Quantitative Management

Measure of Central Tendency
NISHANT PANWAR nishant_panwar82@yahoo.com
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SYLLABUS
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STATISTICS
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MEASUREMENT OF CENTRAL TENDENCY. (1) BASIC CONCEPTS OF PROBABILITY. (2) PROBABILITY DISTRIBUTION. (1) DECISION THEORY. (1)
OPERATIONAL RESEARCH
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LINEAR PROGRAMMING (4) TRANSPORTATION (2) ASSINGMENT (1) WAITING LINE MODEL (1) SIMULATION MODEL. (1)
MEASUREMENT OF CENTRAL TENDENCY

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STRUCTURING OF DATA
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TABLES DIAGRAMS
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LINE BAR CHARTS PICTOGRAMS SCATTER DIAGRAM PIE CHART HISTOGRAMS FREQUENCY POLYGONS/CURVES ORGIVES (CUMULATIVE FREQUENCY CURVES).
FREQUENCY DISTRIBUTION
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SUMMARY STATISTICS
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MEASURES
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CENTRAL TENDENCY DISPERSION SKEWNESS KURTOSIS MEAN

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CENTRAL TENDENCY
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ARTHEMATIC/ WEIGHTED AVERAGE/ GEOMETRIC
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MEDIAN MODE
MEAN
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ARTHEMATIC MEAN
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UNGROUPED DATA. GROUPED DATA.

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FREQUENCY CODING EXTREME VALUES OPENENDED CLASSES TIDEOUS PROCESS.
PROS/CONS
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MEAN Cont
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WEIGHTED MEAN GEOMETRIC MEAN
MEDIAN
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PROS / CONS
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MODE
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UNAFFECTED BY EXTREME VALUES COULD BE USED FOR NON NUMERICAL VALUES OEPN-ENDED CLASSES COULD BE USED.
PROS / CONS
UNEFFECTED BY EXTEREME VALUES. COULD BE USED FOR NON NUMERICAL VALUES. OPEN-ENDED CLASSESCOULD BE USED. MULTINODAL DISTRIBUTION.
POINTS TO BE REMEMBERED
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Relation between Mean, Median & Mode. Practice questions: 15, 16, 17, 18, 21, 26, 30, 38, 40. DISPERSION
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RANGE QUARTILE DEVIATION MEAN DEVIATION STANDARD DEVIATION AND VARIANCE.
Practice questions: 8.15/ 18/ 20/ 24/ 25/ 26/38
THANK YOU QUESTIONS ARE INVITED.
PROBABILITY 02/09/2007
NISHANT PANWAR nishant_panwar82@yahoo.com +9198700 06469
FOUNDATION FUNDAMENTALS
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What is Probability? Why do we need it? MATHEMTICAL DEFINITION STATISTICAL DEFINITION.
FUNDAMENTALS
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Random Trials / Event. Mutually Exclusive Events. Non Mutually Exclusive Events. Statistically Independent Events. Statistically Dependent Events. Types of Probability.
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Marginal. Joint. Conditional.
Mutually Exclusive Events.

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P(A or B) = P(A)+P(B)
Not Mutually Exclusive Events.

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P(A or B) = P(A) + P(B) - P(AB)
Sample Questions:
10.8,10.9,10.10.
Statistically Independent Events.

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Marginal Probability. P(A) = P(A) Joint Probability. P(AB) = P(A) X P(B) Conditional Probability. P(A/B) = P(A) P(B/A) = P(B)
Statistically Dependent Events.

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Marginal Probability. P(A) = P(AB)+P(AC) Joint Probability. P(AB) = P(A/B) X P(B)=P(BA) P(BA) = P(B/A) X P(A)=P(AB) Conditional Probability. P(A/B) = P(AB) / P(B) P(B/A) = P(AB) / P(A)
Sample Questions
10.13,10.17.
Bayes Theorem
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Conditional Probability under statistically dependent events. Sample Questions:

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10.45-------10.46-------10.56-------10.75-------10.76--------
11/12 73/128 11/15, 4/15 0.333 0.53
THANK YOU!!! Questions are invited
PROBABILITY DISTRIBUTION
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Probability Distribution?
Theoretical Frequency Distribution Frequency Distribution is the listing of observed frequency of all the outcomes of the experiment when the experiment is actually done. Probability Distribution is the listing of frequency of all the possible outcomes of the experiment before the experiment is done.
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Types of Probability Distribution?

