Is this statement true?

When deciding on the storage facilities and locations, an organisation needs to assess the current situation comprehensively and forecast the future demands. Quantitative analysis is the best method for these activities.

Is this statement true?
A . Yes, quantitative analysis provides a reality based on numerical values
B . No, some intangible information is difficult to collect and measure
C . Yes, quantitative analysis is easy to implement as it is based on ‘hard’ facts
D . No, subjective judgements are the best as they compensate for weaknesses of quantitative analysis

View Answer

Answer: B

Explanation:

Decisions regarding stores and warehouse locations involve a complex range of issues that are unique to each business. Most storage facilities and location decisions are based on a combination of qualitative and quantitative analysis.

Qualitative analysis uses subjective judgment to analyze a situation based on non-quantifiable in-formation, such as potential markets for new products, forecast on possible risks that may happen, etc.

Quantitative analysis (QA) is a technique that uses mathematical and statistical modeling, measurement, and research to understand behavior. Quantitative analysts represent a given reality in terms of a numerical value.

This may include the following:

– Cost analysis for the current premises and future predictions based on current premises

– Cost analysis for routine operations

– Current inventory performance measures: lead times, service levels, rate of stock turn, stock-outs in a given period and stock cover

To get a big picture of current situation and future demands, organisation should combine both qualitative and quantitative methods so that useful information is achieved and well-informed decisions are made.

Reference: CIPS study guide page 6 LO 1, AC 1.1