Quantitative Techniques - Introduction

Topics to be Covered:
Introduction Definitions Evolution Classification Advantages and Limitations

Introduction:
A person managing a production unit, whether it is a farm, factory or domestic kitchen, has to coordinate men, machines, and money against several constraints like that of time, cost and space, in order to achieve the organizations objectives in an efficient and effective manner. The manager has to analyse the situation on a continuous basis, determine the objectives, identify the best options from the set of available alternatives, implement, coordinate, evaluate and control the situation continuously to achieve these objectives.

Definitions
Quantitative techniques are those statistical and programming techniques, which help decision makers solve problems, concerning business and industry. Quantitative techniques are those techniques that provide the decision makers with systematic and powerful means of analysis, based on quantitative data, for achieving predetermined goals. These techniques involve the use of numbers, symbols, mathematical expressions and serve as supplements to the judgment and intuitions of the decision makers.

Evolution
The utility of quantitative techniques has been realized long ago and the science of mathematics is probably as old as the human society. With the evolution of industrial engineering, scientific methodologies that were prominent earlier in the natural sciences, were found applicable to management functions - planning, organizing and controlling of operations. 19th century, Frederick W. Taylor proposed an application of a scientific method to an operations management problem - Productivity. Determined that the variable that was significant was the combined weight of the shovel (move) and its load. Henry L. Gantt devised a chart to schedule production activity.

Classification
They can broadly be put under two groups: 1) Statistical Techniques: Used in conducting the statistical inquiry concerning certain phenomenon It includes all the statistical methods beginning from the collection of data till the task of

Nehal Joshipura | Managerial Mathematics

interpretation of the collected data. Collection, Classification, Summarizing, Analyzing , Interpretation of the data.

2) Programming Techniques: Used by many decision makers in modern times Applications of Programming Techniques: o System under consideration are defined in mathematical language: Variable (Factors which are Controlled), Coefficients (Factors which are not controlled) o Appropriate mathematical expressions are formulated which describe inter-relations of all variables and coefficients. This is known as the formulation of the mathematical model. It describes the technology and the economics of a business through a set of simultaneous equations and inequalities. o An optimum solution is determined (Maximizing profit and Minimizing cost). It includes variety of techniques like linear programming, games theory, simulation, network analysis, queuing theory, and so on First designed to tackle defense and military problems and are now being used to solve business problems

Advantages
Quantitative techniques especially operations research techniques have gained increasing importance since World War II in the technology of business administration. These techniques greatly help in tackling the intricate and complex business problems providing a tool for scientific analysis. They assist in choosing an optimum strategy for business decision making. They help in minimizing waiting and servicing costs. They render great help in optimum resource allocation. They enable the management to decide when to buy and how much to buy. They are useful to the production management: selecting the building site for a plant, scheduling and controlling, locating, scheduling and calculating the optimum product-mix. They are useful to the personnel management: optimum manpower planning, the number of persons to be maintained on the permanent or full time role, kept in a work pool intended for meeting the absenteeism in systems and the like. They equally help the marketing management to determine distribution points, warehousing should be located, their size, quantity to be stocked, choice of customer, optimum allocation of sales budget to direct selling and promotion expenses with consumer preferences etc. They are very useful to the financial management in finding long term capital, determining optimum replacement polices, work out profit plan, estimating credit and investment risk etc.

Limitations
The inherent limitation concerning mathematical expressions. High costs are involved in the use of quantitative techniques. Quantitative techniques do not take into consideration the intangible factors i.e. non-measurable human factors. Quantitative techniques are just the tools of analysis and not the complete decision making process.

Nehal Joshipura | Managerial Mathematics