A Survey of the Application of Quantitative Techniques to Production/Operations

Management in Large Corporations

Author(s): Thad B. Green, Walter B. Newsom and S. Roland Jones
Reviewed work(s):
Source: The Academy of Management Journal, Vol. 20, No. 4 (Dec., 1977), pp. 669-676
Published by: Academy of Management
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Academy of Management Journal
1977, Vol. 20, No. 4, 669-676.

Research Notes

A SURVEY OF THE APPLICATION OF QUANTITATIVE TECHNIQUES

TO PRODUCTION/OPERATIONS MANAGEMENT IN LARGE
CORPORATIONS

THAD B. GREEN
WALTER B. NEWSOM
S. ROLAND JONES
Mississippi State University

Although a number of studies have investigated the use of quantitative

techniques in industry, few provide an in-depth analysis. Eleven published
research studies present some evidence regarding the extent to which quan-
titative techniques are utilized (Burack & Batlivala, 1972; Ciecka, Comer &
da Silva, 1973; Coppinger & Epley, 1972; Gaither, 1975; Groff, 1968;
Hertz, 1958; Hovey & Wagner, 1958; Schumacher & Smith, 1965; Tur-
ban, 1972; Vatter, 1967; Weston, 1973)., Only eight of them provide analy-
sis of specific areas in which techniques are used (Burack & Batlivala,
1972; Ciecka et al., 1973; Gaither, 1975; Groff, 1968; Hertz, 1958;
Hovey & Wagner, 1958; Schumacher & Smith, 1965; Vatter, 1967). Only
two of these provide a comprehensive analysis of the functional areas-
one in corporate planning (Weston, 1973), the other in manufacturing
(Gaither, 1975).
Similarly, efforts to identify the barriers to using quantitative techniques
in production/operations management (P/OM) are quite general in
nature. Fifteen published papers focus on the barrier question (Amspoker,
Brown, Smith & Culhan, 1973; Argyris, 1971; Churchman, 1964; Church-
man &Schainblatt, 1965; Green &Schilagi, 1972; Hammond, 1974; Harvey,
1970; Huysmans, 1970; Malcolm, 1965; Little, 1970; Radnor, Ruben-
stein & Bean, 1968; Rubenstein, Radnor, Baker, Heiman & McColly,
1967; Shakun, 1972; Stillson, 1963; Vatter, 1967), but only six go beyond
the observation/opinion approach (Amspoker et al., 1973; Argyris, 1971;
Green & Schilagi, 1972; Radnor et al., 1968; Rubenstein et al., 1967;
Vatter, 1967), and only two report empirically identified barriers (Green &
Schilagi, 1972; Vatter, 1967).
With this in mind, the research reported here was designed to explore
the P/OM area. Data were gathered from the Fortune 500 companies on
19 different quantitative techniques, with emphasis on (1) determining the
669
670 Academy of ManagementJournal December

extent of use of each technique, (2) estimating the value of each, (3 ) pre-
dicting the utilization in the future, and (4) identifying the major barriers
to utilization. Regarding the emphasis on barriers, only the two previously
mentioned studies have attempted to identify barriers empirically, but
neither provided statistical support for the existence and relative importance
of the various barriers, and neither study focused on barriers to P/OM
applications.
Questionnaires were mailed to the vice-presidents for production, or the
equivalent, in the Fortune 500 companies included in the 1973 listing.
Seventy-eight usable responses were returned. These respondents were part
of a larger, cross-functional, comparative study of the application of quan-
titative techniques to finance, marketing, and production/operations man-
agement. For this reason, several of the techniques as shown in Table 1
were included realizing the applicability to P/OM may well be limited.
The first three parts of the questionnaire each listed the 19 techniques and
focused on current use, current value, and future use, respectively. For both
the current and future use parts of the questionnaire, the following Likert
scale was used: no use, little use, moderate use, frequent use, and extensive
use. The scale used for the current value part of the questionnaire was: no
value, little value, moderate value, frequent value, and extensive value. The
respondents could also indicate unfamiliar with technique, if appropriate.
As shown in Table 2, part four of the questionnaire included a list of
possible barriers to the utilization of quantitative techniques. The barriers
selected for inclusion were those most frequently mentioned in the literature,
with special reliance on the two studies previously cited which empirically
generated lists of barriers. Respondents were asked to rate the importance
of each barrier on a 10-point Likert scale ranging from one for not im-
portant to 10 for very important.

