Quantitative analysis has been in existence since the beginning of recorded history, but Mr. Taylor coined the principals of the scientific approach to management that we know and use today. Quantitative analysis is defined as a scientific approach to managerial decision making. Quantitative analysis employees mathematical and statistical tools as well as quantitative information or data. Although it was coined quantitative analysis, qualitative factors must be considered also. If there is a lack of qualitative factors makes it difficult to quantify which can lead a hindrance in the decision making process. The successful use of quantitative techniques employing qualitative factors to help with decision making will result in a solution that is accurate, timely, flexible, reliable, economical, and easy to understand and use.
Quantitative analysis consists of seven steps that are used in its approach. The first step consists of defining the problem. This can be the most important step. It is used to develop a clear, concise statement of the problem at hand, which will give direction and meaning to the remaining six steps. It is likely that an organization will have several problems. Therefore it is important for a quantitative analysis group to concentrate on only a few problems so they can devout more time on solving the problem in clear and concise terms taking into account the objective or goal of each.
The second step is to as develop a model. A model is a representation of a situation that is usually mathematical. It captures all essential features but purges all irrelevant and insignificant details. It is considered a simplification or abstract representation of reality. In model building we follow Occam's Razor Principle. Which always starts simple then introduces complexities. Quantitative analysis models consist of two types of variables:.
1. Policy or decision variables- a controlled variable such as inventory.