Statistical Techniques in Business

Statistical Techniques in Business

BN210219

Merija Rai

BUS 604 Data Analysis and Business Intelligence

Presidential Business School affiliated to West Cliff University

Prof.  Aswin Satyal

16 May, 2021
 Statistical Techniques in Business

Definition of Statistics, Its Types and Associated Terms Such as Variables, Types of
Data, and Scale of Measurement with Example

Basically, Statistics is study of gathering, putting together, introducing, investigating, and

interpreting information to help with settling on more effective decision. Statistics is utilized

in our everyday lives and the execution of measurements is common in every one of the

businesses. It is essential for every manager to procure, investigate and study information that

can uphold the decision. In this manner, statistics ought to be concentrated to study the

information gathered and change it into data, to empower better educated dynamic and to

perform data understanding (Lind, Marchal &Wathen, 2018). For example: Your grade point

average is 3.6.

In statistics, its types are categorized in two types which is descriptive and inferential

statistics. Descriptive statistics is concerned with the techniques which basically summarize

the data in informative way. Descriptive data helps to portray information dependent on the

attributes like mean/median/mode and make an interpretation of it into diagrams or tables for

better representation. For example: The mean age from the group of Ncell employees.

Similarly, Inferential Statistics is concerned with the process of sampling from the

population for making decision from the accumulated information and data. Inferential

statistics empowers to make surmising and forecasts dependent on the example and populace

of information. For example: The confidence interval for the mean age of all employees of

Ncell.

Variable is concerned with any qualities, number, or amount that can be estimated or tallied.

For example: age, gender, salary, wages, grades etc. There are two types of variables. They

are qualitative and quantitative variables. Qualitative variable is concerned with the variable

that explain the quality of the things for example: The internet service provider for each
 Statistical Techniques in Business

person working at Shikhar Insurance Company. Whereas, Quantitative variable is concerned

with the variable that explain the quantity of the objects for example: The yearly expenses for

the Shikhar Insurance Company.

Information can be characterized by scale of measurement. The degree of estimation decides

how information ought to be summed up and introduced which will additionally show the

sort of factual examination that can be performed (Lind, Marchal &Wathen, 2018). There are

four scale of measurement.

1. Nominal Level

Nominal level is concerned with the degree of estimation where informations are

recorded and is addressed as levels or names which has no order and just be

characterized or tailed. For example: sex, eye color etc.

2. Ordinal Level

Ordinal Level is concerned with the degree of estimation depends on an overall

positioning or rating of things dependent on a characterized property or subjective

variable. Factors dependent on this degree of estimation are just positioned or tallied.

For example: Dairy milk is ranked as 1, Sneaker is ranked as number 2, Five Star is

ranked number 3 and Chocho Fun is ranked number 4 while tasting the test of 4

chocolates.

3. Interval Level

Interval level is concerned with the degree of estimations where the span or the

distance between values is significant. For example: Standard UK size of men shoes.
 Statistical Techniques in Business

4. Ratio Level

Ratio level data is concerned with the degree of estimation where data depend on a

scale with a known unit of estimation and a significant translation of zero on the scale.

For example: Monthly income of doctor.

Definition of Frequency Table and all of the associated terms

A grouping of qualitative data into mutually exclusive and collectively exhaustive classes

showing the quantity of perceptions in each class. Frequency table is built by arranging

gathered information in ascending order of significant degree with their corresponding

frequencies. Frequency table is used in different survey, research, business groups, educators

etc. In study research, for instance, frequency tables can show the quantity of male and

females who partook in the survey, the quantity of respondents from specific ethnic and racial

foundations, etc. (Nisbet & Yale, 2018). Frequency tables assist us with summing up

information to improve feeling of which models have been sold on the lookout and Excel

programming is generally utilized as a device for such computations. Frequency tables are

utilized frequently to survey how various classifications of qualities are dispersed in the

example. For instance, in a study of observer interest in various games, we could sum up the

respondents' interest in watching cricket.

