Essential Quantitative Methods for Business, Management and Finance, Second Edition

by Les Oakshott

• ISBN13: 9780333963357
• ISBN10: 0333963350
• Edition: 2nd
• Format: Trade Paper
• Copyright: 2001-12-14
• Publisher: Palgrave Macmillan

Summary

Designed to provide the essential elements of an introductory quantitative methods module, this text has proved a very popular choice with students. Written in a concise and student-friendly style, it contains frequent activities and questions for students to practice the techniques taught. New to this second edition is the extensive use of Excel, and a companion website at www.palgrave.com/business/oakshott.

Author Biography

Les Oakshott is Senior Lecturer in the Department of Mathematical Sciences, University of the West of England.

Table of Contents

Preface to the Second Edition	xiv
Notes to the Second Edition	xvi
Revision mathematics	1	(13)
Introduction	1	(1)
Number and number operations	1	(1)
Decimals, fractions and percentages	2	(2)
Powers and roots	4	(1)
Elementary algebra	5	(2)
Indices and logs	7	(1)
Mathematical symbols	8	(1)
Graphs and straight lines	9	(1)
Solving linear equations graphically	10	(1)
Solving linear equations simultaneously	11	(1)
Inequations	12	(1)
Further reading	13	(1)
Sampling methods	14	(18)
Introduction	14	(1)
The basics of sampling	14	(3)
Questionnaire design	17	(2)
Simple random sampling	19	(2)
Stratified sampling	21	(1)
Multi-stage sampling	22	(1)
Cluster sampling	23	(1)
Systematic sampling	23	(1)
Quota sampling	24	(1)
Other sampling methods	25	(1)
Secondary sources of data	26	(1)
Summary	27	(1)
Further reading	27	(1)
Exercises	27	(5)
Presentation of data	32	(31)
Introduction	32	(1)
Data classification	32	(1)
Tabulation of data	33	(6)
Diagrammatic representation of data	39	(10)
Pie charts	39	(1)
Bar charts	40	(2)
Line graphs	42	(1)
Histograms	43	(2)
Frequency polygons	45	(2)
Ogive	47	(2)
Creating charts with Excel	49	(7)
Summary	56	(1)
Further reading	57	(1)
Exercises	57	(6)
Summarising data	63	(31)
Introduction	63	(1)
Measures of location	63	(9)
The mean, median and mode	64	(2)
The mean, median and mode for a frequency distribution	66	(6)
Measures of spread	72	(5)
The standard deviation	73	(3)
The standard deviation for a frequency distribution	76	(1)
Coefficient of variation	77	(1)
Box and whisker plots	78	(1)
Automatic methods of calculating measures of location and spread	79	(7)
The use of Excel	80	(6)
Summary	86	(1)
Further reading	86	(1)
Exercises	87	(7)
Index numbers	94	(14)
Introduction	94	(1)
Simple indices	94	(3)
Weighted aggregated indices	97	(4)
Laspeyres' index	98	(1)
Paasche's index	99	(2)
Retail price index	101	(1)
Summary	102	(1)
Further reading	102	(1)
Exercises	102	(6)
Investment appraisal	108	(22)
Introduction	108	(1)
Measures of investment worth	108	(2)
Traditional methods for comparing projects	110	(1)
Discounted cash flow techniques	111	(7)
Net present value	114	(1)
Internal rate of return	115	(3)
Other applications of the compound interest formula	118	(6)
Sinking funds	118	(2)
Constant repayments	120	(2)
Depreciation	122	(1)
Compound interest with continuous compounding	123	(1)
Summary	124	(1)
Further reading	125	(1)
Exercises	125	(5)
Introduction to probability	130	(21)
Introduction	130	(1)
Basic ideas	130	(2)
The probability of compound events	132	(3)
Conditional probability	135	(1)
Tree diagrams	136	(3)
Bayes' theorem	139	(4)
Permutations and combinations	143	(2)
Expected value	145	(1)
Summary	146	(1)
Further reading	146	(1)
Exercises	146	(5)
Probability distributions	151	(31)
Introduction	151	(1)
Discrete and continuous probability distributions	151	(2)
The binomial distribution	153	(7)
The mean and standard deviation of the binomial distribution	158	(2)
The Poisson distribution	160	(3)
The use of the Poisson distribution as an approximation to the binomial distribution	162	(1)
The mean and standard deviation of the Poisson distribution	163	(1)
The normal distribution	163	(12)
The standard normal distribution	165	(2)
Standardising normal distributions	167	(5)
