Meaning of Quantitative Techniques
Quantitative techniques refer to techniques uses by managers for taking various business decisions. It is simply a means used by business for supporting their decision making and problem-solving ability. Decision making is one of the key function of management and quantitative techniques served as a vital tool available with managers for performing their role.
These techniques collect and evaluate verifiable and measurable data like market share, revenue or salaries which helps in understanding the business performance and behaviour. Quantitative techniques involve collection and analysis of quantitative terms and making conclusions regarding that. These techniques have eased the process of dealing with complex business situations and enable in solving them timely and with accuracy.
It acts as a supplement to judgement and intuition. Quantitative techniques perform a wide variety of functions like it provides tools for scientific research, minimizes the cost, helps in proper deployment of resources, reduces the time period required for completion of task etc.
Quantitative Techniques for Business
Various quantitative techniques used in business are explained clearly below:
Linear Programming is an efficient quantitative technique used for determining optimal product-mix of business in order to maximize its revenue. It is used for finding out the optimum allocation of business resources like materials, manpower, machinery etc. This technique aims at maximum utilization of all resources which are available in limited quantity.
It helps in using a resource to its full potential and avoids any wastage. Mostly every company faces a shortage of resources, thereby with the use of linear programming technique they can allocate them efficiently.
It is a quantitative technique which studies the relationship between two or more variables. Regression analysis technique analyses and tests the relationship nature between a dependent variable and one or more independent variable. It determines and predicts the effect of one variable on another using statistical equation. Forecasting and optimization are two main purposes of regression in a business. One example of core application of regression analysis in the business sector is to determine the impact of advertising expenses of the business on its revenue.
Data mining is a quantitative technique which uses both statistical methods and computer programming skills. This quantitative technique is also termed as knowledge extraction, information harvesting, pattern/data analysis, knowledge discovery etc. It is a process which explores large sets of data also known as big data to determine useful correlations or patterns among data.
This technique is useful in finding out the valid, hidden and useful patterns of data. With the increase in quantity and size of data, the popularity of the data mining process has grown.
Probability Decision Theory
Probability decision theory is one which determines the likely outcomes of future events. It is used for analysis and assessment of uncertainty. The exact outcome of any course of action cannot be determined accurately but only its probability can be determined. Probability decision theory assists the managers in determining the probability of an outcome and then takes decisions accordingly.
Queuing theory is a technique which studies queues and waiting lines. All business suffers from queues or waiting for a period related to resources, personnel, equipment’s and services. This technique predicts waiting periods and queues for business and aims at reducing them.
It analyses every part of waiting in line to be served as the arrival process, number of servers, service process and the number of system places. Queuing theory helps the business in constructing a cost-effective and efficient workflow systems. This theory has wide application in providing fast customer service, enhancing the traffic flow, efficiently shipping orders etc.