RIZAL TECHNOLOGICAL UNIVERSITY

Cities of Mandaluyong and Pasig

STATISTICAL ANALYSIS WITH SOFTWARE APPLICATIONS

MODULE NO. 1
Title : Statistical Analysis in Business and Management

1. Role of Statistics in Decision Making

2. Importance of Statistical Analysis to Business
3. Processes of Statistical Analysis
4. Review of Basic Statistics

Overview

Statistics exists to solve problems

arising from the need to make decisions based on incomplete or uncertain
information. Its goal is the organization, analysis and explanation of facts and
figures derived from studies in the social, behavioral, natural, and management
sciences. It attempts to discover the general rules of behavior and economic and
managerial phenomena for the dual purposes of understanding these phenomena as
they are and of controlling and improving them.
Statistics as an organized system of analysis originated almost a century ago
in attempts to understand the factors influencing industrial and agricultural
production, in order to better control these factors and so to increase efficiency and
production at reasonable cost. Today the aim of statistics include almost all aspects
of business and management decision making.

Study Guide

All students will be required to complete all activities/exercise to practice,

assessment and comprehensive exam that assesses the learning of all course
objectives. This must be weighted in a manner so that all of these requirements
worth a minimum of

 Quizzes 20%
 Class activities/exercises 20%
 Assignment and Project 15%

COURSE TITLE (Statistical Analysis with Software Applications) Y. P. Evangelista

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

 Attendance/Deportment 10%
 Major Examination 35%

General Course Requirements:

Even we are on online classes, you have to :

1. Please keep all your work (assignments, quizzes etc.) for Portfolio
requirements at the end of the semester.
2. Make sure to put your First Name, Last Name Class Section, Time
Schedule, Day Schedule and Date on all activities and assignments.
3. Make sure if we have face to face during online classes your camera in
ON.

Learning Outcomes

At the end of this module the students will be able to :

1. Know the role of statistics in decision making

2. Know the importance of Statistical Analysis to Business
3. Know the processes of Statistical Analysis
4. Know what is Statistics
5. Know the different kinds of Statistics
6. Definition of Variable and its Classification
7. Know the levels of measurement
8. Know the methods of collecting data

Topic Presentation

Importance of Statistical Analysis to Business

Statistical Analysis is used to organize material required for informed decision
making. Its importance is magnified in business, because most decisions are made
under conditions of uncertainty. Uncertainty in itself exists in many aspects of our
modern life. When we toss a coin to start a football or soccer game, we are
uncertain of the outcome. When workers go out on strike they are not sure they will
be rehired again. When we board an airplane, bus or car, or even cross the street,
we are not really certain that we will arrive at our destination safely. While we live
with uncertainties on a daily basis, we still seek the most certainty possible in these
situations. For business decision makers, statistics is an organizing tool that
diminishes uncertainty.

COURSE TITLE (Statistical Analysis with Software Applications) Y. P. Evangelista

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

The nature of business required that decisions about the future be made now.
Typically this are monetary decisions, both short and long term. An engineering
company must decide how much office space it will need in the next five years while
it renegotiates its present lease or decide to build its own office building. A life
insurance company determines rates and premiums based on life expectancies
sometimes 30 years in the future. The monetary considerations are vital --- the
wrong decisions could cost the company a lot of money.
The following examples provide additional illustrations of business situations
requiring statistical analyses.
Accounting. An accounting firm doing an audit for a large national
corporation in the apparel industry is involved in verifying receivables. The company
has receivables all over the Philippines ranging in amounts from P50,000.00 to
P700,000.00. To comply with the auditing standards, the accounting firm has to send
out letters of verification. There are approximately 100,000 account receivables, and
it would be too costly and time consuming to send a letter to each account. The
problem is to determine how many letters to send and to whom to send them. How
many responses would be required to make the survey accurate? Should letters be
sent only to accounts with high balances , low balances , 30 day-old balances, over
90 day balances or what combination of these?

