SSM COLLEGE OF ENGINEERING AND TECHNOLOGY

PARIHASPORA, PATTAN, BARAMULLA

“QUANTITATIVE METHODS”

APPLICATION OF QUANTITATIVE METHODS IN VARIOUS

BUSINESS PROBLEMS

Submitted to: Submitted by:

Mr. AJAZ AHMAD MISTREE Arif Hamid Shah
(HOD of b school of Enrolment No. 519
Roll No. 19260302
Commerce and Management) MBA 1ST Sem. Batch 2019
 ACKNOLODGEMENT

We would like to express our special thanks of gratitude to our teacher

Mr. AJAZ AHAMD Sir as well as our HOD Sir who gave us the golden

opportunity to do this wonderful project on the topic “APPLICATION OF

QUANTITATIVE METHODS IN VARIOUS BUSINESS PROBLEMS”,

which also helped us in doing a lot of Research and we came to know

about so many new things. We are really thankful to them. Secondly we

would also like to thank our parents and friends who helped us a lot in

finishing this project within the limited time. We are also making this

Assignment not only for marks but also to increase our knowledge.

THANKS AGAIN TO ALL WHO HELPED US.

1. EXPLAIN MODEL BUILDING IN OPERATION RESEARCH AND ALSO

DISSCUSS APPLICATION OF OPERATION RESEARCH.
(i) A model is defined as a idealised representation or an abstraction
of some real-life system whether such system refers to a problem
process, operation system object or event.the objective of the
model is to provide a means for analysing the behaviour of the
system for the purpose of improving its performance, or if the
system is not yet in the existence to define the ideal structure of
this future indicating the functional relationship among its
elements.
Most operations research studies involve the construction of a
mathematical model. The model is a collection of logical and
mathematical relationships that represents aspects of the situation
under study. ... A model is always an abstraction that is of necessity
simpler than the real situationModels must be both tractable,
capable of being solved, and valid, representative of the original
situation. These dual goals are often contradictory and are not
always attainable. It is generally true that the most powerful solution
methods can be applied to the simplest, or most abstract, model.the
various types of models used by operations research analysts. The
division is based on the mathematical form of the model.
 In short modelling is a means of providing a clear structure
frame work to the problem for purpose of understanding and
dealing with reality.there is nothing mysterious about models
photograph,roadmap, organisation charts, accounting
statements like profit and loss, balance sheets are all models.

(ii) Applications of Operation Research:

Allocation and Distribution in Projects: ADVERTISEMENTS: ...
 Production and Facilities Planning: (i) Factory size and location
decision. ...
Programmes Decisions: ...
Marketing: ...
Organization Behaviour: ...
Finance: ...
Research and Development
Scheduling and sequencing
 Ware house location
Business Application of Operation Research also helped us in
doing a lot of Research.

Research is a bouquet of mathematical techniques that have evolved

over the last six decades to improve the process of business decision
making.

2. QUANTITATIVE METHODS ARE SCIENTIFIC TOOLS TO ARRIVE AT SOLUTIONS IN

BUSSINESS DECISION MAKING. EXPALIN THE STATEMENT AND HIGHLIGHT THE
LIMITATIONS IF ANY IN THIS REGARD.

The quantitative techniques help in decision making process in the

way that identifies the factors which influence the decisions and quantify
them. It becomes easier to resolve the complexity of the decision making.
Some of the quantitative techniques such as decision theory and
simulation work best in complex decisions.in the business world, and
infect in practically every aspect of daily living, quantitative techniques are
used to assist in decision making in order to work efficiently an a modern
business organisations, whether the organisation is private commercial
company , or a government agency, a state industry or whatever,
managers must be able to use quantitave techniques in a confident and
reliable manner. Accountants make decisions based on the information
relating to the financial state go organisation personal managers make
decisions based on the information relating to the levels of employment in
the organisation and so on.
Various quantitative techniques for decision making are:- 1.
Mathematical Programming 2. Cost Analysis (Break-Even Analysis) 3.
Cost-Benefit Analysis 4. Linear Programming 5. Capital Budgeting 6.
Inventory Management 7. Expected Value 8. Decision Tree 9. Simulation
10. Queuing or Waiting Line Theory.
Limitations of the Scientific Method. Due to the need to have
completely controlled experiments to test a
hypothesis, science can not prove everything. For example, ideas
about God and other supernatural being scan never be confirmed
or denied, as no experiment exists that could test their presence.
Speaking about the methods,intrest is focussed upon so called
scientific methods.science is the mastering of things of the real
world, by knowledge about the truth,the term method derives to
dialogue on methodology in science which is clouded, as the
phrase scientific method is used in two different ways.the one is
very general, as a process of improving understanding. The other
is the traditional sense, and supports that there is a unique
standard method,which is central to identifyof the science . in
effect scientific progress requires many methods quantitative
methods is the scientific management approach .the approaches
stars with the data like raw material for a processed into
information that is valuable to people making decisions.

Limitations of quantitative research methods

  Improper representation of the target population. ...
 Inability to control the environment. ...
 Limited outcomes in a quantitative research. ...
 Expensive and time consuming. ...
 Difficulty in data analysis.
3. EXPLAIN BAYE’S THEORM. ALSO EXPLAIN APPLICATIONS OF
BAYE’S THEORM.

Bayes' theorem, named after 18th-century British mathematician

Thomas Bayes, is a mathematical formula for determining conditional
probability. Conditional probability is the likelihood of an outcome
occurring, based on a previous outcome occurring.

FORMULA FOR BAYE’S THEORM…..

P(A/B) = P (B/A) P (A)….

P(B)

Where A and B are the events and P(B) IS NOT EQUAL 0.

 P(A/B) is a conditional probability: the like hood of

Event A occurring given that B is true.

