Solution to question one

Part a)

Correlation is a measure of association between two or more variables. When two or more
variables very in sympathy so that movement in one tends to be accompanied by corresponding
movements in the other variable(s), they are said to be correlated.

“The correlation between variables is a measure of the nature and degree of association between
the variables”. As a measure of the degree of relatedness of two variables, correlation is widely
used in exploratory research when the objective is to locate variables that might be related in
some way to the variable of interest.

The following are the different types of correlation

Positive and Negative Correlation; If both the variables move in the same direction, we say that
there is a positive correlation, i.e., if one variable increases, the other variable also increases on
an average or if one variable decreases, the other variable also decreases on an average. On the
other hand, if the variables are varying in opposite direction, we say that it is a case of negative
correlation; e.g., movements of demand and supply.

Linear and Non-linear (Curvilinear) Correlation; If the change in one variable is accompanied
by change in another variable in a constant ratio, it is a case of linear correlation. On the other
hand, if the amount of change in one variable does not follow a constant ratio with the change in
another variable, it is a case of non-linear or curvilinear correlation. If a couple of figures in
either series X or series Y are changed, it would give a non-linear correlation.

Simple, Partial and Multiple Correlation; The distinction amongst these three types of
correlation depends upon the number of variables involved in a study. If only two variables are
involved in a study, then the correlation is said to be simple correlation. When three or more
variables are involved in a study, then it is a problem of either partial or multiple correlation. In
multiple correlation, three or more variables are studied simultaneously. But in partial correlation
we consider only two variables influencing each other while the effect of other variable(s) is held
constant.
Part b)

Let xi be the rank given by the first judge

Let yi be the rank givenby the second judge

Let n as thenumber of competitors ( which is 10∈this case )

Using spearman rank correlation

2
6∑d
.rs=1−
n ( n2−1 )

Where di=xi− yi

1st and 2nd Judges

.di= (1−3 ) , ( 6−5 ) , ( 5−8 ) , (10−4 ) , (3−7 ) , ( 2−10 ) , ( 4−2 ) , ( 9−1 ) , ( 7−6 ) , ( 8−9 )

.di=2, 1 ,3 ,6 , 4 , 8 ,2 , 8 , 1 ,1

.∑ d 2=22+12 +32 +6 2+ 4 2+8 2+ 22+ 82+ 12+12

.∑ d 2=200

2nd and 3rd judges

.di= ( 3−6 ) , ( 5−4 ) , ( 8−9 ) , ( 4−8 ) , ( 7−1 ) , ( 10−2 ) , ( 2−3 ) , ( 1−10 ) , (6−5 ) , ( 9−7 )

.di=3 ,1 , 1, 4 , 6 , 8 ,1 , 9 , 1 ,2

.∑ d 2=3 2+1 2+12 + 42 +62 +8 2+12 +9 2+1 2+22

.∑ d 2=230

1st and 3rd judges

.di= (1−6 ) , ( 6−4 ) , ( 5−9 ) , ( 10−8 ) , ( 3−1 ) , ( 2−2 ) , ( 4−3 ) , ( 9−10 ) , (7−5 ) ,(8−7)

.di=5 ,2 , 4 ,2 , 2 ,0 , 1 , 1, 2 , 1

.∑ d 2=5 2+ 22+ 42 +22 +22 +02 +12 +12 +22 +12

.∑ d 2=81
1st and 2nd judges

2
6∑d
.¿ rs=1−
n ( n2−1 )

6∗200
.rs=1−
10 ( 102 −1 )

1200
.rs=1−
990

.rs=1−1.21

.rs ≈−0.21

2nd and 3rd judges

2
6∑d
.¿ rs=1−
n ( n2−1 )

6∗23 0
.rs=1−
10 ( 102 −1 )

1380
.rs=1−
990

.rs=1−1.39

.rs ≈−0.39

1st and 3rd judges

2
6∑d
.¿ rs=1−
n ( n2−1 )

6∗200 81
.rs=1−
10 ( 102 −1 )