Management. Example: A home builder owner in a certain subdivision in

Cainta is not sure as to whether which is more economical : to employ company’s
construction workers or to hire new local workers. (those new construction workers
who lives near the construction site ). There was an argument between Company’s
sales manager and construction manager. There are a lot of real issues here and
the owner needs to know among other things whether the local real estate market
can absorb the new homes and what are the prevailing wage rates for local
construction workers versus company’s wage rate. Statistical Analysis can help in
the decision making, by conducting statistical survey, determining appropriate
sample size and applying statistical tests in arriving at statistical decision and
inferences.

Marketing. Statistical Analysis helps in answering the questions:

‘1) Which city has a good size population in the 20-35 age range , one whose
income level is representative of the country at large.? 2) Will sales decrease
significantly as they bring price up to the competition’s level? If so, how much?

Planning. For Example, an automobile manufacturer is about to start his

planning for three new models to come on the market in five to seven years. The
process must begin now because it takes a long time for design, testing of
prototypes, retooling of assembly plants, etc. The company has suffered some
business reverses in the past (for example , they came out with subcompact models
in years when consumers wanted big, flashy cars.) To avoid the same mistake,
they want to make sure that they do adequate planning and research now. There
is the basic question of how much the car will cost to produce in five years? The
manufacturer will need to forecast wage scales, raw material costs, advertising

COURSE TITLE (Statistical Analysis with Software Applications) Y. P. Evangelista

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

costs, and other production costs. Statistical analysis will be the tool to determine
the appropriate answers to such questions.

Processes of Statistical Analysis

Many of these business decision concerning the future are based on the
gathering of historical data, its statistical organization, and the particular opinions
and personal experiences of the decision maker. Historical data is raw information
about the past (for example, how many new cars were bought last year). Raw data
in itself is not particularly useful to the above car manufacturer, but organizing this
data into age groups of automobile purchasers, type of car purchased and the
purchaser income level is.
Statistics organizes information, it is also important to observe that it provides
a thought pattern for training decision makers. Decision makers who know statistics
can interpret and understand the data and can ask the appropriate questions whose
answers are needed in making decisions.
Many people think that business decisions are now easier to make due to the
increased reliance on computers to sort and analyze masses of historical data.
Computers as we know , can digest, store, and categorize information at far greater
speeds and volume than can people. We often forget though that computers are
merely machines, they do only what we tell them to do. So again it is the decision
maker on the scene, a human being , who must understand what questions to ask
and how to ask them. Only in this way will the computer be able to provide useful
information for decision making.
Statistics exists to solve problems. It is both descriptive and analytical tool. A
statistical problem begins with a question of interest in one of the various areas of
management such as accounting, advertising economics, finance, marketing, or
production. However, the methods and techniques of statistical analysis enter the
arena only after some data bearing on the problem are accumulated. After the data
are collected, the next step is often the organization of the data into an
understandable and easily communicable format. Sometimes the data can be
expressed by a pictorial or graphical structure that allows them to be perceived
visually by persons not very familiar by training or experience with numerical
descriptions. Visual methods, when available, are excellent vehicles for
communicating statistical information quickly and clearly to those not trained in
numerical thinking.
Important techniques of pictorially organizing a set of data so as to more
easily convert the information contained therein.

COURSE TITLE (Statistical Analysis with Software Applications) Y. P. Evangelista

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

Definition of Statistics:
Is the branch of mathematics that deals with the statistical instrumentation of
Collecting, Classifying , Organization, Presenting, Analyzing, and Interpreting , and
drawing conclusions from the quantitative or numerical data.

Divisions of Statistics
1. Descriptive Statistics - includes collection, classification, presentation and
description of numerical data to be able to summarize and describe the group
characteristics of the data. The origin of descriptive can be traced in the early
days in Babylonia between 4500 BC and 3000 BC.

