Academic Excellence

My Profile ▪ M.Sc. in Operational Research (Reading) – University of Moratuwa

▪ B.Sc. (Sp) in Industrial Management – Wayamba University

Professional Qualifications
▪ Cert. in Staff Development – Wayamba University
▪ Dip. In English - Wayamba University
▪ Cert. in Information Technology - Wayamba University

Work Experience
▪ Lecturer Cum Coordinator – Bridge Programme (BCI)
▪ Lecturer – NCC UK Foundation (BCI)
Ms. Sandamini Rambandara
Lecturer Cum Coordinator ▪ Lecturer/Consultant at NIBM(KIC)
BBM Degree ▪ Temporary Tutor – Wayamba University of Sri Lanka
BCI Campus
▪ Intern at Central Bank of Sri Lanka
 BBM 12023
Business Statistics
Sandamini Rambandara

5
 The
1. Introduction to Business Statistics and Data
Syllabus
2. Descriptive statistics to describe data
3. Decision making through Bivariate Analysis
4. Basic probability concepts in Decision Making
5. Probability Distributions
6. Sampling Distributions
7. Statistical Inferences and Estimations
8. Multivariate Analysis
9. Forecasting, Time Series and Random Numbers
10. Data Analysis based on statistical packages
Method of Evaluation

➢ Continuous Assessments (50%)

▪ Mid Semester Test/ Class room Assessments (20%)

▪ Group and Individual Assignments (30%)

➢ End Semester Examination (50%)

Recommended Readings
BBM 12023 – Business Statistics

Lesson 01
Introduction to Business
Statistics and Data
Sandamini Rambandara

9
 Intended Learning Outcomes

At the end of the session students should be able to;

1. Describe the importance of statistics in business decision making
2. Compare different types of statistics and apply appropriate type of statistics for a
given context
3. Justify the selection of a sample in statistical inquiry for a given context
4. Differentiate types of data and scales of data available in the business context
5. Compare different data collection methods
6. Internalize the habit of decision making using appropriate type of statistics
Why Study Statistics?

1. Data are everywhere

2. Statistical techniques are used to make many decisions that affect our lives
3. No matter what your career, you will make professional decisions that involve
data. An understanding of statistical methods will help you make these decisions
effectively
Statistics

1. The science of collecting, organizing,

presenting, analyzing, and interpreting
data to assist in making more effective
decisions
2. Statistical analysis – used to operate,
summarize, and investigate data, so that
useful decision-making information
results.
 The branch of mathematics
that transforms data into
Statistics useful information for
decision makers

Descriptive Inferential
Statistics Statistics

Collecting, summarizing, Using data collected from

presenting and analyzing a small group to draw
data conclusions about a larger
group
Descriptive Statistics
Descriptive Statistics

• Collect data
• e.g., Survey
• Present data
• e.g., Tables and graphs
• Summarize data
• e.g., Sample mean = X i

n
Inferential Statistics
Inferential Statistics

• Estimation
• e.g., Estimate the population mean
weight using the sample mean weight

• Hypothesis testing
• e.g., Test the claim that the population
mean weight is 70 kg
Population Vs Sample
Basic Vocabulary used in Statistics

Variables
Variables are characteristics of an item or individual and are what you analyze
when you use a statistical method.

Data
Data are the different values associated with a variable.

Population
A population consists of all the items or individuals about which you want to
draw a conclusion. The population is the larger group.
Basic Vocabulary of Statistics

Sample
A sample is the portion of a population selected for analysis. The sample is
the small group.

Parameter
A parameter is a numerical measure that describes a characteristic of a
population.

Statistic
A statistic is a numerical measure that describes a characteristic of a sample.
Categorical Data / Qualitative Data

Data categories are not described as numbers but instead by verbal groupings.

➢ Nominal data : Data having “names,” not numerical values.

➢ Ordinal data : With ordinal data, there are categories which can be placed in
distinct order or hierarchy (eg, category A is less severe than category B, Ratings
such as excellent, good, fair, poor etc.).

Numerical Data/ Quantitative Data

Data that have values that represent quantities.

➢ Discrete data : Data arising from a counting process.
➢ Continuous data: Data arising from a measuring process.
Sources of Data

Primary Sources: The data collector is the one using the data for analysis.

✓ Data from a political survey

✓ Data collected from an experiment
✓ Observed data

Secondary Sources: The person performing data analysis is not the data
collector.
✓ Analyzing Census Data
✓ Examining data from print journals or data published on the
internet.
Organizing Numerical Data:
Frequency Distribution

Consider the following set of data.

46, 12, 38, 27, 58, 37, 13, 43, 21, 30, 41, 26, 35, 53, 17, 27, 24, 32, 44, 24

I. Draw a Frequency Distribution Table.

II. Insert Relative and Percent Frequencies in the table.
III. Find the Cumulative Frequency.
Organizing Data

The presentation of the data is broadly classified into the following two
categories;
I. Tabular Presentation
II. Diagrammatic or Graphic Presentation
Classification of Data
▪ This is the first step in data organization, because items with similarities
must be brought together before the data are presented in the form of a
table or a graph.
▪ The process of arranging the data into groups or classes according to
their common characteristics is technically called “Classification”.
▪ For instance, the number of students registered in a university during a year
may be classified on the basis of any of the following criterion,
✓ Sex
✓ Age
✓ The Geographical area
The organization of data pertaining to a quantitative phenomenon involves the
following four stages;

I. The set or series of individual observations – unorganized (raw) or

organized (arrayed) data
II. Discrete or ungrouped frequency distribution
III. Grouped frequency distribution
IV. Continuous frequency distribution
Lets consider the following distribution of marks of 200 students in an
examination.

