INTRODUCTION TO QT

MEANING AND DEFINITION

It is a scientific method used for problem solving and decision making by the
management. The technique which helps the management to take right decision by providing
sufficient analysed quantitative data is called QT.

According to C.R.Kothari quantitative techniques may be defined as,” those techniques

which provide the decision maker with a systematic and powerful means of analysis and help,
based on quantitative, in exploring policies for achieving predetermined goals”.

CLASSIFICATION OF QT
A. Statistical QT: it is a process of systematic collection, analysis, and interpretation of
quantitative data.
1. Collection of data: data can be collected in a scientific way from primary or
secondary sources, according to the needs of the problem
2. Classification and tabulation: classification is the process of arranging data in
different groups on the basis of similarities.
If the data are organized in rows and columns with captions, then it is called
tabulation.
3. Measures of average: it is the most widely applied statistical tool to reduce mass data
into a single figure. Types of average- arithmetic means, geometric mean, median and
mode etc.
4. Measures of variation: it is necessary to know the variability of values in the
distribution from their mean. A measure of variation is used to know the consistency
and variation in the data of two or more groups. It includes Range, mean deviation
and standard deviation etc.
5. Measures if relation: in business it is essential to find out the degree of relationship
existing between two groups of variable and also the extent of influences. Eg
influences of advertisement on sales.
6. Analysis of time series: quantitative variables over a period of time are called time
series. It describes past behavior and future trends of the problem being investigated.
7. Index number: it is a special type of averages used in the study of cost of living,
changing general price level etc. they are mainly used to understand the changing
pattern of prices of different goods.
8. Diagrammatic and graphic presentation: here various kinds’ diagrams and graphs
are prepared for presentation and interpretation of the collected data.
9. SQC: using statistical tools for improving the quality of product.
10. Theory of probability and testing of hypothesis: the probability theory discusses
the likelihood of the occurrence of the events. Testing of hypothesis is used to judge
the reliability of interpretations made from the collected data.

B. Mathematical QT: using mathematical tools and techniques for managerial decisions are
known as mathematical QT.
1. Algebra: algebra concepts and sets, relations, functions etc. are abstract in nature
2. Arithmetic: indices, progression, series, logarithms etc. comes under arithmetic.
 3. Geometry: we can find the areas or volumes of the regions using analytical geometry.
4. Calculus: the term calculus discusses the areas like limits and continuity,
differentiation, integration etc.
5. Matrices: matrices are used to solve system of linear equations. A graphical data can
be converted to numerical data in the form of matrix.
C. Programming or operations research QT: it is scientific approach for problem solving
executive management.
1. Probability: it can be defines as an expression of chance of occurrence of an event.
Business activities are associated with future changes. Probability theory helps the
management to take decision in uncertain situation.
2. Decision theory: it consists of different technique which helps the decision making
process by providing analytical support and logical base.
3. Queuing theory or waiting line: it studies the problems of actions or objects waiting,
by applying mathematical models. Queues exist when the demand is more than
supply. It is applied to find solution to the problem of wastage or loss due to waiting.
4. PERT and CPM: this is used for allocation of resources and controlling of cost &
time. PERT (Programme Evaluation and Review Technique) and CPM(Critical Path
Method) are the most popular OR technique.
5. Simulation: a simulation is an animated model that mimics the operation of an
existing or proposed system, like day to day operation of a bank or assigning students
in a college.
6. Linear Programming: this technique is used to find optimizing the given factor such
as profits or production and minimizing certain factors such as costs, losses, wastage
etc. under certain constraints. This technique is concerned with optimal allocation of
limited resources for different operations.
7. Game theory: this theory determines the optimum strategy to achieve the benefits in
severe competitive situations.

