QUANTITATIVE METHODS

FOR MANAGEMENT
(QMM)

Chapter I

BASIC CONCEPTS

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 Variables, Constants, and Parameters

• A variable is something whose magnitude

can change, i.e., something that can take on
different values.
• Variables frequently used are price, profit,
revenue, cost, national income, consumption,
investment, imports, exports and so on.
• Since each variable can assume various
values, it must be represented by a symbol
(X, Y, P, etc,) instead of a specific number.
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• For example, we may represent price by P,

profit by π, revenue by R, cost by C, national
income by Y, and so forth.
• A constant is a magnitude that does not
change.
• When a constant is joined to a variable, it is
often referred to as the coefficient of that
variable. A coefficient may be symbolic rather
than numerical.
• In order to attain a higher level of generality, we
can use the expression aP in lieu of 7P in a
model (let the symbol ‘a’ stands for a given
constant ). 4

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• As a matter of convention, parametric constants
(parameters) are normally represented by the
symbols a, b, c, or their counterparts in the
Greek alphabet: α, β, γ.

Equations and Inequalities:

• An equation is a statement that two expressions
are equal, and an inequality is a statement that
two expressions are not equal.
• An example of an equation is Y = 15.52X
In this equation, X and Y variables. For
example, X may represent the number of bags
of rice (each bag contains 50 kgs) sold by a
farmer and Y may represent total income from
rice sales. In this case, 15.52 represents the
price per bag of rice ($15.52). This equation
may be part of a model analyzing rice prices or
some other aspect of the agricultural industry.
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• An example of an inequality is 5X < 270
In this case, assume X is a variable
representing the number of machine parts
manufactured by a firm. In addition, 5
represents the worker-hours required to
manufacture one machine part and 270
represents the number of worker-hours
available for producing these parts. This
inequality may be part of a model explaining the
firm’s production process.

The Real-Number System

• Whole numbers such as 1, 2, 3,……..are called
positive integers; these are the numbers most
frequently used in counting.
• The negative counter parts -1, -2, -3,….. are
called negative integers.
• The number 0 (zero) is neither positive nor
negative, and is in that sense unique.
• The whole set of positive integers, negative
integers and 0 (zero) is called as the set of all
integers.
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• Integers do not exhaust all the possible
numbers, for we have fractions, such as 2/3,
5/4, and 7/3, which – if placed on a ruler –
would fall between the integers. Also, we have
negative fractions, such as -1/2 and -2/5.
Together, these make up the set of all fractions.
• The common property of all fractional numbers
is that each is expressible as a ratio of two
integers; thus fractions qualify for the
designation rational numbers. But integers are
also rational, because any integer n can be
considered as the ratio n/1.
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• The set of all integers and the set of all fractions

together form the set of all rational numbers.
• The numbers that cannot be expressed as
ratios of a pair of integers are called as
irrational numbers.
Examples of Irrational Numbers:
• 2 = 1.4142….., which is a nonrepeating,
nonterminating decimal.
• π = 3.1415…(representing the ratio of the
circumference of any circle to its diameter),
which is also a nonrepeating, nonterminating
decimal. 10

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• Each irrational number, if placed on a ruler, would
fall between two rational numbers, so that, just as
the fractions fill in the gaps between the integers
on a ruler, the irrational numbers fill in the gaps
between rational numbers.
• Both rational numbers and irrational numbers
constitute the set of real numbers.
• When the set R is displayed on a straight line, we
refer to the line as the real line.
• The square roots of the negative numbers are the
imaginary numbers.
• The set of real numbers and the set of imaginary
numbers are mutually exclusive. 11

Integers Fraction

Rational Numbers Irrational Numbers

Real Numbers

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6
 The Concept of Sets
• A set is simply a collection of distinct objects.
These objects may be a group of (distinct)
numbers, or something else.
• The objects in a set are called the elements of
the set.
• A set can be written in two ways, i.e., by
enumeration and by description.
• If we let S represent the set of three numbers 2,
3, and 4, we can write, by enumeration of the
elements, S = {2, 3, 4}
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• If we let I denote the set of all positive integers,

enumeration becomes difficult, and we may
instead simply describe the elements and write
I = {x | x a positive integer}
This is read as follows: “I is the set of all
(numbers) x, such that x is a positive integer.”
Example: The set of all real numbers greater
than 2 but less than 5 (call it J) can be
expressed symbolically as J = {x | 2 < x <5}

