STAT-702

3(2-1)

Statistical Methods for Business

Management
Theory
Introduction to business research, business research process, Errors in business
research. Types of research and research Designs. Type of variables and
measurement scales, Measurement scale of attitude, Data collection Methods,
Questionnaire designs. Concept of validity and reliability. Concept of sampling and
sampling designs, Estimation of mean, variance and proportion under different
probability sampling designs. Estimation and interpretation of simple linear
Regression Inference in sample linear Regression Estimation and interpretation of
Multiple linear Regression Standardized regression Coefficients, Inference in
Multiple Linear Regression, Chi-square test of independence, measures of
associations, Linear Correlation, Inference in Simple Linear Correlation, Principal
component analysis, Cluster Analysis.
Practical

Introduction to Minitab, data manipulation in Minitab, Programming in

Minitab, Construction in Minitab, Programming in Minitab,
Construction of Macroes in Minitab. Introduction to SPSS, data
manipulation in SPSS.
What is Statistics?
Statistics is the art and science of extracting information from data

Statistics
Data Information

Information:
Data: Raw facts and Communicated
figures, especially concerning some
numerical facts, particular facts.
collected together for
information.
Why study statistics?
1. Data are everywhere
2. Statistical techniques are used to make many decisions that affect
our lives
3. No matter what your career, you will make professional decisions
that involve data. An understanding of statistical methods will help
you make these decisions efectively

Statistics is a collection of methods for planning experiments/Surveys,

collecting, processing, summarizing, presenting, analyzing and
interpreting DATA and drawing scientific conclusions based on the data
under uncertain conditions.
Variation and Uncertainty
• Statistics is the subject which deals with the variability. No two
objects in a universe are exactly alike. If they were, there would
have been no statistical problem.

• It also deals with uncertainty as every process of getting

observations whether controlled or uncontrolled, involves
deficiencies or chance variation. That is why we have to talk in
terms of probability since the inferences which are made about
the population on the basis of sample evidence cannot be
absolutely certain.
Population vs Sample
Statistical
Inference

Population Sample
(have Parameters) (have Statistic)
Statistic: 𝑿, S, r
Parameters: µ, σ, ρ

Population: A Population is Sample: A representative

a group of all part/subset of the
object/elements/items population.
under investigation.
Why Sampling?

• A process of drawing a sample from population is called

sampling.
• Reduced cost
• Greater speed
• Greater accuracy
• Some times it is the only option (testing the life of bulbs/bullets)
Branches of Statistics

Statistics

Descriptive Inferential

Involves in Organization,
Using sample information
Summarization, and Display of
such as 𝑿, S, r, p to draw
Data into Tables, Graphs and
Inference about Unknown
Summary Numbers such as
Population Parameters.
𝑿, S, r, p
Variable Any Characteristics that varies from Object to Object, Place to Place
or Over time is known as Variable. e.g., marks, age, height, sex,
temperature, sales, revenue, time etc.

Variable

Qualitative Quantitative

Characteristic which
varies in quality (not Discrete Continuous
numerically) e.g.,
Eye colour, Height
No. of students
Education level, Weight
No. of chairs
Behaviour, Marks
No. of deaths
Quality, Time
No. of births in a hospital
Design, Distance
No. of accidents
Performance Temperature
Measurement

• The process of assigning numbers or labels to objects, persons, states or,

events in accordance with specific logically accepted rules for
representing quantities or qualities of attributes or characteristics.
• There are actually four levels of measurement: nominal, ordinal, interval,
and ratio [psychologist researcher named Stanley Stevens 1951].
Nominal

• Nominal scales are used for labeling variables, without any quantitative
value.

• Nominal scales are mutually exclusive (non-overlapping) categories

where order of the categories is not important.

Examples:
Sex, Blood Groups, Religion, Marital status, Political affiliation, Eye colour
Ordinal

• Order of the values is important and significant, but the differences

between each one is not really known.
Poor  Fair  Good  Very Good  Excellent

• But, Is the difference between “Very Good” and “Excellent” the same
as the difference between “Good” and “Very Good?” We can’t say.

Example:
Cricket teams standings in ICC ranking, Students’ Grades, Class
Positions etc.
Interval

• Interval scales are numeric scales in which we know not only the order,
but also the exact differences between the values. i.e., Constant interval
size
• No “true zero” point i.e., Zero does not mean absence

• With interval data, we can add and subtract, but cannot multiply or
divide.

Example: Temperature, IQ scores, Shoe size

Ratio

• Ratio scales tell us about the order, they tell us the exact
value between units, AND they also have a “true zero” point

Example:
Bank Balance, Height, Weight, Speed, Length
Qualitative data
Example 1: Consider the data about Sex of 10 students

Sex M F M M F M F M M M

• Make a frequency distribution, relative frequency and % frequency of the

above data and interpret your results? Make an appropriate graph?
Example 2: Suppose we have also collected data of Sections of these 10
students as
Sex M F M M F M F M M M
Section A A A B B B A B A B
• Construct the Cross tabulation of the above data and interpret your results?
Also make an appropriate graph?
Solution
Example 1 Sex f Relative % freq Example 2
Sex Sec A Sec B Total
freq
Male 7 0.7 70 Male 3 4 7

Female 3 0.3 30 Female 2 1 3

Total 10 1.0 100 Total 5 5 10

Bar Chart Multiple Bar chart

8 7 5
7
4

Frequency
Frequency

6
Sec A
5 3
4 3 2 Sec B
3
2 1
1
0 0
Male Female Male Female
Sex Sex
Simple Bar Chart
• A bar chart is a type of chart which shows the values of different
categories of data as rectangular bars with different lengths.
Example: Draw a Simple Bar Chart to represent the Population of 5
cities of the province Punjab.
Bar diagram showing Population of 5 cities
of Punjab
Cities Population (000)
12,000
10,355
Lahore 10,355 10,000

