uant|tat|ve 1echn|ques |n Management

Introduct|on
lL ls well known LhaL prlor Lo Lhe lndusLrlal revoluLlon lndlvldual buslness was small and
producLlon was carrled ouL on a very small scale malnly Lo caLer Lo Lhe needs of local
markeL Lhe managemenL of such buslness enLerprlses was very dlfferenL from Lhe presenL
managemenL of large scale buslnesses 1he lnformaLlon needed by Lhe declslon maker
usually Lhe owner Lo make effecLlve declslon was much less exLenslve Lhan aL presenL 1he
markeLlng of Lhe producL was noL a problem because cusLomers were personally known Lo
Lhe owner of Lhe buslness 1here was hardly any compeLlLlon ln Lhe buslness 1esL
markeLlng of Lhe producLs was noL needed because Lhe owner used Lo know Lhe cholce and
requlremenL of Lhe cusLomers [usL by personal lnLeracLlon 1he progress of Lhe work was
belng made dally lLself 1hus Lhe producLlon records were noL needed 1he owner also used
Lo work wlLh hls workers he knew all of Lhem personally as Lhe number were very small
1hls reduced Lhe need for keeplng personal daLa
now ln Lhe face of lncreaslng complexlLy ln buslness and lndusLry lnLulLlon also has no place
ln declslon maklng because baslng a declslon on lnLulLlon becomes hlghly quesLlonable
when Lhe declslon lnvolves Lhe cholce among Lhe several courses of acLlon each of whlch
can achleve several managemenL ob[ecLlves slmulLaneously Pence Lhere ls a need for
Lralnlng people who can manage a buslness mosL efflclenLly CuanLlLaLlve Lechnlques have
made valuable conLrlbuLlon Lowards arrlvlng aL an effecLlve declslon ln varlous funcLlonal
areas of buslness such as flnance markeLlng producLlon lnvenLory and personnel 1oday
Lhese Lechnlques are also wldely used ln reglonal plannlng LransporLaLlon publlc healLh
communlcaLlon mlllLary or ln any buslness organlsaLlon
Concept of uant|tat|ve 1echn|ques
Slnce Lhe complexlLy of buslness envlronmenL makes Lhe process of declslon maklng
dlfflculL Lhe declslon maker cannoL rely enLlrely upon hls observaLlon experlence or
evaluaLlon Lo make a declslon ueclslon has Lo be based upon daLa whlch show
relaLlonshlps lndlcaLe Lrends and show raLes of change ln varlous relevanL varlables 1he
fleld of quanLlLaLlve Lechnlques provlde meLhods of collecLlng presenLlng analyslng and
meanlngful lnLerpreLaLlon of daLa for beLLer declslon maklng 1hus quanLlLaLlve approach ln
declslon maklng requlres LhaL problems be deflned analysed and solved ln a consclous
raLlonal sysLemaLlc and sclenLlflc manner based upon daLa facLs lnformaLlon and loglc and
noL on mere whlms and guesses ln oLher words quanLlLaLlve Lechnlques provlde Lhe
declslon maker a sclenLlflc meLhods based upon quanLlLaLlve daLa ln ldenLlfylng a course of
acLlon among Lhe glven llsL of courses of acLlon Lo achleve Lhe opLlmal value of
predeLermlned ob[ecLlve or goal 1hus quanLlLaLlve Lechnlques refer Lo Lhe group of
SLaLlsLlcal and CperaLlons 8esearch 1echnlques 1herefore we can classlfy Lhe quanLlLaLlve
Lechnlques lnLo Lwo Lypes as shown below
uant|tat|ve 1echn|ques



Stat|st|ca| 1echn|ques Cperat|ons kesearch 1echn|ques
1he sLaLlsLlcal 1echnlques provlde meLhods of collecLlng presenLlng analyslng and
meanlngful lnLerpreLaLlon of daLa 1hus Lhe sLaLlsLlcal meLhodology ln collecLlon analysls
and lnLerpreLaLlon of daLa for beLLer declslon maklng ls a slne qua non for managerlal
declslon maklng and research ln boLh physlcal and soclal sclences parLlcularly ln buslness
and economlcs SLaLlsLlcal Lechnlques can be furLher broadly classlfled lnLo Lhree caLegorles
as shown ln Lhe followlng charL
Stat|st|ca| 1echn|ques



