QUANTITATIVE TECHNIQUES FOR

BUSINESS (BBA)
MODULE I
INTRODUCTION TO QUANTITATIVE TECHNIQUES
QUANTITATIVE TECHNIQUES
Quantitative techniques are those technique which provide the
decision makes a systematic and powerful means of analysis, based
on quantitative data.
Classification of quantitative techniques
A) Mathematical techniques
B) Statistical techniques
C) Programming techniques
A) Mathematical techniques
A technique in which quantitative data are used along with
mathematical principles are known as mathematical techniques. It
involves
1) Permutation and Combination
Permutation means arrangement of object in a definite order.
Combination means selection of objects without considering order.
2) Set theory
It is a mathematical theory of well determined collection of objects.
3) Matrix
Matrix is a rectangular array of numbers or symbols enclosed by a
pair of brackets.
4) Determinants
It is a scalar value that is a function of the entries of a square matrix.
5) Differentiation
It is a mathematical process of finding changes in dependent variable
on the basis of changes in independent variable.
6) Integration
It is a process of finding changes in independent variable on the basis
of changes in dependent variable.
B) Statistical Techniques
Statistical techniques are those techniques which are used in
conducting statistical enquiry.
1) Collection of date
By using different methods for collecting primary and secondary
data.
2) Correlation analysis
It is used to study the degree of relationship among two or more
variables
3) Regression analysis
It is used to estimate the value of one variable for a given value of
another.
4) Index number
These measure the fluctuations in various phenomena over a period
of time.
5) Time series analysis
Analysis of time series help us to know the effect of factors which are
responsible for changes.
6) Probability theory
It provides numerical value of the likelihood of the occurrence of
events.
C) Programming Techniques
These are operation research techniques used by decision makers in
modern time.
1) Linear programming
This is used in finding a solution for optimising a given objective
under certain constraints.
2) Queuing theory
This deals with mathematical study of queues.
3) Game theory
It is used to determine the optimum strategy in a competitive
situation.
4) Decision theory
It involves making sound decision under risk and uncertainty.
5) Inventory theory
It helps for optimising the inventory levels.
6)Network programming
It is a technique of planning, scheduling, controlling and coordinating
large and complex projects comprising of number of activities and
events.
7) Simulation
It is a technique of testing a model which resembles a real life
situation.
Functions of quantitative techniques
1) To facilitates decision making.
2) To helps for scientific research
3) To help in minimising cost
4) To help in choosing an optimal strategy.
5) To enable proper use of resources.
Uses and advantages of quantitative techniques
1) Helpful in inventory management.
2) Facilitate decision making.
3) Useful in production management.
4) Proper allocation of resources.
5) Reduction in cost and minimising waiting time.
Limitations of Quantitative Techniques
1) It is very expensive.
2) It is time consuming.
3) It does not consider intangible facts.
4) It based on number of assumptions; it may lead to wrong
estimation.
5) It is a tool for decision making. It’s not decision itself.
 MODULE II
TIME SERIES AND INDEX NUMBER
TIME SERIES
Time series
A time series refers to the values of a variable chronologically
ordered over a successive period of time.
Components of Time series
1. Secular trend
The general tendency of a data to increase or decrease or stagnate
over long period of time is called secular trend.
2. Seasonal variation
Seasonal variations are fluctuations within a year during the season.
These forces have similar pattern year after year.
3. Cyclical variation
Cyclic variations are periodic movements. These variations occur at
intervals of more4 than one year.
4. Random/Irregular variation
Irregular fluctuations are those caused by unusual, unexpected and
accidental events.
Method of measuring trend
1. Graphical method
Merits
a) All kinds of trends can be described with the help of this
method
b) This is the simples and easiest method
c) It helps to understand the character of time series
Demerits
a) It is highly subjective
b) It is not based on any mathematical model
 c) It gives an approximate picture of tendency in the long run
d) It is not useful for further analysis of time series
2. Semi average method
Merits
a) It is simple to understand and easy to calculate
b) Everyone will get same trend line for the given set of data
c) The trend line can be extended towards both direction
Demerits
a) It is assuming the presence of linear trend
b) Two points to be joined on a graph is calculated on the basis
of average, therefore trend line is greatly influenced by
extreme values
c) Trend values are obtained by this method are not reliable
3. Moving average method
Merits
a) This method is simple to understand and easy to calculate
b) As it is based on mathematical data everyone gets same
trend line
c) This method is particularly effective if the trend of a series is
highly irregular
d) Regular cyclical variations can be completely eliminated by a
period of moving average equal to the period cycle
Demerits
a) The choice of period of moving average is subjective
b) Future perdition is not possible with the help of moving
average
c) Trend values of initial as well as end years cannot be
obtained with the help of this method
d) Irregular variations cannot be eliminated completely by this
 method
e) Moving averages are generally affected by extreme values of
items
4. Least squares
Merits
a) Both future as well as intermediate values can be estimated
b) It is not subjective
c) We can all trend values
Demerits
a) Preparation of trends using this method need complex
calculation
b) Recalculation are made if an addition is made in the given
series
c) The assumption of straight-line relationship may sometimes be
misleading
d) This method does not give due importance to cyclical,
seasonal, and irregular fluctuations
e) This method can be used effectively to estimate only for
immediate future and not for distant future.

