Name : PRASHANT D.

DEVALE

Roll Number : 510932455

Learning Centre : KARROX TECHNOLOGIES LTD,

Andheri

Subject : Statistics for Management

Date Of Submission : 13th June, 2009

Assignment No. : MB0024

 STATISTICS FOR MANAGEMENT
MB0024

SET – 2

Q1. What do you mean by sample survey? What are the

different sampling methods? Briefly describe them.

Answer –

sample survey:-

a. Universe or Population: Statistical Survey or enquiries deal

with studying various characteristics of unit belonging to a group.
The group consisting of all the units is called Universe or
Population.
Example: In the statistical survey aimed at determining average
per capita income of the people in the city, all earning individuals
in the city form the population. If the population consists of finite
number of individuals, then it is called a Finite Population. A
population consisting of infinite number of units or units such that
it is practically impossible to observe all the units is called Infinite
Population. Although many populations appear to be exceedingly
large, no truly infinite population of physical objects actually
exists. Given limited resources and time it is practically not
possible to count the number of grains of sand on the beach. Such
populations are termed as infinite population for our study.
Populations may further be classified as Existent or Hypothetical.
A population consisting of concrete objects like the books in
library is known as existent population. Throwing a coin infinite
number of times produces Hypothetical Population.

b. Sample : It is a finite subset of a population drawn from it to

estimate the characteristics of the population. Sampling is a tool
which enables us to draw conclusions about the characteristics of
the population.
The advantages of sampling are:

1) In short time we get maximum information about the

population.
2) It results in considerable amount of saving of time and labour.
3) The organization and administration of a sample survey is
relatively much
less.
4) The results obtained are reliable and always possible to attach
degree of
reliability.
5) There is a possibility of obtaining detailed information. In other
words
there is a greater scope.
6) In case of infinite population, it is the only available method.
7) If the units are destroyed or affected adversely in the course of
investigation, then the only method is sampling.

Q2. What is the different between correlation and

regression? What do you understand by Rank Correlation?
When we use rank correlation and when we use
Pearsonian Correlation Coefficient? Fit a linear regression
line in the following data –

X 12 15 18 20 27 34 28 48
Y 123 150 158 170 180 184 176 130

Answer –

Difference between correlation and regression:

1) Correlation measures the relationship between two
variables and Regression measures relation between
variables and estimates the value of another variable
having the value of one variable.
 2) Correlation are three types:
a) simple correlation
b) Partial correlation
c) multiple correlation

Regression is two types:

a) simple regression
b) multiple regression

Correlation :
When two or more variables move in sympathy with other, then
they are said to be correlated. If both variables move in the same
direction then they are said to be positively correlated. If the
variables move in opposite direction then they are said to be
negatively correlated. If they move haphazardly then there is no
correlation between them.
Correlation analysis deals with
1) Measuring the relationship between variables.
2) Testing the relationship for its significance.
3) Giving confidence interval for population correlation measure.
Spearman’s Rank Correlation Coefficient
Karl Pearson’s correlation coefficient assumes that
i) Samples are drawn from a normal population.
ii) The variables under study are affected by a large number of
independent causes so as to form a normal distribution. When we
do not know the shape of population distribution and when the
data is qualitative type Spearman’s Ranks correlation coefficient
is used to measure relationship. It is defined as 6åD 2 Where N 3 –
N D is the difference between ranks assigned to the variables.
Value of r lies between – 1 and +1 and its interpretation is same
as that of Karl Pearson’s correlation coefficient.

X Y XY X^2 Y^2
1512
12 123 1476 144 9
 2250
15 150 2250 225 0
2496
18 158 2844 324 4
2890
20 170 3400 400 0
3240
27 180 4860 729 0
3385
34 184 6256 1156 6
3097
28 176 4928 784 6
1690
48 130 6240 2304 0

(i) The regression equation of y on x is given by

Y – Y = byx (X – X)

(ii) The regression equation of x on y is given by

_ _
X – X = bxy (Y – Y)

