Scope and Applications of Quantitative Techniques

The scope of statistics was primarily limited in the sense that the ruling kings used to collect data so as to frame suitable military and fiscal policies only. Hence they heavily depended upon statistics. As time went on, statistics came to be regarded as a method of handling and analyzing the numerical facts and figures.

In recent years, the activities of the state have increased tremendously. Statistical facts and figures are of immense help in promoting human welfare. Today, the scope of statistics is so vast and ever expanding. It influences everybody’s life. Even an entry into the world and exit are systematically recorded.

There is no branch of human activity that can escape the attention of statistics. It is a tool of all sciences. It is indispensable for research and intelligent judgment. It has become a recognized discipline in its own right. A few specific areas of application are mentioned below.

• Finance and Accounting: Cash flow analysis, Capital budgeting, Dividend and Portfolio management, Financial planning.
• Marketing Management: Selection of product mix, Sales resources allocation and Assignments.
• Production Management: Facilities planning, Manufacturing, Aggregate planning, Inventory control, Quality control, Work scheduling, Job sequencing, Maintenance and Project planning and scheduling.
• Personnel Management: Manpower planning, Resource allocation, Staffing, Scheduling of training programs.
• General Management: Decision Support System and Management of Information Systems, MIS, Organizational design and control, Software Process Management and Knowledge Management.

Applications

Applications of Quantitative Analysis in the Business Sector

Business owners are often forced to make decisions under conditions of uncertainty. Luckily, quantitative techniques enable them to make the best estimates and thus minimize the risks associated with a particular decision. Ideally, quantitative models provide company owners with a better understanding of information, to enable them to make the best possible decisions.

Project Management

One area where quantitative analysis is considered an indispensable tool is in project management. As mentioned earlier, quantitative methods are used to find the best ways of allocating resources, especially if these resources are scarce. Projects are then scheduled based on the availability of certain resources.

Production Planning

Quantitative analysis also helps individuals to make informed product-planning decisions. Let’s say a company is finding it challenging to estimate the size and location of a new production facility. Quantitative analysis can be employed to assess different proposals for costs, timing, and location. With effective product planning and scheduling, companies will be more able to meet their customers’ needs while also maximizing their profits.

Marketing

Every business needs a proper marketing strategy. However, setting a budget for the marketing department can be tricky, especially if its objectives are not set. With the right quantitative method, marketers can find an easy way of setting the required budget and allocating media purchases. The decisions can be based on data obtained from marketing campaigns.

Finance

The accounting department of a business also relies heavily on quantitative analysis. Accounting personnel use different quantitative data and methods such as the discounted cash flow model to estimate the value of an investment. Products can also be evaluated, based on the costs of producing them and the profits they generate.

Purchase and Inventory

One of the greatest challenges that businesses face is being able to predict the demand for a product or service. However, with quantitative techniques, companies can be guided on just how many materials they need to purchase, the level of inventory to maintain, and the costs they’re likely to incur when shipping and storing finished goods.

The Bottom Line

Quantitative analysis is the use of mathematical and statistical techniques to assess the performance of a business. Before the advent of quantitative analysis, many company directors based their decisions on experience and gut. Business owners can now use quantitative methods to predict trends, determine the allocation of resources, and manage projects.