Population in ‘000’
Rawalpindi 4,765 8,000

Faisalabad 3,675 6,000 4,765

3,675
4,000 3,100
Sargodha 1,550 1,550
2,000
Multan 3,100 0
Lahore Rawalpindi Faisalabad Sargodha Multan
Cities
Multiple Bar Chart

Population Multiple Bar Chart showing Population of

Cities (000) Male Female
Males and Females
Lahore 10,355 5385 4,970 6000
5385
4,970
Rawalpindi 4,765 2478 2,287 5000 Males Females
Faisalabad 3,675 1911 1,764 4000

POPULATION
Sargodha 1,550 806 744 3000 2478
2,287
1911
1,764
2000

1000 806 744

0
Lahore Rawalpindi Faisalabad Sargodha
CITIES
Component Bar Chart

Component Bar Chart showing population of

both Males and Females and Total
Cities Pop (000) Male Female
12000
Lahore 10,355 5385 4,970
10000 Males
Rawalpindi 4,765 2478 2,287
8000 Females
4,970

Population
Faisalabad 3,675 1911 1,764
6000

Sargodha 1,550 806 744 4000

2,287
5385 1,764
2000
2478 1911 744
0 806
Lahore Rawalpindi Faisalabad Sargodha
Cities
Discrete data – Frequency Distribution

Example:
• Following data represents the number of infected plants from a
sample of twenty experimental plots. Your task is to present it in
tabular form.

1 2 4 3 0 1 2 3 1 1 0
2 1 0 2 3 0 0 1 3
Discrete Frequency Distribution

No. of infected Tally Frequency Relative

items frequency
f
X
0 |||| 5 5/20 = 0.25
1 |||| | 6 0.30
2 |||| 4 0.20
3 |||| 4 0.20
4 | 1 0.05
Total 20 1.00
Graphical Representation of Discrete Data
Bar Chart representing the infected items
7

6
6
5
5
Frequency

4
4 4
3

1
1
0
0 1 2 3 4
No. of infected items
Pie Chart
• A pie chart is a type of graph in which a circle is divided into sectors
that each represent a proportion of the whole.
Example: The blood group of 70 students were tested and the following
results were obtained.

Blood No. of Blood Groups of Students

Groups Students (f)

17% 11%
A 8
A
B 30 29% 43%
B
O
O 20 AB

AB 12
Pie Chart
Blood No. of Relative Percent Angle
Groups Students frequency frequency rf x 360
(f)
A 8 8/70 = 0.11 0.11*100 = 11 39.6

B 30 0.43 43 154.8
Divide the total
O 20 0.29 29 104.4
angle of the Circle
AB 12 0.17 17 61.2 360 into four
segments as
Total 70 1.00 100 360 calculated
Simple Bar Chart

• Consider the Same example of the blood group of 70 students

Blood Groups
Blood No. of
35
Groups Students (f) 30
30
A 8 25
20
B 30 20
15 12
O 20
10 8
AB 12
5
0
A B O AB
Simple Bar Chart

Example: Draw a Simple Bar Chart to represent the turnover of a

company for 6 years.
Bar diagram showing the Turnover of a company for
6 years
Years Turnover (Rs) 70,000
2002 25,000 60,000
2003 29,000 50,000

Turnover in Rs.
2004 44,000 40,000

2005 30,000
49,000
20,000
2006 60,000
10,000
2007 64,000
0
2002 2003 2004 2005 2006 2007
Years
we will be dealing with various techniques for summarizing and describing
qualitative data.

Qualitative

Univariate Bivariate
Frequency Frequency
Table Table

Percentages
Component Multiple
Pie Chart Bar Chart Bar Chart

Bar Chart

We will begin with the univariate situation, and will proceed to the
bivariate situation.
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Statistics
Collection of Secondary data
Semi-official Sources
• Pakistan Bureau of Statistics, All Provincial Bureau of Statistics
• State Bank of Pakistan
• NBP
• District Councils
• WAPDA
Private Sources
• Chamber of Commerce & Industry
• Co-Operative Societies
Research Organizations
• PARC, NARC, Universities

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Obtaining Data
Published source
book, journal, newspaper, Published reports
Designed experiment
researcher exerts strict control over units
Survey
a group of people are surveyed and their responses are recorded
Observation study
units are observed in natural setting and variables of interest are recorded
Types of Statistical Analyses Used in Research

3. Differences analysis: used to compare the mean of the

responses of one group to that of another group
4. Associative analysis: determines the strength and direction
of relationships between two or more variables
5. Predictive analysis: allows one to make forecasts for future
events

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Presentation of Data

When the suitable statistical data have been collected, the next step is the
reduction or presentation of the data so that valid inferences can be drawn.
Methods for the presentation of data
• Frequency Distribution
• Graphical presentation
• Stem and Leaf display
• Single Number form

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Representation of Qualitative Data

Tabular Presentation of Data

• A frequency distribution is a tabular summary of data showing the
frequency (or number) of items in each of several non overlapping
classes.
• The objective is to provide insights about the data that cannot be
quickly obtained by looking only at the original data.

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Cross-Section Data

Definition
Data collected on different elements at the same point in
time or for the same period of time are called cross-section
data.
Table 1.2 Total Revenues for 2010 of Six Companies
Time-Series Data
Definition
Data collected on the same element for the same variable at
different points in time or for different periods of time are called
time-series data.
Table 1.3 Money Recovered from Health Care Fraud
Judgments
Panel Data

• Panel data or longitudinal data are multi-dimensional data involving

measurements over time.
• Panel data contain observations of multiple phenomena obtained over
multiple time periods for the same firms or individuals.