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7
• A set with a finite number of elements is called
a finite set.
• Set I and set J, each with an infinite number of
elements, are, on the other hand, examples of
an infinite set.
• Finite sets are always denumerable (or
countable), i.e., their elements can be counted
one by one in the sequence 1, 2, 3, ……Infinite
sets may be either denumerable (set I above),
or nondenumerable (set J above).
• The membership in a set is indicated by
symbol , which is read : “is an element of”. 15

Relationships between Sets

• If two sets S1 and S2 happen to contain identical
elements,
S1 = {2, 7, a, f} and S2 = {2, a, 7, f}
Then S1 and S2 are said to be equal (S1= S2)
• The order of appearance of the elements in a
set is immaterial.
• If one element is different, two sets are not
equal.
• One set may be a subset of another set. 16

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• T is a subset of S if and only if “ x  T” implies
“x  S”.
• Using the set inclusion symbols K (is contained
in) and L (includes), we may then write
T K S or S L T
• It is possible that two given sets happen to be
subsets of each other. When this occurs, we
can be sure that these two sets are equal. To
state this formally: we can have S1KS2 and
S2KS1
if and only if S1 = S2. 17

• The set of all integers is a subset of the set of

all rational numbers.
• The set of all rational numbers is a subset of
the set of all real numbers.
• 2n numbers of subsets can be formed from the
set having n numbers of elements.
• The set itself can be considered as one of the
subsets.
• A null set is considered a subset of any set.
• A set containing no element is called null set or
empty set, and is denoted by Ø or { }. 18

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• The two sets are said to be disjoint if they have
no elements in common.
• For example, the set of all positive integers and
the set of all negative integers are disjoint sets.
• The two sets are neither equal nor disjoint; also,
neither set is a subset of the other, when they
have some elements in common but some
elements peculiar to each.

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Operation on Sets

1. Intersection: A  B = {x | x  A and x  B}
2. Union: A J B = { x | x  A or x  B}
3. Ã = {x | x  U and x Ù A} where U is the
universal set.
Example 1: If A = {3, 5, 7} and B = {2, 3, 4, 8}
A J B = {2, 3, 4, 5, 7, 8}
A  B = {3}

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Example 2:
• The union of the set of all integers and the set
of all fractions is the set of all rational
numbers.
• The union of the rational-number set and the
irrational-number set yields the set of all real
numbers.
Example 3:
If A = {-3, 6, 10} and B = {9, 2, 7, 4},
Then A  B = Ø. Set A and B are disjoint.
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Example 4:
If U = {5, 6, 7, 8, 9} and A = {5, 6},
then à = {7, 8, 9}
Example 5:
The complement of U is a null set. (Ũ = Ø).

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 Union
A B
AJB

Intersection

AB

Compliment

~ A
A
A

~
A
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Example 6:
• The set A includes all people who have seen a
recent television advertisement for a product.
• The set B includes all the people who have
heard a recent radio advertisement for the
same product.
• The intersection of these two sets forms a set
C, where C = A ∩ B.
• The set C includes all the people who have
been exposed to both advertisements.

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Example 7:
• A restaurant chain operates two types of
restaurants.
• Set S includes all the people who have been
customers at the chain’s cafeteria-style
restaurants and set T includes all the customers
at the table-service restaurants.
• The union of S and T, designated as set R
where R = S U T, includes all the people who
have been to either type of restaurant – or to
both.
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Laws of Set Operations:

1. A U B = B U A (Commutative law of unions)
2. A ∩ B = B ∩ A (Commutative law of intersections)
3. A U (B U C) = (A U B) U C
(Associative law of unions)
4. A ∩ (B ∩ C) = (A ∩ B) ∩ C
(Associative law of intersections)
5. A U (B ∩ C) = (A U B) ∩ (A U C)
(Distributive law of unions)
6. A ∩ (B U C) = (A ∩ B) U (A ∩ C)
(Distributive law of intersections) 26

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Example 8: Verify the distributive law, given
A = {4, 5}, B = {3, 6, 7}, and C = {2, 3}
I. Left: A U (B ∩ C) = {4, 5} U {3} = {3, 4, 5}
Right: (A U B) ∩ (A U C) = {3, 4, 5, 6, 7} ∩
{2, 3, 4, 5} = {3, 4, 5}
II. Left: A ∩ (B U C) = {4, 5} ∩ {2, 3, 6, 7} = Ø
Right: (A ∩ B) U (A ∩ C) = Ø U Ø = Ø