486
.rs=1−
990

.rs=1−0.49
.rs ≈ 0.51

The closest approach to common tastes in beauty is between the 1 st and 3rd judge, with a
spearman rank correlation coefficient of approximately 0.51

Solution to question two

Part a)

Decision-making process involves the following steps:

Identify the problem: Decisions are made to solve problems. As a first step of decision-making,
therefore, managers identify the problem. Problem is any deviation from a set of expectations.
Managers scan the internal and external environment to see if the organizational operations
conform to environmental standards. It not, it signals a problem. If company's sales target is
10,000 units per annum but actual sales are 7,000 units, managers sense problem in the company.
The problem is identified with the marketing department. Managers use their judgement,
imagination and experience to identify the problem as wrong identification leads to wrong
decisions.

Diagnose the problem: Managers find cause of the problem by collecting facts and information
that have resulted in the problem. Diagnosis helps to define the problem; its causes, dimensions,
degree of severity and origin so that remedial action can be taken. Managers get to the core of
the problem and isolate the problem in a separate category of operations called the problem-
solving area. In the above example, managers search for reasons of low sales. It could be low
quality, poor promotion, better product introduced by competitors etc. The exact reason is found
and the problem is said to have been diagnosed.

Establish objectives: Objective is the end result that mangers achieve through the decision-
making process. Establishing objectives means deciding to solve the problem. The resolution
forms the objective of decision-making. If the reason for low sales is poor salesmanship,
managers form the objective of improving the skills of salesmen to promote sales.

Collect information: In order to generate alternatives to solve the problem, managers collect
information from the internal and external environment. Information provides inputs for
generating solutions. Information can be quantitative or qualitative. It should be reliable,
adequate and timely so that right action can be taken at the right time.

Generate alternative: Alternatives means developing two or more ways of solving the problem.
Managers develop as many solutions as possible to choose the best, creative and most applicable
alternative to solve the problem.

A.F. Osborn identifies four principles which help to generate alternatives:

(a) Do not criticize ideas while generating possible solutions: Managers should react positively
to all the ideas. Criticism at the stage of generating solutions can limit the number of alternatives.

(b) Freewheel: Even the remote possible solutions which may not be relevant to the problem
should be taken into consideration. These may not be acceptable independently but may be
useful in the overall decision-making process.

(c) Offer as many ideas as possible: Managers should invite maximum ideas for framing
solutions to the problem. Large number of ideas help to arrive at the most effective solution to
the prblem.

(d) Combine and improve on ideas that have been offered: Combination of all the ideas help to
arrive at the best solution.

Evaluate alternatives: All the alternatives are weighed against each other with respect to their
strengths and weaknesses. They are useful if they help to achieve the objective. Alternatives are
evaluated in terms of acceptable criteria to analyze their impact on the problem. Various
quantitative and qualitative criteria against which alternatives are evaluated are as follows:

(a) Costs: Alternatives should not be costly. Improving the skills of salesmen by firing the
existing salesman and hiring new ones may involve strain on company's financial resources.
Such alternatives should be avoided.

(b) Resources: The alternative must fit into the organization’s resource structure. They must be
feasible with respect to budgets, policies and technological set up of the organization.

(c) Acceptable: Alternative should be acceptable to decision-makers and those who are affected
by the decisions. If managers want to increase sales by spending more on advertisement but
finance department refuses to accept the extra financial burden on advertisement, this alternative
should be dropped.

(d) Reversible: A decision is reversible if it can be taken back and other measures can be
adopted. In the above example, if decision to increase sales by increasing cost of advertisement
is not acceptable to all in the organisation, it can be reversed but decision to invest in land and
building cannot be easily reversed as huge amount of time, effort and money are involved in it.
Reversibility of the decision is an important factor that helps to evaluate alternatives.

Select the alternative: After evaluating the alternatives against accepted criteria, managers
screen the non-feasible alternatives and select the most appropriate alternative to achieve the
desired objective. Alternative can be selected through the following approaches:

(a) Experience: Past experience guides the future. Managers follow past actions, search for their
successes and failures, analyze them in the context of future environment and select the most
suitable alternative that suits the present situation.

