Statistics For Management-MB0024 MBA -1 SEM L.

Megha Syam 510925494

________________________________________________________________ Q1. What do you
mean by sample survey? What are the different sampling methods? Briefly describe
them. Answer : Sample 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. Survey sampling describes
the process of selecting a sample of elements from a target population in order to
conduct a survey. A survey may refer to many different types or techniques of
observation, but in the context of survey sampling it most often refers to a
questionnaire used to measure the characteristics and/or attitudes of people. The
purpose of sampling is to reduce the cost and/or the amount of work that it would
take to survey the entire target population. A survey that measures the entire
target population is called a census. Sample survey can also be described as the
technique used to study about a population with the help of a sample. Population
is the totality all objects about which the study is proposed. Sample is only a
portion of this population, which is selected using certain statistical principles
called sampling designs (this is for guaranteeing that a representative sample is
obtained for the study). Once the sample decided information will be collected
from this sample, which process is called sample survey. Assignment – Set 2

It is incumbent on the researcher to clearly define the target population. There

are no strict rules to follow, and the researcher must rely on logic and judgment.
The population is defined in keeping with the objectives of the study. Sometimes,
the entire population will be sufficiently small, and the researcher can include
the entire population in the study. This type of research is called a census study
because data is gathered on every member of the population. Usually, the
population is too large for the researcher to attempt to survey all of its
members. A small, but carefully chosen sample can be used to represent the
population. The sample reflects the characteristics of the population from which
it is drawn.

MB 0025 –Set 2

Page 1
Sampling methods are classified as either probability or non-probability. In
probability samples, each member of the population has a known non-zero
probability of being selected. Probability methods include random sampling,
systematic sampling, and stratified sampling. In non-probability sampling, members
are selected from the population in some non-random manner. These include
convenience sampling, judgment sampling, quota sampling, and snowball sampling.
The advantage of probability sampling is that sampling error can be calculated.
Sampling error is the degree to which a sample might differ from the population.
When inferring to the population, results are reported plus or minus the sampling
error. In non-probability sampling, the degree to which the sample differs from
the population remains unknown. Probability Sampling Methods 1. Random sampling is
the purest form of probability sampling. Each member of the population has an
equal and known chance of being selected. When there are very large populations,
it is often difficult or impossible to identify every member of the population, so
the pool of available subjects becomes biased. 2. Systematic sampling is often
used instead of random sampling. It is also called an Nth name selection
technique. After the required sample size has been calculated, every Nth record is
selected from a list of population members. As long as the list does not contain
any hidden order, this sampling method is as good as the random sampling method.
Its only advantage over the random sampling technique is simplicity. Systematic
sampling is frequently used to select a specified number of records from a
computer file. 3. Stratified sampling is commonly used probability method that is
superior to random sampling because it reduces sampling error. A stratum is a
subset of the population that share at least one common characteristic. Examples
of stratums might be males and females, or managers and non-managers. The
researcher first identifies the relevant stratums and their actual representation
in the population. Random sampling is then used to select a sufficient number of
subjects from each stratum. "Sufficient" refers to a sample size large enough for
us to be reasonably confident that the stratum represents the population.
Stratified sampling is often used when one or more of the stratums in the
population have a low incidence relative to the other stratums. Non Probability
Methods 1. Convenience sampling is used in exploratory research where the
researcher is interested in getting an inexpensive approximation of the truth. As
the name implies, the sample is selected because they are convenient. This non-
probability method is often used during preliminary research efforts to get a
gross estimate of the results, without incurring the cost or time required to
select a random sample. 2. Judgment sampling is a common non-probability method.
The researcher selects the sample based on judgment. This is usually extension of
convenience sampling. For example, a researcher may decide to draw the entire
sample from one "representative" city, even though the population includes all
cities. When

MB 0025 –Set 2

Page 2
using this method, the researcher must be confident that the chosen sample is
truly representative of the entire population. 3. Quota sampling is the non-
probability equivalent of stratified sampling. Like stratified sampling, the
researcher first identifies the stratums and their proportions as they are
represented in the population. Then convenience or judgment sampling is used to
select the required number of subjects from each stratum. This differs from
stratified sampling, where the stratums are filled by random sampling. 4. Snowball
sampling is a special non-probability method used when the desired sample
characteristic is rare. It may be extremely difficult or cost prohibitive to
locate respondents in these situations. Snowball sampling relies on referrals from
initial subjects to generate additional subjects. While this technique can
dramatically lower search costs, it comes at the expense of introducing bias
because the technique itself reduces the likelihood that the sample will represent
a good cross section from the population.

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 : 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. Regression
Regression is defined as, “the measure of the average relationship between two or
more variables in terms of the original units of the data.” Correlation analysis
attempts to study the relationship between the two variables x and y. Regression
analysis attempts to predict the average x for a given y. In Regression it is
attempted to quantify the dependence of one variable on the other. The dependence
is expressed in the form of the equations.