 P (B/A) is also a conditional probability that like hood of event

B occurring given that A is true.

 P (A) and P (B) are probabilities of observing Aand B

respectively; they are known as marginal probability.
 This theorem is applicable in evaluating interest rates with
baye’s theorem and estimated probabilities companies use to
take maximum advantages.
(iii) APPLICATIOINS OF BAYE’S THEORM.
Applications of the theorem are widespread and not limited to the financial
realm. As an example, Bayes' theorem can be used to determine the
accuracy of medical test results by taking into consideration how likely
any given person is to have a disease and the general accuracy of the
test.

 Baye’s theorem can be used to determine the accuracy of medical test

results by taking into consideration how likely any given person is to
have a disease and the general accuracy of the test.

 In finance, bayes theorem can be used to rate the risk

of lending money to potential borrowers.

 This theorem is also applicable for predicting the

environmental damage predicting the water quality
conditions, guiding environmental decisions.
 4. COMPARE AND CONTRAST THE CONDITIONS UNDER WHICH BINOMIAL AND
POISSION DISTRIBUTION FOR ESTIMATION OF PROBABILITY WILL BE
APPROPIATE.

The binomial distribution is one, whose possible number of outcome are

two, I,e success or failure. On the other hand, there is no limit of possible
outcomes in passion distribution. Binomial distribution and poisons
distribution are two discrete probability distribution, normal
distribution,student- distribution,chi-square distribution , and F-distribution
are v the types of continuous random variable.
In probability theory and statistics, the binomial distribution with
parameters n and p is the discrete probability distribution of the number of
successes in a sequence of n independent experiments, each asking a yes–
no question, and each with its own boolean-
valued outcome: success/yes/true/one (with probability p)
or failure/no/false/zero (with probability q = 1 − p). A single success/failure
experiment is also called a Bernoulli trial or Bernoulli experiment and a
sequence of outcomes is called a Bernoulli process; for a single trial,
i.e., n = 1, the binomial distribution is a Bernoulli distribution.

BI-NOMIAL distribution vs. Poisson distribution

COMPARISON CHART…..
(i)
BASIS FOR COMPARISON BINOMIAL DISTRIBTION POISSON DISTRIBUTION
MEANING Binomial distribution is one which Poisson distribution gives the

is the probability of repeated count of independent events

number of trials are studied. occurs randomly with a given

period of time.

NATURE Biparametric Uniparametric

NO,OF TRIALS Fixed Infinite

SUCCESS Constant probability Infinitesimal chance of success

MEAN AND VARIANCE Mean > variance Mean = variance

METHODOLOGY OF QUANTITAVE
TECHNIQUES / METHODS….

The methodology adopted in making and solving

problems is as follows…
1. Formulating the problem

2. Defining decision variable and constraints

 3. Developing a suitable model

4. Acquiring the input data

5. Solving the model

6. Validating the model

7. Implementing the results

8. Solution of an optional strategy

TOOLS FOR SCIENTIFIC ANALYSIS

Quantative techniquesprovide the managers with a variety of tools

from mathematics, statistics, economics and operational research
these tools help the managers to provide a more precise description
and solution of the problem.the solution obtained by using quantitave
technique are often free from the bias of the managers or the owners
of the business.
5. ENUMERATE THE CHARACTERISTICS OF NORMAL DISTRIBUTION
WITH THE HELP OF ILLUSTRATION…
The normal distribution is a probabilty function that describes how the
values of a variable are distributed.it is a symmetric distribution where
most of the observation duster around the central peak and the
probabilities for values further away from the mean tapper off equally
in both directions.

The normal distribution is widely used in understanding

distribution of factors in the poputution..
 NORMAL DISTRIBUTION

Normal distribution a bell-shaped graph which compasses two basic

terms mean and standard deviation. It is asymmetric arrangements of
a data set in which most values cluster in the mean and the rest
tapers off symmetrically towards either extreme.

CHARACTERISTICS OF A NORMAL DISTRIBUTION

 The normal curve is bell-shaped and has a single peak at the exact
centre of the distribution.
  The arthimaticmean, median and mode of the distribution are
equal and located at the peak.

 Half are under the curve is above peak and the other half is bellow
it.

 The normal distribution is symmetrical about its mean.

NUMERICAL PORTION……..
IF A HURRICANE FROM IN THE EASTERN GULF OF MEXICO THERE IS 76% CHANCE THAT IT
HIT WESTERN COURSE OF MEXICO. FROM THE DATA COLLECTED FROM 50 YEARS IT HAS
BEEN DETERMINED THAT THE PROBABILITY OF HURRICANE OCCURING IN THIS AREA IN THE
GIVEN YEARS IS 0.85.

a WHAT IS THE PROBABILITY THAT HURRICANE WILL OCCUR IN THE EASTERN GULF OF
MEXICO AND STRIKE.

b IF THE HURRICANE IN THE EASTERN GULF OF MEXICO IS SEEDED (INDUCED TO RUIN BY

ADDITION OF CHEMICALS BY AIRCRAFT,ITS PROBABILITY OF STRIKING IS REDUCED TO
1/3RD.IF IT IS DECIDED TO SEE THE HURRICANE IN THE GULF WHAT IS THE NEW VALUE OF
PROBABILITY CALCULATED IN PART 1.

SOL…
Probability that hurricane will hit eastern Gulf of Mexico = 0.76
Probability of hurricane = 0.85

A) Probability of hurricane hitting the eastern gulf = 0.76 x 0.85 =0.646 =)

64.6%
B) If the hurricane is seeded probability that hurricane will hit eastern
gulf =1/3 x 0.76= 25.3%

Now if it is decided to see the hurricane new probability = 0.253 x

0.85= 21.50%