Session No.

2
Chapter No. # 01

Quantitative Methods –
An Overview
Key concepts :

Evolution of Quantitative Methods,

Classification of Quantitative
Methods, Methodology of
Quantitative Methods.
“Quantitative Methods are
those Statistical and
programming techniques,
which help decision maker
solve many problems,
especially those concerning
business and industry”
 Evolution of
Quantitative Methods
 Contributors

- Archimedes (212BC)
- Eli Whitney (1798)
- F.W.Taylor (1810)
- Frank and Lilian Gilbreth (1810)
- Charles Babbage (1832)
- A.K. Erlang (1917)
- Walter Shewart (1924)
Emergence of Operations
Research
Pre World War II

Contribution made by
F.W.Lanchester
Thomas Alwa Edison
A.K. Erlang
 World War II

US and Nazi army

Post World

War II
 Classification of
Quantitative Methods

•Statistical Techniques

•Programming Techniques
 Statistical Techniques
• Data Analysis
• Measures of Central tendency
• Measures of Dispersion
• Correlation and Regression
Programming Techniques

• Linear Programming
• Games Theory
• Simulation
• Network Analysis
• Queuing Theory
Methodology in Quantitative Methods

•Observing the Organizational Environment

•Defining the problem
•Constructing the model
•Collecting data
•Arriving at the solution
•Presenting the solution
Applications of QM
 Accounting
· Forecasting cash flows
· Assigning audit teams effectively
· Using sampling to improve audit accuracy
· Accounts receivable management
· Deciding credit worthiness
· Improving the effectiveness of cost
accounting
· Resolving transfer pricing problems
· Establishing byproducts costs
· Developing standard costs
 Finance
· Building cash management models
· Allocating capital among various capital
budgeting alternatives
· Managing an investment portfolio
· Building financial planning models
· Determining optimal times to replace
equipment
· Deciding on the most effective dividend
policy
 Production/Operations

. Balancing plant capacity with market

requirements
· Leveling a production schedule to minimize
hiring/layoffs
· Mixing chemical ingredients to achieve least cost
· Smoothing production schedules when demand
is seasonal
· Minimizing work-in-progress (WIP) inventory
· Moving products through the manufacturing
process in the shortest time
· Scheduling school bus pickups to minimize
total travel cost and time
· Deciding whether to manufacturer or
purchase components
· Balancing an assembly line which has many
different operations
· Locating a new plant in the most effective
place
· Allocating R & D budgets most effectively
· Choosing sites for oil and gas exploration to
reduce risk of dry wells
· Choosing the best size for a new plant or
warehouse
· Planning the long-term manufacturing
capacity for a company
· Scheduling railroad car deliveries
· Making quality control more effective
· Scheduling job shops to improve capacity
Determining landing and takeoff schedules
for large airports
 Organizational developments/Human Research

· Minimizing the need for temporary help through better

scheduling
· Determining how to negotiate in a bargaining situation
· Coordinating manpower needs in a seasonal business
· Hiring new pilots at the right time and right rate for
airlines
· Deploying a field sales force optimally
· Assigning laboratory scientists to projects to improve
success rate
· Scheduling training programs to maximize skill
development and retention
· Designing organizational structures more effectively
· Choosing pension alternatives to provide greater
benefits to employees
 Marketing
· Developing the best product mix
· Effectively allocating the best time to
introduction a new product
· Locating warehouses to minimize distribution
costs, and determining the best size
· Planning salesperson's travel to minimize time
and cost
· Assigning salespersons to customers to
maximize sales effectiveness
· Predicting brand loyalty
· Finding the least-cost shipping arrangements
from plant to customer