Descr|pt|ve Stat|st|cs Induct|ve Stat|st|cs Stat|st|ca| Dec|s|on 1heory
O uaLa CollecLlon lnference Analysls of 8uslness ueclslons
O 9resenLaLlon LsLlmaLlon
1esLlng of PypoLhesls

a) Descr|pt|ve Stat|st|cs 1he branch of sLaLlsLlcs whlch deals wlLh collecLlon
organlsaLlon analysls and lnLerpreLaLlon of daLa where Lhe analysls ls llmlLed Lo Lhe
collecLed daLa Lhemselves and does noL lnvolve lnferences or generallsaLlons abouL
Lhe populaLlon ls known as descrlpLlve sLaLlsLlcs
b) Induct|ve Stat|st|cs lL ls a powerful branch of sLaLlsLlcs whlch deals wlLh Lhe
[udgemenL based on sLaLlsLlcal analysls and usually lnvolves esLlmaLlon LesLlng of
hypoLhesls predlcLlons and generallsaLlons abouL Lhe populaLlon wlLh Lhe help of
Lhe avallable lnformaLlon
c) Stat|st|ca| Dec|s|on 1heory SLaLlsLlcal declslon Lheory deals wlLh analyslng
complex buslness problems wlLh alLernaLlve course of acLlon (called sLraLegles) and
posslble consequences 8aslcally lL ls Lo provlde more concreLe lnformaLlon
concernlng Lhese consequences so LhaL besL course of acLlon can be ldenLlfled
among Lhe alLernaLlve course of acLlons lL relles heavlly noL only upon Lhe naLure of

problem buL also upon Lhe declslon envlronmenL 8aslcally Lhere are four dlfferenL
sLaLes of declslon envlronmenL as glven below

State of Dec|s|on Consequences
CerLalnLy ueLermlnlsLlc
8lsk 9robablllsLlc
uncerLalnLy unknown
ConfllcL lnfluenced by an opponenL

Slnce sLaLlsLlcal declslon Lheory also uses probablllLles ln analysls Lherefore lL ls also called a
sub[ecLlve approach
1he uant|tat|ve Ana|ys|s Approach
1he quanLlLaLlve analysls approach conslsLs of deflnlng a pproblem developlng a model
acqulrlng lnpulL daLa developlng a soluLlon LesLlng Lhe soluLlon analyslng Lhe resulLs and
lmplemenLlng Lhe resulLs (See llgure 11) Cne sLep does noL have Lo be flnlshed
compleLely before Lhe nexL ls sLarLed ln one or more of Lhese sLeps wlll be modlfled Lo
some exLenL before Lhe flnal resulLs are lmplemenLed
1he uant|tat|ve Ana|ys|s Approach











