Table Of Content

Quantitative Methods for Business Fifth Fifth Edition Edition Quantitative Methods Managers in every organisation use quantitative methods. One of their essential skills is the ability Q to understand numerical information and use it for decision making. Not surprisingly, management u students do a course in quantitative methods, typically with names like quantitative analysis, decision analysis, business modelling or fi nancial methods. This book gives an introduction to methods that a for Business are widely used in business, which every student of management will meet somewhere in their course. n Whether you are studying for an HND, a fi rst degree, an MBA or postgraduate degree, or a professional t qualifi cation, the book covers key topics in an easy to follow and practical way. i t Donald Waters a t Quantitative Methods for Business, fi fth edition, is divided into fi ve parts which develop the i subject in a logical sequence. v • Part One introduces the subject, asks why managers use quantitative methods and reviews e essential quantitative tools. • Part Two describes data collection and description, showing how to select and present M information reliably. e • Part Three looks at specifi c types of management problem that are invariably tackled using t quantitative methods, such as fi nancial analyses and forecasting. h • Part Four introduces the ideas of uncertainty, focusing on probabilities, the elements of o statistics and sampling. d • Part Five shows how statistical ideas are used in decision making, quality management, inventory management and other areas. s f o r Key features B • A comprehensive view of quantitative methods actually used by managers. • No previous knowledge or experience assumed, enabling you to study at your own pace. u • The subject is developed in a logical order with a clear and easy to follow style. s i • Worked examples illustrate key principles needed to grasp the subject. n • ‘Ideas in practice’ and case studies show how methods are actually used. e • Self-assessment problems, chapter outlines and summaries, review questions, research s projects and sources of information help to reinforce learning. s • Extensive companion website with a range of additional material at www.pearsoned.co.uk/waters. W a Donald Waters is the author of many successful textbooks and is well known for his clarity of style. t He was a professor of fi nance and operations management and now works in management analysis, e research and education. r s www.pearson-books.com Front cover image: © Getty Images CVR_WATE9470_05_SE_CVR.indd 1 07/02/2011 10:38 Quantitative Methods for Business Visit the Quantitative Methods for Business, Fifth Edition companion website at www.pearsoned.co.uk/waters to find valuable student learning material including: n Reviews of important material n Data sets for problems, examples and cases in the book n Spreadsheet templates for calculations n Additional material to extend the coverage of key topics n Proofs and derivations of formulae n Answers to problems n Additional worked examples and case studies n A list of useful websites We work with leading authors to develop the strongest educational materials in business, bringing cutting-edge thinking and best learning practice to a global market. Under a range of well-known imprints, including Financial Times Prentice Hall, we craft high quality print and electronic publications which help readers to understand and apply their content, whether studying or at work. To find out more about the complete range of our publishing please visit us on the World Wide Web at: www.pearsoned.co.uk Quantitative Methods for Business FIFTH EDITION Donald Waters Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk First published 1993 Second edition published under the Addison-Wesley imprint 1997 Third edition 2001 Fourth edition 2008 Fifth edition published 2011 © Pearson Education Limited 1997, 2001 © Donald Waters 2008, 2011 The right of Donald Waters to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. The screenshots in this book are reprinted by permission from Microsoft Corporation. ISBN 978-0-273-73947-0 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Waters, C. D. J. (C. Donald J.), 1949– Quantitative methods for business / Donald Waters. — 5th ed. p. cm. ISBN 978-0-273-73947-0 (pbk.) 1. Industrial management–Mathematical models. 2. Decision making– Mathematical models. I. Title. HD30.25.W384 2011 658.4′03–dc21 2011000148 10 9 8 7 6 5 4 3 2 1 15 14 13 12 11 Typeset in 10/12pt Sabon by 35 Printed by Ashford Colour Press Ltd, Gosport TO CHARLES BRIEF CONTENTS Preface xvii Part One – Background 1 1 Managers and numbers 3 2 Calculations and equations 19 3 Drawing graphs 50 Part Two – Collecting and summarising data 75 4 Collecting data 77 5 Diagrams for presenting data 103 6 Using numbers to describe data 134 7 Describing changes with index numbers 163 Part Three – Solving management problems 183 8 Finance and performance 185 9 Regression and curve fitting 216 10 Forecasting 249 11 Linear programming 283 Part Four – Introducing statistics 311 12 Uncertainty and probabilities 313 13 Probability distributions 336 14 Using samples 370 15 Testing hypotheses 392 Part Five – Management problems involving uncertainty 421 16 Making decisions 423 17 Quality management 452 18 Inventory management 479 19 Project management 504 20 Queues and simulation 531 viii Brief contents Glossary 555 Appendices Appendix A Solutions to review questions 567 Appendix B Probabilities for the binomial distribution 581 Appendix C Probabilities for the Poisson distribution 586 Appendix D Probabilities for the Normal distribution 590 Appendix E Probabilities for the t-distribution 591 Appendix F Critical values for the c2 distribution 592 Index 594 CONTENTS Preface xvii Part One – Background 1 1 Managers and numbers 3 Chapter outline 3 Why use numbers? 3 Solving problems 7 Useful software 12 Chapter review 15 Case study – Hamerson and Partners 15 Problems 16 Research projects 16 Sources of information 17 2 Calculations and equations 19 Chapter outline 19 Working with numbers 20 Changing numbers to letters 27 Solving equations 29 Simultaneous equations 32 Powers and roots 36 Chapter review 45 Case study – The Crown and Anchor 46 Problem s 46 Research projects 47 Sources of information 49 3 Drawing graphs 50 Chapter outline 50 Graphs on Cartesian coordinates 50 Quadratic equations 58 Drawing other graphs 62 Graphs of simultaneous equations 66 Chapter review 70 Case study – McFarlane & Sons 71 Problems 72 Research projects 73 Sources of information 73