What is the role and scope of quantitative methods of scientific decision making in business management?

Answer 1

An accessible introduction to the essential quantitative methods for making valuable business decisions. Quantitative methods-research techniques used to analyze quantitative data-enable professionals to organize and understand numbers and, in turn, to make good decisions.

The quantitative techniques help in decision making process in the way that identify the factors which influence the decisions and quantify them. It becomes easier to resolve the complexity of the decision making. Some of the quantitative techniques such as decision theory and simulation work best in complex decisions.

Quantitative techniques can be understood as a collection of mathematical and statistical tools

that are used to provide powerful means of analysis using quantitative data for effective decision

making in business. These techniques involve systematics and scientific methods for solving

complex problems for taking effective business decisions.

Quantitative techniques involve the use of numbers symbols, mathematical expressions, and

other elements of quantities, and serve as supplements to the judgment and intuitions of the

decision makers. These tools help businesses in optimum utilization of limited resources.

Traditionally, quantitative techniques are understood by different names such operation research,

or management science. More recently, statistical techniques are also understood to have been

part of quantitative techniques

3. Decision making

Decision making pervade all aspects of the business. The verb decide has been derived from

Latin prefix ‘de’ and the word ‘caedo’ meaning “off” and “to cut” respectively. This led to origin

of the word “Decido ” or deciduous, referring to those plants the leaves of which fall in the

autumn. But that is only one meaning of it. Other word derived from it is “decide” that means

“take the plunge” suggesting the meaning of in which making a wrong decision provokes the

fear of falling.

As per Drucker long range planning deals with the futurity of present decisions rather than future

decisions. Thus it relates present planning and future events. Current decisions should be made

keeping in mind the anticipated effect and the outcome of events that influences future values

and decisions. Decisions should balance efficiency with flexibility, and existing opportunities to

react to future circumstances and needs.

Decision making process

Decision making is systematic process involving several steps such as identifying the problem or

issue, identifying decision criteria, allocating weights to decision criteria, generating alternatives,

evaluating and choosing an alternative, implementing the decision alternative and finally

evaluating if the decision alternative was effective or not. For example, If an organization is

deciding to buy laptops for its 500 employees, then it needs to first find out why these laptops are

needed, the kind of configuration needed in those laptops, the price, quality, service warranties

that different vendors will be charging, evaluating a set of vendors and then take a decision to

order from a vendor.

Decision making, Rationality and Bounded Rationality

It is assume that managers make rational decision making by making logical and consistent

choices to so as to maximize value. But it may not be possible as right and timely information to

make fully rational decisions is not available in most of the situations.