Statistics for Management Manipal University Jaipur (MUJ)

MASTER OF BUSINESS ADMINISTRATION

SEMESTER 1

STATISTICS FOR MANAGEMENT

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Unit 1
Introduction to Statistics
Table of Contents

SL Fig No / Table SAQ /

Topic Page No
No / Graph Activity
1 Introduction 1 1, I
1.1 Objectives - -
1.2 Relevance - - 3-9
1.3 Statistics in practice - -
1.4 Importance of statistics in modern
- -
business environment
2 History of Statistics 2, 3, 4, 5, 6 2 10
3 Definition of Statistics - 3 11 - 14
4 Scope and Application of Statistics - 4 15 - 16
5 Characteristics of Statistics 7, 8 5 17 - 18
6 Functions of Statistics - - 19 - 21
7 Limitations of Statistics 9, 10 - 22 - 23
8 Statistical Softwares - - 24 - 26
9 Summary - - 27
10 Glossary - - 28
11 Terminal Questions - - 28
12 Answers - - 29
13 Case Study - - 30
14 References - - 31

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1. INTRODUCTION
Statistics plays an important role in almost every facet of human life. In business context,
managers are required to justify decisions on the basis of data. They need statistical models
to support these decisions. Statistical skills enable managers to collect, analyse and interpret
data in order to take suitable decisions.

Statistical concepts and statistical thinking enable them to:

• Solve problems in almost every domain

• Support their decisions
• Reduce guesswork

In this unit, you will study about Statistics, which deals with gathering, organising,
presenting and analysing data.

1.1. Objectives:

After studying this unit, you should be able to:

❖ Describe the scope and applications of statistics

❖ Explain the characteristics of statistics
❖ Recognise the functions of statistics
❖ Identify the limitations of statistics
❖ Analyse statistical software’s

1.2. Relevance

Nature created variation and thereby generated the importance for the subject of statistics.
This essentially exists only because of variation in data

– be it the height or weight of newly born babies, features like face, height or weight of
persons, growth of companies or market price. Truly, the capital Greek word ∑ (pronounced
summation), used for indicating total or sum of numbers and the small Greek word σ
(pronounced sigma), used for measuring deviation could be labelled as the life blood for
statisticians. Although nature believes in variation, it also believes in mathematical variation

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like weight of the new born babies, height of the individuals etc. without any bias. The other
examples of man-made asymmetrical variation are: educational qualification, house hold
income etc. The study of Statistics will help in the study of variation in data for finding
patterns and making conclusions.

(Source: Adapted from T. N. Srivastava & Shailaja Rejo (2008) Statistics for Management 5 th
ed.TMH)

1.3. Statistics in Practice

Business Week

Business Week is the most popular business magazine in the world. With its global presence,
it circulates more than 1 million copies around the globe. Along with feature articles on
current scenario, the magazine also contains regular sections on Global Business, Economic
Analysis, and Information of Science & Technology.

Business Week issues provide a detailed report on a topic of current interest. Often, the
detailed report includes statistical facts and conclusions that help the reader understand the
business and economic information easily. Moreover, the weekly Business Week provides
information related statistics about the state of the economic system including production
indices, stock prices, market growth, mutual funds and interest rates.

Business Week also focuses on statistical information to help manage its own business. For
example, an annual survey of subscribers help the company to learn about subscriber
demographics, reading habits, likely purchases, lifestyles, etc. The Business Week managers
depend on the statistical conclusion from the survey to provide better services to subscribe
and to advertise.

(Source: David R. Anderson, Dennis J. Sweeney & Thomas A. Williams 5th edition, Thomson
Business Information Pvt Ltd.)

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1.4. Importance of statistics in modern business environment

Due to advanced communication networks, rapid changes in consumer behaviour, varied

expectations of a variety of consumers and new market openings, modern managers have a
difficult time in making quick and appropriate decisions. Therefore, there is a need for them
to depend more upon quantitative techniques like mathematical models, statistics,
operations research and econometrics.

