Statistics

Introduction to Statistics
Statistics is a branch of mathematics that deals with the collection, analysis and interpretation of
data.

Data can be defined as groups of information that represent the qualitative or quantitative
attributes of a variable or set of variables. In layman's terms, data in statistics can be any set of
information that describes a given entity. An example of data can be the ages of the students in
a given class. When you collect those ages, that becomes your data.

A set in statistics is referred to as a population. Though this term is commonly used to refer to
the number of people in a given place, in statistics, a population refers to any entire set from
which you collect data.

Definition

A branch of mathematics dealing with the collection, analysis,

interpretation, and presentation of masses of numerical data.
Definition of Statistics:
1. Statistics can be defined as the collection presentation and interpretation of numerical
data.- Croxton and Crowed.

2. Statistics are numerical statement of facts in any department of enquiry placed

interrelation to each other.- Bouly.

3. Statistics are measurement, enumerations or estimates of natural or social phenomena

systematically arrangement to exhibit their inner relation.- Conner.

4. By Statistics we mean quantitative data affected to a marked extend by a multiplicity of

causes. – Youle and Kendal.

5. The science of Statistics is essentially a branch of applied mathematics and can be

regarded as a mathematics applied to observation data.- R.A fisher.

Functions of Statistics:
1. To Present Facts in Definite Form:
We can represent the things in their true form with the help of
figures. Without a statistical study, our ideas would be vague and
indefinite.
The facts are to be given in a definite form. If the results are given in
numbers, then they are more convincing than if the results are
expressed on the basis of quality.

The statements like, there is lot of unemployment in India or

population is increasing at a faster rate are not in the definite form.
The statements should be in definite form like the population in
2004 would be 15% more as compared to 1990.

2. Precision to the Facts:

The statistics are presented in a definite form so they also help in
condensing the data into important figures. So statistical methods
present meaningful information. In other words statistics helps in
simplifying complex data to simple-to make them understandable.

The data may be presented in the form of a graph, diagram or

through an average, or coefficients etc. For example, we cannot
know the price position from individual prices of all good, but we
can know it, if we get the index of general level of prices.

3. Comparisons:
After simplifying the data, it can be correlated as well as compared.
The relationship between the two groups is best represented by
certain mathematical quantities like average or coefficients etc.
Comparison is one of the main functions of statistics as the absolute
figures convey a very less meaning.

4. Formulation and Testing of Hypothesis:

These statistical methods help us in formulating and testing the
hypothesis or a new theory. With the help of statistical techniques,
we can know the effect of imposing tax on the exports of tea on the
consumption of tea in other countries.

5. Forecasting:
Statistics is not only concerned with the above functions, but it also
predicts the future course of action of the phenomena. We can make
future policies on the basis of estimates made with the help of
Statistics. We can predict the demand for goods in 2005 if we know
the population in 2004 on the basis of growth rate of population in
past. Similarly a businessman can exploit the market situation in a
successful manner if he knows about the trends in the market. The
statistics help in shaping future policies.

6. Policy Making:
With help of statistics we can frame favourable policies. How much
food is required to be imported in 2007? It depends on the food-
production in 2007 and the demand for food in 2007. Without
knowing these factors we cannot estimate the amount of imports.
On the basis of forecast the government forms the policies about
food grains, housing etc. But if the forecasting is not correct, then
the whole set up will be affected.

7. It Enlarges Knowledge:
Whipple rightly remarks that “Statistics enables one to enlarge his
horizon”. So when a person goes through various procedures of
statistics, it widens his knowledge pattern. It also widens his
thinking and reasoning power. It also helps him to reach to a
rational conclusion.

8. To Measure Uncertainty:
Future is uncertain, but statistics help the various authorities in all
the phenomenon of the world to make correct estimation by taking
and analyzing the various data of the part. So the uncertainty could
be decreased. As we have to make a forecast we have also to create
trend behaviors of the past, for which we use techniques like
regression, interpolation and time series analysis.

