Decision analysis concept and definition of quantitative techniques
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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. In order to work effectively in a modern business organisation, whether the organisation is a private commercial company, a government agency, a state industry or whatever, managers must be able to use quantitative techniques in a confident and reliable manner. Accountants make decisions based on the information relating to the financial state of organization. Economists make decision based on the information relating to the economic framework in which the organization operates. Marketing staff make decisions based on customer response to product and design.
Personnel managers make decisions based on the information relating to the levels of employment in the organization, and so on. Such information is increasingly quantitative and it is apparent that managers need a working knowledge of the procedures and techniques appropriate for analyzing and evaluating such information. Such analysis and certainly the business evaluation cannot be delegated to the specialist statistician or mathematician, who, adept though they might be at sophisticated numerical analysis will frequently have little overall understanding of the business relevance of such analysis.
The importance of quantitative methods for managers
The quantitative methods contain two component parts, the quantitative and method, with asymmetrical attention to the quantitative term.
Speaking about method, interest is focused upon the so- called Scientific Method. Science is the mastering of things of the real world, by knowledge about the truth. The term method drives to dialogue on methodology in science which is clouded, as the phrase scientific method is used in two different ways. The one is very general, as a process of improving understanding. Although vague, it is considered as a powerful definition, since it leaves room for criticizing dogmatic clinging to beliefs and prejudices, or appreciating careful and systematic reasoning about empirical evidence. The other is the traditional sense, and supports that there is a unique standard method, which is central to identity of the science. In effect, scientific progress requires many methods, so there is not a unique standard method, though taught as a straightforward testing hypotheses derived from theories in order to test those theories. The more acceptable definition of scientific method is a process by which scientists, collectively and over time, endeavour to construct an accurate (that is reliable, consistent and non-arbitrary) representation of the real world. The popular hypothetic-deductive standard method is excluding consideration of the process of discovery in science. Rather, research is defined as a penetrating process of learning and understanding the substance of actual things and facts, by use of different methods. The research process incorporates formulation of a research issue and construction of a conceptual framework, by using all available information sources.
The quantitative methods have a number of attributes, such as: they employ measurable data to reach comparable and useful results, assume alternative plans for achieving objectives, plan data, concerning observations collection, configuration and elaboration by statistical and econometric stochastic methods, check data reliability, choose appropriate sampling method, use carefully the estimates of the parameters for forecasting and planning purposes, etc. since they derive from ex-post data concerning past.
In an increasingly complex business environment managers have to grapple with a problems and issues which range from the relatively trivial to the strategic. In such an environment the quantitative techniques have an important role. It is obvious that life for any manager in any organization is becoming increasingly difficult and complex. Although there are many factors contributing to this, figure 1 illustrates some of the major pressures making decision making increasingly problematic. Organizations find them selves operating in an increasingly complex environment. Changes in government policy, privatization, increasing involvement of the European Union contribute to this complexity. At the same time, organizations face increasing competition from both home and abroad.
Personnel managers make decisions based on the information relating to the levels of employment in the organization, and so on. Such information is increasingly quantitative and it is apparent that managers need a working knowledge of the procedures and techniques appropriate for analyzing and evaluating such information. Such analysis and certainly the business evaluation cannot be delegated to the specialist statistician or mathematician, who, adept though they might be at sophisticated numerical analysis will frequently have little overall understanding of the business relevance of such analysis.
The importance of quantitative methods for managers
The quantitative methods contain two component parts, the quantitative and method, with asymmetrical attention to the quantitative term.
Speaking about method, interest is focused upon the so- called Scientific Method. Science is the mastering of things of the real world, by knowledge about the truth. The term method drives to dialogue on methodology in science which is clouded, as the phrase scientific method is used in two different ways. The one is very general, as a process of improving understanding. Although vague, it is considered as a powerful definition, since it leaves room for criticizing dogmatic clinging to beliefs and prejudices, or appreciating careful and systematic reasoning about empirical evidence. The other is the traditional sense, and supports that there is a unique standard method, which is central to identity of the science. In effect, scientific progress requires many methods, so there is not a unique standard method, though taught as a straightforward testing hypotheses derived from theories in order to test those theories. The more acceptable definition of scientific method is a process by which scientists, collectively and over time, endeavour to construct an accurate (that is reliable, consistent and non-arbitrary) representation of the real world. The popular hypothetic-deductive standard method is excluding consideration of the process of discovery in science. Rather, research is defined as a penetrating process of learning and understanding the substance of actual things and facts, by use of different methods. The research process incorporates formulation of a research issue and construction of a conceptual framework, by using all available information sources.
The quantitative methods have a number of attributes, such as: they employ measurable data to reach comparable and useful results, assume alternative plans for achieving objectives, plan data, concerning observations collection, configuration and elaboration by statistical and econometric stochastic methods, check data reliability, choose appropriate sampling method, use carefully the estimates of the parameters for forecasting and planning purposes, etc. since they derive from ex-post data concerning past.
In an increasingly complex business environment managers have to grapple with a problems and issues which range from the relatively trivial to the strategic. In such an environment the quantitative techniques have an important role. It is obvious that life for any manager in any organization is becoming increasingly difficult and complex. Although there are many factors contributing to this, figure 1 illustrates some of the major pressures making decision making increasingly problematic. Organizations find them selves operating in an increasingly complex environment. Changes in government policy, privatization, increasing involvement of the European Union contribute to this complexity. At the same time, organizations face increasing competition from both home and abroad.
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