 votes)

70 views24 pages

Basic Quantitative Techniques: 1 December 7, 2016

Uploaded by

Sudhindra Deshmukh

We take content rights seriously. If you suspect this is your content, claim it here.

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Download as PPT, PDF, TXT or read online on Scribd

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Basic Quantitative

Techniques

December 7, 2016

Quantitative Techniques
An Introduction

December 7, 2016

Topics to be Covered

Introduction
Definitions
Evolution
Classification
Role of Quantitative Techniques in Business
and Industry
Quantitative Techniques and Business
Management
Advantages and Limitations
December 7, 2016

As the process of decision-making is becoming

increasingly difficult, managers can no longer afford
to make decisions on the basis of subjective factors
like experience, observation, or evaluation alone.
They have to use objective and quantitative methods
to collect, present, analyze and meaningfully interpret
the available data to arrive at proper solutions.

December 7, 2016

Quantitative methods involve the use of

numbers,
symbols,
mathematical
expressions, and other quantitative elements
and serve as supplements to the subjective
intuition of the decision -makers. The utility
of these methods has been realized from
long ago.

December 7, 2016

Introduction

A person managing a production unit, where it is a

farm, factory, or domestic kitchen, has to coordinate
men, machines, and money against several
constraints like that of time, cost and space, in order
to achieve the organizations objectives in an efficient
and effective manner.
The manager has to analyze the situation on a
continuous basis, determine the objectives, identify
the best options from the set of available alternatives,
implement, coordinate, evaluate and control the
situation continuously to achieve these objectives
December 7, 2016

Definitions
Quantitative techniques are those statistical
and programming techniques, which help
decision makers solve many problems,
especially those concerning business and
industry
Quantitative techniques are those techniques
that provide the decision makers with
systematic and powerful means of analysis,
based on quantitative data, for achieving
predetermined goals
December 7, 2016

Cont

These techniques involve the use of numbers

symbols, mathematical expressions, other
elements of quantities, and serve as
supplements to the judgment and intuitions of
the decision makers

December 7, 2016

Evolution

The utility of quantitative techniques has been

realized long ago and the science of
mathematics is probably as old as the human
society
The evolution of industrial engineering,
scientific methodologies the were prominent
earlier in the natural sciences, were found
applicable to management functions-planning,
organizing and controlling of operations

December 7, 2016

Evolution

19th century, Frederick W. Taylor Proposed

an application of a scientific method to an
operations management problem- Productivity.
Determined that the variable that was
significant was the combined weight of the
shovel (move) and its load.
Henry L. Gantt, devised a chart-to schedule
production activities

December 7, 2016

Classification
They can broadly be put under two groups
1) Statistical Techniques: Which are used in
conducting the statistical inquiry concerning
a certain phenomenon
It includes all the statistical methods
beginning from the collection of data till the
task of interpretation of the collected data.
Collection, Classification, Summarizing,
Analyzing , Interpretation of the data

December 7, 2016

Classification
2) Programming Techniques: Used by many
decision makers in modern times
First designed to tackle defense and military
problems and are now being used to solve
business problems
It includes variety of techniques like linear
programming, games theory, simulation,
network analysis, queuing theory, and so on

December 7, 2016

Classification

Applications of Programming Techniques:

System under consideration are defined in mathematical
language: Variable (Factors which are Controlled),
Coefficients (Factors which are not controlled)
Appropriate mathematical expressions are formulated
which describes inter-relations of all variables and
coefficients. This is known as the formulation of the
mathematical model. It describes the technology and the
economics of a business through a set of simultaneous
equations and inequalities
An optimum solutions is determined (Maximizing profit
and Minimizing cost)
December 7, 2016

Role of Quantitative Techniques in

Business and Industry

Quantitative techniques specially operation

research techniques have gained increasing
importance since world war II in the
technology of business administration. These
techniques greatly help in tackling the intricate
and complex problems of modern business and
industry

December 7, 2016

Role of Quantitative Techniques in

Business and Industry
Role can be well understood under the following heads
1) They provide a tool for scientific analysis
2) They
provide solutions for various business
problems
3) They enable proper deployment of resources
4) They help in minimizing waiting and servicing costs
5) They enable the management to decide when to buy
and how much to buy

December 7, 2016

Contd
1)
2)

They assist in choosing an optimum strategy

They render great help in optimum resource
allocation
They facilitate the process of decision
making
Through various quantitative techniques
management can know the reaction of
integrated business systems

December 7, 2016

Quantitative Techniques and

Business Management

II.

III.

It helps the directing authority in optimum allocation

of various limited resources viz., men, machines,
money, material, time etc
It useful to the production management: selecting the
building site for a plant, scheduling and controlling ,
locating, scheduling and calculating the optimum
product-mix
It useful to the personnel management: optimum
manpower planning, the number of persons to be
maintained on the permanent or full time role, kept in
a work pool intended for meeting the absenteeism.

December 7, 2016

Quantitative Techniques and

Business Management
iv) It equally help the marketing management to
determine distribution points, warehousing should be
located, their size, quantity to be stocked choice of
customer, optimum allocation of sales budget to direct
selling and promotion expenses with consumer
preferences
v) It is very useful to the financial management finding
long range capital, determining optimum replacement
polices, workout profit plan, estimating credit and
investment risk.
December 7, 2016

SCOPE OF QT

Production management- quantitative techniques are

useful to the production management in
(a) selecting the location site for a plant, scheduling and
controlling its development and designing of plant layout.
(b) Locating within the plant and controlling the
movements of required production material and finished
goods inventories and
(c) scheduling and sequencing production by adequate
preventive maintenance with optimum product mix.

December 7, 2016

Personnel management- quantitative techniques

are useful to personnel management to find out
(a) optimum manpower planning,
(b) the number of employees to be maintained on
the permanent or full time roll,
(c) the number of persons to be kept in a work
pool intended for meeting the absenteeism,
(d) in studying personnel recruiting procedures,
accidents rates, labor turnover.

December 7, 2016

Marketing management- Quantitative techniques equally

help n marketing management to determine
(a) warehouse distribution point and where warehousing should
be located, their size quantity to be stocked and the choice of
customers,
(b) The optimum allocation of sales budget to direct selling and
promotional expenses,
(c) The choice of different media of advertising and bidding
strategies and
(d) The customer preferences relating to size, color, packaging et
for various products as well as to outbid and outwit customers.

December 7, 2016

Financial management Quantitative

techniques are also very useful to the financial
management in
(a) finding long range capital requirements as
well as how to generate these requirements,
(b) Determining optimum replacement policies
(c) working out a profit plan for the firm
(d) developing capital investment plan,
(e) estimating credit and investment risk

December 7, 2016

Limitations
a)

The
inherent
limitation
concerning
mathematical expressions
High costs are involved in the use of
quantitative techniques
Quantitative techniques do not take into
consideration the intangible factors ie nonmeasurable human factors.
Quantitative techniques are just the tools of
analysis and not the complete decision making
process
December 7, 2016

Thank You

December 7, 2016