Mean of x = £x /n = 202/8 = 25.25

Mean of y = £y/n=1271/8=158.875

Bxy= (n £ xy – £ x £ y) / (£ y^2 –(£y)^2)

here sum of x= 202 where sum denoted by £
sum of y= £y =1271
sum of x^2=£ x^2=6066
sum of y^2= £y^=2205625
sum of xy =£xy=32254 and n= total number of
values= 8
put the above value in the equation
 bxy = (8*32254)-(202*1271)/205625-(1271)^2
= 1290/440684 = 0.0029
hence bxy = 0.0029
Similarly byx =(n £ xy – £ x £ y) / (£ x^2 –(£ x)^2)
byx= ((8*32254)-(202*1271)/(6066-(202)^2)
byx= 1290/-40804 = - 0.037
hence Answer is: i) Y – 25.25 = -0.037 (X – 158.875)
ii) X – 158.875 = 0.0029 (Y – 25.25)

Q.3 What do you mean by business forecasting? What are

the different methods of business forecasting? Describe
the effectiveness of time-series analysis as a mode of
business forecasting. Describe the method of moving
averages.

Answer –

Business Forecasting:-
Business forecasting refers to the analysis of past and present
economic conditions with the object of drawing inferences about
probable future business conditions. The process of making
definite estimates of future course of events is referred to as
forecasting and the figure or statements obtained from the
process is known as ‘forecast’ future course of events is rarely
known. In order to be assured of coming course of events, help is
taken of an organized system of forecasting Following are the
main methods of business forecasting
Business Barometers :-
Business indices are constructed to study and analyze the
business activities on the basis of which future conditions are
predetermined. As business indices are the indicators of future
conditions, so they are also known as “Business Barometers” or
‘Economic Barometers’. With the help of these business
barometers the trend of fluctuations in business conditions are
made known and by forecasting a decision can be taken relating
to the problem. The construction of business barometer consists
of gross national product, wholesale prices, consumer prices,
industrial production, stock prices, bank deposits etc. These
quantities may be concerted into relatives on a certain base. The
relatives so obtained may be weighted and their average be
computed. The index thus arrived at in the business barometer.

The business barometers are of three types:

i. Barometers relating to general business activities: it is

also known as general index of business activity which refers to
weighted or composite indices of individual index business
activities. With the help of general index of business activity long
term trend and cyclical fluctuations in the ‘economic activities of a
country are measured but in some specific cases the long term
trends can be different from general trends. These types of index
help in formation of country’s economic policies.
ii. Business barometers for specific business or industry:
These barometers are used as the supplement of general index of
business activity and these are constructed to measure the future
variations in a specific business or industry.
iii. Business barometers concerning to individual business
firm: This type of barometer is constructed to measure the
expected variations in a specific individual firm of an industry

Time Series Analysis

Time series
analysis is also used for the purpose of making business
forecasting. The forecasting through time series analysis is
possible only when the business data of various years are
available which reflects a definite trend and seasonal variation. By
time series analysis the long term trend, secular trend, seasonal
and cyclical variations are ascertained, analyzed and separated
from the data of various years.
Merits
i. It is an easy method of forecasting.
ii. By this method a comparative study of variations can be made.
iii. Reliable results of forecasting are obtained as this method is
based on mathematical model.
Demerits
i. This method is expensive, difficult and time taking.
ii. This method deals with past data only.
iii. This method can only be used when the data for several years
are available

Method of Moving Averages

This method is used for smoothing the time series. That is, it
smoothens the fluctuations of the data by the method of moving
averages.
When Period of moving average is odd: To determine the trend by
this method, we use the following method:
i. Obtain the time series
ii. Select a period of moving average such as 3 years, 5 years etc.
iii. Compute moving totals according to the length of the period of
moving average.
If the length of the period of moving average is 3 i.e., 3 yearly
moving average is to be calculated, compute moving totals as
follows:
a + b + c, b + c + d, c + d + e, d + e + f….. for 5years moving
average, moving totals are computed as follows:
a + b + c + d + e, b + c + d + e + f, c + d + e + f + g….. Placing
the moving totals at the centre of the time span from which they
are computed. iv. Compute moving averages by moving totals in
step (3) by the length of the period of moving average and place
them at the centre of the time span from which the moving totals
are computed. These moving averages are also called the trend
values.
By plotting these trend values (if desired) one can obtain the
trend curve with the help of which we can determine the trend
whether it is increasing or decreasing. If needed, one can also
compute short term fluctuations by subtracting the trend values
from the actual values.