Use and Value Findings

Table 1 depicts the survey data related to current use. With the responses
unfamiliar with technique and no use combined to reflect total nonuse, the
data show that nine of the techniques were not being used at all by 60 per-
cent or more of the responding organizations. At the other extreme, only
seven of the 19 techniques were of frequent use or extensive use by 25 per-
cent or more of the respondents. A definite lack of utilization of quantita-
tive techniques in production/operations management is reflected in these
data. However, conclusions regarding the low usage rate may be somewhat
misleading because, as noted earlier, several of the 19 techniques are not
considered to have high applicability to production/operations manage-
ment.
Some of the techniques are hypothesized as being more relevant to P/OM
than others, as suggested by the following classification on applicability:
(1) definite P/OM applicability-simulation, queuing theory, network
1977 Green, Newsom and Jones 671

TABLE I
Extent of Use of Quantitative Techniques
Percentage of Responses
Unfamiliar
With No Little Moderate Frequent Extensive
QuantitativeTechnique Technique Use Use Use Use Use
Simulation 10 22 29 22 14 3
Queuing theory 19 42 27 5 3 4
Bayesian statistics 30 44 17 6 3 0
Game theory 16 61 20 3 0 0
Time series analysis 4 8 21 27 21 19
Network analysis 3 14 28 23 17 15
Markov chain 39 39 18 4 0 0
Inventory models 11 11 11 22 12 33
Regressionand correlation 8 6 22 22 20 22
Linear programming 4 13 27 20 19 17
Nonlinear programming 14 49 21 14 1 1
Goal programming 41 30 7 13 4 5
Factor analysis 34 38 13 13 1 1
Chi square 23 29 18 18 7 5
Analysis of variance 12 16 21 23 16 12
Discriminant analysis 37 36 17 9 0 1
Canonical analysis 60 29 6 4 1 0
Experimentaldesign 13 17 16 24 9 11
Statistical sampling 0 15 19 16 26 24

analysis, inventory models, linear programming, nonlinear programming,

and goal programming; (2) specialized PIOM applicability-game theory,
time series analysis, regression and correlation, chi square, analysis of
variance, experimental design, and statistical sampling; and (3) limited
P/OM applicability-Bayesian statistics, Markov chain, factor analysis,
disciminant analysis and canonical analysis. Reexamining the Table 1

FIGURE I
Extent of Use of Quantitative
Techniques by Level of
Hypothesized Applicability

Greater Than 60 Percent Greater Than 25 Percent

Level of Applicability
Definite P/OM applicability
Specialized P/OM applicability
Limited P/OM applicability
of Respondents Not Using
Techniques
Queuing theory
Nonlinear programming
Goal programming
Game theory
Bayesianstatistics
Markov chain
Factor analysis
Discriminantanalysis
Canonical analysis
Responding Frequent or
Extensive Use
Network analysis
Inventorymodels
Linearprogramming
Time series analysis
Regressionand correlation
analysis
Analysis of variance
Statistical sampling
672 Academy of Management Journal December

data on this basis suggests a somewhat greater extent of use, as indicated in

Figure 1, but the picture still is not particularly bright.
Respondents indicated that they expected the extent of use to increase
in the future for several of the 19 techniques. Using chi square analysis,
significant differences (at the .05 level) between current and future use
were indicated for six of the 19 techniques-simulation, queuing theory,
nonlinear programming,time series analysis, network analysis and Bayesian
statistics. All differences represented increases in the future.
A comparison of the current use data with the responses regarding the
current value of the techniques indicates a direct relationship between use
and value. The Spearman rank correlation coefficient between the rank of
the weighted average use and the rank of the weighted average value was
.976. The weighted average use was calculated by first assigning a weight
of one for both the unfamiliar and no use responses and weights of two,
three, four and five respectively for little use, moderate use, frequent use,
and extensive use; these weights then were multiplied times the number
of responses in each of the use categories, with the sum divided by the
sample size. This same procedure was used to calculate the weighted average
for the value respondents.

