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BUSINESS STATISTICS

Dr. Sirajul Islam

Chairman MGT

Lecture - 1
# Statistics:

⊗ Statistics - Facts, figures, data. Information, (1) this is plural meaning of Statistics.

⊗ Information is refined form of data.

⊗ Information is higher form of data.

⊗ All information is data but all data is not information.

⊗ Statistics is a distinct area of knowledge. It will help us to know - hoe to collect data, how to
use data, how to evaluate information from data, what are data, how to present & interpret
data. This is called singular meaning of Statistics. (2)

# What is data? -- Basic (1)

⊗ A collection of facts from which conclusions may be drawn; "statistical data”.

⊗ An item of factual information derived from measurement or research.

⊗ Data refers to graphs or images, particularly as measurements or observations of a set of


variables.

⊗ The term data means groups of information that represent the qualitative or quantitative
attributes of a variable or set of variables.

# Example:

This is an example about the wrong statistical evaluation in the field of literacy rate of Bangladesh.

Literacy Rate (2010) - 60%-65% according to government

Literacy Rate (1971) - 17%

Literacy Rate (before '71) - 14%

Literacy Rate (1982) - 30% according to Ershad government

Literacy Rate (1991) - 40% according to Khaleda Zia government

Literacy Rate (1996) - 60% according to Sheikh Hasina government, (we see a jump ? ? ?)

Literacy Rate (2001) - 64% according to Khaleda Zia's 2nd government

Best efforts ever taken in the field of literacy rate in this country after the liberation are -
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1. During Sheikh Muzib Govt. - University students used to teach illiterate people around
the and the students were paid moderately for teaching the illiterate people.

2. During Zia Govt. - Every people were asked to literate one people.

# What is Fact? -

What has been recorded and accepted by society may be refer to fact, whether it is true or false.

Real Fact is Genuine and Statistical fact is not genuine but nearly genuine.

# Basic Characteristics of Statistics:

⊗ 1. Statistics must be expressed in numerical forms.

Example: Very few facts can not be expressed under statistics (human emotions, white-
black, good-bad, and male-female).

⊗ 2. Statistics must be aggregates of facts.

Example: fact must be aggregate of several data as like above 30 pcs of information.

⊗ 3. Statistics must be affected by more than one reason.

Example: Multiplicity of cause must be present. Like - production of factory depends on


several factors and also final result of a student.

⊗ 4. Statistics must be comparable and homogenous.

Example: when things are not comparable, it will not be statistics & the things and facts
should be similar or alike.

⊗ 5. Statistics must be collected in a systematic manner.

Example: Utilization of resource minimally and maximize our purpose make things easy &
this is referred to systematic way of doing things.

Method of Data Collection: -----> Systematic Way.

⊗ 6. Statistics must be reasonably accurate.

Example: Like the fact - date of birth.

** Business does some value add to our life in basic purpose.

# Why should we study statistics?

⊗ Statistics is very important for taking appropriate or sound business decisions.

⊗ Statistics is vitally important in resource allocation.

Resource allocation starts with priority basis, which will give us most profitable return.
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⊗ Statistics is also important in govt. administration.

⊗ Statistics plays very important role in social sciences.

⊗ Statistics is necessary in natural science and also in biological sciences.

Lecture - 2
# Reference:

1. Business Statistics

- Gupta & Gupta

- Mia & mya

# Limitations of Statistics:

1. Statistics is only applicable in quantitative analysis.

2. The rules or laws of statistics are true only in the long run.

3. Statistics can lead us to wrong conclusions if inappropriately used.

4. Statistics is only a means, not the end result.

# Types of Data, Methods of collecting data & presentation of data:

1. Primary Data

2. Secondary Data

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# Primary Data:

When we collect the data directly from the field of investigation.

⊗ Example: Please mention your date of birth… If the data is got from any official source, it is
secondary data. Else if the data is obtained by direct investigation in field like in any given school,
then it is called primary data.

⊗ We need to rely on primary data for research purpose.

⊗ For authentication of data, we need to rely on secondary data, e.g. Population of Bangladesh.

⊗ If any one wants to establish a dairy farm, he will require the live stock data of the region he
wants to establish the dairy farm. He will need the govt. data about the live stock of that particular
region. It is secondary data.

# Different Methods of collecting primary data:

There are four different methods of collecting primary data-

1. Questionnaire Method – 95 % of data we can collect with this method

2. Interview method

3. Observation method

4. Mechanical device method

2, 3, 4 are the supplementary method for questionnaire method.

