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In the business world, and in fact, in practically every aspect of daily living,

quantitative techniques are used to assist in decision making. Why? Unlike

the classroom, in the real world there is often not enough information

available to be guaranteed of making a correct decision. For instance, if

advertisers would like to know how many households in the United States

with televisions are tuned to a particular television show, at a particular date

and time, it would be impossible to determine without the complete

cooperation of every household and an astonishing amount of time and

money. As a result of the inability to determine characteristics of interest,

the application of quantitative techniques has become a necessity.

Application of QT in functional areas of management: -

There are basically four functional areas of management: -

1. Planning : - It is the management function that involves defining goals,

establishing strategies for achieving those goals and developing plans

to integrate and co-ordinate activities.

Various Quantitative Techniques

like Linear Programming, PERT/CPM, Capital Budgeting Techniques etc

are mainly used in this function. Linear Programming is used to plan

the allocation of resources to various activities with the objective of

increasing profits or decreasing costs, keeping in mind various

constraints. PERT/CPM are the network analysis techniques used to

assist managers in planning large scale construction projects, research

& development. Capital Budgeting techniques like Pay Back Period

method, Accounting Rate of Return method, Internal Rate of Return etc

are used to check the feasibility of projects. Inventory management

techniques like EOQ are used to answer questions like: - When to

order, how much to order, Safety Stock etc keeping in mind the

ordering cost & the carrying cost. Game theory and Decision Theory

are used to plan the business strategies.

2. Organizing : - It is the management function that involves determining

what tasks are to be done, who is to do them, how the tasks are to be

grouped, who reports to whom and where decisions are to be made.

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Linear programming is used to guide the top management to make

proper organizational hierarchy to attain its objectives with

optimization of resources. Assignment techniques are used when

people of varying abilities have to do different jobs and the costs will

be different in each case, hence this technique helps us to assign the

jobs to people in such a way that overall costs are minimized.

Sequencing techniques are used where there is a choice as to the

order in which no. of tasks can be performed. Hence a proper

sequence has to be adopted to optimize the resources. Queuing theory

helps the management to solve queue problems and determine the

service costs and the waiting costs.

3. Directing : - It is the management function that involves the

accomplishment of organizational goals through people. It means thatDIRECTING involves start of working of organizational machinery. It

mainly involves the Organizational Behavior i.e. behavior of people

on work, motivation, leadership etc.

Here techniques like Assignment, Sequencing etc are used to

smoothen the working of the organization.

4. Controlling : - It is the management function that involves monitoring

actual performance, comparing actual to standard, and taking action if

necessary. This management function again leads to Planning function

and hence the cycle goes on and on..

Here Statistical techniques are used to make the scales for

performance appraisal of employees e.g. Graphic Rating Scales,

Behaviorally Anchored Rating Scales etc. Inventory management

techniques are used to set the standards for inventories and checking

the actual results of those techniques with the planned ones.

PERT/CPM is also used to assist the controlling the large scaleconstruction projects, research and development.

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In short nearly every quantitative technique is used in all the functional

areas of management. But we must not allow quantitative techniques

to make decisions for us; we must use these techniques only as a tool

to assist us in decision making.