In this section, there are examples that illustrate some of the uses of statistics in business
and economics.

Accounting

Public accounting firms use statistical sampling procedures when conducting audits for
their clients.

Finance

Financial advisors use a variety of statistical information to guide their investment

recommendations.

Marketing

Electronic scanners at retail checkout counters are being used to collect data for a variety of
marketing research applications.

Production

Today’s emphasis is on quality. Quality is of utmost importance in production. A variety of

statistical quality control charts are used, to monitor the average output of a production
process.

Economics

Economists are frequently asked to provide forecasts about the future of the economy. They
use a variety of statistical information in making such forecasts. For example, in forecasting

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inflation index, economists use statistical information on indicators such as the producer
index, the unemployment rate and manufacturing capacity utilisation.

Caselet 1

The new General Manager Mr. Ravi of a manufacturing company is concerned about the
dwindling profits of the company. The Marketing and Production Managers identify the reason
as the guarantee period given to customers, since the product has to be replaced if it fails within
the guarantee period. This replacement lowers the company’s profits and also causes loss of
reputation. The General Manager wants to reduce the percentage of failure of units within a
year. This means that he should take action to improve the life of the unit. After preliminary
studies he decides to:
i) Estimate the average life of the units and their variation.
ii) Take action to improve the life of the unit.
iii) Lower the replacement cost as much as possible.

As you can see, the General Manager is using Statistics to solve a problem and to increase
profits. Decision making is a key part of our day-to-day life. Even when we wish to purchase
a television, we want to know the price, quality, durability, and maintainability of various
brands and models before buying one. In this scenario, data is collected and an optimum
decision is made. In other words, we are using Statistics.

Suppose a company wishes to introduce a new product, it has to collect data on market
potential, consumer likings, availability of raw materials, and feasibility of producing the
product. Hence, data collection is the back-bone of any decision making process.

Many organisations find themselves data-rich but, they are poor in drawing information out
of it. Therefore, it is important to develop the ability to extract meaningful information from
raw data, in order to make better decisions. Statistics plays an important role in this aspect.

Statistics is broadly categorised into two parts based on their functions, namely, Descriptive
Statistics and Inferential Statistics. Figure 1.1 illustrates those two categories.

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Fig. 1.1: Categories in Statistics

Descriptive Statistics: Descriptive Statistics is used to present the general description of

data which is summarised quantitatively. This is mostly useful in clinical research, while
communicating the results of experiments.

Caselet 2

In a firm, Human Resource Manager (HR Manager) calculates the average salary of employees of
the production department. The statistical data collected is related to the production department
and does not give any information about the other departments of the firm. Here, the HR Manager is
using descriptive statistics. In this example, the HR Manager displays the summarised numerical
data in the form of tables, charts, and diagrams, which come under descriptive statistics.

Inferential Statistics

Inferential Statistics is used to make valid inferences from the data for effective decision
making among managers or professionals. Statistical methods such as estimation, prediction
and hypothesis testing come under inferential statistics. The researchers make deductions
or conclusions, regarding some characteristics of a population from the data that is collected
from a sample of that population.

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Caselet 3

In a firm, the Human Resources Manager (HR Manager) uses the average salary of employees of
the production department, along with the salary details of other departments, to
estimate/project the average salary of employees for all other departments in the firm. Here, the
HR Manager is using inferential statistics as the estimation of averages deals with inferential
statistics.

Activity 1
Place the number of the appropriate definition next to the item it describes

A. Statistic 1. Do not contain the same outcome

B. Parameter 2. The use of sample statistics to draw

C. Discrete conclusions concerning the population.

E. Mutually exclusive 3. A numerical characteristic of a sample.

F. Zero 4. Only finite values can exist on the X axis.

G. Continuous 5. Sum of deviation around a mean.

H. Inferential statistic 6. Measurement may assume any value

associated with uninterrupted Scale

7. A numerical characteristic of a population.

Solution

A. 3, B. 7, C. 4, E. 1, F. 5, G. 6, H. 2

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SELF-ASSESSMENT QUESTIONS - 1

