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STATISTICS FOR MANAGMENT

0040/MBF 103
ASSINGMENT
FALL 2014
LC-02009

NAME: NANDESHWAR SINGH


ROLL NO.1408001255
Q.1. According to the definition of Statistics given by Croxton and Cowden,
what are the four components of Statistics?

Ans :

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. 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. I
2. Presentation of data : The collected data is usually presented for further analysis
in a tabular, diagrammatic or graphic form and it is condensed, summarized 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.

3. Analysis of data : The data presented has to be carefully analyzed 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 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 analyzed
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.

Q2) What do you mean by Statistical Averages? List various requisites of a Good Average.

Ans) Statistical average : The statistical average or simply an average refers to the
measure of middle value of the data set.

Some of the important definitions are as follows:


According to Clark and Sekkade, "An average is an attempt to find one single figure
to describe the whole of figures".

According to Murray R. Spiegal, "Average is a value which is typical or


representative of a set of data".

According to Coxton and Cowden, "An average is a single value within the range of
the data that is used to represent all the values in the series. Since an average is
somewhere within the range of data, it is sometimes called a measure of central
value".

According to Sipson and Kafka, "A measure of central tendency is a typical value
around which other figures congregate”. The following are the requisites of a good
average

1) It should be simple to calculate and easy to understand.

2) It should be based on all values.

3) It should not be affected by extreme values.

4) It should not be affected by sampling fluctuation.

5) It should be rigidly defined, preferably by an algebraic formula, so that

different persons obtain the same value for a given set of data.

Q3) Explain the concept of combined mean .Find the mean for the entire group
of workers from the following data

Group – 1 Group – 2

Mean wages 150 200

No. of workers 500 450


Ans)

Combined arithmetic mean can be computed if we know the mean and number of
items in each group of the data.

The following equation is used to compute combined mean. Let 󠇆 󠇆͞x1 & 󠇆͞x2 of first and
second groups of data containing N1 and N2 terms, respectively.

̅̅̅+N2X
NıXı ̅2
Then, combined mean = X12 - 𝑥= Nı+N2

COMBINED MEAN :

Given data : Nı=500 N2 = 450

X̅1 = 150 X̅2 = 200


̅̅̅+N2X
NıXı ̅2 500 x 150 + 450 x 200
Combined mean = X̅12 = =
Nı+N2 500+450

165000
= 950

= 173.6

Q4) what is Chi-square test? Point out its application under what condition this
test is applicable?
Ans. Standard deviation is the root of sum of the squares of deviations divided by their numbers.
It is also called mean square error deviation (or) root mean square deviation. It is a second
moment of dispersion. Since the sum of squares of deviations from the mean is a minimum, the
deviations are taken only from the mean (But not from median and mode).The standard deviation
is root mean square (RMS) average of all the deviations from the mean. It is denoted by sigma
().

Individual series: There are two methods of calculating standard deviation


in an individual observation or series:
i) When deviations taken from Actual Mean: This method is used only when
the mean is a whole number.

Ʃ (x−x̅ ) ²
Variance =
N
Standard deviation = √𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒

ii) Deviation Taken from Assumed Mean: When the Arithmetic Mean is a
fractional value the method explained in (i) will be tedious and time consuming.
Hence we use the following formula.

Ʃd2
Variance = − (d̅ )²
Ʃf

Standard Deviation () = √𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒

Where, d stands for the deviation from assumed mean dX A, A is assumed mean, f = N

Discrete series:
i) Actual Mean Method:

Ʃf (x−x̅ ) ²
Variance =
Ʃf
Standard Deviation () = √𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒

ii) Assumed Mean Method:


Variance = [Ʃfd²
Ʃf
Ʃfd
− [ Ʃf ]² ]
Continuous series:
In a continuous series mid-values of the class intervals are to be found out.
Where, ‘X’ is the mid value of class interval for continuous series.

