MBA Quantitative Methods

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Bharathiar University Quantitative Methods Notes

INTRODUCTION
Scientific methods have been mans outstanding asset to pursue an ample number of activities. It is analysed that whenever some national crisis, emerges due to the impact of political, social, economic or cultural factors the talents from all walks of life amalgamate together to overcome the situation and rectify the problem. In this chapter we will see how the quantitative techniques had facilitated the organization in solving complex problems on time with greater accuracy. The historical development will facilitate in managerial decision-making & resource allocation, The methodology helps us in studying the scientific methods with respect to phenomenon connected with human behaviour like formulating the problem, defining decision variable and constraints, developing a suitable model, acquiring the input data, solving the model, validating the model, implementing the results. The major advantage of mathematical model is that its facilitates in taking decision faster and more accurately

Managerial activities have become complex and it is necessary to make right decisions to avoid heavy losses. Whether it is a manufacturing unit, or a service organization, the resources have to be utilized to its maximum in an efficient manner. The future is clouded with uncertainty and fast changing, and decision-making – a crucial activity – cannot be made on a trial-and-error basis or by using a thumb rule approach. In such situations, there is a greater need for applying scientific methods to decision-making to increase the probability of coming up with good decisions. Quantitative Technique is a scientific approach to managerial decision-making. The successful use of Quantitative Technique for management would help the organization in solving complex problems on time, with greater accuracy and in the most economical way. Today, several scientific management techniques are available to solve managerial problems and use of these techniques helps managers become explicit about their objectives and provides additional information to select an optimal decision. This study material is presented with variety of these techniques with real life problem areas

HISTORICAL DEVELOPMENT
During the early nineteen hundreds, Fredrick W. Taylor developed the scientific management principle which was the base towards the study of managerial problems. Later, during World War II, many scientific and quantitative techniques were developed to assist in military operations. As the new developments in these techniques were found successful, they were later adopted by the industrial sector in managerial decision-making and resource allocation. The usefulness of the Quantitative Technique was evidenced by a steep growth in the application of scientific management in decision-making in various fields of engineering and management. At present, in any organization, whether a manufacturing concern or service industry, Quantitative Techniques and analysis are used by managers in making decisions scientifically

ABOUT QUANTITATIVE TECHNIQUE
Quantitative Techniques adopt a scientific approach to decision-making. In this approach, past data is used in determining decisions that would prove most valuable in the future. The use of past data in a systematic manner and constructing it into a suitable model for future use comprises a major part of scientific management. For example, consider a person investing in fixed deposit in a bank, or in shares of a company, or mutual funds, or in Life Insurance Corporation. The expected return on investments will vary depending upon the interest and time period. We can use the scientific management analysis to find out how much the investments made will be worth in the future. There are many scientific method software packages that have been developed to determine and analyze the problems

In case of complete non-availability of past data, quantitative factors are considered in decision-making. In cases where the scope of quantitative data is limited, qualitative factors play a major role in making decisions. Qualitative factors are important situations like sudden change in tax-structures, or the introduction of breakthrough technologies. Application of scientific management and Analysis is more appropriate when there is not much of variation in problems due to external factors, and where input values are steady. In such cases, a model can be developed to suit the problem which helps us to take decisions faster. In today's complex and competitive global marketplace, use of Quantitative Techniques with support of qualitative factors is necessary

Quantitative Technique is the scientific way to managerial decision-making, while emotion and guess work are not part of the scientific management approach. This approach starts with data. Like raw material for a factory, this data is manipulated or processed into information that is valuable to people making decision. This processing and manipulating of raw data into meaningful information is the heart of scientific management analysis.

Formulating the Problem
As a first step, it is necessary to clearly understand the problem situations. It is important to know how it is characterized and what is required to be determined. Firstly, the key decision and the objective of the problem must be identified from the problem. Then, the number of decision variables and the relationship between variables must be determined. The measurable guaranties that are represented through these variables are notified. The practical limitations or constraints are also inferred from the problem.