Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd
Upload
30 views

Introduction

This document provides an introduction to the quantitative methods course BMAF 201, including an overview of operations research, quantitative techniques, and decision making. It discusses how quantitative methods can be used in decision making through examples like predicting trends, determining resource allocation, and evaluating investments. The document also outlines the decision making process and benefits of using quantitative techniques in business decision making such as improved decision quality, reduced risk, and increased efficiency.

Uploaded by

eunice Ilakiza
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
30 views

Introduction

This document provides an introduction to the quantitative methods course BMAF 201, including an overview of operations research, quantitative techniques, and decision making. It discusses how quantitative methods can be used in decision making through examples like predicting trends, determining resource allocation, and evaluating investments. The document also outlines the decision making process and benefits of using quantitative techniques in business decision making such as improved decision quality, reduced risk, and increased efficiency.

Uploaded by

eunice Ilakiza
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 13

BMAF 201

Quantitative Methods for Business Decisions


Topic 1: Introduction
• Quiz 1 (Testing knowledge on differentiation)
• Operations research
• Quantitative methods / techniques
• Decision making
• Uses / importance of quantitative methods or BMAF 201
• Importance of quantitative techniques in decision making
• Specific examples on how quantitative methods/techniques can be used in
decision making
• Benefits of using quantitative methods / techniques in decision making
• Quiz 2 (Using statistics techniques to inform investment decision)
QUIZ 1 (30.10.2023)

•
Operations research
The contents of this course of BMAF 201 follow the path of Operations
research.
Operations Research is the use of quantitative methods to assist analysts
and decision-makers in designing, analyzing, and improving the
performance or operation of systems.
System is a set of interrelated components that works together to perform a
specific task
• Financial systems (banks, insurance, investors), scientific or engineering
systems, or industrial systems (manufacturers, consumers)
Example of a system
Uses of operational research tools
• Optimize the performance of systems that are already well-understood,
or to investigate the performance of systems that are ill-defined or
poorly understood, perhaps to identify which aspects of the system are
controllable (and to what extent) and which are not. (Choose optimal
combination of variables to feed the system)
• Mathematical, computational, and analytical tools and devices are
employed to provide information and insight to human decision
makers to utilize and implement what has been learned through the
analysis process to achieve the most favorable performance of the
system.
Quantitative methods
Quantitative methods / approaches / techniques – the use of
mathematical, statistical, and programming tools to define, describe and
resolve wide range of problems.

What are these tools?


Linear programming, Non-linear programming, Probability, Game
theory, Inventory control models, Network models, Queuing models,
IRR for Project Management, Transportation and Assignment models,
matrix, regression etc
Uses of quantitative methods / techniques
1. Predicting trends i.e. forecasting models eg. Sales =
f(Advertisement, Inventory)
2. Determine allocation of resources through use of LPP i.e. how much
resources to use, how much output to produce.
3. Manage projects and evaluate investment i.e. use of IRR
4. Helps in choosing of optimal strategy i.e from game theory approach
5. Provide tools for business and market research
Decision making is the process of selecting one option from a set of
alternatives. It is a human process often aided by intuition as well as facts.
Rationality is the ability to make decisions that are in our best interests.
Bounded rationality is the idea that our rationality is limited by our
cognitive abilities and resources.
Rational decision making involves the following steps (Decision making
process)
• Identifying the problem or decision to be made.
• Gathering information about the alternatives.
• Evaluating the alternatives and their consequences.
• Selecting the best alternative.
• Implementing the decision and monitoring the results.
Quantitative techniques play an important role in business decision
making by helping businesses to:
• Identify problems and opportunities. Quantitative techniques can be
used to analyze data and identify trends, patterns, and relationships
that may not be immediately obvious. This can help businesses to
identify potential problems and opportunities early on.
• Evaluate alternatives and choose the best option. For example, a
business might use quantitative techniques to evaluate the potential
profitability of a new product or to determine the best way to allocate
resources.
• Make predictions about future events. This helps businesses to make
better decisions about things like inventory levels, marketing
campaigns, and staffing levels.
Some specific examples of how quantitative techniques can be used in
business decision making include: (Real world applicability of
quantitative techniques)
• Using market research data to identify customer needs and
preferences.
• Using financial analysis to assess the financial feasibility of a new
project.
• Using operations research techniques to optimize production and
inventory levels.
• Using statistical analysis to test the effectiveness of a new marketing
campaign.
• Using machine learning techniques to predict customer churn or to
recommend products to customers.
Here are some of the benefits of using quantitative techniques in
business decision making:
• Improved decision quality. Quantitative techniques can help
businesses to make better decisions by providing them with objective
and data-driven insights.
• Reduced risk. Quantitative techniques can help businesses to identify
and assess risks, and to develop strategies to mitigate those risks.
• Increased efficiency. Quantitative techniques can help businesses to
automate tasks and to make decisions more quickly and efficiently.
• Improved communication. Quantitative techniques can help businesses
to communicate their decisions to stakeholders more effectively.
QUIZ 2 (03.11.2023) (5 Marks)
One of the uses of the quantitative methods is to assist analysts to compare
between investments opportunities and come up with optimal decision. As an
analyst for investment company ABC you are required to advise clients on
what stocks to pick and buy. You have found below three stocks and computed
their average annual return and standard deviation.
Share for company X Annual Mean return = 16%, Annual Standard deviation = 27%
Share for company Y Annual Mean return = 14.5%, Annual Standard deviation = 39%
Share for company Z Annual Mean return = 13.6%, Annual Standard deviation = 3.5%

Applying your quantitative method skills on measure of central tendency and


measure of dispersion, a) which company would you advise your clients to
invest in? (2 marks) b) What is the basis / reason for your advice? (3 marks)

You might also like