INDEX NUMBERS
Index Numbers are special kind of averages, expressed in ratio,
calculated as percentage and used as numbers.

Features for index numbers

a) Index number is a number which is used as a tool for comparing
prices and quantities of a particular commodity or a group of
commodities in a particular time period with respect to other time
period or periods.
b) Index numbers indicate relative change in price or quantity or
value expressed in percentage.
 c) Index numbers are always unit free.
d) The year in which the comparison is made is called the “Current
Year” and the year with respect to which the comparison is made
is the “Base Year”.

PRICE RELATIVE (PR)

Price relative is defined as the ratio of Current Year’s price to the Base
𝑷
Year’s price expressed as percentage Symbolically, PR = 𝟏 × 𝟏𝟎𝟎
𝑷𝟎
Types of Index numbers
1. Price index
Price index is used to measure the value of money, at certain time
with the price of a base year.
Wholesale price index reveals the changes in in general price level of a
country.
Retail price index reveals the changes in the retails price of a
commodity.
2. Quantity index
Quantity index number is help full to study the output of an economy .it
reveals the changes in the volume of goods produced or consumed.
3. Value index
Value index numbers compare the total value of a particular period
with reference to the total value of base period. The total value is
arrived at by multiplying together the price of commodity and the
quantity consumed.
Method of constructing price index numbers
1. Un Weighted methods
a) Simple aggregate method
Expressing the aggregate price of all commodities in the current
year as percent of the aggregate price in the base year.

∑ 𝐏𝟏
𝐏𝟎𝟏 = × 𝟏𝟎𝟎
∑ 𝐏𝟎
 b) Simple average of price relative
Price of a commodity in the current year is taken as a percentage of the
price of corresponding item of the base year and the index is obtained by
averaging these percentage figures.
𝐏
∑ 𝟏 × 𝟏𝟎𝟎
𝐏𝟎
𝐏𝟎𝟏 =
𝐍

2. Weighted methods
Appropriate weights are assigned to various commodities in accordance
with their relative importance in group.
1) Laspeyer’s method
Quantities of base year are taken as weights, So that Laspeyer’s Method is
also known as base year weights(base year Index)
∑ 𝐩𝟏 𝐪𝟎
𝐏𝟎𝟏 = × 𝟏𝟎𝟎
∑ 𝐩𝟎 𝐪𝟎

2) Paasche’s method
Quantities of current year are taken as weights, Paasche’s Index
number also called current year index or current year weights
∑ 𝐩𝟏 𝐪𝟏
𝐏𝟎𝟏 = × 𝟏𝟎𝟎
∑ 𝐩𝟎 𝐪𝟏