MB 0025 –Set 2

Page 3
Different between correlation and regression Correlation and linear regression are
not the same. Consider these differences:
•

Correlation quantifies the degree to which two variables are related. Correlation
does not find a best-fit line (that is regression). You simply are computing a
correlation coefficient (r) that tells you how much one variable tends to change
when the other one does. With correlation you don't have to think about cause and
effect. You simply quantify how well two variables relate to each other. With
regression, you do have to think about cause and effect as the regression line is
determined as the best way to predict Y from X. With correlation, it doesn't
matter which of the two variables you call "X" and which you call "Y". You'll get
the same correlation coefficient if you swap the two. With linear regression, the
decision of which variable you call "X" and which you call "Y" matters a lot, as
you'll get a different best-fit line if you swap the two. The line that best
predicts Y from X is not the same as the line that predicts X from Y. Correlation
is almost always used when you measure both variables. It rarely is appropriate
when one variable is something you experimentally manipulate. With linear
regression, the X variable is often something you experimental manipulate (time,
concentration...) and the Y variable is something you measure. The correlation
answers the STRENGTH of linear association between paired variables, say X and Y.
On the other hand, the regression tells us the FORM of linear association that
best predicts Y from the values of X. (2a) Correlation is calculated whenever: *
both X and Y is measured in each subject and quantifies how much they are linearly
associated. * in particular the Pearson's product moment correlation coefficient
is used when the assumption of both X and Y are sampled from normally-distributed
populations are satisfied * or the Spearman's moment order correlation coefficient
is used if the assumption of normality is not satisfied. * correlation is not used
when the variables are manipulated, for example, in experiments. (2b) Linear
regression is used whenever: * at least one of the independent variables (Xi's) is
to predict the dependent variable Y. Note: Some of the Xi's are dummy variables,
i.e. Xi = 0 or 1, which are used to code some nominal variables. * if one
manipulates the X variable, e.g. in an experiment. Linear regression are not
symmetric in terms of X and Y. That is interchanging X and Y will give a different
regression model (i.e. X in terms of Y) against the original Y in terms of X. On
the other hand, if you interchange variables X and Y in the calculation of
correlation coefficient you will get the same value of this correlation
coefficient.

MB 0025 –Set 2

Page 4
• •

The "best" linear regression model is obtained by selecting the variables (X's)
with at least strong correlation to Y, i.e. >= 0.80 or <= -0.80 The same
underlying distribution is assumed for all variables in linear regression. Thus,
linear regression will underestimate the correlation of the independent and
dependent when they (X's and Y) come from different underlying distributions.

Spearman's rank correlation coefficient or Spearman's rho, named after Charles

Spearman and often denoted by the Greek letter ρ (rho) or as rs, is a
nonparametric measure of correlation – that is, it assesses how well an arbitrary
monotonic function could describe the relationship between two variables, without
making any other assumptions about the particular nature of the relationship
between the variables. Certain other measures of correlation are parametric in the
sense of being based on possible relationships of a parameterized form, such as a
linear relationship. In principle, ρ is simply a special case of the Pearson
product-moment coefficient in which two sets of data Xi and Yi are converted to
rankings xi and yi before calculating the coefficient. In practice, however, a
simpler procedure is normally used to calculate ρ. The raw scores are converted to
ranks, and the differences di between the ranks of each observation on the two
variables are calculated. If there are no tied ranks, then ρ is given by:

where:

di = xi − yi = the difference between the ranks of corresponding values Xi and Yi,

and n = the number of values in each data set (same for both sets).
If tied ranks exist, classic Pearson's correlation coefficient between ranks has
to be used instead of this formula.

One has to assign the same rank to each of the equal values. It is an average of
their positions in the ascending order of the values.

MB 0025 –Set 2

Page 5
Conditions under which P.E can be used. 1. Samples should be drawn from a normal
population. 2. The value of “r” must be determined from sample values. 3. Samples
must have been selected at random.

X Y

12 123

15 150

18 158

20 170

27 180

34 184

28 176

48 130

Linear Regression Line for the above data can be plotted as :

Total Numbers : 8 Slope (b) :0.16701 Y-Intercept (a) : 154.65 Regression Equation
: 154.66 + 0.17x

Q3. 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 refers to the analysis of past and present economic conditions with
the object of drawing inferences about probable future business conditions. To
forecast the future, various data, information and facts concerning to economic
condition of business for past and present are analyzed. The process of
forecasting includes the use of statistical and mathematical methods for long
term, short term, medium term or any specific term.

MB 0025 –Set 2

Page 6
Following are the main methods of business forecasting:1. 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 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.

2. 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. 3. Extrapolation is the simplest method of business
forecasting. By extrapolation, a businessman finds out the possible trend of
demand of his goods and about their future price trends also. The accuracy of
extrapolation depends on two factors: i) Knowledge about the fluctuations of the
figures, ii) Knowledge about the course of events relating to the problem under
consideration.

