In the business world, and in fact, in practically every aspect of daily living,

quantitative techniques are used to assist in decision making. Why? Unlike

the classroom, in the “real world” there is often not enough information
available to be guaranteed of making a correct decision. For instance, if
advertisers would like to know how many households in the United States
with televisions are tuned to a particular television show, at a particular date
and time, it would be impossible to determine without the complete
cooperation of every household and an astonishing amount of time and
money. As a result of the inability to determine characteristics of interest,
the application of quantitative techniques has become a necessity.

Application of QT in functional areas of management: -

There are basically four functional areas of management: -

1. Planning: - It is the management function that involves defining goals,

establishing strategies for achieving those goals and developing plans
to integrate and co-ordinate activities.
Various Quantitative Techniques
like Linear Programming, PERT/CPM, Capital Budgeting Techniques etc
are mainly used in this function. Linear Programming is used to plan
the allocation of resources to various activities with the objective of
increasing profits or decreasing costs, keeping in mind various
constraints. PERT/CPM are the network analysis techniques used to
assist managers in planning large scale construction projects, research
& development. Capital Budgeting techniques like Pay Back Period
method, Accounting Rate of Return method, Internal Rate of Return etc
are used to check the feasibility of projects. Inventory management
techniques like EOQ are used to answer questions like: - When to
order, how much to order, Safety Stock etc keeping in mind the
ordering cost & the carrying cost. Game theory and Decision Theory
are used to plan the business strategies.

2. Organizing: - It is the management function that involves determining

what tasks are to be done, who is to do them, how the tasks are to be
grouped, who reports to whom and where decisions are to be made.
 Linear programming is used to guide the top management to make
proper organizational hierarchy to attain its objectives with
optimization of resources. Assignment techniques are used when
people of varying abilities have to do different jobs and the costs will
be different in each case, hence this technique helps us to assign the
jobs to people in such a way that overall costs are minimized.
Sequencing techniques are used where there is a choice as to the
order in which no. of tasks can be performed. Hence a proper
sequence has to be adopted to optimize the resources. Queuing theory
helps the management to solve queue problems and determine the
service costs and the waiting costs.

3. Directing: - It is the management function that involves the

accomplishment of organizational goals through people. It means that
DIRECTING involves “start of working of organizational machinery.” It
mainly involves the “Organizational Behavior” i.e. behavior of people
on work, motivation, leadership etc.

Here techniques like Assignment, Sequencing etc are used to

smoothen the working of the organization.

4. Controlling: - It is the management function that involves monitoring

actual performance, comparing actual to standard, and taking action if
necessary. This management function again leads to Planning function
and hence the cycle goes on and on…..

Here Statistical techniques are used to make the scales for

performance appraisal of employees e.g. Graphic Rating Scales,
Behaviorally Anchored Rating Scales etc. Inventory management
techniques are used to set the standards for inventories and checking
the actual results of those techniques with the planned ones.
PERT/CPM is also used to assist the controlling the large scale
construction projects, research and development.
In short nearly every quantitative technique is used in all the functional
areas of management. But we must not allow quantitative techniques
to make decisions for us; we must use these techniques only as a tool
to assist us in decision making.