Discrete Distribution Continuous Distribution
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Random Variable
It takes values of the outcomes of an Random Experiment.
Example: Probability distribution of Heads if coin is tossed three times?

First Toss T T T T H H H H 2nd Toss T H T H T H H T 3rd Toss T T H H T T H H Prob 0.125 0.125 0.125 0.125 0.125 0.125 0.125 0.125
PD
0.4 Probability 0.3 0.2 0.1 0 1 2 3 4 Number of heads 0.125 0.125 0.375 0.375
No of heads 0 1 2 3
Probability 0.125 0.375 0.375 0.125
FUNDAMENTALS
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Discrete Distribution
Random Variable can take fixed values only. Distribution of birthday months of a class. 1,2,3,4.
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Continuous Distribution
Random Variable can take n values very close to each other. Distribution of harmful affluent in ppm in a river flowing.
Types of Probability Distribution.

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Binomial (Discrete). Poissons (Discrete) Normal (Continuous).
Binomial Distribution
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Conditions:
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There are only 2 possible outcomes of an experiment. The probability of any outcome is fixed over a period of time. The trials/ outcomes are statistically independent. P (r) = {n! / (r! (n-r)!)} * pr*qn-r r = Number of favorable outcome. n = Number of trials. p = Probability of success. q = Probability of failure = 1-p. Mean () = n * p Std deviation () = (npq).
Formula:
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Problems
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For a binomial distribution with n = 12, p = 0.45, please find the following: q P (r=8) 0.0762 q P (r>4) 0.6955 q Mean and Standard Deviation It is election time, out of random selection probability that a candidate is supporting BJP is 0.55, Congress is 0.30 and SP is 0.15. Out of randomly chosen 10 voters, What is the probability that: q Four are Congress supporters. 0.2001 q None are BJP supporters. 0.0003 q Two are SP Supporters. 0.2759 q At least 8 are Congress Supporters. 0.0016
Poissons Distribution
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Conditions:
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The average value of outcomes per period of time is known. The probability of 2 or more values per unit of time is very small and tending towards 0 The value of variable arriving per second is independent of the the other second in that period of time. The events/outcomes are statistically independent. P (r) = (r e )/ r! r = Number of favorable outcome. = Number of occurrences per interval of time. e = 2.71828.
Formula:
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Poissons as approximation of Binomial Distribution

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When n > or equal to 20 & p is less than 0.05.
P (r) = ((np)r * e np)/ r!
Problems
1)
Given that = 4.2, please calculate
a) p (r less than or equal to 2) 0.2103 b) p (r=8) 0.0360 2) The IMO is responsible for printing of bills, the printing error is 0.5% of all the bills. What is the probability that out of a batch of 1000 bills. a) None are flawed. 0.0067 b) Ten are flawed. 0.00016
Normal Distribution
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Z = (x-)/ Z= number of std deviations from the mean X=random value = mean of population = Std deviation.
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+/- = 68% +/- 2 = 95.5% +/- 3 = 99.7%
Problems
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A training program requires on an average 500 hrs to be completed by a trainee with a standard deviation of 100 hrs. What is the probability that a candidate would require: q More than 500 hours to complete. (50%) q Require between 500 hours and 600 hours to complete. (34.13%) q More than 700 hours to complete. (2.28%) q Between 550 and 650 hours to complete. (24.17%) q Lesser than 580 hours to complete. (78.81%) q Take between 420 and 570 hours to complete. (54.61%)
Normal Distribution as approximation of Binomial Distribution.