3) Fisher’s Ideal Index number method

The geometric mean of Laspeyer’s and Paasche’s Indices , This method is
also known as “ideal Index “
∑ 𝒑𝟏 𝒒𝟎 ∑ 𝒑𝟏 𝒒𝟏
𝑷𝟎𝟏 =√ × × 𝟏𝟎𝟎 𝑶𝑹 √𝑳 × 𝑷
∑ 𝒑𝟎 𝒒𝟎 ∑ 𝒑𝟎 𝒒𝟏

Where L is Laspayer’s Index

P is Paasche’s Index
 4) Dorbish &Bowley’s Index number method
Simple arithmetic mean of the Laspeyer’s and Paasche’s indices
∑ 𝒑𝟏 𝒒𝟎 ∑ 𝒑𝟏 𝒒𝟏
+ 𝑳+𝑷
∑ 𝒑𝟎 𝒒𝟎 ∑ 𝒑𝟎 𝒒𝟏
𝑷𝟎𝟏 = × 𝟏𝟎𝟎 𝒐𝒓 × 𝟏𝟎𝟎
𝟐 𝟐

Where L is Laspayer’s Index

P is Paasche’s Index
5) Marshall Edgeworth method
Average quantities of both the base year and current are taken as
weights
∑ 𝒑𝟏 𝒒𝟎 + ∑ 𝒑𝟏 𝒒𝟏
𝑷𝟎𝟏 = × 𝟏𝟎𝟎
∑ 𝒑𝟎 𝒒𝟎 + ∑ 𝒑𝟎 𝒒𝟏
6) Kelly’s Method
Fixed quantities are taken as weights.
∑ 𝒑𝟏 𝒒
𝑷𝟎𝟏 = × 𝟏𝟎𝟎
∑ 𝒑𝟎 𝒒

2.1 Weighted average of relatives

Price of each commodity in the current year is taken as a percentage of
the price corresponding item of the base year; these relatives are
multiplied by given weights and the result is obtained by averaging the
resulting the average figures.
∑ 𝑰𝑾 𝒑𝟏
𝑷𝟎𝟏 = ∑𝑾
× 𝟏𝟎𝟎 I=
𝒑𝟎
Quantity Index
Quantity index measures the change in quantity/volume of the goods
produced, soled/consumed. The methods used for constructing quantity
index number are similar to that of constructing price index, only
difference is that all ‘p’ s and ‘q’ s in the formula of price index number are
to be interchanged together.
1. Simple Aggregate Method
∑ 𝑞1
𝑄01 = × 100
∑ 𝑞0
 𝑞
∑ 1 ×100
𝑞0
2. Simple Average of relative 𝑄01 =
𝑁
∑ 𝑞1 𝑝0
3. Laspeyer's Q01= ∑ 𝑞0 𝑝0
× 100
∑ 𝑞1 𝑝1
4. Paasche's Q01= ∑ 𝑞0 𝑝1
× 100