BarrierFindings
The data related to barriers were analyzed in two different ways. First,
they were examined to identify the relative importance of the barriers as
perceived by the respondents. Secondly, factor analysis was used to de-
termine if there were barriers that related to each other in such a way that
it would be possible to develop some broader classification of barriers.
Perceived Importance-Table 2 presents the mean response and the
rank order, in columns two and three respectively, for each of the 15 bar-
riers, with the barriers listed in the same order as they appeared on the
original questionnaire. With respondents rating each barrier on a 10-point
Likert scale ranging from one for not important to 10 for very important,
the mean ratings for each of the 15 barriers ranged from 6.51 to 3.92.
Through the use of analysis of variance, statistically significant differences
in the perceived importance of the barriers were found. The F was 5.80,
significant at the .01 level. The Least Significant Differences (LSD) test
was run to determine where the differences were. The results are shown in
Figure 2 where any two variables connected by a line are not significantly
different from each other although the means may be somewhat different.
For example, the mean rating for barrier three is significantly higher than
barrier eight, but not significantly greater than barriers one, five, or 10. In
like manner all other significant differences may be examined.
Factor Analysis-Factor analysis resulted in four factors with eigen-
values greater than 1. These four factors explained 64.7 percent of the
original variance, with factors one and two together explaining 47.8 per-
1977 Green, Newsom and Jones 673

TABLE 2
Means, Rank Order and
Factor Analysis of Barriers

Factor Factor Factor Factor

Barrier Mean Rank 1 2 3 4
1. Managerslack knowledge of
quantitativetechniques 6.04 2 .94 .07 .07 -.17
2. Managersare not quantitatively
oriented 4.56 10 .43 .23 -.25 .12
3. Benefitsof using techniquesare
not clearly understoodby
managers 6.51 1 .80 .17 .03 .09
4. Managersare unwilling or unable
to use the computer for decision
making and/or computersare
not available 4.17 12 .38 .08 .09 .01
5. Managersare not exposed to
quantitativetechniquesearly
in their training 5.80 3 .70 .41 .09 .03
6. Managementis successful
without using techniques 5.43 6 .03 .20 .18 .09
7. Managersin key positions lack
knowledge of quantitative
techniques 5.39 7 .68 .32 .25 -.16
8. Only a small portion of man-
agement is trained in the use
of quantitativetechniques 5.47 5 .38 .81 .14 -.18
9. Senior managementpersonnel
does not encourageuse of
techniquesby younger manage-
ment personnel 3.93 14 .15 .48 .02 .18
10. Requireddata are difficultto
quantify 5.79 4 -.09 .05 .28 .88
11. The cost of developing models
and using techniques is too high 5.33 8 --.02 .11 .82 .31
12. Managementdistrustsor fears
the use of techniques 3.92 15 .29 .36 .11 .06
13. The data requiredin using the
techniques are not available 4.85 9 .06 .16 .41 .48
14. The expense of employing quan-
titative specialistsis too great 4.16 13 .24 .07 .58 .09
15. Recent college graduateswith
quantitativetraininghave not
yet attainedpositions of influence 4.32 11 .47 .39 .05 .03