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Lecture - 3

# The precautions we should take while preparing a questionnaire:

1. There should be as few questions as possible in a questionnaire.


2. Questions should be prepared in most simple & common terms.
3. Questions should be prepared in a manner so that response can be given very easily.
4. There should not be any biasness in the questions in a questionnaire.
5. There should be sufficient check & balance in questions of a questionnaire.
6. There should not be any leading questions in a questionnaire.
7. There should not be any double barreled questions in a questionnaire.
8. The overall design of the questionnaire should be attractive & appealing.
9. Every questionnaire must accompany a forwarding letter.
• Questionnaire – MCQ, Yes-No, Ranking of data, Range of data in rather than exact value is
more preferable.
• Political & religious biasness is very harmful.

# Means of questionnaire:

There are two way of questionnaire -

1. Sending questionnaire by mail to the receiver.


2. Employing some individual, who will carry out the questionnaire to public. The employee is
called the investigator. There are several benefits of this means over the first means.

# Editing of data:

1. Editing for completeness: incomplete questionnaire must be discarded.


2. Editing for Uniformity: numerical values must be obtained in same unit.
3. Editing for Consistency: Check & Balance in questions.
4. Editing for Timeliness:

# Classification of data set:

Classification is the process of arrangement of data on the basis of some characteristics that are
present in the data set.

# Basis of classification of data:

1. On the basis of time.


2. On the basis of space.
3. On the basis of variables.
4. On the basis of attributes.

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#Example: on the basis of time

Time (X) Production (Y) of jute in ton


1991 200
1992 210
1993 114
1994 224
1995 218
#Example: on the basis of Space

Space (X) Production (Y) of Rice in ton


Dhaka 400
Chittagong 600
Rajshahi 1200
Khulna 700
Barisal 900
Sylhet 500

# Classification on the basis of variables:

# Variables:

These will be expressed in numerical forms.


These will vary from one person to another.
It may have continuity in its character.
Variables are those elements that can be directly expressed in numerical forms, that will vary from
one unit to the next unit and it may have continuity in its character.

# Example:

Marks in exam (X) Number of Students (Y)


51-55 3
56-60 4
61-65 8
66-70 5
71-75 4

# Classification on the basis of Attributes:

Qualitative characteristics of an object is named attribute, i.e. good-bad, black-white, male-female.


These are mutually exclusive in nature.

Attributes are qualitative characteristics of an object that can not be directly expressed in numerical
form and these are mutually exclusive in nature.

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# Example:

Attribute: Occupation (X) Number of persons (Y)


Farming 300
Business 100
Service 200
Professional 50
Others 7

# Methods of classification:

1. Inclusive method of classification 2.Exclusive Method of classification


Income taka (X) Frequency (F) Income taka (X) Frequency (F)
101-200 3 100-200 4
201-300 5 200-300 6
301-400 10 300-400 12
401-500 6 400-500 5
501-600 4 500-600 2
Total 28 Total 29

3. Unequal class interval 4.Equal class interval / Open ended


distribution
(not preferred in statistics)
Income taka (X) Frequency (F) Income taka (X) Frequency (F)
100-200 1 Upto 300 1
200-300 4 300-400 5
300-400 6 400-500 8
400-500 2 500-600 6
500-800 1 600 & above 1
Total 14 Total 21

5. This is not a statistical classification


Income taka (X) Frequency (F)
100-200 1
200-300 5
300-400 8
400-500 6
500-600 0
600-700 0
700-800 1
Total 21

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• In inclusive method of classification, both the upper & lower limit elements are included in
that particular class.
• In exclusive method of classification, the upper limit element of each class is excluded in
that class.
• In any classification method, the lower limit element must be counted in the class.
• Exclusive method is more preferable in statistics than inclusive method.
• There is no possibility of missing link or value in exclusive method of classification.
• A benefit of exclusive method is to calculate the mid value of a class interval.

# Measures of central tendency:

# Central Tendency:

In many statistical distributions, there is a tendency among most of the values to concentrate around
a certain value, generally in the middle of the distribution. This tendency of the values is known as
central tendency.

There are different statistical methods of measuring the central tendency. These methods
collectively are known as measures of central tendency.

# Six methods of measuring central tendency:

1. Simple average or arithmetic mean.


2. Mode.
3. Median.
4. Geometric mean.
5. Harmonic mean.
6. Quadratic mean.

Lecture - 4

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Distribution:

When we represent statistical value in different classes along with the frequency of the classes, it is
called statistical distribution.

Basic Objective of measuring central tendency:

1. To find out a representative value of the whole distribution.


2. To describe the whole distribution by the representative value in a relative situation.

Example:

Average income of people of Bangladesh – 700 $ per capita / per year

Average income of people of USA – 25000 $ per capita / per year

Average income of people of Japan – 27000 $ per capita / per year

Here we obtained the representative value of the people of Bangladesh and we got a comparative
scenario with other two countries in terms of per capita income of the people.