∑𝑞 𝑝 ∑𝑞 𝑝
5. Fisher's Ideal Q01= √∑ 1 0 × ∑ 1 1 × 100
𝑞 𝑝 𝑞 𝑝
0 0 0 1

∑ 𝑞 1 𝑝0 ∑ 𝑞 1 𝑝1
+
∑ 𝑞 0 𝑝0 ∑ 𝑞 𝑜 𝑝1
6. Dorbish Bowley's Q01= × 100
2
∑ 𝑞1 𝑝0 +∑ 𝑞1 𝑝1
7. Marshall Edgeworth Q01= ∑ 𝑞0 𝑝0 +∑ 𝑞0 𝑝1
× 100
Value Index
Value refers to the product of price and quantity .
∑ 𝑝𝑛 𝑞𝑛
𝑉0𝑛 = × 100
∑ 𝑝0 𝑞0
Note
➢ GM is the best average in the construction of index number
➢ Method of relative is also known as arithmetic mean method
➢ When a series of index numbers for different years are expressed in
a tabular form to compare the changes in different years, then this
tabular representation of numbers is known as “index time series”.
Test of consistency
1. Time reversal test
Time reversal test is a test to determine whether a given method will work
both ways in time, forward and backward. According to Fisher “The test
is that the formula for calculating the index number should be such that it
will give the same ratio between one point of comparison and the other,
no matter which of the two is taken as base.” In other words, when the
data for any two years are treated by the same method, but with the
bases reversed, the two index numbers secured should be reciprocals of
each other so that their product is unity. Symbolically,
𝑷𝟎𝟏 × 𝑷𝟏𝟎 = 𝟏
Where 𝑃01 is the index for time “1” on time “0” as base and 𝑃10 is the
index for time “0” on time “1” as base. Laspayer’s and Paasche’s Index
numbers are not satisfying this test
 2. Factor reversal test
The product of price index and quantity index should be equal to value
index, symbolically;
𝐏𝟎𝟏 × 𝐐𝟎𝟏 = 𝐕𝟎𝟏
Fisher ideal index number is the only test satisfied by the factor reversal
test.
3. Unit test
This test state that the formula for constructing and index number should
be independent of the units in which price and quantities are expressed.
All methods except simple (un weighted) aggregate methods are
satisfying this test.
4. Circular test
According to this test, if indices are constructed for year one based on
zero, for year two based on year one and for year zero based on year two,
the product of all the indices should be equal to one; symbolically the test
is represented as
𝐏𝟎𝟏 × 𝐏𝟏𝟐 × 𝐏𝟐𝟎 = 𝟏
Simple aggregative index and Kelly’s fixed base methods satisfying this
test.
Fixed base & Chain base Index numbers
1. Fixed base Index method (FBI)
All index numbers constructed during the given period are with respect to
a fixed base period.
𝐏𝐫𝐢𝐜𝐞 𝐨𝐟 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐲𝐞𝐚𝐫
FBI= × 𝟏𝟎𝟎
𝐏𝐫𝐢𝐜𝐞 𝐨𝐟 𝐛𝐚𝐬𝐞 𝐲𝐞𝐚𝐫

2. Chain base Index method (CBI)

In this method, there is no fixed base period; the year immediately
preceding the one for which the price index has to be calculated is
assumed as the base year.

𝐥𝐢𝐧𝐤 𝐫𝐞𝐥𝐚𝐭𝐢𝐯𝐞 𝐨𝐟 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐲𝐞𝐚𝐫 ×𝐥𝐢𝐧𝐤 𝐫𝐞𝐥𝐚𝐭𝐢𝐯𝐞 𝐨𝐟 𝐩𝐫𝐞𝐯𝐢𝐨𝐮𝐬 𝐲𝐞𝐚𝐫

CBI=
𝟏𝟎𝟎

𝐏𝐫𝐢𝐜𝐞 𝐨𝐟 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐲𝐞𝐚𝐫 𝑷𝒏

Where Link relative= × 𝟏𝟎𝟎 𝐎𝐑 × 𝟏𝟎𝟎
𝐩𝐫𝐢𝐜𝐞 𝐨𝐟 𝐩𝐫𝐞𝐯𝐢𝐨𝐮𝐬 𝐲𝐞𝐚𝐫 𝑷𝒏−𝟏
Splicing
The statistical procedure involved in connecting two index number series
,with different base period series of indices to make continuity is termed
as “splicing” Splicing means the process of reducing two overlapping
series of indices with different base periods into a continuous index
number series.
Old index of overlap year
Forward splicing: × new index of calculation year
New index of overlap year

New index of overlap year

Backward splicing: × old index of calculation year
Old index of overlap year

Consumer price Index numbers (CPI)

