Quantitative Methods

Student Notes

Note
This document contains the important points discussed in the pre-recorded courseware. It will help in revising the
important concepts related to Quantitative Methods course.

This Student Note is authorized for use only by Birla Institute of Technology and Science (BITS) - Pilani students. Copying or
posting of its content is an infringement of copyright.
 Quantitative Methods

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Student Notes 0.1: Introduction to courseware

Introduction to courseware – Quantitative methods
Setting the expectation
Objective:
 To enable the managers to apply basics techniques to
- Business statistics
- Linear Programing
 Target audience are/is
- Practicing managers
We enable managers to identify problems where quantitative methods can
be applied and how to apply.
 Skill required
- Arithmetic – addition, subtraction, multiplication, division
- Calculator – Basic calculations
- Excel – Familiarity with the helpful
We will see how to generate output and analyze the output.
Organization of classes
- Business statistics – 11 modules
Main focus of this course is statistics
- Linear Programing – 03 modules
Organization of classes – Business Statistics
- Descriptive statistics
- Probability
- Probability distribution
- Sampling and Sampling distribution
- Interval estimation
- Hypothesis testing- 4 modules
- ANOVA
- Simple Linear Regression
Organization of classes – Linear Programing
- Introduction to LP
- Graphical Solution
- Interpreting Excel Solver:
Here we do sensitivity analysis: We generate output by excel and analyze
that using excel solver. We need to install excel solver.

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 Quantitative Methods

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Final Words
 Does help to have a book in business statistics
 Does help to solve by hands problems to those solved in class
 Inform us any errors found in these classes.
Introduction to statistics for business
Here we will discuss statistics for managers.
Why should the managers should bother about statistics?
There is exponential growth of date and with increasing cost there is an explosion of
data which is available to managers. This overload of data can overwhelm any
manager. Organization and summarizing, the data can be transformed into knowledge
which enable managers in decision making.
Typical Applications
Management needs a snapshot/trend in the
 Volume of work to justify request for more personal
 Nature of customer complaints: If a manager understand the complaint
correctly then 20-80 rule may apply that means 80% of problems may
come from 20% of causes. If he focusing on 20% problems may be
very important for business.
Management needs answer of the following:
 What is the probability that customer will default?
The company needs to develop a criteria to decide riskiness of a customer.
 Does the consignment meets customer specifications?
Here the manufacturer may take the sample of consignment and test the sample
and see whether the consignment meets customer specifications.
The Starting point is getting data.
An ice cream manufacturer intend to introduce new exotic flavours, so he may be
interested in the size of the market. There may be several variable of interest such as
how receptive a market is to exotic flavours, per capita expenditure on sweets and ice
cream and etc. Some of the data are obtained from industries or market research
firms, such data is called secondary data. If the company is already operating its target
market then company may decide to study its existing customers to estimate market.
Such an exercise would be called getting primary data. For the primary the company
could do experimental study by taking sample test of its potential customers and can
do observational study by asking questions of its potential customers.

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 Quantitative Methods

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Next Step is to summarize the data.

Numerical measures like mean, mode, and median are measures of central tendency.
Each is sample statistic which we hope is typical of the population. Sample statistics
are denoted by roman letters and population parameters denoted by Greek letters.

There are other numerical measures like range, variance, standard deviation and inter
quartile range that gives an idea to a manager how the data is spread out.

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 Quantitative Methods

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We could also use tabular representation of data.

Finally we can use graphical representation to describe a data. Pie chart, bar chart,
histogram, and trend line can be used to represent a data.

If it is not possible to access the whole population then a manager test only sample
population.

If a sample is indeed representative of population, then sample statistics can be

extrapolated as parameter for the population. This is called estimation

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 Quantitative Methods

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We could test hypothesis related to a parameters of the population. Hypothesis

testing and estimation comes under inferential statistics.

Organization of sessions:
Descriptive Statistics
Probability Distributions
Estimation
Hypothesis Testing

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 Quantitative Methods

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Learning outcome:
 Descriptive and inferential statistics
 Sources of data
 Experimental and observational studies
 Variable – a character of interest
 Population and sample
 Parameter and statistics
Questions to consider:
Q1. Why should the managers should bother about statistics?
Q2. What is the difference between descriptive and inferential statistics?
Q3. What are typical applications of statistics?
Q5. What is the difference between a sample and a population?
Q6. What is the difference between a statistic and a parameter?

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Students. Copying or posting of its content is an infringement of copyright. 6