Q.4 What is definition of Statistics? What are the different

characteristics of statistics? What are the different
functions of Statistics? What are the limitations of
Statistics?

Answer: -

Definitions of Statistics:

A.L.Boddington defined Statistics as ‘The science of estimates

and probabilities’. According to Croxton and Cowden, ‘Statistics is
the science of collection, presentation, analysis and interpretation
of numerical data.’ Thus, Statistics contains the tools and
techniques required Characteristic of Statistics

1. Statistics Deals with aggregate of facts: Single figure cannot be

analyzed. Thus, the fact ‘Mr Lee is 170 cms. tall’ cannot be
statistically analyzed. On the other had, if we know the heights of
60 students of a class, we can comment upon the average height,
variation, etc

2. Statistics are affected to a marked extent by multiplicity of

causes: The statistics of yield of paddy is the result of factors such
as fertility of soil, amount of rainfall, quality of seed used, quality
and quantity of fertilizer used, etc.

3. Statistics are numerically expressed: Only numerical facts can

be statistically analyzed. Therefore, facts as ‘price decreases with
increasing production’ cannot be called statistics.

4. Statistics are enumerated or estimated according to reasonable

standards of accuracy: The facts should be enumerated (collected
from the field) or estimated (computed) with required degree of
accuracy. The degree of accuracy differs from purpose to purpose.
In measuring the length of screws, an accuracy up to a millimeter
may be required, whereas, while measuring the heights of
students in a class, accuracy up to a centimeter 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.

6. Statistics are collected for a predetermined purpose: There

must be a definite purpose for collecting facts. Eg. Movement of
wholesale price of a commodity for the collection, presentation,
analysis and interpretation of data. This definition is precise and
comprehensive. According to Prof.Horace Secrit Statistics deals
with aggregate of facts, affected to 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.

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 arearranged in
logical order can be called statistics Limitation of Statistics

Functions of Statistics
1. It simplifies mass data
2. It makes comparison easier
3. It brings out trends and tendencies in the data
4. It brings out hidden relations between variables.
5. Decision making process becomes easier.

Major limitations of Statistics are:

1. Statistics does not deal with qualitative data. It deals only

with quantitative data.

2. Statistics does not deal with individual fact: Statistical

methods can be applied only to aggregate to facts.

3. Statistical inferences (conclusions) are not exact: Statistical

inferences are true only on an average. They are
probabilistic statements.

4. Statistics can be misused and misinterpreted: Increasing

misuse of Statistics has led to increasing distrust in statistics.

5. Common men cannot handle Statistics properly: Only

statisticians can handle statistics properly.

Q.5 What are the different stages of planning a statistical

survey? Describe the various methods for collecting data
in a statistical survey.

Answer –

Planning of a Statistical Survey : The relevance and accuracy

of data obtained in a survey depends upon the care exercised in
planning. A properly planned investigation can lead to best results
with least cost and time. The planning stage consists of the
following sequence of activities.

1. Nature of the problem to be investigated should be clearly

defined in an unambiguous manner.

2. Objectives of investigation should be stated at the outset.

Objectives could be to obtain certain estimates or to
establish a theory or to verify a existing statement to find
relationship between characteristics etc.

3. The scope of investigation has to be made clear. It refers to

area to be covered, identification of units to be studied,
nature of characteristics to be observed, accuracy of
measurements, analytical methods, time, cost and other
resources required.

4. Whether to use data collected from primary or secondary

source should be determined in advance.

5. The organization of investigation is the final step in the

process. In encompasses the determination of number of
investigators required, their training, supervision work
needed, funds required etc.

Collection of Data :

a.Collection of data is the first and most important stage in any

statistical
survey
b. The method for collection of data depends upon various
considerations
such as objective, scope, nature of investigation, availability of
resources.
c. Data collected for the first time keeping in view the objective of
the survey is
known as primary data. They are likely to be more reliable.
However cost of
collection of such data are much higher.
d. Collection of primary data can be done by anyone of the
following methods.
i. Direct personal observation
ii. Indirect oral interview
iii. Information through agencies
iv. Information through mailed Questionnaires
v. Information through schedule filled by investigators
e. In Direct personal observation the investigator collects data by
having
direct contact with units of investigation. The accuracy of data
depends upon
the ability, training and attitude of theinvestigator. This method is
suitable where
i) The scope of investigation is narrow
ii) Investigation requires personal attention of the
investigator
iii) Investigation is confidential
iv) Accuracy of data is important.