1. In which of the following situations would you like to use Statistics?

a) Buying a house
b) Purchasing medicine prescribed by a doctor
c) Investing funds in several options
d) Attending relatives marriages
2. Out of the following, which one does not refer to a mass of data?
a) Banking Statistics
b) Mathematical Statistics
c) Agricultural Statistics
d) Income Statistics
3. Which of the following statement is most appropriate?
a) Nature believed in statistics
b) Nature created statistics
c) Nature believed in variation
d) Nature believed in symmetrical variation
4. Which of the following statement is true?
a) Statistics enlarges physical vision
b) Statistics helps in estimation
c) Statistics quantifies uncertainty
d) Statistics is of no use to humanity.
5. The origin of statistics can be traced to
a) State
b) Commerce
c) Economics
d) Industry

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2. HISTORY OF STATISTICS

This is a year wise presentation of the history of statistics.

1654 - Pascal – mathematics of probability, in correspondence with Fermat

1662 - William Petty and John Graunt – first demographic studies

1713 - Jakob Bernoulli – Ars Conjectandi

1733 - DeMoivre – Approximatio; law of error (similar to standarddeviation)

Rev. Bayes – An essay towards solving a problem in the

1763 -
Doctrine of Chances, foundation for "Bayesian statistics"
1805 - A-M Legendre – least square method
1809 - C. F. Gauss – Theoria Motus Corporum Coelestium
1812 - P. S. Laplace – Théorie analytique des probabilités
1834 - Statistical Society of London established

Adolphe Quetelet – organised first international statisticsconference;

1853 -
applied statistics to biology; described the bell-shaped curve.

1877 - F. Galton – regression to the mean

1888 - F. Galton – correlation
1889 - F. Galton – Natural Inheritance
1900 - Karl Pearson – chi square; applied correlation to natural selection
1904 - Spearman – rank (non-parametric) correlation coefficient

1908 - "Student" (W. S. Gossett) –The probable error of the mean; thet-test

R. A. Fisher – ANOVA; evolutionary biology

1919 -
Jerzy Neyman and Egon Pearson (son of Karl Pearson) – type IIerrors, power of a
1930's -
test, confidence intervals

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3. DEFINITION OF STATISTICS

According to Seligman, “Statistics is a science which deals with the method of collecting,
classifying, presenting, comparing and interpreting the numerical data to throw light on
enquiry”.

According to Horace Secrist, Statistics may be defined as “an aggregate of facts affected to a
marked extent by multiplicity of causes, numerically expressed, enumerated or estimated
according to a reasonable standard of accuracy, collected in a systematic manner for a
predetermined purpose and placed in relation to each other”1. This definition is both
comprehensive and exhaustive.

Prof. Boddington, on the other hand, defined Statistics as “The science of estimates and
probabilities”2. This definition is also not complete.

According to Croxton and Cowden, “Statistics is the science of collection, presentation,

analysis and interpretation of numerical data from logical analysis”3.

(1Source: Agarwal B L (2006) Basic Statistics 4th ed. Pg 1 New Age International Publishers)
(2Source: Agarwal B L (2006) Basic Statistics 4th ed. Pg 2 New Age International Publishers)
(3Source: Agarwal B L (2006) Basic Statistics 4th ed. Pg 2 New Age International Publishers)

Figure 1.2 depicts four different components of Statistics as per Croxton and Cowden.

Fig. 1.2: Basic Components of Statistics According to Croxton and Cowden

1. Collection of data

Careful planning is required while collecting data. Two methods used for collecting data
are census method and sampling method. The investigator has to take care while
selecting an appropriate collection method.

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In the census method, every unit or object of the population is included in the
investigation. For example, in the census method, if we want to study the average
annual income of 500 families in a given area, we must study the income of all the
families in that area. When the population is large, applying the census method would
be difficult.

Sometimes a sample of units or objects is taken from the population to describe the
overall characteristics of that population. This method of collecting data is called
sampling. Sampling method is helpful when it is a large population or when the results
are needed in a short time.