Consumer price index is also known as cost-of-living index or price of
living index. It measures the relative change in the cost of maintaining a
certain standard of living of specified class of people over a period of time.
Consumer price index I is also known as Wholesale Price Index, cost of
living index or General Index. CLI is defined as the weighted AM of index
numbers of few groups of basic necessities. Generally, for calculating CLI;
food, clothing, house rent, fuel & lightning and miscellaneous groups are
taken into consideration.
Application of Cost of Living Index
➢ It helps to calculate the purchasing power of money and real income
of the consumer.
➢ Increase in CLI implies increase in price index causing thereby an
inflation i.e. reduction in the purchasing power.
100
Purchasing Power of Rs 1= ×1
cost of living index

1. Aggregate Expenditure Method

∑ 𝐩𝟏 𝐪𝟎
𝐂𝐏𝐈 = × 𝟏𝟎𝟎
∑ 𝐩𝟎 𝐪𝟎
2. Family Budget Method
∑ 𝑰𝑾 𝒑𝟏
𝑷𝟎𝟏 = ∑𝑾
× 𝟏𝟎𝟎 where 𝑰 =
𝒑𝟎
Characteristics of index numbers
1. index numbers are expressed in percentages
2. index numbers are specialized averages
3. index number measure changes not capable of direct measure
4. index number is a relative measure
5. index numbers are calculated for the purpose of comparison
6. index numbers are described economic barometer
7. index numbers measure the net change in group of relevant
variables.

MODULE III
CORRELATION AND REGRESSION ANALYSIS
Correlation
Correlation is a statistical technique which can be used to study the
relationship between two or more variables.
Uses of correlation analysis
1) It helps to understand the economic behavior.
2) It helps in estimating cost, price, etc.
3) It is used as a basis for regression analysis.
4) It helps to reduce range of uncertainty.
5) It measures the degree of relationship between variables.
Types / Classification of Correlation
1) Positive correlation
When the variables are varying in the same direction, it is called
positive correlation.
2) Negative correlation
When the variables are varying in the opposite direction, it is called
negative correlation.
3) Simple correlation
If only two variables are studied in a correlation analysis, it is called
simple correlation.
4) Multiple correlation
If more than two variables are studied in a correlation analysis, it is
called multiple correlation.

5) Partial correlation
It means the measure of association between two variables, while
controlling the effect of one or more additional variables.
6) Linear correlation
It means straight line relationship between two variables.
7) Non-linear correlation
It means there is no straight line or constant relationship between
two variables.

Degrees of Correlation
1. Perfect positive correlation
If an increase in the value of one variable is followed by the same
proportion of increase in the other variable, if a decrease in value of
one variable is followed by the same proportion of decrease in the
other variable, is called perfect positive correlation.

2. Perfect negative correlation

If an increase in the value of one variable is followed by the same
proportion of decrease in the other variable, if a decrease in value of
one variable is followed by the same proportion of increase in the
other variable, is called perfect positive correlation.
3. Limited degree of positive correlation
If an increase in the value of one variable is followed by a non-
proportional increase in the other variable, if a decrease in value of
one variable is followed by a non-proportional decrease in the other
variable, is called limited degree of positive correlation.
4. Limited degree of negative correlation
If an increase in the value of one variable is followed by a non-
proportional decrease in the other variable, if a decrease in value of
one variable is followed by a non-proportional increase in the other
variable, is called limited degree of negative correlation.
5. Zero correlation
No correlation between variables is called zero correlation.

Methods of studying correlation

1. Scatter diagram
2. Karl Pearson’s coefficient of correlation
3. Spearman’s rank correlation.
Scatter diagram
It is a graphical method of studying correlation.
Merits of scatter diagram
1. It is a simple method.
2. It is very easy to understand.
3. It does not have complex calculations
4. It is not influenced by the size of extremalities.
Demerits of scatter diagram
1. It gives only a rough idea about correlation.
2. It is not possible to establish extent degree of relationship.
Karl Pearson's coefficient of correlation
This is one of the most popular method of measuring correlation.
This method was developed by Karl Pearson in 1896.
Properties of Karl Pearson's coefficient of correlation
1. The coefficient of correlation lies between +1 and -1
2. No correlation denoted by r=0
3. It measures the degree and direction of changes.
4. It simply measures the correlation.