Advantages are
i) original data
ii) more accurate and reliable
iii) Satisfactoryinformation can be extracted by the investigator
through indirect questions
iv) Data arehomogeneous and comparable
v) additional information can be gathered
vi] Misinterpretation of questions can be avoided. However it
consumes
more time and cost.
f. Indirect oral interview is used when area to be covered is large.
The data is
collected from a third party or witness or head of institution.
This method is
generally used by police department.

Advantages are
i) economical in terms of time, cost and man power
ii) confidential information can be collected
iii) information is likely to be unbiased and reliable. However
the degree of
accuracy of information is less.

g. Method of collecting information through local agencies or

correspondents
are generally adopted by newspaper and T.V. Local agents are
appointed in
different parts of the area under investigation. They send the
desired
information at regular intervals. It used where the area to be
covered is very
large and periodic information is required. The information is
likely to be
affected by the bias of the correspondents or agencies.

h. Very often information is collected through Questionnaires. The

questionnaires are filled by of questions pertaining to the
investigation.
They are sent to the respondents with a covering letter
soliciting
cooperation by giving correct information and mailing it back.
The
objectives of investigation are explained in the covering letter
together with assurance for keeping information provided by them
as confidential.
This method is generally adopted by research workers and other
official and nonofficial agencies, It covers large area of
investigation. It is more economical and free from investigator’s
bias. However it results in many “nonresponse”
situations. The respondent may be illiterate. They can provide
wrong information due to wrong interpretation of questions.
i. Success of Questionnaire method of collection of data depends
mainly on proper drafting of
the questionnaire. Following general principle are considered.
i. The number of questions should be less.
ii. Lengthy questions should be avoided.
iii. Answers to them should be short.
iv. Questions regarding personal matters should be avoided.
v. It should be unambiguous.
vi. There should not be any scope for misinterpretation.
vii. They should have been arranged in logical sequence
viii. A covering letter should accompany.

j. Information can be collected through schedules filled by

investigator
through personal contact. In order to get reliable information,
the
investigator should be well trained, tactful, unbiased and hard
working.
It is suitable for extensive area of investigation through
investigator’s
personal contact. The problem of nonresponse is minimized.

k. The data used for the investigation of the current problem from
the data
collected and used by some other agency or person for his
investigation is
known a secondary data. Their accuracy, reliability, objectives
and scope
should be examined thoroughly before use.

l. Primary data are collected by census method. In other words

information
with respect to each and every individual of the population is
observed.
Whereas secondary data may be collected either by census or
sampling
 methods.m. Pilot survey: It is a small trial survey undertaken
before main
survey. It gives a measure of efficiency of the Questionnaire. It
reduces the
inconveniences and loss of information. It helps us to introduce
necessary
changes.
Q.6 What are the functions of classification? What are the
requisites of a good classification? What is Table and
describe the usefulness of a table in mode of presentation
of data?

Answer-

Functions of classification
The functions of classification are :
a. It reduce the bulk data
b. It simplifies the data and makes the data more comprehensible.
c. It facilitates comparison of characteristics.
d. It renders the data ready for any statistical analysis

Requisites of a good classification

Requisites of good classification are :
i. Unambiguous: It should not lead to any confusion
ii. Exhaustive: every unit should be allotted to one and only one
class
iii. Mutually exclusive: There should not be any overlapping.
iv. Flexibility: It should be capable of being adjusted to changing
situation.
v. Suitability: It should be suitable to objectives of survey.
vi. Stability: It should remain stable through out the
investigation
vii. Homogeneity: Similar units are placed in the same class.
viii. Revealing: Should bring out essential features of the
collected data

Types of classification
The very important types are:
1)Geographical classification: Data are classified according to
region.
2) Chronological classification: Data are classified according
to the time of its occurrence.
3) Conditional classification: Data are classified according to
certain conditions.
4) Qualitative classification: Classification of data that are
nonmeasurable.
E.g. Sex of a person, marital status, colour etc.
5) Quantitative classification: Classification of data that are
measurable either in discrete or continuous form.
6) Statistical Series: Data arranged logically according to size
or time of occurrence or some other measurable or
nonmeasurable characteristics.