(b) Experimentation: An alternative to experience is experimentation where each alternative is

put to practice and most suitable alternative is selected. This method is costly as implementation
of every alternative to the decision-making situation involves heavy capital expenditure. Testing
each alternative, therefore, is not possible. Also, this method may be suitable in the present
circumstances only. The selected course of action should meet the future requirement also.

(c) Research and analysis: It helps to search and analyses the impact of future variables on the
present situations, apply mathematical models and select the most suitable alternative. This
method is more suitable and less costly, in terms of time and money, as compared to
experimentation and experience.

Implement the alternative: The selected alternative should be accepted and implemented by the
organizational members. Implementation must be planned. Those who will be affected by
implementation should participate in the implementation process to make it effective and fruitful.
Implementation of the alternative should ensure the following:

(a) The selected alternative should be communicated to everyone in the organization.

(b) Changes in the organization structure because of implementation should be communicated to
everyone in the organization.

(c) Authority and responsibility for implementation should be specifically assigned.

(d) Resources should be allocated to departments for carrying out the decisions.

(e) Budgets, schedules, procedures and controls should be established to ensure effective
implementation.

(f) A committed workforce should be promoted. Unless everyone is committed to the decision,
the desired outcome will not be achieved.

Monitor the implementations: The implementation process should be monitored to know its
acceptability amongst organizational members. The alternative should be regularly monitored,
through progress reports, to see whether the objective for which it was selected is achieved or
not. If not, managers should make corrections wherever necessary in the implementation process.
It may even require restart of the entire decision-making process. If yes, such alternative forms
the basis for future decision- making.

Part b)

Quantitative techniques play a crucial role in business decision-making by providing tools and
methods to analyze and interpret data, assess risks, optimize processes, and make informed
choices. Here are some key aspects of their role:

Data Analysis: Quantitative techniques allow businesses to analyze large datasets to identify
patterns, trends, and correlations. This analysis can help in understanding customer behavior,
market trends, and operational efficiencies.

Forecasting: Businesses use quantitative techniques such as time series analysis and regression
analysis to forecast future trends in sales, demand, and other key metrics. These forecasts are
vital for planning production, inventory management, and resource allocation.

Optimization: Quantitative techniques like linear programming, integer programming, and

simulation models help businesses optimize resources, such as production capacity, workforce
scheduling, and inventory levels. Optimization aims to maximize profits or minimize costs while
adhering to various constraints.

Risk Management: Quantitative techniques, including probability theory and Monte Carlo
simulation, assist in assessing and managing risks associated with business decisions. By
quantifying uncertainties and assessing their potential impact, businesses can make more
informed decisions to mitigate risks effectively.

Decision Support: Quantitative models provide decision-makers with valuable insights and
recommendations based on rigorous analysis of data and scenarios. Decision support systems
(DSS) and business intelligence tools often incorporate quantitative techniques to assist
managers in evaluating alternatives and selecting the best course of action.

Performance Evaluation: Quantitative techniques enable businesses to measure and evaluate

performance using key performance indicators (KPIs), balanced scorecards, and other metrics.
This evaluation helps in assessing the effectiveness of strategies and identifying areas for
improvement.

Market Analysis: Quantitative techniques are widely used in market research to analyze
consumer preferences, conduct segmentation, and assess market potential. Techniques such as
conjoint analysis and cluster analysis provide valuable insights into customer behavior and
market dynamics.

Financial Analysis: Quantitative techniques are essential in financial analysis for assessing
investment opportunities, valuing assets, and managing financial risks. Tools like discounted
cash flow (DCF) analysis, financial modeling, and risk assessment models are commonly used in
financial decision-making.

Overall, quantitative techniques serve as powerful tools for enhancing the quality and
effectiveness of business decision-making, enabling organizations to make data-driven choices in
an increasingly complex and competitive environment.