2. Presentation of data

The collected data is usually presented for further analysis in a tabular, diagrammatic
or graphic form and it is condensed, summarised and visually represented in a tabular
or graphical form.

Tabulation is a systematic arrangement of classified data in rows and columns. For the
representation of data in diagrams, we use different types of diagrams such as one-
dimensional, two-dimensional and three- dimensional diagrams.

• Line diagrams, bar diagrams are one-dimensional diagrams. (Refer to figure 1.3
and figure 1.4 for the illustrations of line diagrams and bar diagrams respectively)

Fig. 1.3: Line Fig. 1.4: Bar diagram

diagram

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• Pie-charts are two-dimensional diagrams which are in the form of a circle. In a pie-
chart, total and component parts are shown in a circular shape.

The pie-chart in figure 1.5 represents the sales figures of SPQcompany

for the year 2008.

Fig. 1.5: Sales Figures of SPQ Company

• The pie-chart in figure 1.6 shows the monthly expenses of a family. From the pie-
chart, we can infer that Prasad’s family spent maximum on food and spent equal
amounts on fuel and miscellaneous items.

Fig. 1.6: Pie-chart of Prasad’s Family Expenses

3. Analysis of data

The data presented has to be carefully analysed to make any inference from it. The
inferences can be of various types, for example, as measures of central tendency,
dispersion, correlation or regression.

Measures of central tendency will cluster around the figure which is in the central
location. In case of population, the measures are the parameters and in case of the

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sample are statistics that are estimates of population parameters. The three most
common ways of measuring the centre of distribution is mean, mode and median.

In case of population, the measures of dispersion are used to quantify the spread of the
distribution. Range, interquartile range, mean deviation and standard deviation are
four measures to calculate the dispersion.

4. Interpretation of data

The final step is to draw conclusions from the analysed data. Interpretation requires a
high degree of skill and experience.

Thus, Statistics contains the tools and techniques required for collection, presentation,
analysis and interpretation of data. Thus, we can conclude that this definition is precise
and comprehensive.

SELF-ASSESSMENT QUESTIONS - 2

6. According to the definition of Statistics given by Croxton and Cowden, what are
the four components of Statistics?
7. ‘Statistics may be called the science of counting’ is the definition given by
a) Croxton
b) A.L.Bowley
c) Boddington
d) Webster
8. In the olden days statistics was confined only to _________ .

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4. SCOPE AND APPLICATION OF STATISTICS

Statistical methods are applied to specific problems in various fields such as Biology,
Medicine, Agriculture, Commerce, Business, Economics, Industry, Insurance, Sociology and
Psychology.

In the field of medicine, statistical tools like t-tests are used to test the efficiency of the new
drug or medicine. In the field of economics, statistical tools such as index numbers,
estimation theory and time series analysis are used in solving economic problems related to
wages, price, production and distribution of income. In the field of agriculture, an important
concept of statistics such as analysis of variance (ANOVA) is used in experiments related to
agriculture, to test the significance between two sample means.

In Biology, Medicine and Agriculture, Statistical methods are applied in the following:

• Study of the growth of plants

• Movement of fish population in the ocean
• Migration pattern of birds
• Analysis of the effect of newly invented medicines
• Theories of heredity
• Estimation of yield of crop
• Study of the effect of fertilizers on yield
• Birth rate
• Death rate
• Population growth
• Growth of bacteria

Insurance companies decide on the insurance premiums based on the age composition of the
population and the mortality rates. Actuarial science is used for the calculation of insurance
premiums and dividends.

Statistics is a part of Economics, Commerce and Business. Statistical analysis of the variations
in price, demand and production are helpful to both businessmen and economists. Cost of
living index numbers help governments in economic planning and fixation of wages. A

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government’s administrative system is fully dependent on production statistics, income

statistics, labour statistics, economic indices of cost, and price. Economic planning of any
nation is entirely based on the statistical facts. Cost of living index numbers are also used to
estimate the value of money. In business activities, analysis of demand, price, production
cost, and inventory costs help in decision making.

