Quantitative Methods

MM ZG515 / QM ZG515
Handout and Introduction
BITS Pilani
Work Integrated Learning
Programmes Division
Srinivas Kota
 BITS Pilani
Work Integrated Learning
Programmes Division

Handout
Course

• Title: Quantitative Methods

• Units: 4 units
• Combines business statistics and management science
that are essential for business managers.
• Objectives:
– Provide an understanding of various tools and techniques of
• Business Statistics
• Management Science
– Clarity on how to apply analytical techniques in different
business situations
– Use spreadsheets for data analysis problems

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Learning Outcomes
• Able to understand data and use of basic statistics tools
• Able to understand basics of probability and probability
distributions
• Understanding basics of hypothesis testing (One sample
and two sample tests)
• Understanding of ANOVA and Chi-square tests
• Understanding Linear Programming, Transportation and
Assignment techniques of Management science and their
practical applications

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Content Structure
Statistics
Data Collection and Presenting data in Tables and Charts
Numerical Descriptive Measures
Probability
Discrete probability distributions
Continuous probability distributions and Normal distribution
Sampling and Sampling Distributions
Confidence Interval Estimation
Fundamentals of Hypothesis Testing: One-Sample Tests Two-Sample Tests
F-test and ANOVA
Chi-Square Tests

Linear Programming Problems (LPP)

LPP: Simplex method
Transportation problem
Assignment problem

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Text Books

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Evaluation Scheme

Evaluation Name Type Weight Duration Day, Date, Session,

Component Time
Quiz-I Online 5%
EC - 1 Quiz-II Online 5%
Quiz-III Online 5%
Closed 35% 2 hours
EC - 2 Mid-Semester Test
Book
Comprehensive Open 50% 3 hours
EC - 3
Exam Book

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 BITS Pilani
Work Integrated Learning
Programmes Division

Introduction
Quantitative methods
• Quantitative analysis is the scientific approach to
managerial decision making

• Processing and manipulating of raw data into meaningful

information

Quantitative methods

Business Statistics Linear Programming

(11 modules) (3 modules)

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Topics for Today

• Collecting data and Types of data

• Tables and charts for Categorical data

• Organizing Numerical data

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 BITS Pilani
Work Integrated Learning
Programmes Division

Collecting data and types of data

Data collection

Sources of data

• Primary
i. Direct personal observations ‐ variations occur
ii. Interviews ‐ prone to bias
iii. Questionnaires ‐ cover wide variety, should be good

• Secondary
• Collected earlier for some other purpose
i. External sources ‐ govt. & non govt. publications, 
international organizations, groups etc.
ii. Internal sources ‐ generated within the organization

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Types of Variables

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 Data measurement scale

Ratios,
Differences Ratio Data Order Quantity

True zero
exists Quantitative
Data
Adding &
Subtracting Interval Data Feedback 1 – 5
No true zero

Rankings, order
Ordinal Data Date of Joining

Qualitative
Data
Categories (no Customer Name
ordering or Nominal Data
direction)

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Exercise 1

The following information is collected from students upon

exiting the campus bookstore during the first week of
classes:
(a) Amount of time spent shopping in the bookstore
(b) Number of textbooks purchased
(c) Academic major
(d) Gender

Classify each of these variables as categorical or

numerical. If the variable id numerical, determine whether
the variable is discrete or continuous.

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Exercise2

Classify each of the following as nominal, ordinal, interval,

or ratio data.

a. The time required to produce each tire on an assembly line

b. The number of quarts of milk a family drinks in a month
c. The ranking of four machines in your plant after they have been
designated as excellent, good, satisfactory, and poor
d. The telephone area code of clients in the United States
e. The age of each of your employees
f. The rupee sales at the local pizza shop each month
g. An employee’s identification number
h. The response time of an emergency unit

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 BITS Pilani
Work Integrated Learning
Programmes Division

Tables & charts for Categorical Data

Summarizing qualitative data

• Summary Table

• Bar Chart

• Pie Chart

• Pareto Diagram

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The Summary Table

• Raw data of answers to a question by 16 students:

A    B    A    B    C    C B    C    A    B    B B A    A C   B

• More organized format:

Option A 5
Option B 7
Option C 4

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The Summary Table

• Frequency, amount or percentage in a set of categories
Frequencies

Banking Preference Frequency

(Category) (Data)

ATM 32

Automated or live telephone 4

Drive-through service at branch 34

In person at branch 84

Internet 50

Total (Always have a total row!) 204

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The Summary Table

• Frequency, amount or percentage in a set of categories
Frequencies & percentages

Banking Preference Frequency Percentage

(Category) (Data) (%)

ATM 32 16.00

Automated or live telephone 4 2.00

Drive-through service at branch 34 17.00

In person at branch 84 41.00

Internet 50 24.00

Total (Always have a total row!) 204 100.00

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The Bar Chart

With Data Without Data

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The Pie Chart

Students grades in an exam

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The Pareto Diagram

• Named after Vilfredo Pareto, an Italian economist

• Identify important problems and opportunities for

improvement

• Separate “vital few” from the “trivial many”

• Prioritize problem solving activities

• An example
• Analyzing defects in a product

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The Pareto Diagram

• List out different

types of defects Type of Defect Frequency Percentage Cum. Percent.

• Tabulate their Black spot 76 35.85 % 35.8 %

frequency of
occurrences Damage 43 20.28 % 56.1 %

• Arrange them in Pin mark 34 16.04 % 72.2 %

descending order of
Scratches 24 11.32 % 83.5 %
frequencies
• Find out % and Silver streak 15 7.08 % 90.6 %
cumulative % of
Warpage 12 5.66 % 96.3 %
defects
Other 8 3.77 % 100.0 %

Total 212 100.00 %

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The Pareto diagram

• List out different

types of defects
• Tabulate their
frequency of
occurrences
• Arrange them in
descending order of
frequencies
• Find out % and
cumulative % of
defects
• Try to categorize
them till other
defects are small
• Plot them together

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Exercise1
What changes in their compensation package do workers
in India want most? A survey by a Statistical Institute
indicated the following.
Perks %

More money 42

Better health care 20

Better retirement 12

Work/family balance 10

Other 16

Construct a bar chart, pie-chart and a Pareto chart

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Solution1

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Exercise2

Sales of leading petroleum companies are given below

create a pie chart
Company Annual Sales
(crores)
Exxon Mobil 372824

Chevron 210783

Conoco Phillips 178558

Valero Energy 96758

Marathon Oil 60044

Sunoco 42101

Total 961068

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Exercise3

Amount spent on back to college shopping by an average

student is given below, create a bar chart
Category Amount Spent (00’s)

Electronics 211.89

Clothing and Accessories 134.40

Hostel Furnishings 90.90

School Supplies 68.47

Misc. 93.72

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