1. GROUP: 1IO 52A RMZ
SUBJECT: MODERN MANAGEMENT THEORY
THEME: “QUANTITATIVE THEORY OF MANAGEMENT”
NAME: SHOKHINUR KHAMROEVA
2. Branches of Quantitative Management:
The branches of quantitative management are:
(a) Management Science,
(b) Operations Management, and
(c) Management Information Systems.
3. (A) MANAGEMENT SCIENCE:
“Management science
is an approach that
aims at increasing
decision effectiveness
through the use of
sophisticated
mathematical models
and statistical
methods.”
4. (B) OPERATIONS MANAGEMENT:
“Operations management is the
function, or field of expertise, that is
primarily responsible for managing the
production and delivery of an
organisation’s products and services.”
In operations management, people use
quantitative techniques of forecasting,
inventory analysis, statistical quality
control methods, networking models
etc. in areas such as inventory
management, production planning,
designing the production process,
purchasing raw materials, storing and
selling the final products and similar
areas in manufacturing units.
5. (C) MANAGEMENT INFORMATION SYSTEM (MIS):
“MIS is the field of management that focuses on designing
and implementing computer-based information systems for
use by management.” Large amount of information is
quickly processed (conversion of raw data into useful
information) to make useful business decisions.
Problem-solving process in the quantitative theory is
depicted below:
6. ASSUMPTIONS OF QUANTITATIVE THEORY:
1. Organisations are decision-making units which make
efficient decisions through mathematical models.
2. Business problems can be solved through joint efforts of
a team that consists of experts from the fields of
mathematics, statistics, accountancy, engineering etc.
3. Business problems can be expressed in mathematical
models where relevant factors can be quantified in
numerical terms. Management is seen as mathematical
process expressed in terms of mathematical symbols and
relationships.
7. EVALUATION OF QUANTITATIVE MANAGEMENT:
The quantitative theory (or
management science theory)
considers solving complex
business problems in financial
management, inventory
valuation, inventory control,
production scheduling, human
resource planning and other
areas where quantifiable data
can be obtained.
8. SOME OF THE POSITIVE ATTRIBUTES OF THIS
THEORY ARE:
1. It establishes relationships amongst quantifiable variables of
decision-making situations and facilitates disciplined thinking.
2. Mathematical models help to derive precise and accurate
results by analysing complex statistical data.
3. This approach is useful in areas of planning and control
where data is available in quantitative terms. Decisions are
based on data and logic rather than intuition and judgement.
4. Computers have facilitated analysis of almost every variable
that affects the workplace that might otherwise have been
overlooked. Statistical packages are available which facilitate
analysis of qualitative data also (dummy variables are used to
analyse the non-quantifiable data).
9. LIMITATIONS OF QUANTITATIVE MANAGEMENT:
Despite its widespread
use in the business
world, its application is
restricted in certain
areas. All managerial
problems cannot be
solved by
mathematical models.
10. THIS THEORY, THEREFORE, SUFFERS FROM THE
FOLLOWING LIMITATIONS:
1. Its application is restricted in areas that deal with
human behavior. Human behavior cannot be predicted
through mathematical equations. Use of behavioral
techniques is more appropriate in such situations.
2. Amongst different functions of management, its use is
limited in organizing, staffing and directing. It applies
more in planning and control functions.
3. Even where this theory is applicable, it does not
eliminate risk but only attempts to reduce it. In fact, in
many situations mathematical models may just be used
as models for analyzing the results rather than used as
the basis for making decisions
11. 4. This approach assumes that all the variables affecting
the problem can be quantified in numerical terms which is
not always true.
5. In some cases, managers are constrained by time, cost
and technological considerations in collecting data
relevant for decision-making. Decisions in such cases are
based on availability of limited information. Such
decisions are not optimum decisions but only ‘satisfying
decisions’. Though this theory has restricted use in
certain areas, it is of immense use in areas where data
can be obtained in quantitative terms.
