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Methods

RISHAB

Why should I care to study this subject?

QM in Business

QM helps managers to

Identify, Collect, Interpret, Analyze, and Manipulating Data

Why?

Because managers need answers.

Why managers need answers?

Because managers have to take decisions.

Why managers need to take decisions?

Do managers really need QM to take decisions?

Do managers use mathematics while thinking about a

problem and finding the solution and then take the

decision?

Yes or No

Most of the problems require quick solutions and many a

times a manager has to take a shot based on intuition.

By mastering the skill of quick decision making

How does one master this skill?

Use QM.

methods

Marketing

Electronic point-of-sale scanners at retail checkout counters are

used to collect

data for a variety of marketing research applications.

Production

A variety of statistical quality control charts are used to monitor

the output of a production process.

Finance

Financial advisors use price-earning ratios and dividend yields to

guide their investment recommendations.

Syllabus

Scales of Measurement: Nominal, Ordinal, Interval, and Ratio

Scale

Probability: Fundamentals, Addition Theorem, Multiplication

Theorem, Bayes Theorem, Random Variable

Probability Distributions: Binomial, Poisson and Normal

Distribution

Sampling and Sampling Distributions: Population, Sample, Types

of Sampling, Sampling Distributions, Standard Errors, Sampling from

Normal and Non-normal Population, Central Limit Theorem, Finite

Population Parameters

Syllabus

Estimation:

Point and Interval Estimation, Confidence Intervals, Interval

estimates of Mean and Proportion from Large Samples, Interval

Estimation using t-distribution, Sample size for estimating means

and proportions

Hypothesis: Null, Alternate Hypothesis, Steps of Formulating

Hypotheses

Testing of Hypotheses: Basic Concepts, Type I and Type II

Errors, One Tailed and Two Tailed Tests, One Sample Tests,

Hypothesis Testing of Means when Population Standard

Derivation is Known and when Unknown, Hypothesis Testing of

Proportions for Large Samples. Two Sample Tests for Equality of

Coverage

Chi-Square: Chi Square Test of Independence. and Goodness of

fit.

Analysis of Variance (One Way ANOVA): Test for Equality of

Means. Inference about a population variance and about two

population variances.

Bivariate analysis: Bivariate correlation and regression,

Coefficient of determination, assumptions in the regression

model, tests of significance for the correlation and regression

coefficients.

Syllabus

Time Series Analysis: Components of Time Series, Trend AnalysisMoving Average, Fitting linear and second degree trends, Seasonal

Variation (Computing using Ratio to Trend Method), Cyclical Variation.

Irregular Variation, Problems Involving All Four Components of Time

Series.

Decision Trees: Decision Tree Analysis-Expected value under risk,

under perfect information, and under sample information.

Linear Programming, Transportation and Assignment

problems: Formulating Linear Programming Problems, Graphical

approach, Formulation of Transportation and Assignment problems,

Solutions using Excel solver and other software.

Case Studies

ICICI Banks Get up to 100% Cash Back offer Real Foods

Solnyx Pharmaceuticals: The Atoxeril Clinical Trial

Care Hygiene

Roja Silks

Hindustan Foods

Ram Publishers

Lakshmi Engines

Best Fibre

Text Books

1. Louise Swift and Sally Piff (2010), Quantitative Methods for

business, management and finance, 3rd Edition, Palgrave Macmillan.

2. Anderson, Sweeney and Williams (2011), Statistics for Business

and Economics, 9th Edition, Cengage Learning

3. Levine, Stephan, Krehbiel and Berenson (2010), Statistics for

Managers, 5th Edition, PHI

Scales of Measurement

Nominal Scale

Ordinal Scale

Interval Scale

Ratio Scale

Nominal Scale

Tag

Ordinal Scale

Rank

Interval Scale

Difference

Ratio Scale

Proportion

True Zero

Scales of Measurement

Introduction to Probability

Experiments, Counting Rules, and Assigning Probability

Events and their probabilities

Basic Relationships of Probability

Conditional Probability

Bayes Theorem

of Favorable Occurrence

Increasing Likelihood of Occurrence

Probability

:

0

The event

is very

unlikely

to occur.

