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Quantitative Methods

# Quantitative Methods

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10/28/2015

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The Role of Quantitative Methods in Business and Management

Quantitative methods play an important role both in business research and in the practical
solution of business problems. Managers have to take decisions on a wide range of issues,
such as:

how much to produce
what prices to charge
how many staff to employ
whether to invest in new capital equipment
whether to fund a new marketing initiative
whether to introduce a new range of products
whether to employ an innovative method of production.
In all of these cases, it is clearly highly desirable to be able to compute the likely effects of
the decisions on the company's costs, revenues and, most importantly, profits. Similarly, it is
important in business research to be able to use data from samples to estimate parameters
relating to the population as a whole (for example, to predict the effect of introducing a new
product on sales throughout the UK from a survey conducted in a few selected regions).
These sorts of business problems require the application of statistical methods such as:

time-series analysis and forecasting
correlation and regression analysis
estimation and significance testing
decision-making under conditions of risk and uncertainty
break-even analysis.
These methods in turn require an understanding of a range of summary statistics and
concepts of probability. These topics therefore form the backbone of this course.

Statistics

Most of the quantitative methods mentioned above come under the general heading of
statistics. The term "statistics" of course is often used to refer simply to a set of data – so, for
example, we can refer to a country's unemployment statistics (which might be presented in a
table or chart showing the country's unemployment rates each year for the last few years,
and might be broken down by gender, age, region and/or industrial sector, etc.). However,
we can also use the term "Statistics" (preferably with a capital letter) to refer to the academic
discipline concerned with the collection, description, analysis and interpretation of numerical
data. As such, the subject of Statistics may be divided into two main categories:

(a) Descriptive Statistics

This is mainly concerned with collecting and summarising data, and presenting the
results in appropriate tables and charts. For example, companies collect and
summarise their financial data in tables (and occasionally charts) in their annual
reports, but there is no attempt to go "beyond the data".

Data and Data Collection 3

(b) Statistical Inference

This is concerned with analysing data and then interpreting the results (attempting to
go "beyond the data"). The main way in which this is done is by collecting data from a
sample and then using the sample results to infer conclusions about the population.
For example, prior to general elections in the UK and many other countries,
statisticians conduct opinion polls in which samples of potential voters are asked which
political party they intend to vote for. The sample proportions are then used to predict
the voting intentions of the entire population.

Of course, before any descriptive statistics can be calculated or any statistical inferences
made, appropriate data has to be collected. We will start the course, therefore, by seeing
how we collect data. This study unit looks at the various types of data, the main sources of
data and some of the numerous methods available to collect data.

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