Quantitative Theory of Management
The quantitative management approach is given by the mathematical school that recommends the use of computers and mathematical techniques to solve complex management issues and assist in the managerial decision-making process. Managers observe historical quantitative relationships and use quantitative techniques such as statistics, information models, and computer simulations to improve their decision making.
Quantitative Approaches to Management Theory
During World War II, the U.S and the U.K army brought together business managers, government officials, and scientists and took their help to decide on the best way to utilize the existing resources. These experts from different domains and areas used some of the mathematical and statistical approaches devised by Taylor and Gantt to solve these logistical problems. This is how the quantitative-based management perspective emerged.
The quantitative approach to management includes the application of statistics, optimization models, information models, and computer simulation to assist in the managerial decision-making process. More specifically, this approach focuses on achieving organizational effectiveness through the application of mathematical and statistical concepts.
The three main branches of the quantitative approach are:
- Management Science,
- Operations Management
- Management Information System
Management Science:
The management science approach stresses the use of mathematical models and statistical methods for decision-making. Various mathematical tools like the waiting-line theory or queering theory, linear programming, the Program Evaluation Review Technique (PERT), the critical path method (CPM), the decision theory, the simulation theory, the probability theory, sampling, time series analysis, etc., are used in management science approach to increase the effectiveness of managerial decision-making.
Management science techniques are widely used in the following areas.
- Capital budgeting
- Cash flow management
- Production Scheduling
- Developing Product Strategies
- Human resource planning
- Inventory Optimization
Operations Management:
Operations management is an applied form of management science. It deals with the effective management of the production process and the timely delivery of an organization's products and services. Operations managers make use of tools like forecasting, inventory analysis, materials requirement, planning systems, networking models, statistical quality control methods, and project planning and control techniques.
Operations management is primarily used in the following areas:
- Inventory Management
- Work Scheduling
- Production Planning
- Facilities Location and design
- Quality Assurance
Management information systems (MIS):
A management information system (MIS) is an information system used for decision-making, and for the coordination, control, analysis, and visualization of information in an organization. Management information systems focus on designing and implementing computer-based information systems for business organizations. In simpler terms, the MIS converts raw data into information and provides the required information to each manager at the right time in the needed form.
Businesses use management information systems to increase the value and profits of the business. MIS has the capability of providing timely and appropriate information allowing the managers to make effective information-based decisions.
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