QUANTITATIVE TECHNIQUES

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Unit 1

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Quantitative Approach?
The quantitative approach is to
make an optimal decision by using
mathematical and statistical
models in a situation when the
probability of all outcomes is
uncertain. 4
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 • Problem to be clearly defined
For best • Several alternatives exist
results • Decision outcomes are easily
measurable.
Qualitative Approach?

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How likely is it that you would
recommend this brand
(product or service)
to a friend or a colleague?

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 Net Promoter Score
Very likely to
Most unlikely to recommend
recommend
1 2 3 4 5 6 7 8 9 10

Detractors Passive Promoters

Recommend to others Classification Percent (%)

Recommend to others Promoter
Not likely to recommend Passive
Would not recommend Detractor
Total

Net Promoter Score (NPS)

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 Net Promoter Score
Very likely to
Most unlikely to recommend
recommend
1 2 3 4 5 6 7 8 9 10

Detractors Passive Promoters

Recommend to others Classification Percent (%)

Recommend to others Promoter 50
Not likely to recommend Passive 30
Would not recommend Detractor 20
Total 100

Net Promoter Score (NPS)

Net Promoter Score = Percent Promoters minus Percent Detractors

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 Net Promoter Score
Very likely to
Most unlikely to recommend
recommend
1 2 3 4 5 6 7 8 9 10

Detractors Passive Promoters

Recommend to others Classification Percent (%)

Recommend to others Promoter 50
Not likely to recommend Passive 30
Would not recommend Detractor 20
Total 100

Net Promoter Score (NPS) 30

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 Results of qualitative analysis
often are ambiguous but may
contain additional information,
while the quantitative results tend
to be decisive.

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 There is a clearly stated objective.

There are several alternative courses of

action.

Quantitative And the benefit can be measured.

techniques can
be used when: Uncertainties for which allowance must be
made

Events beyond the control of the decision

maker.

Uncertainty concerning which outcome (or external

events) will actually happen.
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 Question 1
Determine the expected sales of an air-conditioner which depends on how hot the summer is. The
expected value for any event with its probability of occurrence is given in the table below.

Event Outcome
Sales (Rs) Probability (%)
Hot summer (42 to
1,00,00,000 30%
50 deg C)
Normal summer (32
70,00,000 50%
to 40 deg C)
Cool summer (20 to
40,00,000 20%
35 deg C)
Expected Sales

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Statistical Methods

• Statistical methods are

mathematical formulas,
models, and techniques that
are used in statistical analysis
of raw research data.

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Classification of Data

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 The classification of data
reduces the large volume of raw data
into homogeneous groups.

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The process of placing classified data into tabular form is
known as tabulation.

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A census is the procedure of
systematically acquiring and
recording information about the
members of a given population.
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Population
A population can be
defined by any
number of
characteristics within
a group that
statisticians use to
draw conclusions
about the subjects in
a study.

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Sample

In statistical
inference, a subset of
the population, known
as statistical sample is
chosen to represent
the population in a
statistical analysis.

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Descriptive • Descriptive statistics describe what is
versus going on in a population or data set.
• Inferential statistics, by contrast,
Inferential allow scientists to take findings from a
Statistics sample group and generalize them to a
larger population.
 • The continuous variable is
capable of manifesting every
Continuous and conceivable fractional value
Discrete
within the range of
possibilities.
Variables
• When the variable can only have
a whole number, it is called
discrete variable.

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 Case Study – State of Business in India’s Countryside
(Adapted from “Business Statistics” by Ken Black, Fifth Edition, page no. 3)

Questions
1. Are the statistics presented in this report exact figures or estimates?
2. How and where could the researchers have gathered such data?
3. In measuring the potential of the rural India marketplace, what other
statistics could have been gathered?

4. What levels of data measurement are represented by data on rural

India?

5. How can managers use these and other statistics to make better
decisions about entering this marketplace?

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 3
5

Levels of
Data
Measurement
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Hierarchy, Distance and
Zero point

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 Scale Values
Nominal (called names or labels) Order values: No
Same distance: No
Absolute zero point: Not applicable

Ordinal Order values: Yes

Same distance: No
Absolute zero point: Not applicable

Interval (means space in between) Order values: Yes

Same distance: Yes
Absolute zero point: No

Ratio Order values: Yes

Same distance: Yes
Absolute zero point: Yes
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 • Random sampling is a technique in which
the selected sample is a subset of
statistical population and each member of
Random the subset has an equal probability of
Sampling
being chosen.

• The sample so chosen is called simple

random sample which is an unbiased
representation of a group.
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 A random number is a number
generated using a large set of numbers
and a mathematical algorithm which
gives equal probability to all numbers
occurring in the specified distribution.
Random Number

=RAND()

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For example, if you wanted random numbers from 1 to 250, you could enter the following
formula:
=INT(250*RAND())+1

The INT eliminates the digits after the decimal, the 250* creates the range to be covered,
and the +1 sets the lowest number in the range.

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 Question 2
Draw a sample of 5 students from a population of 185 students.

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