Introduction to Quantitative Techniques

1. Introduction to Quantitative Techniques Dr. Vijay Kumar

2. Quantitative techniques consists of certain mathematical and statistical tools which are useful for achieving objectives like profit maximization, cost minimization, production etc.

3. Features of Quantitative Approach QT help in solving many management and decision making problems that has following main features: • Every management problem can be represented by one or more equations which is termed as model of the management problem once a model is prepared, future solutions can be obtained using that model thus freeing the managers to concentrate on more pressing matters. • The solution to the model is obtained by QTs which are obtained from various fields like mathematics, statistics etc.

4. This approach allows a decision maker to solve a complex problem involving multiple variables much more quickly than that if he had to compute them using traditional methods. • Using quantitative approach helps in analyzing the business problems in actual working environment which often from the ideal conditions assumed in mathematics, economics and other disciplines.

5. Importance of Quantitative Techniques QT are important in business due to the following factors: • Basic for Scientific Analysis: QT provides a scientific method for tackling various problems of modern business. It provides various tools from mathematics, economics, statistics which helps the manager to provide a more precise description and solution of the problem.

6. Solution for various Business Problems: QT provides solution to many business problems like in production, marketing, inventory, banking, finance etc. It provides answers to various questions like (a) How many units should be produced so as to maximize profit? (b) How should the production be matched to demand so as to minimize the cost of inventory?

7. Optimum allocation of resources: It enables a manager to optimally allocate the resources of a business so that a given level of output being produced at minimum cost or maximum output is being produced at a given cost. • Selection of an Optimal Strategy: It helps the manager to select the optimal strategy from alternative course of action • Decision making: It provides a method of decision making in the face of uncertainty.

8. Scope of QT • Production Management: QT helps in selecting the location site for the plant, scheduling and sequencing production by adequate preventive maintenance with optimum product mix, controlling the movement of raw material and finished goods etc. • Personnel Management: QT helps in finding out the optimum manpower planning, number of employees to be enrolled full/ part time, persons to be kept in a work pool intended for meeting the absenteeism, in studying labour turnover etc.

9. Marketing Management: QT helps in determining warehouse distribution point, their size, location, etc. It also helps in the optimum allocation of sales budget direct advertising and bidding strategies. • Financial Management: QT is useful in finding long range capital requirements, determining optimum replacement policies, working out a profit plan for the firm etc.