The data in this form is called the raw or unorganized data.

Arrayed Data : A better presentation of the above set of data would be to arrange
them in an ascending or descending order of magnitude which is called the ‘arraying’
of the data. However, this presentation although is better than the raw data does not
reduce the volume of the data.

Discrete or Ungrouped Frequency Distribution: A much better way of the

representation of the data is to express it in the form of a discrete or ungrouped
frequency distribution where we count the number of times each value of the
variable occurs in the data set.
This is facilitated through the technique of Tally Marks.
Grouped Frequency Distribution: This method consists in classifying the data into
different classes (or class intervals) by dividing the entire range of the values of the
variable into a suitable number of groups called classes and then recording the
number of observations in each group (or class).

Thus, in the above dataset, if we divide the total range of the values, 78 – 15 = 63
into groups of size 5 each, then we shall get (63/5) = 13 groups and the distribution
of marks is then given by the following grouped frequency distribution.
The various groups into which the values of the variable are classified are known as classes or class intervals ; the
length of the class interval (which is 5 in the above case) is called the width or magnitude of the classes. The two
values specifying the class are called the class limits ; the larger value is called the upper class limit and the smaller
value is called the lower class limit.
Continuous Frequency Distribution: While dealing with a continuous variable it is
not desirable to present the data into a grouped frequency distribution of the type we
discussed earlier.

For example, if we consider the ages of a group of students in a school, then the
grouped frequency distribution into the classes 4—6, 7—9, 10—12, 13—15, etc.,
will not be correct, because this classification does not take into consideration the
students with ages between 6 and 7 years i.e., 6 < X < 7 ; between 9 and 10 years i.e.,
9 < X < 10 and so on. :
In such situations we form continuous class intervals, (without any gaps), of the
following type :
Age in years :
➢ Below 6
➢ 6 or more but less than 9
➢ 9 or more but less than 12
➢ 12 or more but less than 15
and so on, which takes care of all the students with any fractions of age.
The presentation of the data into continuous classes of the above type along with the
corresponding frequencies is known as continuous frequency distribution.
Inclusive Type Class Intervals: The classes of the type 30—39, 40—49, 50—59,
60—69, etc., in which both the upper and lower limits are included in the class are
called “inclusive classes”.
For instance, the class interval 40—49 includes all the values from 40 to 49, both
inclusive. The next value, 50 is included in the next class 50—59 and so on.
However, the fractional values between 49 and 50 cannot be accounted for in such a
classification.
Hence, ‘Inclusive Type’ of classification may be used for a grouped frequency
distribution for discrete variables like marks in a test, number of accidents on the
road, etc., where the variable takes only integral values.
Exclusive Type Class Intervals: Let us consider the distribution of ages of a group
of persons into classes 15—19, 20—24, 25—29, etc., each of magnitude 5.

This classification does not account for the individuals with ages more than 19 years
but less than 20 years. In such a situation (where the variable is continuous), the
classes have to be made without any gaps as given below :
➢ 15 years and over but under 20
➢ 20 years and over but under 25
➢ 25 years and over but under 30
and so on ; each class in this case also being of magnitude 5.
More precisely the above classes can be written as :

and so on, where it should be clearly understood that in the above classes, the upper
limits of each class are excluded from the respective classes and are included in the
immediate next class are termed as ‘exclusive classes’.
Class Boundaries: If in a grouped frequency distribution there are gaps between the
upper limit of any class and lower limit of the succeeding class (as in the case of
inclusive type of classification), there is need to convert the data into a continuous
distribution by applying a correction for continuity for determining new classes of
exclusive type.
The upper and lower class limits of the new ‘exclusive type’ classes as called class
boundaries. If d is the gap between the upper limit of any class and lower limit of
the succeeding class, the class boundaries for any class are then given by,
:
This technique enables us to convert a grouped frequency distribution (inclusive
type) into continuous frequency distribution and is extensively helpful in
computing certain statistical measures like mode, median, etc.
Example: Form a frequency distribution from the following data by Inclusive
Method, taking 4 as the magnitude of class-intervals :
Example: Following figures relate to the weekly wages of workers in a
factory. Prepare a frequency table by taking a class interval of 5.
Example: A college management wanted to give scholarships to B. Com.
students securing 60 per cent and above marks in the following manner,
Histograms

▪ It is one of the most popular and commonly used devices for plotting continuous
frequency distribution.

▪ It consists in erecting a series of adjacent vertical rectangles on the sections of the

horizontal axis (X-axis), with bases (sections) equal to the width of the
corresponding class intervals and heights are so taken that the areas of the
rectangles are equal to the frequencies of the corresponding classes.
▪ When the class widths (magnitudes) are not equal, we calculate an Adjustment Factor
and adjust the frequencies accordingly.

▪ Then we divide the Frequency by the Adjustment Factor and obtain the New Frequency
(Height of the Rectangle) of the particular class.
▪ Here the Lowest Class interval is 5.
End of the Lesson…
Thank You!