Example:
Measures of Central Tendency (Mean, Median, Mode), Measures of
Variability (Standard Deviation, Average Deviation, Range), Skewness and
Kurtosis

2. Inferential Statistics – refers to techniques of interpreting the values resulting

from the descriptive techniques and using then in drawing conclusions or
judgment about the population on representative sample. It is also consists of
higher degree of analysis, interpretation and inferences. The area of inferential
statistics called hypothesis testing is a decision making procedure to find out
whether there is a significant difference between a claim about a population and
information obtained the said population. Inferential statistics was traced in the
1600s.

Example:
Hypothesis testing using the z – test, the t – test, analysis of variance, simple
linear correlation, the chi – square test, regression analysis and time series
analysis.

VARIABLES AND BROAD CLASSIFICATION OF VARIABLES

Variable – refers to a factor , property, attribute, characteristic or behavior that

differentiates a group of persons, a set of things, events, conditions or approaches
from another group(s) or set(s) and which takes on two or more dimensions,
categories, or levels with descriptive or numerical values that can be measured
qualitatively and/or quantitatively.
Examples of variables are sex (male and female), socio economic
status(high/middle/low); geographic location (urban, rural) grade level
(nursery/kindergarten/primary/intermediate) home related dimensions (family
composition/socio economic status/home environment/language spoken at home).

COURSE TITLE (Statistical Analysis with Software Applications) Y. P. Evangelista

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

Variables can be broadly classified as either quantitative or qualitative, with the

latter further classified into discrete and continuous types.( See figure below)

VARIABLE

QUALITATIVE QUANTITATIVE

DISCREET CONTINUOUS

BROAD CLASSIFICATION OF VARIABLE

1. Qualitative – variables express a categorical attribute, such as sex, (male

female) religion, marital status, region of residence, higher educational
attainment. Qualitative variables do not strictly take on numeric values
(although we can have numeric codes for them , e.g. for sex variable, 1
and 2 may refer to male and female respectively). Qualitative data answer
questions “what kind”.
2. Quantitative – (otherwise called numerical) data, whose sizes are
meaningful , answer questions such as “how much” or “how many”.
Quantitative variables have actual units of measure. Examples of
quantitative variables include the height, weight, number of registered cars,
household size and total household expenditures/income of survey
respondents. Quantitative data may be further classified into:

a) Discrete data - are those data that can be counted e.g., the
number of days for cellphones to fail, the ages of survey respondents
measured to the nearest year, and the number of patients in a hospital.
These data assume only (a finite or infinitely) countable number values.
b) Continuous data - are those that can be measured, e.g. the exact
height of a survey respondent and the exact volume of some liquid
substance. The possible values are unaccountably infinite.

COURSE TITLE (Statistical Analysis with Software Applications) Y. P. Evangelista

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

Example :

VARIABLE TYPE OF TYPE OF

VARIABLE QUANTITATIVE
VARIABLE
Class student number Qualitative
Sex Qualitative
Number of Siblings Quantitative Discrete
Weight (in kilograms) Quantitative Continuous
Height (in centimeters) Quantitative Continuous
Age of Mother Quantitative Discrete
Usual Daily Allowance in School (in pesos) Quantitative Discrete
Usual Daily Food Expenditure (in school) Quantitative Discrete
Usual Number of Text Messages sent in a day Quantitative Discrete
Usual Sleeping Time Qualitative
Most Preferred Color Qualitative
Happiness Index for the Day Qualitative

LEVELS OF MEASUREMENT

Four levels of measurement of variables, nominal, ordinal, interval and ratio. These
are hierarchical in nature and are described as follows :

1. Nominal Level - level of measurement arises when we have variables that

are categorical and non numeric or where the numbers have no sense of
ordering. As an example, consider the numbers on the uniforms of
basketball players. Is the player wearing a number 7 a worse player than the
player wearing number 10? Maybe or maybe not, but the number on the
uniform does not have anything to do with their performance. The numbers
on the uniform merely help identify the basketball player. Other examples of
the variables measured at the nominal level include sex, marital status,
religious affiliation. For the study on the validity of the statement regarding
effect of breakfast on school performance, students who responded Yes to
Question Number 1 can be coded 1 while those who responded No, code 0
can be assigned.