The normal distribution as an approximation to the binomial distribution	172	(2)
The normal distribution as an approximation to the Poisson distribution	174	(1)
Summary	175	(1)
Further reading	175	(1)
Exercises	175	(7)
Decision-making under conditions of uncertainty	182	(29)
Introduction	182	(1)
Payoff tables	183	(3)
The value of perfect information	186	(1)
Decision trees	186	(11)
Decision trees and Bayes' theorem	190	(4)
Sensitivity analysis	194	(3)
Utility	197	(5)
Summary	202	(1)
Further reading	202	(1)
Exercises	202	(9)
Analysis and interpretation of sample data	211	(18)
Introduction	211	(1)
Samples and sampling	211	(1)
Point estimates	212	(2)
Sampling distribution of the mean	214	(2)
Confidence intervals for a population mean for large samples	216	(3)
Confidence intervals for a population mean for small samples	219	(2)
Confidence interval of a percentage	221	(1)
Calculation of sample size	222	(1)
Finite populations	223	(1)
Summary	224	(1)
Further reading	224	(1)
Exercises	224	(5)
Testing a hypothesis	229	(32)
Introduction	229	(1)
The purpose of hypothesis testing	229	(1)
Large sample test for a population mean	230	(5)
Small sample test for a population mean	235	(2)
The Z-test for a population percentage	237	(2)
Hypothesis test involving two population means	239	(5)
Large sample tests for two independent population means	239	(1)
Small sample tests for two independent population means	240	(2)
Paired samples	242	(2)
Hypothesis tests involving two population percentages	244	(2)
The chi-square hypothesis test	246	(5)
The `goodness of fit' test	247	(2)
The test of association	249	(2)
Summary	251	(2)
Further reading	253	(1)
Exercises	253	(8)
Correlation and regression	261	(25)
Introduction	261	(1)
Scatter diagrams	261	(4)
Correlation	265	(5)
Spearman's rank correlation coefficient (R)	265	(3)
Pearson's product moment correlation coefficient (r)	268	(2)
Linear regression	270	(1)
The method of least squares	271	(2)
Coefficient of determination	273	(1)
Automatic methods of analysing bivariate data	273	(7)
Summary	280	(1)
Further reading	281	(1)
Exercises	281	(5)
Time series analysis	286	(24)
Introduction	286	(1)
The decomposition model	286	(2)
Isolating the trend	288	(4)
Isolating the seasonal component	292	(3)
Analysis of errors	295	(3)
Seasonally adjusted series	298	(1)
Forecasting using the decomposition model	299	(2)
Exponential smoothing	301	(2)
Using spreadsheets in time series analysis	303	(3)
Summary	306	(1)
Further reading	306	(1)
Exercises	306	(4)
Linear programming	310	(23)
Introduction	310	(1)
Basics of linear programming	310	(1)
Model formulation	311	(2)
Graphical solution of linear programming problems	313	(1)
Finding the optimum -- the isoprofit/cost method	314	(2)
Finding the optimum -- an alternative method	316	(1)
Tight and slack constraints	317	(1)
Sensitivity analysis	317	(4)
Changes to the right hand side of a constraint	317	(1)
Changes to the objective function coefficients	318	(3)
Minimisation problems	321	(2)
Using Excel's `Solver' to solve linear programming problems	323	(4)
Summary	327	(1)
Further reading	327	(1)
Exercises	327	(6)
Critical path analysis	333	(18)
Introduction	333	(1)
The activity-on-node method	333	(4)
The float of an activity	337	(1)
Resource scheduling	338	(2)
Cost scheduling	340	(3)
Summary	343	(1)
Further reading	344	(1)
Exercises	344	(7)
Inventory control	351	(13)
Introduction	351	(1)
Costs of holding stock	351	(1)
The Economic Order Quantity (EOQ) model	352	(5)
Time between orders and the re-order level	356	(1)
Discounts	357	(1)
Uncertainty in demand	357	(3)
Summary	360	(1)
Further reading	360	(1)
Exercises	360	(4)
Simulation	364	(15)
Introduction	364	(1)
Queuing problems	364	(2)
Random numbers	366	(2)
Tabular simulation	368	(1)
Accuracy of simulation results	369	(1)
Spreadsheet simulation	370	(4)
Summary	374	(1)
Further reading	374	(1)
Exercises	374	(5)
Appendix 1: Answers to selected exercises in the text	379	(9)
Appendix 2: Statistical tables	388	(14)
Appendix 3: Mathematical and statistical formulae	402	(7)
Index	409