4. Regression Analysis The regression approach offers many valuable contribution

to the solution of the forecasting problem. It is the means by which we select
from among the many possible relationships between variables in a complex economy
those which will be useful for forecasting. Regression relationship may involve
one predicted or

MB 0025 –Set 2

Page 7
dependent and one independent variables simple regression, or it may involve
relationships between the variable to be forecast and several independent
variables under multiple regressions. Statistical techniques to estimate the
regression equations are often fairly complex and time-consuming but there are
many computer programs now available that estimate simple and multiple regressions
quickly. 5. Modern Econometric Methods Econometric techniques, which originated in
the eighteenth century, have recently gained in popularity for forecasting. The
term econometrics refers to the application of mathematical economic theory and
statistical procedures to economic data in order to verify economic theorems.
Models take the form of a set of simultaneous equations. The value of the
constants in such equations are supplied by a study of statistical time series, 6.
Exponential Smoothing Method This method is regarded as the best method of
business forecasting as compared to other methods. Exponential smoothing is a
special kind of weighted average and is found extremely useful in short-term
forecasting of inventories and sales. 7. Choice of a Method of Forecasting The
selection of an appropriate method depends on many factors – the context of the
forecast, the relevance and availability of historical data, the degree of
accuracy desired, the time period for which forecasts are required, the cost
benefit of the forecast to the company, and the time available for making the
analysis. Effectiveness of 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. Method of Moving Averages One of the most
simple and popular technical analysis indicators is the moving averages method.
This method is known for its flexibility and user-friendliness. This method
calculates the average price of the currency or stock over a period of time. The
term “moving average” means that the average moves or follows a certain trend. The
aim of this tool is to indicate to the trader if there is a beginning of any

MB 0025 –Set 2

Page 8
new trend or if there is a signal of end to the old trend. Traders use this
method, as it is relatively easy to understand the direction of the trends with
the help of moving averages. Moving average method is supposed to be the simplest
one, as it helps to understand the chart patterns in an easier way. Since the
currency’s average price is considered, the price’s volatile movements are evened.
This method rules out the daily fluctuation in the prices and helps the trader to
go with the right trend, thus ensuring that the trader trades in his own good. We
come across different types of moving averages, which are based on the way these
averages are computed. Still, the basis of interpretation of averages is similar
across all the types. The computation of each type set itself different from other
in terms of weightage it lays on the prices of the currencies. Current price trend
is always given a higher weightage. The three basic types of moving averages are
viz. simple, linear and exponential. A simple moving average is the simplest way
to calculate the moving price averages. The historical closing prices over certain
time period are added. This sum is divided by the number of instances used in
summation. For example, if the moving average is calculated for 15 days, the past
15 historical closing prices are summed up and then divided by 15. This method is
effective when the number of prices considered is more, thus enabling the trader
to understand the trend and its future direction more effectively. A linear moving
average is the less used one out of all. But it solves the problem of equal
weightage. The difference between simple average and linear average method is the
weightage that is provided to the position of the prices in the latter. Let’s
consider the above example. In linear average method, the closing price on the
15th day is multiplied by 15, the 14th day closing price by 14 and so on till the
1st day closing price by 1. These results are totaled and then divided by 15. The
exponential moving average method shares some similarity with the linear moving
average method. This method lays emphasis on the smoothing factor, there by
weighing recent data with higher points than the previous data. This method is
more receptive to any market news than the simple average method. Hence this makes
exponential method more popular among traders. Moving averages methods help to
identify the correct trends and their respective levels of resistance.

MB 0025 –Set 2

Page 9
Q4. 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? 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 for the
collection, presentation, analysis and interpretation of data. This definition is
precise and comprehensive. Characteristic of Statistics a. Statistics Deals with
aggregate of facts: Single figure cannot be analyzed. b. 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. c. Statistics are
numerically expressed: Only numerical facts can be statistically analyzed.
Therefore, facts as ‘price decreases with increasing production’ cannot be called
statistics. d. 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
upto a millimeter may be required, whereas, while measuring the heights of
students in a class, accuracy upto a centimeter is enough. e. 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. f. Statistics are collected for a pre-determined purpose: There must
be a definite purpose for collecting facts. Eg. Movement of wholesale price of a
commodity. g. 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 logical order can be called
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.

MB 0025 –Set 2

Page 10
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.

Q5. What are the different stages of planning a statistical survey? Describe the
various methods for collecting data in a statistical survey. The planning stage
consists of the following sequence of activities. 1. Nature of the problem to be
investigated should be clearly defined in an un- ambiguous 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. It
encompasses the determination of number of investigators required, their training,
supervision work needed, funds required etc.

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

MB 0025 –Set 2

Page 11
Q6. 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? 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 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.

Table is nothing but logical listing of related data in rows and columns. b.
Objectives of tabulation are:i. To simplify complex data ii. To highlight
important characteristics iii. To present data in minimum space iv. To facilitate
comparison v. To bring out trends and tendencies vi. To facilitate further
analysis

MB 0025 –Set 2

Page 12