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Used when value of np or nq is at least 5.
Problems
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12.9, 12.11, 12.12, 12.32,12.35, 12.44, 12.52, 12.56, 12.68, 12.72, 12.77, 12.81
THANK YOU!!!!!!
DECISION THEORY
THEORY
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DECISION THEORY DECISION PROCESS

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LIST ALL OUTCOMES/EVENTS LIST ALL STRATEGIES/ACTIONS. CALCULATE THE PAY- OFFS FOR EACH STRATEGY. CHOOSE THE OPTIMAL STARTEGY. STARTEGIC. TACTICAL. ADMINISTRATIVE. OPERATIONAL.
TYPES OF DECISION
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SCOPE
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SINGLE STAGE. MULTI STAGE DECISION TREE. UTILITY. DECISIONSn n n
CERTAINTY. UNCERTAINTY. RISK.
SINGLE STAGE DM sample problem

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PAY-OFF MATRIX OPPORTUNITY LOSS/ REGRET MATRIX. CRITERION

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DECISION UNCRETAINTY
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LAPLACE. MAXIMIN / MINIMAX. MAXIMAX / MINIMIN. HURWICZ ALPHA. SALVAGE PRINCIPLE. MOST LIKELIHOOD PRINCIPLE. EXPECTATION PRINCIPLE.
DECISION RISK
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MULTI STAGE DECISION MAKING. SAMPLE PROBLEM. UTILITY DECISION MAKING SAMPLE PROBLEM.
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25.3, 25.4 (Pg 510) 25.12 (Pg 520) 25.19, 25.20, 25.28, 25.37, 25.44, 25.46, 25.52, 25.53
THANK YOU. Questions are invited.
II - Operational Research LINEAR PROGRAMMING

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What and Why O.R.? Decision Types:

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Certainty/ Uncertainty. Static/Dynamic. Nature/ Rational. Problem Definition. Data Collection. Solutions available. Optimal Solution.
SCIENTIFIC METHOD
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FLOW
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FORMULATION OF PROBLEM.
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MAXIMISATION MINIMIZATION
SOLUTION OF PROBLEM.
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GRAPHICAL SIMPLEX METHOD
SENSITIVITY ANALYSIS.
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Is application of scientific methods, tools and techniques to problems involving operations of system, so as to provide optimal solution to the same. FEATURES:
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Decision making. Scientific Approach. Objective. Inter Disciplinary Approach. Digital Computers.
METHODOLOGY
Define Problem Model Development Obtain Input Data Solution
What is Desirable?
Physical Ionic Analogue Symbolic

Feasible/Non Feasible Optimal/Non Optimal Unique/Multiple.
Solution Testing
Implementation
PROBLEM FORMULATION
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FIND OBJECTIVE FUNCTION

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Clearly identifiable and measurable. The equation must be linear in nature. The resources and activity variable should be clearly identifiable and measurable. Should be linear in nature.
DECISION VARIABLES
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CONSTRAINTS
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POSITIVE CONDITION.
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Standardization: q ADD SLACK VARIABLE IN CASE OF q SUBSTRACT SLACK AND ADD ARTIFICIAL VARIABLE IN CASE OF q ADD ARTIFICIAL VARIABLE IN CASE OF =. Objective function: q VALUE OF SLACK VARIABLES ---- 0 q VALUE OF ARTIFICIAL VARIABLES------ M (MINIMIZATION)
------ -M (MAXIMIZATION)
Optimality check: q IN CASE OF MAXIMIZATION, -ve OR 0 q IN CASE OF MINIMIZATION, +ve OR 0
Replacement ratios
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THE LOWEST POSITIVE VALUE IS THE OUTGOING ROW.