FIGURE 2
Significant Differences in Barrers

3 1 5 10 8 6 7 11 13 2 15 4 14 9 12
674 A cademy of Management Journal December

cent. The results of the factor analysis also are shown in Table 2. Only
variables with a correlation of at least .5 with a factor are considered as
loading on that factor. The factors can be viewed as follows: factor one
as lack of knowledge of quantitative techniques by managers; factor two
as only a small portion of management is trained to use quantitative tech-
niques; factor three as cost of using techniques; and factor four as the
difficulty of quantifying data.
The difference between the barriers of greatest importance and those of
less importance is interesting. The top three perceived barriers-benefits
of using the techniques are not clearly understood by managers, managers
lack of knowledge of quantitative techniques, and managers are not ex-
posed to quantitative techniques early in their training-all load on factor
one. This means that these three barriers are not only preceived to be of
the greatest importance by the respondents but also they are related to
each other. It can be concluded that the respondents clearly point to
lack of knowledge as the major reason to explain the lack of utilization of
quantitative techniques. Factor two, which included only the barrier ranked
fifth in perceived importance-only a small portion of management is
trained in the use of quantitative techniques-supports this conclusion.
This is a particularly disappointing finding with respect to the future of
quantitative techniques, since the various lack of knowledge barriers are
neither rapidly nor easily overcome.
The overall problem is further intensified when it is realized that effec-
tively coping with the barriers which constitute factors three and four-
the cost of developing and using models is too high, the expense of em-
ploying quantitative specialists is too great, and required data are difficult
to quantify-probably will have little impact on enhancing the use of
quantitative techniques unless the lack of knowledge problem also is suc-
cessfully overcome. If this is true, our attention returns to factor one-
lack of knowledge of quantitative techniques by managers-but with a
remagnification of its importance.

Implications

If the barriersthat ranked low had been perceived by the respondents to

be of greater importance, then the expectation that time and/or money
would overcome the problems might be reasonable. But the barriers re-
lated to time and money-availability of computers, expense of employing
quantitative specialists, and recent college graduates with quantitative
training have not yet attained positions of influence-were not perceived
to be of great importance. The barriersrated by the respondents as having
the greatest importance are definitely related to lack of knowledge.
In order to overcome this lack of knowledge, at least three approaches
can be taken. First, practicing quantitative specialists could direct con-
1977 Green, Newsomn and Jones 675

siderably more of their time toward educating managers. Second, the entry
of quantitative training into executive development programs could do
much to erase the lack of knowledge. Finally, universities could increase
the emphasis on quantitative skills of nonquantitative majors. The authors
would suggest the latter approach as having a more dramatic long-run
impact on the utilization of quantitative techniques.
The effectiveness of increasing manager knowledge as a way of im-
proving technique utilization also appears to be reflected in the findings
presented in Table 1. The techniques which respondents indicated as being
used most were those which had the fewest unfamiliar with technique
responses. This lends support to the long-held belief about the relationship
between knowledge and use.
The conclusions and inferences suggested by the data from this survey
should be cautiously accepted because, like most surveys, several short-
comings were inherent in the study. There is uncertainty about the extent
and nature of the nonresponse bias. In addition, it is possible that by choos-
ing vice-presidents for production as the respondents, the extent of use
reflected in the data may be an underestimate,if it can be assumed that top
level management may not be fully aware of all quantitative applications in
their organizations. Another element of uncertainty involves the question
of whether the vice-presidents actually answered the questionnaire. There
was not evidence to the contrary, and in fact many requests for copies of
the findings came directly from the vice-presidents. However, if they did
pass the questionnaire downward to someone with greater knowledge about
technique use, the data actually reflect greater accuracy. Even with these
shortcomings,the extent of use reflected in the data is particularlytroubling,
since all organizations surveyed were in the Fortune 500 listing. Conse-
quently, it can be extrapolatedthat the extent of use in smaller organizations
is very likely to be considerably less. With respect to the data related to
barriers, any impact of the shortcomings of the survey is expected to be
minimal.
Unfortunately, the findings from this research cannot be compared
directly with other surveys because the various studies simply are not com-
parable in terms of populations sampled, the focus of the research, etc.
Generally speaking, however, it can be stated that the results of the survey
reported here reflect a somewhat pessimistic perspective of the application
of quantitative techniques to production/operations management.

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