Management of limited resources and labour needs statistical methods to maximise profit.
Planned recruitments and distribution of staff, proper quality control methods, and a careful
study of the demand for goods in the market and balanced investment, help the producer to
extract maximum profit out of minimum capital investment. In manufacturing industries,
statistical quality control techniques help in increasing and controlling the quality of
products at a minimum cost. Hence, statistics is applied in every sphere of human activity.

SELF-ASSESSMENT QUESTIONS – 3
9. Mention some other areas where there is a scope of applying statistics.

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5. CHARACTERISTICS OF STATISTICS

There are several characteristics of Statistics. Not only does it deal with an aggregate of facts,
it also gets affected by multiple causes. Statistics numerically expressed, is estimated with
varying degrees of accuracy and is collected in a systematic manner for pre-determined
purposes. To ensure comparative and analytical studies, statistical facts need to be arranged
in a systematic, logical order. Let us look at each characteristic in detail.

1. Statistics deals with an aggregate of facts

A single figure cannot be analysed. For example, the fact ‘Mr Kiran is 170 cms tall’
cannot be statistically analysed. On the other hand, if we know the heights of 60
students in a class, we can comment upon the average height and variation.

2. Statistics gets affected to a great extent by multiplicity of causes The Statistics of

the yield of a crop is the result of several factors, such as the fertility of soil, amount of
rainfall, the quality of seed used, the quality and quantity of fertilizer used.
3. Statistics are numerically expressed

Only numerical facts can be statistically analysed. Therefore, facts such as ‘price
decreases with increasing production’ cannot be called statistics. The qualitative data
such as, the categorical data cannot be called as statistics, for example, the eye colour
of a person or the brand name of an automobile.

4. Statistics are enumerated or estimated with required degree of accuracy

The facts have to be collected from the field or estimated (computed) with the required
degree of accuracy. The degree of accuracy differs depending upon the purpose. For
example, in measuring the length of screws, an accuracy of up to a millimetre may be
required, whereas while measuring the heights of students in a class, an accuracy of up
to a centimetre is enough.

5. Statistics are collected in a systematic manner

The facts should be collected according to planned and scientific methods otherwise,
they are likely to be wrong and misleading.

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6. Statistics are collected for a pre-determined purpose

There must be a definite purpose for collecting facts. Otherwise, indiscriminate data
collection might take place which would lead to wrong diagnosis.

7. Statistics are placed in relation to each other

The facts must be placed in such a way that a comparative and analytical study becomes
possible. Thus, only related facts which are arranged in a logical order can be called
Statistics. Statistical analysis cannot be used to compare heterogeneous data.

SELF-ASSESSMENT QUESTIONS – 4

10. Answer the following:

a) Should the same degree of accuracy be applied while measuring the height of a
mountain and the height of a person?
b) Does Statistics deal with qualitative data?
11. Categorise the following data as qualitative or quantitative data
a) The number of transactions occurring in an ATM per day
b) The popular brand name in cars is Maruthi

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6. FUNCTIONS OF STATISTICS

Statistics is used for various purposes. It is used to simplify mass data and to make
comparisons easier. It is also used to bring out trends and tendencies in the data, and the
hidden relations between variables. All these help in easy decision making. Let us look at
each function of Statistics in detail.

1. Statistics simplifies mass data

The use of statistical concepts helps in simplification of complex data. Using statistical
concepts, the managers can make decisions more easily. The statistical methods help in
reducing the complexity of the data and in the understanding of any huge mass of data.

Solved Problem 1:

Fifty people were interviewed to rate a regional movie on the scale of 1 to 10, with number
1 being the top movie and number 10 being the worst movie. The table 1.1 shows the ratings
given by 50 customers. Simplify the data.