Merits of Karl Pearson’s coefficient of correlation

1. This is the most widely used method.
2. It gives a numerical value to express a relationship.
3. It gives both direction and degree of relationship between
variables.
4. It gives a single figure.
5. It gives accurate degree of correlation

Demerits of Karl Pearson’s coefficient of correlation

1. It is difficult to understand.
2. Time consuming method.
3. Complicated. mathematical calculations.
4. Unduly affected by extreme items.
5. Difficult to compute value of coefficient of correlation.
Probable error
It is a statistical device which measure the reliability and
dependability of value of coefficient of correlation.
Coefficient of determination
The square of coefficient of correlation is called coefficient of
determination.
Spearman’s rank correlation
The correlation coefficient obtained from ranks of the variables
instead of their quantitative measurement is called Spearman’s rank
correlation.

Merits of Spearman’s rank correlation

1. Simple to understand.
2. Easy to calculate.
3. It is an approximate measure.
4. It is useful when data are qualitative.
5. It can be applied for both quantitative and qualitative data.

Demerits of Spearman’s rank correlation

1. It is not convenient when N is large.
2. Further algebraic treatment is not possible.
3. It is applicable only individual observations.
4. It uses rank only. Ignores actual figures.
Regression
It is the measure of the average relationship between two or more
variables in terms of original units of the data.
Types of regression
1. Linear regression
It is a type of regression which uses only one independent variable
to explain the dependent variable.
2. Multiple regression
It is a type of regression which uses two or more variable to explain
the dependent variable.
Regression line
It is a line which shows average relationship between two variables X
and Y.

Regression equation
It is the algebraic expression of the regression lines.
Difference between Correlation and Regression
Correlation Regression
It studies the degree of It studies the nature of
relationship between variables. relationship between variables.
It is not used for prediction. It is used for prediction.
There is no question of There must be dependent and
dependent and independent independent variables.
variable.
It used to determine degree of It is used to study cause and
relationship. effect relationship.
There may nonsense correlation. There is no nonsense regression.
 MODULE IV
PROBABILITY

Set
Set is a well-defined collection of distinct objects.
Representation of Sets
1. Tabular method
In this method a set is described by the elements separated
by commas and enclosed with in braces
2. Set builder method
In this method set is represented by specifying the characteristics
property of its elements
Types of sets
1. Null set
A set containing no elements is called null or empty set
2. Single set
A set containing a single element is called single set or unit set

3. Finite set
Set consists of a finite number of elements
4. Infinite set
Set consists of a infinite number of elements
5. Equivalent set
Two sets A and B are said to be equivalent set then it contains
equal number of elements
6. Equal set
Two sets contain equal elements are called equal sets
7. Subset
If every element of A is an element of B then A is called subset of
B
 8. Universal set
If all the sets under consideration are subset of a fixed set U is
called Universal set
9. Disjoint set
Two sets A and B are said to be disjoint set if no elements A in B
Venn diagram
The relationship between sets can be represented by means of
diagram is known as Venn diagram.
Probability
Probability refers to the chance of happening or non-happening of
event.
Sample Point
Every indecomposable outcome of a random experiment is called
sample point.
Sample Space
It is a set containing all the sample points of that random
experiment.
Event
It is a subset of sample space.

Equally likely events

Two events are said to be equally likely if anyone them cannot be
expected to occur in preference to other.
Mutually exclusive events
A set of events are said to be mutually exclusive of occurrence of one
of them excludes the possibility of the occurrence of others.

Exhaustive events
It includes all possible outcomes of random experiment.
Dependent event
Happening of one event affect the happening of other is called
dependent event.
Permutation
It means arrangement of object in definite order.

Combination
It means selection of object without considering their order.
Classical definition of probability
If a random experiment results ‘n’ equally likely, mutually exclusive
and exhaustive number of cases of which ‘m’ cases are favourable to
the occurrence of an event ‘A’, then the probability of the event ‘A’ is
m
P(A) =
n

Relative frequency definition of probability

According to this definition, the probability of an event can be
defined as the relative frequency with which it occurs in an
indefinitely large number of trials. It is also called empirical
approach.