NATURE / CHARACTERISTICS OF QT:

➢ Quantitative: it is purely based on numerical data. The qualitative data should be
converted into quantitative data to be used in QT.
➢ It is a science: QT is a subject which is entirely built on universally accepted principles
and practices. Its approach is systematic. So it can be considered as a science.
➢ It is an art: the application of QT special skill which can be acquired through practice
and experience. So it is an art also.
➢ It is descriptive: some of the quantitative techniques are used for describing the problem.
A single figure such as an average or a diagram gives total description of data.
➢ It is multidisciplinary science: it involves mathematics, statistics, computer science,
engineering programming, management science etc.
➢ It is comparative: several methods of QT compare two groups of data or two situations.
➢ Tools of decision making: The tool of QT is mainly used by management for making
decisions.
FUNCTIONS OF QT
1. Simplify the complex facts: QT helps to reduce the mass data into a single figure for
easy interpretation.
2. Quantitative treatment: QT basically performs the function of quantification of facts.
Therefore the information gets definiteness and it becomes simple for understanding.
3. Scientific study: QT gives a scientific approach to the problems. QT is very flexible so
that they can be applied to the problems in any field.
4. Precise and accurate result: QT provide numerical base and conduct systematic study.
Thus it provides answers which are precise and accurate.
5. Compare two or more phenomena: it helps to compare two or more data
6. Further studies: it always used for solving several problems and used for further studies.
7. Gives cause and effect relation between data: QT helps to understand cause and effect
relationship of given data.
8. Provide solution to problems: the tools and techniques of QT are helps to solve various
problems in business.
9. Facilitate decision making: techniques like decision theory of QT helps the business
organization for taking accurate and correct decision on time.

UTILITIES /USES OF QT
1. QT is useful for decision making
2. It facilitates scientific study of the problem for future estimation and forecasting.
3. Tools of QT applied in every managerial functions
4. Methods of QT are used in manufacturing industries for various purpose such are
production process, resources allocation, cost reduction etc.
5. It has a special usage in marketing.
6. It has specific utility in human resource management and development programs.
7. The finance department of an institution depends on QT is designing of capital structure,
estimation of credit requirements, budget preparations etc.

APPLICATION OF QT IN BUSINESS AND INDUSTRY

1. Production:
Transformation of raw material into finished products is production. The
efficiency of production department determined by how bets they reduce wastage of idle
materials, unnecessary movement of resources. All these can be monitored through
different quantitative techniques.
2. Procurement:
Every business organization need to purchase different resources. The role of this
department is to determine the quality and quantity of resources purchased. All these
activities are undertaken with the help of QT. Eg:-techniques like queuing theory,
decision theory, inventory control etc.
3. Marketing:
The success of any business is directly determined by its ability to market the
products. The marketing department uses the technique like marketing research, sales
promotion technique, consumer survey etc. for increasing the market share.
 4. Human resources management:
The functions of HR department include recruitment, selection, training,
placement and payment of salaries to the employees. For all these activities QT are used
5. Finance:
Finance is considered as lifeblood of business. Quality of finance can be improved
by applying QT in business. QT helps to find out the long range capital requirements,
ways of raising funds, to develop capital investment plans, utilization of funds etc.
6. Research and development:
R & D department is very important in every business. R & D department
encourages innovative projects, inventions and discoveries. All these activities can be
performed efficiently by using different QT’s.
7. Channels of distribution:
Channels of distribution means the way or path used for transferring product from
one point to another. The tools and technique of QT are mainly used for distribution
activities.

LIMITATIONS OF QT
1. Complicated process:
Some tools and techniques of QT are based on mathematical methods and
formula, which are difficult to understand and operate. It required special skilled
employees for doing this.
2. Not accurate:
QT is based on data collected from primary or secondary sources. If the collected
data are not accurate, then we cannot assure 100% accuracy in the result.
3. Expensive:
Application QT required skilled employees, suitable equipment’s, modern
technology etc. which are expensive. Due to heavy expenditure, small organization
totally away from QT and bigger organizations are also restricting them to the most
essential areas.
4. Ignore qualitative aspects:
Quantitative techniques can be applied to those problem which are numerical in
nature and which are capable of quantitative expressions. Qualitative phase which cannot
be quantified also have important role in business field but it totally ignored while using
QT.
Eg:- human relationship, loyalty, sincerity etc
5. Only tools:
QT provides number of tools and techniques to support decision making. But they
are not a substitute to the decision making system.
6. Depends on assumptions:
Some of the techniques are based on assumptions. The assumptions may not be
relevant and may not hold well in all situations. But they are assumed good to the
problem under consideration. If the assumptions are wrong then it will affect the entire
result.