Name : TARUN BATRA

Class : BBA (EVENING)

Semester : 2
Subject : Quantitative Techniques and
Operations Research in Management
Subject code : BBA-106
Teachers name : Ms. Jyoti Gupta
Enrollment no. : 02280301713





Question :
Discuss the significance and scope of Quantitative Techniques in
modern Business Management. Also explain the concept of nonsense
correlation and bring out some real examples of it with special reference
to India.
Quantitative techniques
Quantitative techniques may be defined as those techniques which provide the decision makes a
systematic and powerful means of analysis, based on quantitative data. It is a scientific method
employed for problem solving and decision making by the management. With the help of
quantitative techniques, the decision maker is able to explore policies for attaining the
predetermined objectives. In short, quantitative techniques are inevitable in decision-making
process. Statistical tools help in estimating the numerical values for economic activities and
testing of various hypotheses for correct judgment and decision making. A business organization
cannot take a decision unless it knows the exact estimate of consumer's demand, the value of the
cost function, production, price, sales and distribution. Further, one has to verify the applicability
of the related theories. For example, it is a well known macro-economic theory that inflation
(consistent rise in the price level) and unemployment are negatively related in the short run and
unrelated in the long run. Statistical model can be used to verify this theory. Furthermore, the
theory of probability provides the logic for dealing with the situations of uncertainty.
Mathematical tools like calculus algebra, logarithms, etc. can also be used in the derivation and
exposition of economic analysis. econometric estimates are used in many empirically estimated
functions by combining economic logic, statistical techniques and mathematical functions to
determine nature and degree of relationships between a dependent variable (say, demand) and
one or more independent variables (like price, income, advertisement etc.)
Input-output technique is a popular quantitative technique. It is useful in the context of macro
level planning and projection. At the micro level of a corporate unit, it can be applied in demand
forecasting. This technique states technological relationship existing between sectors.
The output from one sector acts as input for another sector, resulting in intersectional
interdependence. This relationship is explicitly stated in the form of technology matrix',
'transaction matrix', 'Leontief matrix',

Importance of quantitative techniques in modern business :
1. Basis for scientific analysis- With the increase in complexities of modern business it is not
possible to rely on the unscientific decisions based on the intuitions. This provides the scientific
methods for tackling various problems for modern business.
2. Tools for scientific analysis- Quantitative techniques provide the managers with a variety of
tools from mathematics, statistics, economics and operational research. These tools help the
manager to provide a more precise description and solution of the problem. The solutions
obtained by using quantitative techniques are often free from the bias of the manager or the
owner of the business.
3. Solution for various business problems. Quantitative techniques provide solutions to almost
every area of a business. These can be used in production, marketing, inventory, finance and
other areas to find answers to various question like (a) how the resources should be used in
production so that profits are maximized. (b) How should the production be matched to demand
so as to minimize the cost of inventory.
4. Optimum allocation of resources- An allocation of resources is said to be optional if either a
given level of output is being produced at minimum cost or maximum output is being produced
at a given cost. A quantitative technique enables a manager to optimally allocate the resources of
a business or industry.
5. Selection of an optimal strategy- Using quantitative techniques it is possible to determine the
optimal strategy of a business or firm that is facing competition from its rivals. The techniques
for determining the optimal strategy is dependent upon game theory.
6. Optimal deployment of resources- Using quantitative technique It is possible to find out the
earliest and latest time for successful completion of project and this is called program evaluation
and review technique.
7. Facilitate the process of decision making- quantitative techniques provide a method of decision
making in the face of uncertainty. These techniques are based upon decision theory.

SCOPE OF QT

Production management- quantitative techniques are useful to the production management
in (a) selecting the location site for a plant, scheduling and controlling its development and
designing of plant layout. (b)Locating within the plant and controlling the movements of
required production material and finished goods inventories and (c)scheduling and sequencing
production by adequate preventive maintenance with optimum product mix.

Personnel management- quantitative techniques are useful to personnel management to find
out (a) optimum manpower planning, (b) the number of employees to be maintained on the
permanent or full time roll, (c) the number of persons to be kept in a work pool intended for
meeting the absenteeism, (d) in studying personnel recruiting procedures, accidents rates, labor
turnover.
Marketing management- Quantitative techniques equally help n marketing management to
determine (a) warehouse distribution point and where warehousing should be located, their size
quantity to be stocked and the choice of customers, (b)The optimum allocation of sales budget to
direct selling and promotional expenses,(c) The choice of different media of advertising and
bidding strategies and (d) The customer preferences relating to size, color, packaging et for
various products as well as to outbid and outwit customers.
Financial management - Quantitative techniques are also very useful to the financial
management in (a) finding long range capital requirements as well as how to generate these
requirements, (b) Determining optimum replacement policies (c)working out a profit plan for the
firm (d) developing capital investment plan, (e)estimating credit and investment risk.
CORRELATION :
Correlation is a statistical measure that indicates the extent to which two or more variables
fluctuate together. A positive correlation indicates the extent to which those variables increase
or decrease in parallel; a negative correlation indicates the extent to which one variable
increases as the other decreases.
When the fluctuation of one variable reliably predicts a similar fluctuation in another variable,
theres often a tendency to think that means that the change in one causes the change in the
other. However, correlation does not imply causation. There may be, for example, an unknown
factor that influences both variables similarly.
Nonsense correlation :
A correlation between two variables that is not due to any causal relationship, but to the fact that
each variable is correlated with a third variable, or to random sampling fluctuations. Also known
as illusory correlation.

Examples:
1. Success of a movie and number of votes.
2. Rise in price and enjoying at Water Park.
3. Poverty and transportation.








PLAGIARISM REPORT (Quantitative Techniques and Operations
Research in Management)