Axiomatic approach to probability

Let S be the sample space of a random experiment and A be an event
which is the subset of the sample space, so we can associate a real
number P(A) to the event A. P(A) is called the probability of the
event. It satisfies the following axioms:
1. 0 ≤ P(A) ≤ 1
2. P(S) = 1
3. P (A U B) = P(A) + P(B)
Addition theorem of probability
Mutually exclusive events Not mutually exclusive events
If two events A and B are If two events A and B are not
mutually exclusive, the mutually exclusive, the
probability of occurrence of probability of the occurrence of
either A or B is the sum of either A or B is the sum of their
individual probability of events A individual probability minus
and B. probability of both to happen.
P(A U B) = P(A) + P(B) P(A U B) = P(A)+P(B)-P(A∩B)
Multiplication theorem of probability
Independent variable Dependent variable
If two events are independent, If two events are dependent, the
then the probability of occurring probability of occurring the
both will be the product of second event will be affecting the
individual probability. outcome of the first.
P(A∩B) = P(A).P(B) P(A∩B) = P(A).P(B/A)
Baye’s Theorem
Let S be the sample space of a random experiment which is
partitioned into ‘n’ mutually exclusive events B1, B2,…., Bn. Let A be
an event in the sample space which can happen only if anyone of the
events B1, B2,…., Bn happens.
P(Bi).P(A/Bi)
P (Bi/A) = P(B1).P(A/B1)+P(B2)P(A/B2)+...+P(Bn)P(A/Bn)
 MODULE V
THEORETICAL DISTRIBUTION
Theoretical Distribution
Theoretical distribution is a distribution obtained for a random
variable on the basis of a mathematical model. It is also called
probability distribution.
Random Variable
It is a variable whose value is determined by the outcome of a
random experiment.
Discrete probability distribution
If the random variable of a probability distribution assumes specific
values only, it is called discrete probability distribution.
Continuous probability distribution
If random variable of a probability distribution assumes any value in
a given interval, it is called continuous probability distribution.
Binomial Distribution
Binomial distribution is the probability distribution expressing the
probability of one set of dichotomous alternatives that is success or
failure.
Properties of Binomial Distribution
1. It is a discrete probability distribution.
2. The mean of binomial distribution is np.
3. The SD of binomial distribution is √𝑛𝑝𝑞.
4. The shape and location of binomial distribution changes as ‘p’
changes for a given ‘n’.
 5. Mean of the binomial distribution increases as ‘n’ increases
with ‘p’ remaining constant.
Poisson Distribution
Poisson distribution is a discrete probability distribution that
expresses the probability of a given number of events occurring in a
fixed interval of time.
Properties of Poisson Distribution
1. It is a discrete probability distribution.
2. It is a positively skewed distribution.
3. Mean and variance of Poisson distribution are equal to ‘m’.
4. Standard deviation of Poisson distribution is √𝑚
5. In Poisson distribution, the number of success is relatively
small.
Uses of Poisson Distribution
1. Count the number of telephone calls.
2. Count the number of defects.
3. Count the number of bacteria per unit.
4. Count the number of accidents.
5. Count the number of persons dying due to heart attack.
Normal Distribution
Normal distribution is continuous probability distribution for a real
valued random variable.
Properties of Normal Distribution / Normal Curve
1. It is a continuous probability distribution.
2. Normal curve is symmetrical about the mean.
 3. Normal curve is bell shaped curve.
4. Both side of normal curve coincide exactly.
5. Normal curve is mesokurtic.
6. Normal curve is asymptotic to the base line.
7. Total area under a normal curve is 100%.

This is just a theory short note based on syllabus of Quantitative

Techniques for business. You should concentrate more on problems.
For full details of the subject, please refer text book.

ALL THE BEST