IN CASE OF TIE IN B, DIVIDE THE VALUES BY THE RESPECTIVE ELEMENTS IN THE KEY COLUMN AND THEN COMPARE FIRST IDENTITIES AND THEN BODY. LOWER VALUE IS OUTGOING ROW
SPECIAL CASES
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MULTIPLE OPTIMAL SOLUTION
Del j =0 ; non basic variables. Artificial variable in solution. Rep ratio (bij) = 0//-ve
NON FEASIBLE SOLUTION
UNBOUNDNESS
DEGENERACY Sample problems ---n
16.1, 16.4, 16.8 , 16.10 , 16.11 , 16.14 , 16.23 , 16.26 , 16.33,
Smart people always ask QUESTIONS THANK YOU
DUAL OF SIMPLEX
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For every LPP there is a corresponding LPP, through which the solution could be derived for the original LPP
STEPS n Convert into standard form.

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All the variables to be positive in sign. For Maximization, all constraints signs be For Minimization, all constraints signs be
All maximization problems would get converted to minimization in dual and vice versa.
II - Operational Research LINEAR PROGRAMMING SENSITIVITY ANALYSIS

CASES
SINGLE PARAMETER CHANGE n Changes in Objective function (Cj)
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Basic Variables
(Ratio of Del j and corresponding row and find out the least ve and least +ve values)
Non Basic Variables (Del j + Cj).
Changes in the (Bi) values: Right Hand Side Ranging.
(Ratio of bi and corresponding Slack column values and find out least
ve and least +ve values)
Addition of new product.
CASES
MULTI PARAMETER CHANGE n Changes in Objective function (Cj)
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Variables with Del j = non zero

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Ranges already available as in single parameter. Sum (Ratios)>1 ; < 1 Unchanged.
Variables with Del j = zero

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Changes in the (Bi) values: Right Hand Side Ranging.

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Sum (Ratios)>1 ; < 1 Unchanged.
Ratio: R=j / Ij if j is +ve R= - j / Dj if j is -ve
II - Operational Research TRANSPORTATION MODEL 12.10.2008

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Branch of Linear Programming Model Solution

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Simplex method. Transportation Model. North West Corner Rule (NWC). Least Cost Method (LCM). Vogels Approximation method (VAM) Stepping Stone method. Modified Distribution method. (MODI)
Transportation Model
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OPTIMALITY CHECK
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STEPS
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STANDARDIZATION
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Balance the problem matrix. In case of maximization, please convert the problem to minimization. Initial Feasible Solution using VAM. Test degeneracy, in case exists remove by adding eepsilon. Test for optimality. Incase not optimal find revised allocations, using MODI/Stepping Stone Method. In case optimal, find the objective function value.
SOLUTION
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OPTIMALITY TEST
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Tie in the value difference :

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Select the one with minimum cost allocation/ in case again tie choose the one with the maximum allocation. If all values of non basic variables are 0 or +ve,the solution is optimal. If all values of non basic variables are +ve, the solution is optimal and unique. If values of non basic variables are 0,the solution is optimal but not unique.
Optimality Condition:
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SPECIAL CASES
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Unbalanced Problems
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Supply not equal to Demand. Not allowed. M + N -1 not equal to Allocations. If all values of non basic variables are +ve, the solution is optimal and unique. If values of non basic variables are 0 and +ve, The solution is optimal but not unique.
Prohibited Routes
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Degeneracy
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Unique V/s Optimal Solution

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Sample Problems
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21.9, 21.10, 21.12, 21.23, 21.46, 21.52, 21.54.
Asking Queries is one of your fundamental rightUse it. THANK YOU.
STEPS:
START
Balance the problem by adding dummy rows /columns
Problem is Balanced?
NO
YES
Problem is Of Minimisation?
NO
Convert the Maximisation to Minimisation.
YES
Obtain Initial Feasible Solution using VAM
Problem is Degenerate?
YES
Remove degeneracy by Adding E
NO
Problem is Optimal. Check Using MODI?
NO
Improve the solution
YES Find Objective Function Value STOP

II - Operational Research ASSIGNMENT MODEL 30.09.2007

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Branch of Linear Programming Model Solution