2. Ordinal level - also deals with c categorical variables like the nominal level,
but in this level ordering is important, that is the values of the variable
could be ranked. For the study of the validity of the statement regarding
effect of breakfast on school performance, students who had healthy
breakfast can be coded 1, those who had unhealthy breakfast as 2 while
those who had no breakfast at all as 3. Using the codes the responses could

COURSE TITLE (Statistical Analysis with Software Applications) Y. P. Evangelista

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

be ranked. Otherexamples of the ordinal scale include socio economic status

(A to E where A is wealthy , E is poor, difficulty of questions in exam ( easy,
medium, difficult), rank in a contest (first place, second place, etc.), and
perceptions
in Likert scales.

Note : While there is a sense of ordering, there is nozero point in an ordinal

scale. In addition, there is no way to find out how much “distance” there is
between one category and another. In a scale from 1 to 10, the difference
between 7 and 8 may not be the same difference between 1 and 2.

3. Interval level – tells us that one unit differs by a certain amount of degree
from another unit. Knowing how much one unit differs from another is an
additional property of the interval level on top of having the properties
possess by the ordinal level. When measuring temperature in Celsius, a
10 degree difference has the same meaning anywhere along the scale –
the difference between 10 and 20 degree Celsius is the same as between
80 and 90 centigrade. But we cannot say that 80 degrees Celsius is twice
as hot as 40 degrees Celsius since there is no true zero, but only an arbitrary
zero point. A measurement of zero degrees Celsius does not reflect a true
“lack of temperature.” Thus, Celsius scale is in interval level. Other example
of a variable measure at the interval is the Intelligence Quotient (IQ) of a
person.

4. Ratio level - also tells us that one unit has so many times as much of the
property as does another unit. The ratio level possesses a meaningful
(unique and non arbitrary ) absolute, fixed zero point and allow all arithmetic
operations. The existence of the zero point is the only difference between
ratio and interval level of measurement. Examples of the ratio scale include
mass, heights, weights, energy and electric charge. With mass as an
example, the difference between 120 grams and135 grams is 15 grams, and
this is the same difference between 380 grams and 395 grams. The level at
any given point is constant , and a measurement of 0 reflects a complete lack
of mass.

Methods of Collecting Data

1. Interview – researcher prepares a set of question and respondents answer verbally
and directly
2. Questionnaire - research prepares a well – planed, written questions
3. Registration - Registration method refers to continuous, permanent, compulsory
recording of the occurrence of vital events together with certain identifying or
descriptive characteristics concerning them, as provided through the civil code, laws
or regulations of each country.
The vital events may be live births, fetal deaths, deaths, marriages, divorces,
judicial separations, annulments of marriage, adoptions, recognitions
(acknowledgements of natural children), legitimation

COURSE TITLE (Statistical Analysis with Software Applications) Y. P. Evangelista

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

4. Observation – collects information on the characteristics of the units under study by

actual measurement
5. Experimentation – makes trials and tests, it is used to describe any process that
generates a set of data

References

References and Open Educational Resources (OER)

Books:

1. Albert, Jose Ramon G., Ph.D. Training Manual, Teaching for Senior
High School Statistics and Probability, 2016
2. Almeda, Josefina Venegas, Capistrano, Therese Garcia, Sarte,
Genelyn Ma. Ferry Elementary Statistics 2010.
3. Sirug, Winston S. Ph. D., Basic Probability and Statistics
A Step by Step Approach.
4. Stephen A. Book / Marc J. Epstein. Statistical Analysis

COURSE TITLE (Statistical Analysis with Software Applications) Y. P. Evangelista

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