V!
n€€Th
QUANTITATIVE TECHNIQUES
FOR BUSINESS
Introduction to QT
Area of Discussion
Meaning & Definition
Classification of QT
Functions of QT
Application of QT in Business & Industry
Limitations of QT
QUANTITATIVE TECHNIQUES
Quantitative techniques may be defined as those
techniques which provide the decision maker with
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.
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 QT
1. Mathematical Quantitative Techniques
2. Statistical Quantitative Techniques
3. Programming Quantitative Techniques
Mathematical QT
• A technique in which quantitative data are used
along with the principles of mathematics is
known as mathematical quantitative
techniques.
• Mathematical quantitative techniques involve:
1. Permutations and Combinations: Permutation means
arrangement of objects in a definite order. The number of
arrangements depends upon the total number of objects and the
number of objects taken at a time for arrangement. nP = n!
r
(n-r)!
Combination means selection or grouping objects without
considering their order. nC = n!
r
r! (n-r)!
2. Set Theory: Set theory is a modern mathematical device which
solves various types of critical problems.
3. Matrix Algebra: Matrix is an orderly arrangement of certain given
numbers or symbols in rows and columns. It is a mathematical
device of finding out the results of different types of algebraic
operations on the basis of the relevant matrices.
4. Determinants: It is a powerful device developed
over the matrix algebra. This device is used for
finding out values of different variables connected
with a number of simultaneous equations.
5. Differentiation: It is a mathematical process of
finding out changes in the dependent variable with
reference to a small change in the independent
variable.
6. Integration: Integration is the reverse process of
differentiation.
7. Differential Equation: It is a mathematical equation
which involves the differential coefficients of the
dependent variables.
Statistical QT
Statistical techniques are those techniques
which are used in conducting the statistical
enquiry concerning to certain Phenomenon.
They include all the statistical methods
beginning from the collection of data till
interpretation of those collected data.
Statistical techniques involve:
1. Collection of data: One of the important statistical methods is
collection of data. There are different methods for collecting primary
and secondary data.
2. Measures of Central tendency, Dispersion, Skewness and Kurtosis:
Measures 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 peakedness 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.
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: Analysis of time series helps us to know the
effect of factors which are responsible for changes
6. Interpolation and Extrapolation: Interpolation is the statistical
technique of estimating under certain assumptions, the missing
figures which may fall within the range of given figures. Extrapolation
provides estimated figures outside the range of given data.
7. Statistical Quality Control: Statistical quality control is used for
ensuring the quality of items manufactured. The variations in quality
because of assignable causes and chance causes can be known with
the help of this tool. Different control charts are used in controlling
the quality of products.
8. Ratio Analysis: Ratio analysis is used for analyzing financial statements
of any business or industrial concerns which help to take appropriate
decisions.
9. Probability Theory: Theory of probability provides numerical values of
the likely hood of the occurrence of events.
10. Testing of Hypothesis: Testing of hypothesis is an important statistical
tool to judge the reliability of inferences drawn on the basis of sample
studies.
Programming QT
Programming techniques are also called
Operations Research Techniques.
Programming techniques are model building
techniques used by decision makers in
modern times.
Programming techniques involve:
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.
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-coordinating 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 etc.
7. Simulation: It is a technique of testing a model which resembles a real life
situations
8. Replacement Theory: It is concerned with the problems of replacement of
machines, etc. due to their deteriorating efficiency or breakdown. It helps
to determine the most economic replacement policy.
9. Non Linear Programming: It is a programming technique which involves
finding an optimum solution to a problem in which some or all variables
are non-linear.
10. Sequencing: Sequencing tool is used to determine a sequence in which
given jobs should be performed by minimizing the total efforts.
11. Quadratic Programming: Quadratic programming technique is designed
to solve certain problems, the objective function of which takes the form
of a quadratic equation.
12. Branch and Bound Technique: This is designed to solve the
combinational problems of decision making where there are large number
of feasible solutions. Problems of plant location, problems of determining
minimum cost of production etc. are examples of combinational
problems.
Functions of QT
1. To facilitate the decision-making process
2. To provide tools for scientific research
3. To help in choosing an optimal strategy
4. To enable in proper deployment of resources
5. To help in minimizing costs
6. To help in minimizing the total processing
time required for performing a set of jobs
7. helping in capital resource allocation
Application (USES)
of QT in
Business & Industry
Scope (Areas) of QT
QT is applied to various fields like, Business, Industry, Economics,
Politics, Social and Physical Sciences.
Business & Industry:-
Financing (cash flow & capital budgeting)
Purchasing (levels of stock)
Manufacturing (Production scheduling & Allocation of resources)
Marketing (Product selection, Advt. Strategy)
Distributing (Distribution policy, location, warehouse)
Personal Management (Recruitment, job assignment, training,
remuneration)
Research and Development (research area, coordination of
research projects)
Socio-Economic Problems (traffic, public transport, queuing,
communication of information)
1) QT of Inventory Control are useful in deciding
when and how items are to be purchased so as to
maintain a balance between the cost of holding
and cost of ordering the inventory.
2) QT of Programme Evaluation Review Technique
(PERT) and Critical Path Method (CPM) helps in
determining the earliest and the latest times for
the events and the activities of a project so as to
enable the management for proper deployment of
resources.
3) QT of Linear Programming is used for optimal
allocation of the scarce resources in the problems
of scheduling and product mix.
4) QT of Decision Tree Analysis and Simulation
helps the management in taking the best
possible course of action under the conditions
of uncertainty and risks.
5) QT of Queuing Theory is used to minimise the
cost of waiting and servicing of the customers
in queues.
6) QT of Replacement Theory guides the
management in taking a decision as to the
replacement period of the equipments or
machines.
Limitations of QT
1. Quantitative techniques involves mathematical
models, equations and other mathematical
expressions.
2. Quantitative techniques are based on number of
assumptions.
3. Quantitative techniques are very expensive.
4. Quantitative techniques do not take into
consideration intangible facts like skill, attitude etc.
5. Quantitative techniques are only tools for analysis
and decision-making. They are not decisions itself.
FOURTH SEMESTER CBCSS-UG EXAMINATION APRIL 2021
QUESTIONS
What are the different types of Quantitative
Techniques? (3 Marks)
What is meant by Combination? (3 Marks)
What is Differentiation? (3 Marks)
Discuss the functions and uses of Quantitative
Techniques. (10 Marks)
FOURTH SEMESTER CBCSS-UG EXAMINATION APRIL 2022
QUESTIONS
What is Queuing theory? (3 Marks)
What is a Quantitative Techniques and what are its functions
(3 Marks)
What are the functions of Quantitative Techniques? (6 Marks)
Describe in detail various programming techniques. (10 Marks)
What is Quantitative Technique? What are the use and
limitations of quantitative technique in business and industry?
(10 Marks)
END OF MODULE-1
THANK YOU
V!n€€Th