Table 1.1: The Ratings (scale of 1 to 10) for a Regional Movie Given by 50 Customers

15768 75347 12587 47424 98725

45798 78967 23287 63576 39548

The data in table 1.1 can be condensed and is presented in table 1.1a using the statistical
concepts such as, calculating frequency and frequency distribution to draw conclusions and
then the frequency table is prepared. In this example, from the bulk data consisting of 50
rating scores, the frequency table was prepared. The frequency table is in a condensed and
simple form. From the table 1.1a, we can easily interpret that for the regional movie, most of
the customers gave 7 as a rating (that is, 11 customers). Only two customers gave a rating of
1 for the movie, which means that, only two out of 50 customers surveyed, liked this movie
the most.

Table 1.1a depicts the rating by customers using frequency and frequency distribution.

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Table 1.1a: Frequency Table

Rating Frequency Frequency Distribution
1 2 2/50 = 0.04
2 5 5/50 = 0.10
3 4 4/50 = 0.08
4 6 6/50 = 0.12
5 7 7/50 = 0.14
6 4 4/50 = 0.08
7 11 11/50 = 0.22
8 7 7/50 = 0.14
9 4 4/50 = 0.08
10 0 0/50 =0
Total 50 1

2. Statistics brings out trends and tendencies in the data

After data is collected, it is easy to analyse the trend and tendencies in the data by using
the various concepts of Statistics.

3. Statistics brings out the hidden relations between variables

Statistical analysis helps in drawing inferences on the data. Statistical analysis brings
out the hidden relations between variables.
4. Decision making power becomes easier

With the proper application of Statistics and statistical software packages on the
collected data, managers can take effective decisions, which can increase the profits in
a business.

5. Statistics makes comparison easier

Without using statistical methods and concepts, collection of data and comparison
would be difficult. Statistics helps us to compare data collected from various sources.
Grand totals, measures of central tendency and measures of dispersion, graphs and
diagrams and coefficient of correlation all provide ample scope for comparison.

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Hence, visual representation of the numerical data helps to compare the data with less effort
and effective decisions can be made.

SELF-ASSESSMENT QUESTIONS – 5
12. The total sale of a product in Area A is 840 for 30 working days. The total sale of
the same product in Area B is 784 for 28 working days. Should Statistics be applied
to get an appropriate picture regarding the comparison of sales?

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7. LIMITATIONS OF STATISTICS

Despite all its characteristics and functions, Statistics also has certain limitations.

1. Statistics does not deal with qualitative data

Qualitative data deals with meanings while quantitative data deals with numbers.
Qualitative data describes properties or characteristics that are used to identify things.
Quantitative data describes data in terms of quantity using the numerical figure
accompanied by a measurement unit. Statistics deals only with quantitative data.

Statistics deals with numerical data, which can be expressed in terms of quantitative
measurements. So, the qualitative phenomenon like beauty and intelligence cannot be
expressed numerically and any statistical analysis cannot be directly applied on these
qualitative phenomena. However, Statistical techniques may be applied indirectly by
first reducing the qualitative data to accurate quantitative terms. For example, the
intelligence of a group of students can be studied on the basis of their marks in a
particular examination.

2. Statistics does not deal with individual facts

Statistical methods can be applied only to aggregates of facts, because analysis and
interpretation of data is highly difficult in the case of individual facts.

3. Statistical inferences (conclusions) are not exact

Statistical inferences are true only on an average. They are probabilistic statements.
For example, in case of a data, which consists of the height of 200 male persons taken
from a graduate school, the inferences so obtained may not hold true for an individual
male person in particular.

4. Statistics can be misused and misinterpreted

Lack of sufficient knowledge of statistical science often leads to incorrect conclusions.

Therefore, proper care must be taken while selecting the collection method and also in

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choosing appropriate statistical models. Increasing misuse of Statistics has led to

increasing distrust in Statistics.

5. Common men cannot handle Statistics properly

The field of Statistics is so vast that it needs experience as well as skill to understand it
effectively and apply the statistical concepts and models. Hence, only statisticians can
handle statistics properly.