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Class Assignment 1:
If U = {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}
Set A = {1, 2, 3, 4, 5, 6}
Set B = {2, 4, 6, 8, 10}
Find 1. A U B 2. A ∩ B 3. A U Ø
4. A ∩ U 5. A U Ã

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Example 9:
• Set S includes all people who have purchased a
household cleaning product at a supermarket.
• Set T includes those who have bought the product
at a hardware store.
• Set R includes those who have purchased it at a
drug store.
• In order to understand its customers and develop a
marketing strategy, the product’s manufacturer
wants to know the set of all people who have both
bought the product in a supermarket and either
one or both of the other two types of outlets.
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S R

S ∩ (T U R) = (S ∩ T) U (S ∩ R)

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• The relationship is shown in the Venn diagram
given above.
• The set T U R includes all of circles T and R
including their intersection.
• The firm needs to know the set, which includes
the intersection of set S with the union of T and R
(see the shaded area of the Venn diagram).
• The shaded area demonstrates the distributive
law, i.e., S ∩ (T U R) = (S ∩ T) U (S ∩ R).
• The shaded area includes those people who have
purchased the product at (1) both a super market
and a hardware store, (2) both a super market
and a drug store, or (3) a super market, hardware
store, and drug store. 31

Class Assignment 2:
A food manufacturer conducts a survey of consumer
usage of three similar breakfast cereals (A, B, and C)
which it produces. A total of 5000 consumers is
sampled and the following results are obtained:
i. 1500 have used cereal A.
ii. 600 have used cereal B.
iii.700 have used cereal C.
iv.300 have used A and B.
v. 200 have used A and C.
vi.50 have used B and C.
vii.None have used all three. 32

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1.Draw a Venn diagram showing these survey
results.
2.With these results, demonstrate the distributive
law of sets of the form, A ∩ (B U C) = (A ∩ B) U
(A ∩ C).

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Exponents:
Rule I: xm X xn = xm+n
Proof: xm X xn=(x X x X…X x)(x X x…X x)
m terms n terms

Rule II: xm / xn = xm-n (x g 0)

Proof: xm / xn = (xXxX…Xx) / (xXxX…Xx)
= xXxX…Xx = xm-n
m-n terms

Rule III: X-n = 1 / xn (x g 0)

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 Rule IV: x0 = 1 (x g 0)
Rule V: x1/n = n
x
Rule VI: Xm/n =n Xm
Rule VII: (xm)n = xmn
Rule VIII: xm X ym = (xy)m
Rule IX: Xm/Ym = (X/Y)m

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Class Assignment 3:
Evaluate each of the following expressions.
1.(27)-1/3
2.(82)1/3
3.(125)1/3 / 52
4.[(7)0(8)1/3]-5
5.(271/3)(272/3)

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18
Simplify the following expressions:
1.(X4) (X1/2) (X-3)
2.(1 / X3) (X2 / Y1/3)
3.(X6 / Y2) / (6 / Y)
4.(XYW)2(W2X3)1/2
5.(1 / W2) (3XYW)4

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Factoring
Example 1:
4Y3 – 5XY2 + 6Y
= Y(4Y2 – 5XY + 6)
Example 2:
Y = (X + a) (X + b) = X2 + (a +b) X + ab
Y = X2 – 7X + 12 = (X – 4)(X – 3)

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Example 3:
Y = abX2 + (ad + cb)X + cd = (aX + c)(bX + d)
Y = 8X2 + 26X + 15 = (4X + 3)(2X + 5)
Example 4:
Y = X2 – 25 = (X + 5)(X – 5)
Example 5:
X3 + a3 = (X + a)(X2 – aX + a2)
X3 + 27 = (X + 3)(X2 – 3X + 9)

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Example 6:
X3 – a3 = (X – a)(X2 + aX + a2)
X3 – 125 = (X – 5)(X2 + 5X + 25)

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Class Assignment 4:

Completely factor each of the following

expressions.

1. 6X3 – 4X2 + 12XY

2. Y2 + 6Y – 16
3. 2X2 – 6X – 8
4. X2 – 225
5. X3 + 8000
6. X3 – 216
7. 5Y2 – 17Y + 14 41

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