Simple Average: Example:

X=Variable ; X = Average Xi fi Xi fi
1 n 10 4 40
X= ∑ Xi
n i =1 15 5 75
and also 20 6 120
25 3 75
1 n
X= ∑ Xi *
n i =1
fi 30 2 60
Total 20 ∑= 370

Example: therefore,

1 n
Income (x) in Tk. f Mid Value (X) Xifi
X = ∑ Xi * fi
100-200 2 150 300 n i =1
200-300 3 250 750
=1/16 * 5500
300-400 6 350 2100
400-500 4 450 1800 = 343.75
500-600 1 550 550
This method is called direct
Total 16 5500
method.

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Short Method:

Σfd
X = A+ ×C
n
X−A
d=
C
A is assumed average and C is the class interval

Income (x) in Tk. Mid Value (X) f d =(X-A)/C f*d


100-200 150 2 -2 -4
200-300 250 3 -1 -3
300-400 350 = A 6 0 0
400-500 450 4 1 4
500-600 550 1 2 2
∑ = 16 ∑=
-1
Therefore, X = A+ ( ∑ f d / n) * C
= 350+ (-1/16)*100 = 343.75

Comparative Example 2:

Age (x) f Mid value(X) f*x d fd


10-20 1 15 15 -2 -2
20-30 2 25 50 -1 -2
30-40 5 35=A 175 0 0
40-50 2 45 90 1 2
50-60 1 55 55 2 2
Total 11 385 0
ΣfX 385
direct method, X = = = 35
n 11
Σfd 0
short method, X = A + × C = 35 + ×10 = 35
n 11

This sort of distribution is called perfect distribution.

** When class intervals are equal, then we can apply both direct & short method. For unequal class
interval, only direct method is applicable.

** In case of open ended distribution, we will consider the class interval of the open end as like the
other class intervals.

Median:

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Median is a form of statistical average. It is the value that divides a series into two equal parts,
when we rearrange those values either in ascending or descending order.

Median is a positional measure of average.

For Discrete Data:

n +1
Median = th Value (odd number of data)
2
n n
+ ( + 1)
Median = 2 2 th Value (even number of data)
2

For Group Data:

Income fi Cumulativ Reverse


(x)
100-200 2 e frequency
2 16
200-300 3 5 14
300-400 6 11 11
400-500 4 15 5
500-600 1 16 1

Median Group = (n+1)/2 = 17/2 = 8.5

n +1
− fc
Median = L1 + 2 ×C
fm
L = Lower limit of the median group
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f c = cumulative frequency of the presiding row


f m = normal frequency of the median class
Therefore Median = 300 + {(8.5 – 5) / 6}*100

= 358.33

Example 2: Median Class = (n+1)/2 = 26/2 = 13

n +1
Marks (x) fi Cumulative − fc
20-30 4 frequency
4 ∴ Median = L1+ 2 ×C
30-40 6 10
fm
40-50 10 20 = 40+ (13-10)/10 * 10
50-60 3 23
60-70 2 25 = 43

Mode:

Mode is the value that contains the highest no. of frequency in a statistical distribution.
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Example: Discrete Data

X f
3 2
5 4
7 8
9 15
11 12
The mode of this distribution is 9.

Example: Group Data

Income (x) fi
100-200 2
200-300 3
300-400 6
400-500 4
500-600 1

Mode = L1 + ∆ 1
×C
∆1 + ∆ 2
∆ 1
= modal class frequency - premodal class frequency

∆ 2
= modal class frequency - postmodal class frequency

Here modal class is of frequency 6.

Mode = 300 + 3/5 * 100 = 360

Difficulties in deriving mode of a distribution:

Income (x) fi1 fi2 fi3


100-200 8 3 2
200-300 6 6 4
300-400 5 4 15
400-500 4 5 15
500-600 2 10 12

1. In case of fi1, extreme frequency occurs at the beginning class. Here the derivation of Δ1 is
not possible.
2. In case of fi2, extreme frequency occurs at the ending class. Here the derivation of Δ2 is not
possible.
3. In case of fi3, there are two modal classes. This is called a Bi-modal Problem.
In these conditions, to determine the mode of a distribution:

Mode = 3 x Median – 2 x Mode

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Uses of Mode:

1. Mode is used in weather forecast.


2. Mode is highly useful in selecting the location of a business house.
3. Mode is used in biological offspring studies.
4. Mode is also useful in case of open ended distributions.

Uses of Median:

1. Median is used to find out the central position of a distribution.


2. Median is used in the construction of dividers on the streets.
3. Median is used where there are presence of extreme values in any distribution.
4. Median can also be used in case of open ended distributions.

Characteristics of a good measure of Central Tendency:

Characteristics Mean Median Mode


It should be easy to define and easy to calculate. Yes Yes Yes
It should take into consideration all the values in a distribution. Yes Yes No
It should be suitable for higher statistical and mathematical use. Yes No No
It should not be affected by extreme values. No Yes No
It should not be highly affected by sampling fluctuations. Yes Yes No

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