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8. STATISTICAL SOFTWARES

When the collected data is small, the analysis and interpretation can be done without much
difficulty. But when the amount of data is huge, the process of analysis and interpretation
would be difficult. Therefore, there is a need for statistical packages to calculate it in an easier
way.

With the advent of computers, lot of statistical packages have been developed which help the
scientific and technical researchers or statisticians in getting the most accurate and useful
information from the data. These statistical packages help the statisticians in summarising,
presenting and analysing huge amounts of data in a short time. Some such statistical
software applications are Minitab, SPSS, and E-Views that are mentioned in brief here.

Minitab

Minitab is a statistical software package that was designed especially for the teaching of
introductory statistics courses. It is an easy-to-use statistical software package and is a vital and
significant component of such a course. This permits the student to focus on statistical concepts
and thinking, rather than computations or the learning of a statistical package. The main aim of
any introductory statistics course should, always be the why of statistics rather than technical
details that do little to stimulate the majority of students and do little to reinforce the key
concepts. (Source: http://www.minitab.com)

SPSS (Statistical Package for Social Sciences)

SPSS Inc. technology encapsulates advanced mathematical and statistical expertise, to extract
predictive knowledge that when deployed into existing processes makes them adaptive to
improve the outcome.
Predictive Analytics Software will help:
Capture all the information you need about people's attitudes and opinionsPredict the outcome
of interactions before they occur
Act on your insights by embedding analytic results into the business processes. (Source:
http://www.spss.com)

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EViews

EViews is a statistical software tool, which offers academic researchers, corporations, government
agencies, and students the access to powerful statistical, forecasting, and modelling tools through
an innovative, easy-to-use object-oriented interface.
EViews is the ideal package for anyone who works with time series, cross-section, or longitudinal
data. EViews offers an extensive array of powerful features for data handling, statistics and
econometric analysis, forecastingand simulation, data presentation, and programming. EViews
generates forecasts or model simulations and produce high quality graphs and tables. (Source:
http://www.eviews.com/)

JMP Software

JMP is statistical discovery software. JMP helps you explore data, fit models, discover patterns,
and discover points that don’t fit patterns. JMP is best for data analysis; JMP aims to present a
graph with every statistics.

Table 1.1b depicts the statistical techniques and their application.

Table 1.1b: Illustrative List of Statistical Techniques and Their Application

Statistical Technique Field Specification
Binomial Distribution Quality Assurance Sampling Inspection

Correlation and Regression Financial Risk, Hedging of Investments,

Analysis Marketing Cross- Market Analysis
Index Number Economics Wholesale and consumerPrice
Indices
Sampling Market Research Consumer Survey
Normal Distribution Equity Research EPS
Testing of Hypothesis Agriculture Testing a Fertiliser
Rank Correlation Rankings Rankings with multiple criteria
Weighted Average Finance Sensex, NIFTY
Percentiles Education Relative Ranking

Table 1.1c depicts list of decision situation and corresponding statistical techniques.

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Table 1.1c: Illustrative List of Decision Situation and Corresponding Statistical

Techniques
Statistical TechniquesApplicable
Area Decision

Marketing Assessment of Demand of Times Series, Correlation

Product, Customer Profiling and andRegression
Market Research
Retail Management Identifying Customer Buying Cluster Analysis,
Behaviour and Patterns Correlation and Regression

Finance andBanking Evaluation of Investment, Correlation Analysis and

Derivatives and Predicting EPS Regression Analysis,
Probability, Hypothesis,
Time series
Insurance Determining the Premium, Probability, Hypothesis,
Impact of Different Factors on Time Series, Correlation
Health and Life Analysis and Regression
Analysis
Operations Controlling and Improving Statistical Quality control,
Production Process and Quality Six Sigma, Sampling
Inspection
HRD Performance Appraisal and Normal Distribution,
Reward System Correlation Analysis,
Conjoint Analysis

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9. SUMMARY

Let us now summarise the key learnings of this unit:

• Decision making process becomes more efficient with the help of Statistics. Statistics
deals with an aggregate of facts.
• Statistics is applied in all fields of our activities. Statistical interpretation requires
skilled and experienced statisticians. Statistical data is numerical data or quantitative
data but not qualitative data.
• Statistics is broadly divided into Descriptive and Inferential Statistics.
• Descriptive Statistics gives the general description of quantitative data, whereas
inferential statistics deals with reaching valid conclusions about the data in order to
make effective judgment.
• The statistical software packages used by the interpreters or statisticians are Minitab,
SPSS, Microsoft Excel, EViews and others.

