Table Of ContentQuantitative Methods for Business
and Management
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Quantitative Methods for
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Business and Management
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An Entrepreneurial Perspectiv(cid:82)e
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Stuart Wall
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Claire Coday
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Chris Mitchell (cid:87)
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iii
Pearson Education Limited
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First published 2014 (print and electronic)
© Pearson Education Limited 2014 (print and electronic)
The rights of Stuart Wall, Claire Coday and Chris Mitchell to be identified as the authors
of this work have been asserted by them in accordance with the Copyright, Designs and
Patents Act 1988.
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rights in such trademarks, nor does the use of such trademarks imply any affiliation with or
endorsement of this book by such owners.
Contains public sector information licensed under the Open Government Licence (OGL)
v2.0. www.nationalarchives.gov.uk/doc/open-government-licence.
Pearson Education is not responsible for the content of third-party internet sites.
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Times provides global business news, insightful opinion and expert analysis of business,
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ISBN: 978-0-273-77055-8 (print)
978-0-273-77061-9 (PDF)
978-0-273-78630-6 (eText)
British Library Cataloguing-in-Publication Data
A catalogue record for the print edition is available from the British Library
Library of Congress Cataloging-in-Publication Data
Wall, Stuart, 1946-
Quantitative methods for business and management / Stuart Wall, Claire Coday,
Chris Mitchell. – 1 Edition.
pages cm
Includes index.
ISBN 978-0-273-77055-8 (pbk.)
1. Industrial management–Statistical methods. 2. Commercial statistics. I. Title.
HD30.215.W36 2014
658.5–dc23
2013050431
10 9 8 7 6 5 4 3 2 1
17 16 15 14
Print edition typeset in 9.5/12.5 pt Charter ITC Std by 71
Print edition printed and bound by Ashford Colour Press, Gosport
NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION
Brief contents
Preface xi
Guided tour x iii
Acknowledgements xv
Publisher’s acknowledgements xvi
Part One
Introduction stage of product life cycle 1
1 Collecting and presenting data 3
2 Making sense of data: Central location and dispersion 35
3 Financial decision making: Project appraisal 66
Part Two
Growth stage of product life cycle 95
4 Regression, correlation and time series 97
5 Probability and probability distributions 135
6 Sampling and tests of hypotheses 176
Part Three
Maturity stage of product life cycle 219
7 Business modelling: Linear relationships 221
8 Business modelling: Non-linear relationships 252
9 Project management 286
Appendix 1 Review of basic mathematics 314
Appendix 2 Probabilities for the normal distribution 344
Appendix 3 Cumulative binomial probabilities 346
Appendix 4 Cumulative Poisson probabilities 347
Appendix 5 Student t critical values 348
Appendix 6 x2 critical values 3 50
Appendix 7 Table of random numbers 352
Index 353
v
Contents
Preface xi
Guided tour x iii
Acknowledgements xv
Publisher’s acknowledgements xvi
Part One
Introduction stage of product life cycle 1
1 Collecting and presenting data 3
Introduction 3
Collection of data 5
Presenting data using frequency tables 7
Presenting data using bar charts and pie charts 10
Presenting data using histograms 18
Presenting data using frequency polygons and frequency curves 24
Presenting data using the Lorenz curve 28
Review questions 30
2 Making sense of data: Central location and dispersion 35
Introduction 35
Notation 37
Measures of central location 39
Normal and skewed distribution 46
Measures of dispersion 52
Coefficient of variation (C of V) 60
Review questions 63
3 Financial decision making: Project appraisal 66
Introduction 66
Investment and financial decision making 68
Interest rates and project appraisal 70
Compound factors, discounting and present value 74
Cash flow and financial decision making 78
Investment appraisal: non-discounting techniques 79
Investment appraisal: discounting techniques 82
Review questions 91
vii
Contents
Part Two
Growth stage of product life cycle 95
4 Regression, correlation and time series 97
Introduction 97
Regression analysis 98
Correlation 108
Spearman’s coefficient of rank correlation 116
Time series and forecasting 118
Review questions 129
5 Probability and probability distributions 135
Introduction 135
Probability calculations 137
Venn diagrams: events not mutually exclusive 141
Independent events: AND rule 142
Dependent events: conditional probability 144
Game theory and expected value 155
The normal distribution 158
The binomial distribution 165
The Poisson distribution 170
Review questions 173
6 Sampling and tests of hypotheses 176
Introduction 176
Types of sample 178
Distribution of sample means 185
Confidence intervals 190
Tests of hypotheses: principles and practice 196
Student t-distribution 206
Chi-squared test 210
Review questions 217
Part Three
Maturity stage of product life cycle 219
7 Business modelling: Linear relationships 221
Introduction 221
Break-even analysis 222
Linear programming 231
viii
