QUANTITATIVE

METHODS
Sessions:- 8
Course:- BBA-IV
By
Dr. Dilip Kumar

Disclaimer: This PPT is the property of the ICFAI University, Jharkhand and can be used only for the educational purpose of the students of the University
Content Details

Quantitative Methods
Simple average methods
Weighted average methods
Learning Objectives

After this session the learner will be able to:

1 Explain about the quantitative methods of

forecasting

2
Understand the how simple average
methods help to forecasting the production
QUANTITATIVE METHODS
Simple Average Methods

The simple average of a set of observations is computed as the sum of the

individual observations divided by the number of observations in the set.

For example,
assume there are five students in a small class with the following scores on a
certain test—say math—82, 78, 83, 91 and 85.
The teacher is interested in calculating their average score.
Then the simple average would be 83.8 and is calculated as:
SA = (82 + 78 + 83 + 91 + 85) / 5 = 83.8.
Types of Forecasting Models
Types of Forecasts

Qualitative: Based on experience, Judgment, Knowledge

Quantitative: Based on data, Statistics

Formal Methods: Systematically reduce forecasting errors

Time Series models:

Causal models (Regression)

Simple Average method

Note that the n past observation is equally weighted Issue with moving
average forecast:

All n past observations treated equally

Observation older than n are not included at all

Requires that n past observation be retained

Problem when 1000’s of items are being forecast

Simple Average Weighted Average
Average of values computed by assigning Average of value computed after taking into
equal importance to each value account the relative importance of each other
Total of all value Total of weighted value

Weights are not assigned Weights are assigned to value

Used in simple data analysis situations where Used in relative complex data analysis
each value is of equal importance situations where each value requires a
significantly different importance
Easy to compute Complex as compared to simple average

Less accurate More accurate as compared to simple average

Summary

1 It gives brief knowledge about simple average methods in

operation management

2 It highlighted how to solve operation related questions

using simple and weighted average methods.