Page 18 - DMGT209_QUANTITATIVE_TECHNIQUES_II

Unit 1: Quantitative Techniques for Managers

combined impact of a force that is constantly at work. This force has four components: Notes
(i) Editing time series data, (ii) secular trend, (iii) periodic changes, cyclical changes and
seasonal variations, and (iv) irregular or random variations. With time series analysis,
you can isolate and measure the separate effects of these forces on the variables. Examples
of these changes can be seen, if you start measuring increase in cost of living, increase of
population over a period of time, growth of agricultural food production in India over the
last fifteen years, seasonal requirement of items, and impact of floods, strikes, and wars
and so on.
(vii) Index Numbers: Index number is a relative number that is used to represent the net result
of change in a group of related variables that has some over a period of time. Index
numbers are stated in the form of percentages.

Example: If we say that the index of prices is 105, it means that prices have gone up by 5%
as compared to a point of reference, called the base year. If the prices of the year 1985 are
compared with those of 1975, the year 1985 would be called “given or current year” and the year
1975 would be termed as the “base year”. Index numbers are also used in comparing production,
sales price, volume employment, etc. changes over period of time, relative to a base.
(viii) Sampling and Statistical Inference: In many cases due to shortage of time, cost or non-
availability of data, only limited part or section of the universe (or population) is examined
to (i) get information about the universe as clearly and precisely as possible, and
(ii) determine the reliability of the estimates. This small part or section selected: from the

universe is called the sample and the process of selections such a section (or past) is called
sampling.
Scheme of drawing samples from the population can be classified into two broad categories:
(a) Random sampling schemes: In these schemes drawing of elements from the population
is random and selection of an element is made in such a way that every element has
equal chance (probability) of being selected.

(b) Non-random sampling schemes: In these schemes, drawing of elements from the
population is based on the choice or purpose of selector.
The sampling analysis through the use of various ‘tests’ namely Z-normal distribution, student’s
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‘t’ distribution; F-distribution and x -distribution make possible to derive inferences about
population parameters with specified level of significance and given degree of freedom. You
will read about a number of tests in this block to derive inference about population parameters.

Self Assessment

State whether true or false:
8. Regression measures the degree to which the change in one variable (the dependent
variable) is associated with change in the other variable (independent one).
9. Index number is a relative number that is used to represent the net result of change in a
group of related variables that has some over a period of time.
1.6 Advantages of Quantitative Approach to Management

Executives at all levels in business and industry come across the problem of making decision at
every stage in their day-to-day activities. Quantitative techniques provide the executive with
scientific basis for decision-making and enhance his ability to matte long-range plans and to

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