llgure 11
ueflnlng Lhe 9roblem
ueveloplng a Model
ueveloplng a SoluLlon
1esLlng Lhe SoluLlon
Analyslng Lhe 8esulLs
Acqulrlng lnpuL uaLa
lmplemenLlng Lhe 8esulLs
Def|n|ng the rob|em 1he flrsL sLep ln Lhe quanLlLaLlve approach ls Lo develop a clear
conclse sLaLemenL of Lhe problem 1hls sLaLemenL wlll glve dlrecLlon and meanlng Lo Lhe
followlng sLeps
ln many cases deflnlng Lhe problem ls Lhe mosL lmporLanL and Lhe mosL dlfflculL sLep lL ls
essenLlal Lo go beyond Lhe sympLoms of Lhe problem and ldenLlfy Lhe Lrue causes
When Lhe problem ls dlfflculL Lo quanLlfy lL may be necessary Lo develop a speclflc
measurable ob[ecLlves A problem may be lnadequaLe healLh care dellvery ln hosplLal 1he
ob[ecLlves mlghL be Lo lncrease Lhe number of beds reduce Lhe average number of days a
paLlenL spends ln Lhe hosplLal lncrease Lhe physlclan Lo paLlenL raLlo and so on
Deve|op|ng a mode| Cnce we selecL Lhe problem Lo be analysed Lhe nexL sLep ls Lo develop
a model Slmply sLaLed a model ls a represenLaLlon (usually maLhemaLlcal) of a slLuaLlon
Lven Lhough you mlghL noL have been aware of lL you have been uslng models mosL of your
llfe ?ou may have developed model's of people's behavlour ?our model mlghL be LhaL
frlendshlp based on reclproclLy an exchange of favours lf you need a favour such as small
loan your model would suggesL LhaL you ask a good frlend
1he model should be solvable reallsLlc and easy Lo undersLand and modlfy and requlred
lnpuL daLa should be obLalnable 1he model developer has Lo be careful Lo lnclude Lhe
approprlaLe amounL of deLall Lo be solvable yeL reallsLlc
Acqu|r|ng Input Data Cnce we have developed a model we musL obLaln Lhe daLa LhaL are
used ln Lhe model (lnpuL daLa) CbLalnlng accuraLe daLa for Lhe model ls essenLlal even lf
Lhe model ls a perfecL represenLaLlon of reallLy lmproper daLa wlll resulL ln mlsleadlng
resulLs 1hls slLuaLlon ls called 'garbage ln garbage ouL' (ClCC) lor a large problem
collecLlng accuraLe daLa can be one of Lhe mosL dlfflculL sLeps ln performlng quanLlLaLlve
analysls 1here are a number of sources LhaL can be used ln collecLlng daLa ln some cases
company reporLs and documenLs can be used Lo obLaln Lhe necessary daLa AnoLher source
ls lnLervlews wlLh Lhe employees or oLher persons relaLed Lo flrm ln oLher case sampllng
procedures can be used Lo obLaln daLa
Deve|op|ng a So|ut|on ueveloplng a soluLlon lnvolves manlpulaLlng Lhe model Lo arrlve aL
Lhe besL (opLlmal) soluLlon of Lhe problem ln some cases Lhls requlres LhaL an equaLlon be
solved for Lhe besL declslon ln oLher cases you can use a Lrlal and error meLhod 1rylng
varlous approaches and plcklng Lhe one LhaL resulL ln Lhe besL declslon 1he accuracy of Lhe
soluLlon depends on Lhe accuracy of Lhe lnpuL daLa and Lhe model
1est|ng the so|ut|on 8efore a soluLlon can be analysed and lmplemenLed lL needs Lo be
LesLed compleLely 8ecause Lhe soluLlon depends on Lhe lnpuL daLa and Lhe model boLh
requlre LesLlng
1esLlng Lhe lnpuL daLa and Lhe model lncludes deLermlnlng Lhe accuracy and compleLeness
of Lhe daLa used ln Lhe model lnaccuraLe daLa wlll lead Lo an lnaccuraLe soluLlon 1here are
several ways Lo LesL lnpuL daLa Cne meLhod of LesLlng Lhe daLa ls Lo collecL addlLlonal daLa
from a dlfferenL source lf Lhe orlglnal daLa were collecLed uslng lnLervlews perhaps some
addlLlonal daLa can be collecLed by dlrecL measuremenL or sampllng 1hese addlLlonal daLa
can Lhen be compared wlLh Lhe addlLlonal daLa and sLaLlsLlcal LesLs can be employed Lo
deLermlne wheLher Lhere are dlfferences beLween Lhe orlglnal daLa and Lhe addlLlonal daLa
Ana|ys|ng the kesu|ts and Sens|t|v|ty Ana|ys|s Analyslng Lhe resulLs sLarLs wlLh deLermlnlng
Lhe lmpllcaLlons of Lhe soluLlon ln mosL cases a soluLlon Lo a problem wlll resulL ln some
klnd of acLlon or changes ln Lhe way an organlsaLlon ls operaLlng 1he lmpllcaLlons of Lhese
acLlons or changes musL be deLermlned and analysed before Lhe resulLs are lmplemenLed
8ecause a model ls only an approxlmaLlon of reallLy Lhe senslLlvlLy of Lhe soluLlon Lo Lhe
changes