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Outline five limitations of quantitative techniques in business decision making. (10 marks)NOVEMBER 2022
Limited scope of data: Quantitative techniques are based on numerical data and may not take into account qualitative information that may be important in decision making. Assumptions: Many quantitative techniques rely on certain assumptions, such as normal distribution of data, which may not alwaysRead more
- Limited scope of data: Quantitative techniques are based on numerical data and may not take into account qualitative information that may be important in decision making.
- Assumptions: Many quantitative techniques rely on certain assumptions, such as normal distribution of data, which may not always hold true in real-world situations.
- Over-reliance on data: Decision making based solely on quantitative data can lead to an over-reliance on data and neglect of other important factors, such as human intuition and experience.
- Limited predictions ability: Some quantitative techniques are only able to make predictions based on historical data, and may not take into account future changes in the market or economy.
- Complexity: Some quantitative techniques can be complex and difficult to understand, which can make it difficult for managers to interpret the results and make decisions based on them.
- Data Quality: The quality of data used for decision making is crucial for the accuracy of the quantitative techniques. If the data is inaccurate, incomplete or irrelevant, it can lead to poor decision making.
- Lack of Context: Quantitative techniques often lack the ability to take into account the context in which the data was collected, which can lead to decisions that are not relevant to the specific situation.
- Limited Flexibility: Quantitative techniques are often designed for a specific purpose and may not be easily adaptable to new or changing circumstances.
- Bias: Quantitative techniques can be affected by bias, both in terms of the data used and in terms of the assumptions made by the analyst.
- Limited explanatory power: Quantitative techniques can provide a lot of information, but they may not be able to explain the underlying reasons for the patterns or trends they uncover.
See lessExplain the meaning of each of the following types of matrices, giving an example in each case: (i) equal matrices; (ii) row matrix; (iii) transpose matrix; (iv) scalar matrix; (v) square matrix. (10 marks)NOVEMBER 2022
(i) Equal matrices: Two matrices are considered equal if they have the same dimensions (i.e., the same number of rows and columns) and the corresponding elements in each matrix are equal. For example, the following two matrices are equal: [1 2 3] [4 5 6] [1 2 3] [4 5 6] (ii) Row matrix: A row matrixRead more
(i) Equal matrices: Two matrices are considered equal if they have the same dimensions (i.e., the same number of rows and columns) and the corresponding elements in each matrix are equal. For example, the following two matrices are equal:
[1 2 3]
[4 5 6]
[1 2 3]
[4 5 6]
(ii) Row matrix: A row matrix is a matrix that has only one row. For example, the following is a row matrix:
[1 2 3]
(iii) Transpose matrix: The transpose of a matrix is a new matrix where the rows and columns of the original matrix are switched. For example, the transpose of the matrix:
[1 2 3]
[4 5 6]
is:
[1 4]
[2 5]
[3 6]
(iv) Scalar matrix: A scalar matrix is a matrix where all elements are equal to a scalar (i.e., a single value). For example, the following is a scalar matrix:
[2 2 2]
[2 2 2]
[2 2 2]
(v) Square matrix: A square matrix is a matrix where the number of rows is equal to the number of columns. For example, the following is a square matrix:
[1 2 3]
[4 5 6]
[7 8 9]
A square matrix of n x n is called n-square matrix.
See lessExplain five uses of index numbers in decision making. (8 marks) NOVEMBER 2022
Measuring inflation: Index numbers such as the Consumer Price Index (CPI) are used to measure changes in the cost of living over time. This information is used by policymakers to make decisions about monetary policy and by businesses to make decisions about pricing and wages. Assessing economic actiRead more
- Measuring inflation: Index numbers such as the Consumer Price Index (CPI) are used to measure changes in the cost of living over time. This information is used by policymakers to make decisions about monetary policy and by businesses to make decisions about pricing and wages.
- Assessing economic activity: Index numbers such as the Gross Domestic Product (GDP) and the Purchasing Managers’ Index (PMI) are used to measure the overall level of economic activity in an economy. This information is used by policymakers to make decisions about fiscal policy and by businesses to make decisions about investment and hiring.
- Evaluating stocks and bonds: Index numbers such as the S&P 500 and the Dow Jones Industrial Average are used to measure the performance of stock markets. Bond market indices such as the Barclays Capital US Aggregate Bond Index are used to measure the performance of bond markets. These indices are used by investors and analysts to make decisions about where to invest their money.
- Measuring performance: Index numbers such as the Human Development Index (HDI) and the Ease of Doing Business Index (EDBI) are used to measure the performance of countries or regions in a specific area. This information is used by policymakers and businesses to make decisions about where to invest resources and efforts.
- Benchmarking: Index numbers are used as a benchmark for evaluating the performance of a particular investment or portfolio. By comparing the performance of an investment to a relevant index, investors and analysts can assess whether the investment is performing well or underperforming.
- Identifying trends: Index numbers can be used to identify trends in a particular market or economy. By tracking changes in an index over time, analysts can detect patterns that can be used to make predictions about future market movements or economic conditions.
- Assessing Consumer sentiment: Index numbers such as Consumer Confidence Index (CCI) are used to measure how consumers feel about the economy and their own financial situation. This information is used by businesses and policymakers to make decisions about consumption, investment and how to adjust to the market.
- Assessing Industry performance: Index numbers such as the S&P BSE SENSEX and NIFTY are used to measure the performance of a particular industry or sector. This information is used by investors and analysts to make decisions about which industries or sectors to invest in.
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