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10. GLOSSARY

• Data: Data is the facts and figures that are collected, analysed and interpreted.
• Descriptive Statistics: Descriptive statistics is tabular, graphical and numerical
methods used to summarise data.
• Element: Element is the entities on which data are collected.
• Qualitative Data: Data that are labels or names used to identify an attribute of each
element.
• Quantitative Data: Quantitative data describes data in terms of quantity using the
numerical figure accompanied by a measurement unit.
• Sample: Sample is a subset of the population.
• Statistical Inference: This is the process of using data obtained from a sample to make
estimates about the characteristics of a population.
• Statistics: Statistics is the art and science of collecting, analysing, presenting and
interpreting data.
• Population: Population is the set of all elements of interest in a particular study.

11. TERMINAL QUESTIONS

1. Mention the characteristics of Statistics.
2. Give the meaning of the word Statistics.
3. What are the limitations of Statistics?
4. What are the functions of Statistics?
5. What is the importance of Statistics in modern business environment?
6. Explain any two applications of Statistics.

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12. ANSWERS
Self Assessment Questions
1. c) Investing funds in several options
2. b) Mathematical statistics
3. c) Nature believed in variation
4. b) Statistics quantifies uncertainity
5. a) State
6. The four components of Statistics are collection, presentation, analysis and
interpretation of data.
7. b) A. L. Bowley
8. State affair
9. Industrial Quality control, Investment policies, to find market potential for a product.
10. a) No
b) No
11. a) Quantitative data
b) Qualitative data
12. Yes
Terminal Questions
1. Refer to section 5
2. Refer section 3
3. Refer to section 7
4. Refer to section 6
5. Refer to section 1.3
6. Refer to section 4

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13. CASE STUDY

The Manager of the customer service division of a consumer electronics company was
interested in determining whether customers who had purchased a DVD player over the past
12 months were satisfied with their products. Using the warranty cards submitted after
purchases, the manager was planning to survey these customers.

a. According to you as a researcher in this case, how would you decide in proceeding with
descriptive statistics?
b. Can you decide in thinking for a Manager of customer service division of a consumer
electronics company to use inferential statistics? Justify your answer.
c. Describe the population and sample for this survey.
d. Develop three categorical and numerical questions that you feel would be appropriate
for the study.

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14. REFERENCES

• Agarwal B. L., (2006) Basic Statistics, 4th Ed, New Age International Publishers.
• Bowerman, B. L & R.T. O Connel, Applied Statistics: Improving Business Processes, Irwin
1996.
• David R. Anderson, Dennis J. Sweeney & Thomas A. Williams Thomson Business
Information Pvt Ltd. 5th Ed.
• Freedman D. R. Pisani and R. Purves, Statistics 3rd Ed, W.W Norton 1997.
• Rand R. Wilcox, (2009) Basic Statistics – Understanding Conventional Methods and
Modern Insights, Oxford University Press.
• Richard I. Levin, David S. Rubin, (2008) Statistics for Management, 7th
• Ed, PHI Learning Private Limited.
• Srivastava, T. N. & Shailaja Rejo (2008). Statistics for Management, 5th Ed. TMH.
• Tanur , J.M, Statistics: A Guide to the unknown, 4th Ed, Brooks /cole, 2002.
• Tukey J. W, Exploratory Data Analysis, Addison –Wesley, 1977.
E-References:

• http://www.textbooksonline.tn.nic.in/Books/11/Stat-EM/Chapter-1.pdf.

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