Scope of Statistics
 In Business Decision Making
 In Medical Sciences
 In Actuarial Science
 In Economic Planning
 In Agricultural Sciences
 In Banking & Insurance
 In Politics & Social Science
Role of statistics in business
1. Marketing: Statistical analysis are frequently used in providing information
for making decision in the field of marketing it is necessary first to find out
what can be sold and the to evolve suitable strategy, so that the goods which
to the ultimate consumer. A skill full analysis of data on production
purchasing power, man power, habits of compotators, habits of consumer,
transportation cost should be consider to take any attempt to establish a new
market.

2. Production: In the field of production statistical data and method play a

very important role. The decision about what to produce? How to produce?
When to produce? For whom to produce is based largely on statistical
analysis.

3. Finance: The financial organization discharging their finance function

effectively depend very heavily on statistical analysis of peat and tigers.

3. Banking: Banking institute have found if increasingly to establish research

department within their organization for the purpose of gathering and
analysis information, not only regarding their own business but also
regarding general economic situation and every segment of business in which
they may have interest.

4. Investment: Statistics greatly assists investors in making clear and valued

judgment in his investment decision in selecting securities which are safe and
have the best prospects of yielding a good income.

5. Purchase: the purchase department in discharging their function makes

use of statistical data to frame suitable purchase policies such as what to buy?
What quantity to buy? What time to buy? Where to buy? Whom to buy?

6. Accounting: statistical data are also employer in accounting particularly in

auditing function, the technique of sampling and destination is frequently
used.

7. Control: the management control process combines statistical and

accounting method in making the overall budget for the coming year
including sales, materials, labor and other costs and net profits and capital
requirement.

importance of Statistics:

1. Statistics and planning: Statistics in indispensable into planning in the

modern age which is termed as “the age of planning”. Almost all over the
world the govt. are re-storing to planning for economic development.

2. Statistics and economics: Statistical data and techniques of statistical

analysis have to immensely useful involving economical problem. Such as
wages, price, time series analysis, demand analysis.

3. Statistics and business: Statistics is an irresponsible tool of production

control. Business executive are relying more and more on statistical
techniques for studying the much and desire of the valued customers.

4. Statistics and industry: In industry statistics is widely used inequality

control. In production engineering to find out whether the product is
confirming to the specifications or not. Statistical tools, such as inspection
plan, control chart etc.

5. Statistics and mathematics: Statistics are intimately related recent

advancements in statistical technique are the outcome of wide applications of
mathematics.

6. Statistics and modern science: In medical science the statistical tools for
collection, presentation and analysis of observed facts relating to causes and
incidence of dieses and the result of application various drugs and medicine
are of great importance.

7. Statistics, psychology and education: In education and physiology

statistics has found wide application such as, determining or to determine the
reliability and validity to a test, factor analysis etc.
Importance and requisites of a good statistical average

Suppose the students from two or more classes appeared in the examination and we wish to
compare the performance of the classes in the examination or wish to compare the
performance of the same class after some coaching over a period of time. When making such
comparisons, it is not practicable to compare the full frequency distributions of marks.
However compactly these may be presented. Therefore, for such statistical analysis, we need
a single representative value that describes the entire mass of data given in the frequency
distribution. This single representative value is called the central value, measure of location
or an average around which individual values of a series cluster. This central value or an
average enables us to get a gist of the entire mass of data, and its value lies somewhere in the
middle of the two extremes of the given observations. For this reason such a central value or
an average is frequently called a measure of central tendency.

From the above discussion, it should be clear to you that the concept of a measure of central
tendency is concerned only with quantitative variables and is undefined for qualitative
variables as these are immeasurable on a scale. Now we will discuss the various measures of
central tendency.

Various Measures of Central Tendency

Measures of central tendency, or averages, are used in a variety of contexts and form the
basis of statistics. An average is a typical value in the sense that it is sometimes employed to
represent all the individual values in a series of a variable.

Of the above-mentioned five important averages Arithmetic Mean, Median and Mode are
the most popular ones. Geometric mean & Harmonic Mean comes next.

In statistics, we have various types or measures of central tendencies. We will study the
following measures:

I. Arithmetic Mean
II. Median
III. Mode
 Requisites of a good average are as follows:
1. It should be simple to compute.
2. It should be easy to understand.
3. It should be rigidly defined.
4. It should be representative of all the items.
5. It should not be unduly affected by extreme values.
6. It should be capable of further algebraic treatment.