Variance = [ Ʃfd²
Ʃf
Ʃfd
− [ Ʃf ]² ] x (i)²

𝑥−A
Where d  , A = assumed mean, f = N, i = class width
𝐼
2)
Addition rule
The addition rule of probability states that:

i) If ‘A’ and ‘B’ are any two events then the probability of the occurrence
of either ‘A’ or ‘B’ is given by:
ΡΑ Β=ΡΑ+ΡΒΡΑ Β

ii) If ‘A’ and ‘B’ are two mutually exclusive events then the probability of
occurrence of either ‘A’ or ‘B’ is given by:
ΡΑ Β= ΡΑ+ΡΒ

iii) If ‘A’, ‘B’ and ‘C’ are any three events then the probability of occurrence
of either ‘A’ or ‘B’ or ‘C’ is given by:
ΡΑΒC= 󠇆ΡΑ+ΡΒ+ΡCΡΑΒΡΒCΡΑC+ΡΑΒC

1. Sampling errors
The sample results are bound to differ from population results, since sample
is only a small portion of the population. It is also known as inherent error
and cannot be avoided. It is not worth to eliminate them completely. These
errors may be due to the following factors:
Faulty selection of sample
Substitution of units to be studied
Faulty demarcation of sampling units
Error due to bias in estimation
However, the sampling errors follow random or chance variations and tend
to cancel out each other on averaging.
2. Non-sampling errors
Non-sampling errors are attributed to factors that can be controlled and
eliminated by suitable actions. They are due to the following factors:
Faulty planning, faulty definitions
Defective methods of interviewing
Personal bias of investigator
Lack of trained and qualified investigators
Respondents failure to answer
Improper coverage
Compiling errors
Publication errors

Advantages of business forecasting


Helpful in increasing profit and reducing losses
Every business is carried out with the purpose of earning maximum profits.
So, by forecasting the future price of the product and its demand, the
businessman can predetermine the production cost, production and the
level of stock to be determined. Thus, business forecasting is regarded as
the key of success of business.
Helpful in taking management decisions
Business forecasting provides the basis for management decisions,
because in present times the management has to take the decision in the
atmosphere of uncertainties. Also, business forecasting explains the future
conditions and enables the management to select the best alternative.
Useful to administration
On the basis of forecasting, the government can control the circulation of
money. It can also modify the economic, fiscal and monetary policies to
avoid adverse effects of trade cycles. So, with the help of forecasting, the
government can control the expected fluctuations in future.
Basis for capital market
Business forecasting helps in estimating the requirement of capital, position
of stock exchange and the nature of investors.
Useful in controlling the business cycles
The trade cycles cause various depressions in business such as sudden
change in price level, increase in the risk of business, increase in
unemployment, etc. By adopting a systematic business forecasting,
businessmen and government can handle and control the depression of
trade cycles.
Helpful in achieving the goals
Business forecasting helps to achieve the objective of business goals
through proper planning of business improvement activities.
Facilitates control
By business forecasting, the tendency of black marketing, speculation,
uneconomic activities and corruption can be controlled.
Utility to society
With the help of business forecasting the entire society is also benefited
because the adverse effects of fluctuations in the conditions of business are
kept under control.

Q5.

Ans )
MARKS (C.I) Frequency Less than C.F

10 – 20 2 2

20 – 30 8 10

30 – 40 6 16

40 – 50 14 30

50 – 60 3 33

60 – 70 10 43

70 – 80 7 50

N = 50

N 50
𝑀𝑒𝑑𝑖𝑎𝑛 = = = 25
2 2

40 – 50 is the median class


l = 40 , h = 40-30 =10 , f = 14 , c.f = 16

Median = l +
h
f
[ N
2
– c.f ]
40 +
10
14
[ 25 – 16 ] =
40+10
14
= 16

fı−f0
Mode : L + xI
2fı −f0−f2

L = 40, F1 =14, F0 = 06, F2 = 3, I = 10

14−6
Mode = 40 + x 10
2x14−6−3

8
= 40 + 19 x 10 = 44.2

Q6.
Ans)

Year sales X XY X²

2011 120 -3 -360 9

2012 130 -2 -260 4

2013 135 -1 -135 1

2014 125 0 0 0

2015 140 1 140 1

2016 160 2 320 4

2017 165 3 495 9

Ʃy 󠇆 󠇆= 󠇆975 Ʃx 󠇆= 󠇆0 Ʃ 󠇆xy =200 Ʃx² 󠇆= 󠇆28

When Ʃx = 0 and
Ʃy 975
Ʃy = Na, therefore A = = = 139.2
n 7
Ʃxy 200
Ʃxy 󠇆= 󠇆bƩx², 󠇆 󠇆therefore, 󠇆b 󠇆= 󠇆 = = 7.8
Ʃx² 28

The equation of trend line is y = a+bx


Y =139.2 + 7.1x

Sales for 2018 = 165 – 10 = 155


Sales for 2019 = 165 + 5 = 170

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