.

5

is almost

of the event is

certain

just as likely as

to occur.

it is unlikely.

Space

An experiment is any process that generates well-defined outcomes

The sample space for an experiment is the set of all experimental outcomes

An experimental outcome is also called a sample point

Assigning Probability

Classical Method

Relative Frequency Method

Subjective Method

Classical Method

If an experiment has n possible outcomes, this method

would assign a probability of 1/n to each outcome.

Example

Experiment: Rolling a die

Sample Space: S = {1, 2, 3, 4, 5, 6}

Probabilities: Each sample point has a

1/6 chance of occurring

Each probability assignment is given by

dividing the frequency (number of days) by

the total frequency (total number of days).

Number of

Number

Polishers Rented of Days Probability

.10

4

0

.15

6

1

4/40

.45

18

2

.25

10

3

.05

2

4

1.00

40

Subjective Method

When economic conditions and a companys

circumstances change rapidly it might be

inappropriate to assign probabilities based solely on

historical data.

We can use any data available as well as our

experience and intuition, but ultimately a probability

value should express our degree of belief that the

experimental outcome will occur.

The best probability estimates often are obtained by

combining the estimates from the classical or relative

frequency approach with the subjective estimate.

An

An event

event is

is aa collection

collection of

of sample

sample points.

points.

The

The probability

probability of

of any

any event

event is

is equal

equal to

to the

the sum

sum of

of

the

the probabilities

probabilities of

of the

the sample

sample points

points in

in the

the event.

event.

IfIf we

we can

can identify

identify all

all the

the sample

sample points

points of

of an

an

experiment

experiment and

and assign

assign aa probability

probability to

to each,

each, we

we

can

can compute

compute the

the probability

probability of

of an

an event.

event.

Relationships

There are some basic probability relationships that

can be used to compute the probability of an event

without knowledge of all the sample point probabilities.

Complement

Complement of

of an

an Event

Event

Union

Union of

of Two

Two Events

Events

Intersection

Intersection of

of Two

Two Events

Events

Mutually

Mutually Exclusive

Exclusive Events

Events

Compliment of an Event

The

The complement

complement of

of event

event AA is

is defined

defined to

to be

be the

the event

event

consisting

consisting of

of all

all sample

sample points

points that

that are

are not

not in

in A.

A.

cc

The

complement

of

A

is

denoted

by

A

The complement of A is denoted by A ..

Event A

Venn

Diagram

Ac

Sample

Space S

The

The union

union of

of events

events AA and

and BB is

is the

the event

event containing

containing

all

all sample

sample points

points that

that are

are in

in AA or

or BB or

or both.

both.

The

The union

union of

of events

events AA and

and BB is

is denoted

denoted by

by AA B

B

Event A

Event B

Sample

Space S

The

The intersection

intersection of

of events

events AA and

and BB is

is the

the set

set of

of all

all

sample

sample points

points that

that are

are in

in both

both AA and

and B.

B.

The

The intersection

intersection of

of events

events AA and

and BB is

is denoted

denoted by

by AA

Event A

Event B

Intersection of A and B

Sample

Space S

Addition Law

The

The addition

addition law

law provides

provides aa way

way to

to compute

compute the

the

probability

probability of

of event

event A,

A, or

or B,

B, or

or both

both AA and

and BB occurring.

occurring.

The

The law

law is

is written

written as:

as:

P(A B) = P(A) + P(B) P(A B

Two

Two events

events are

are said

said to

to be

be mutually

mutually exclusive

exclusive ifif the

the

events

events have

have no

no sample

sample points

points in

in common.

common.

Two

Two events

events are

are mutually

mutually exclusive

exclusive if,

if, when

when one

one event

event

occurs,

occurs, the

the other

other cannot

cannot occur.

occur.

Event A

Event B

Sample

Space S

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