Assignments A Quantitative Techniques in Management

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Question 1: How has quantitative analysis changed the current

scenario in the management world today?

Answers:
Quantitative analysis requires the representation of the problem using a
mathematical model. Mathematical modeling is a critical part of the
quantitative approach to decision making. Quantitative factors can be
measured in terms of money or quantitative units. Examples are
incremental revenue, added cost, and initial outlay.

Qualitative factors in decision making are the factors relevant to a decision

that are difficult to measure in terms of money. Qualitative factors may
include:
1. effect on employee morale, schedule and other internal elements;
2. relationship with and commitments to suppliers;
3. effect on present and future customers; and
4. long-term future effect on profitability. In some decision-making
situations, qualitative aspects are more important than immediate
financial benefit from a decision.

Assignments A Quantitative Techniques in Management

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Different Statistical Techniques

Measures of Central Tendency: For proper understanding of quantitative
data, they should be classified and converted into a frequency distribution.
This type of condensation of data reduces their bulk and gives a clear
picture of their structure. If you want to know any specific characteristics, of
the given data or if frequency distribution of one set of data to be compared
with another, then it is necessary that the frequency distribution itself must
be summarized and condensed in such a manner that it must help us to
make useful inferences about the data and also provide yardstick for
comparing different sets of data.
Measures of Dispersion: Measures of dispersion would tell you the
number of values, which are substantially different from the mean, median
or mode. The commonly used measures of dispersion are range, mean
deviation and standard deviation.
Correlation: Correlation coefficient measures the degree to which the
change in one variable (the dependent variable) is associated with change
in the other variable (Independent one). For example, as a marketing
manager, you would like to know if there is any relation between the
amounts of money you spend on advertising and the sales you achieve.
Here, sales are the dependent variable and advertising budget is the
independent variable. Correlation coefficient, in this case, would tell you the
extent of relationship between these two variables, whether the relationship
is directly proportional (i.e. increase or decrease in advertising is
associated with increase or decrease in sales) or it is an inverse

Assignments A Quantitative Techniques in Management

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relationship (i.e. increasing advertising is associated with decrease in sales

and vice-versa) or there is no relationship between the two variables.
Regression Analysis: Regression analysis includes any techniques for
modeling and analyzing several variables, when the focus is on the
relationship between a dependent variable and one or more independent
variables. Using this technique, you can predict the dependent variables on
the basis of the independent variables. In 1970, NCAER (National Council
of Applied and Economic Research) predicted the annual stock of scooters
using a regression model in which real personal disposable income and
relative weighted price index of scooters were used as independent
variable.
Time Series Analysis: With time series analysis, you can isolate and
measure the separate effects of these forces on the variables. Examples of
these changes can be seen, if you start measuring increase in cost of
living, increase of population over a period of time, growth of agricultural
food production in India over the last fifteen years, seasonal requirement of
items, impact of floods, strikes, and wars so on.
Index Numbers: An index number is an economic data figure reflecting
price or quantity compared with a standard or base value. The base usually
equals 100 and the index number is usually expressed as 100 times the
ratio to the base value. For example, if a commodity costs twice as much in
1970 as it did in 1960, its index number would be 200 relatives to 1960.
Index numbers are used especially to compare business activity, the cost of
living, and employment. They enable economists to reduce unwieldy
business data into easily understood terms.
Sampling and Statistical Inference: In many cases due to shortage of
time, cost or non-availability of data, only limited part or section of the
universe (or population) is examined to (a) get information about the
universe as clearly and precisely as possible, and (b) determine the
reliability of the estimates. This small part or section selected from the
universe is called the sample, and the process of selections such a section
(or past) is called sampling.

Assignments A Quantitative Techniques in Management

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Example: Site selection process (quantitative and qualitative factors)

While quantitative factors have been and will continue to be very important
in the site selection process, qualitative factors are also critical in order to
ensure that the company makes the best decision. What are the most
important quantitative and qualitative factors evaluated by site selection
advisors and companies when making a decision regarding the location of
a new or expanded operation? The list will vary depending on type of
facility (i.e. manufacturing, logistics, research & technology, office), but
most factors apply to all forms of projects. Below is a summary of the most
important quantitative and qualitative factors considered by companies.
Quantitative Factors
1. Property Tax Rates
2. Corporate Income Tax Rates
3. Sales Tax Rates
4. Real Estate Costs
5. Utility Rates
6. Average Wage/Salary Levels
7. Construction Costs
8. Workers Compensation Rates
9. Unemployment Compensation Rates
10. Personal Income Tax Rates
11. Industry Sector Labor Pool Size
12. Infrastructure Development Costs
13. Education Achievement Levels
14. Crime Statistics
15. Frequency of Natural Disasters
16. Cost of Living Index
17. Number of Commercial Flights to Key Markets

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18. Proximity to Major Key Geographic Markets

19. Unionization Rate/Right to Work versus Non-Right to Work State
20. Population of Geographic Area
Qualitative Factors
1. Level of Collaboration with Government, Educational and Utility
Officials
2. Sports, Recreational and Cultural Amenities
3. Confidence in Ability of All Parties to Meet Companys Deadlines
4. Political Stability of Location
5. Climate
6. Availability of Quality Healthcare
7. Chemistry of Project Team with Local and State Officials
8. Perception of Quality of Professional Services Firms to Meet the
Companys Needs
9. Predictability of Long-term Operational Costs
10.

Ability to Complete Real Estate Due Diligence Process Quickly

Another important part of the site selection evaluation process relates to

the weighting of the key quantitative and qualitative factors. Depending on
the type of project, factors will be weighted differently. As an example, for a
new manufacturing facility project, issues such as utility rates, real estate
costs, property tax rates, collaboration with governmental entities, and
average hourly wage rates may be weighted more heavily. By contract, for
a new office facility factors such as real estate costs, number of commercial
flights, crime statistics, climate and industry sector labor pool size may be
more important.

Assignments A Quantitative Techniques in Management

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Every project is unique and must be evaluated based upon its own
individual set of circumstances.
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