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Simplex method. Transportation Model. Assignment Model. Hungarian Assignment Method.
Assignment Model
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OPTIMALITY CHECK
STEPS
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STANDARDIZATION
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Balance the problem matrix. In case of maximization, please convert the problem to minimization. Initial Feasible Solution using HAM. Minimum number of horizontal/vertical lines covering all the zeros = n (number of rows and columns). If above is not valid, substract the minimum value from the entire elements which are not covered with lines and add to the elements at intersection of 2 lines. In case optimal, do assignments and find objective function value.
SOLUTION
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OPTIMALITY TEST
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Points:
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Allocate the rows with one zero. Allocate the columns with one zero. Incase of further tie in 0, select arbitarily. If the number of Horizontal/ Vertical Lines covering all the zeros are equal to the number of rows/columns, solution is optimal. Unbalanced problems. Constrained. Multiple Optimal Solution.
Optimality Condition:
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Situations:
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Sample Problems
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22.4, 22.8, 22.17, 22.19, 22.23, 22.32, 22.36,
Silence is golden, speech is silverbut knowledge leads to the above two. Questions if any???
THANK YOU.
II - Operational Research SIMULATION

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Problem needs to be modeled to be solved. Simulation is pilot running of the problem/scenario , which cannot be modeled, under different conditions. Solution
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Monte Carlo Simulation Technique. Problem Definition. Construction of appropriate model. Experimentation. Evaluation of results.
Phases of Simulation Problem

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APPLICATION OF SIMULATION
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Financial Scenarios. Production. Inventory management. Project Management. Business process Re engineering. Metrological Departments. Construction Industry. Sales. Marketing. and the list goes on.
RANDOM NUMBERS
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Important component in completing Simulation Techniques. The series of numbers which do not have any relation with other number in the series. Methods of generating RN.
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Arithmetical
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rn = p. rn-1(Module m)
Mid Square Method.
Problems..
Sample Problems
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32.4, 32.7, 32.13, 32.26, 32.29
THANK YOU.

Quantitative Management

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Measure of Central Tendency

NISHANT PANWAR nishant_panwar82@yahoo.com

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MEASUREMENT OF CENTRAL TENDENCY

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CENTRAL TENDENCY DISPERSION SKEWNESS KURTOSIS MEAN

ARTHEMATIC/ WEIGHTED AVERAGE/ GEOMETRIC

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UNGROUPED DATA. GROUPED DATA.

FREQUENCY CODING EXTREME VALUES OPENENDED CLASSES TIDEOUS PROCESS.

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WEIGHTED MEAN GEOMETRIC MEAN

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RANGE QUARTILE DEVIATION MEAN DEVIATION STANDARD DEVIATION AND VARIANCE.

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Practice questions: 8.15/ 18/ 20/ 24/ 25/ 26/38

THANK YOU QUESTIONS ARE INVITED.

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What is Probability? Why do we need it? MATHEMTICAL DEFINITION STATISTICAL DEFINITION.

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Marginal. Joint. Conditional.

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Mutually Exclusive Events.

Not Mutually Exclusive Events.

P(A or B) = P(A) + P(B) - P(AB)

Statistically Independent Events.

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Statistically Dependent Events.

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Conditional Probability under statistically dependent events. Sample Questions:

11/12 73/128 11/15, 4/15 0.333 0.53

THANK YOU!!! Questions are invited

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Types of Probability Distribution?

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Example: Probability distribution of Heads if coin is tossed three times?

Probability 0.125 0.375 0.375 0.125

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Types of Probability Distribution.

Binomial (Discrete). Poissons (Discrete) Normal (Continuous).

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Poissons as approximation of Binomial Distribution

When n > or equal to 20 & p is less than 0.05.

P (r) = ((np)r * e np)/ r!

Given that = 4.2, please calculate

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+/- = 68% +/- 2 = 95.5% +/- 3 = 99.7%

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Normal Distribution as approximation of Binomial Distribution.

Used when value of np or nq is at least 5.

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NISHANT PANWAR nishant_panwar82@yahoo.com

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DECISION THEORY DECISION PROCESS

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SINGLE STAGE. MULTI STAGE DECISION TREE. UTILITY. DECISIONSn n n