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Quantitative Techniques Introduction 1

The document provides an introduction to Quantitative Techniques (QT), defining them as statistical and mathematical methods that aid decision-making in business and industry. It outlines the significance, classifications, and applications of QT, including various mathematical, statistical, and programming techniques, while also comparing QT to economics, research, and physical sciences. Additionally, it addresses the limitations of QT, such as potential inaccuracies and high costs.

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Minnu K
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13 views

Quantitative Techniques Introduction 1

The document provides an introduction to Quantitative Techniques (QT), defining them as statistical and mathematical methods that aid decision-making in business and industry. It outlines the significance, classifications, and applications of QT, including various mathematical, statistical, and programming techniques, while also comparing QT to economics, research, and physical sciences. Additionally, it addresses the limitations of QT, such as potential inaccuracies and high costs.

Uploaded by

Minnu K
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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1.

Introduction to QT
Chapter content: Meaning of QT - Definition of QT – Significant of QT – Classifications of QT –
QT vs. Economics – QT vs. Research – QT vs. Physical science – QT vs. Natural science – OT vs. Business –
Limitations of QT

Meaning of Quantitative techniques:


Quantitative techniques are those statistical, mathematical, programming techniques which help in the
decision making process especially relating to business and industry

Definition of Quantitative techniques:


“Quantitative techniques can be defined are those techniques which provide a decision maker with a
systematic and powerful means of analysis, based on quantitative data. The decision maker is able to
explore policies for achieving the predetermined objectives.”

Significant of Quantitative techniques:


© To take a number of decisions for managing a business under uncertainty, risk and competition.
© To take decision for increasing production, maximizing profits, minimizing costs and optimum
utilization of resources.
© To take decision for finding out the best course of action.
© To take decision for complicated business matters.

Classification of Quantitative Techniques:


I. Mathematical Quantitative Techniques.

1. Set theory:
Set theory is a modern mathematical technique which solves various types of critical
problems.
2. Matrix (Matrices):
Matrix is orderly arrangement of certain numbers or objects in to rows and
columns. It is used to find out result of different types of algebraic operations.
3. Determinants:
It is a device used to find out the values of different variables connected with a
number of simultaneous equations.
4. Permutation:
Permutation is the arrangement of objectsin a definite order.
5. Combination:
Combination is the selection or grouping of objects without considering their order.
6. Differentiation:
Differentiation is the process of finding out changes in the dependent variable with
reference to small changes in independent variables.
7. Integration:
Integration is the process of finding out changes in the independent variable with
reference to small changes in dependent variables.
8. Differential equation:
It is a mathematical equation which involves the differential co-efficient of
dependent variables.

II. Statistical Quantitative Techniques.


1. Collection of data:
It is the process of collecting required data from the source through various
methods
2. Classification and tabulation of data:
It is the process of classifying and tabulating of collected data to make it meaningful.
3. Measures of central tendency:
It is a method for finding the average of a series. Eg. Arithmetic mean, Median,
Mode, harmonic mean, geometric mean etc
4. Measures of dispersion:
It is a method for finding the variability of a series. Eg. Range, Quartile deviation,
Mean deviation, Standard deviation
5. Measures of skewness:
It is a method for finding asymmetry of distribution
6. Measures of kurtosis:
It is a method for measuring the flatness of peakness in a distribution.
7. Correlation analysis:
It is a method for studying the degree of relationship among two or more variables.
8. Regression analysis:
It is a method for estimating the value of one variable for a given value of another
variable.
9. Index number:
It is a method for measuring the fluctuations of various phenomena like price,
quantity etc.
10. Time series analysis:
It is a method for knowing the effect of factor which are responsible for changes.
11. Interpolation:
It is a technique for estimating the missing figures which may fall within the range of
given figures.
12. Extrapolation:
It is a technique for estimating missing figures outside the range of given data.
13. Probability theory:
It provides numerical value of the likelyhood of occurance of an event.
14. Ratio analysis:
This technique used for analyzing the financial statement of business concern.
15. Statistical Quality Control:
It is used for ensuring the quality of items manufactured.
16. Analysis of variance( ANOVA):
It is a method of splitting the total variations of the given data into constituent parts
which measure different source of variations.
17. Testing of hypothesis:
It is a tool to judge the reliability of inferences drawn on the basis of sample studies.

III. Programming Techniques ( Operation research Techniques)

1. Linear programming:
It is a technique used for finding a solution for optimizing a given objective under
certain constraints.
2. Queuing theory:
This tool used of minimizing the cost of servicing and waiting.
3. Game theory:
It is a tool used to determine optimum strategy in a competitive situation.
4. Transportation problem:
This tool to used to make capacity of distribution and minimizing cost of
transportation.
5. Decision theory:
It is a tool to take sound decision under the conditions of risk and uncertainity.
6. Inventory theory:
It is a tool for optimizing inventory level.
7. Network programming:
It is a technique of planning, scheduling, controlling, monitoring and coordinating
large and complex projects comprising of a number of activities and events.
8. Simulation:
This is the technique of testing a model which resembles a real life situation.
9. Replacement theory:
It is concerned with the problem of replacement of machine due to its
deteriorating efficiency or break down.
10. Sequencing:
It is a tool used to determine a sequence in which a given job should be performed
by minimizing the total efforts.
11. Goal programming:
It is a tool used to deal with problems having multiple objectives.
12. Markov analysis:
It is a tool used for analyzing current movement of one variable in an effort to
predict the future movement of same variable.

Quantitative Technique vs Economics


© It helps in the proper understanding of economic problems.
© It helps in the formulation of economic policies.
© It helps to know and answer what to produce, how to produce and for whom to produce.
© It helps to take correct decisions.
© It is used for economic research.
Quantitative Technique vs Research
© It helps to determine the areas of research.
© It helps to determine the objectives of research.
© It helps to make analysis of research.
© It helps to conclude the research problem.

Quantitative Technique vs Physical science


© It is used in the field of astronomy, chemistry, engineering, geology, physics etc

Quantitative Technique vs Natural science


© To study natural science

Application of Quantitative Technique in the field of business


© It is tool for scientific analysis
© It helps to make solution for various business problems.
© It helps to make production planning.
© It helps to make proper utilization of resources.
© It is tool for decision making.
© It is tool for quality maintenance.
© It helps to make proper deployment of human resources.
© It helps to decision for marketing process.
© It helps to find out long term capital requirements.
© It helps to find out ways of raising funds.
© It helps to develop capital investment plans.
© It helps to determine credit policies.
© It helps to determine the quantity and timing of purchase of raw materials and other assets.
© It helps to take decision related with location and size of warehouses, distribution centre etc.
© It helps o determine optimum production mix.
© It helps to determine size of stock to meet the future demand.
© It helps to select suitable employees.

Limitations of Quantitative Technique


» It may leads to wrong conclusion.
» High costs.
» A quantitative technique does not consider intangible factors.
» It is time consuming process
» It is only a tool for analysis.

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