Comparison of Two Numerical Ways of Describing Quantitative Variables; Measures of

Location and Measure of Dispersion with an Example

There are two mathematical methods of depicting quantitative factors inside the study of

descriptive statistics which are measures of locations and measure of dispersion. Measure of

location portrays the central of data which consists mean, median and mode. Mean is the

most widely used central of data to calculate the average. For example: the expenses of 5

randomly selected people of Nepal are Rs10000, 15000, 10000, 20000, 25000.
 Statistical Techniques in Business

Mean expenditure= Rs (10000+15000+10000+20000+25000)/5=Rs16000

Median= 10000

Measure of dispersion is concerned with giving data about the spread of a variable's qualities

(Child Care and Early Education Research Connection, 2021). The measure of dispersion is

calculated by using standard deviation. Standard deviation is important in this sort of case

because utilizing the central of data and information isn't sufficient on the grounds that you

can't discover the significant piece of information that are underneath the middle. For

example: For example, a top-level manager should know the performance of employee which

are poor and below the average.

Identifying and Describing Ways of Displaying and Exploring Data with an Example

When the raw data or information is gathered and assembled into significant information,

there are a few techniques for showing and investigating this data. There are different ways of

displaying data and information through charts and figures such as pie chart, stem and leaf

displays, dot-plots, percentile, quartile, scatter diagram and box plot which enables to give

structure of the data. Basically, stem and leaf method of displaying data is one of the methods

that is utilized to show quantitative data in a consolidated structure. It shows each numerical

value into two part where the driving digits turn into the stem and the following digit the leaf.

The stems are situated in the left side and the leaf is situated in the right side (Lind, Marchal

&Wathen, 2018).

Likewise, percentile distinguish the set of observation into 100 equal parts. For example: If

my GPA is in 90th percentile which implies that 90%of the students have a GPA lower than

mine while 10% have a higher GPA. The median is the 50th percentile of a bunch of

information organized from least to most extreme. A Box Plot is a graphical showcase, in
 Statistical Techniques in Business

light of quartiles, that assists us with envisioning a set of data and information. It is

constructed by calculating minimum value, the first quartile, the median, the third quartile

and maximum value.

Concepts of Probability

Probability is concerned with the degree of likelihood that a particular event will happen. It

mathematically measures the level of uncertainty so that there will be certainty for the events

that will occur. Generally, Probability has always positive value between 0 to 1 where 0

means there is no chance of occurring that events where as 1 means there is always chance of

happening the events (Sharma & Chaudhary, 2019). The effective likelihood that the coin

falls heads up is 1/2, as indicated by the standard hypothesis of probability by which the

denominator of a portion is the absolute number of conceivable outcomes while the

numerator is the quantity of possibilities for each case, similarly dispersed; at that point the

likelihood of the coin falling tails up is likewise 1/2. The amount of the multitude of

probabilities (for this situation (1/2 + 1/2) is, obviously, 1, addressing supreme assurance or

100 for each percent likelihood (TALLET, 1976). Business choices are driven dependent on

the computation of likelihood. An exploration performed to comprehend to gauge capital

expenses for private ventures depended on the likelihood of accomplishment for such

organizations (Cheung, 1999). The concept of probability can help organization for decision

making process where probability value can help manager to understand and visualize that

will help them to change their business strategy if necessary.

Shikhar Insurance Company Implements Statistics to Make Strategic Business Decision

Statistics is important to every organization who wants to achieve their targeted goal at their

estimated time. Statistics help organization to run their business with the smooth flow and

enhance to gain competitive advantage. However, Shikhar insurance is one of the leading
 Statistical Techniques in Business

companies in Nepal which is using both descriptive and inferential statistics throughout their

running period. This type of company has both population and sample where population is all

the customer that have registered insurance with this company where as sample is the

customer that have insurance with in Kathmandu valley. Similarly, they use quantitative

variables like age, gender, address of their customers. They use various frequency tables to

describe and analyze customer records, monthly expenditure, monthly premium. Shikhar

Insurance company uses different charts, tables to show their performance and allow their

customer to oversee financial statement of the company. This will provide stock information

to the people who are interested. Moreover, they make sure to calculate the probability of

data from the past and utilize them to make effective decision making in future. For example;

they will figure out what kind of policies has more demand and what they should do to

provide quality service by analyzing the data and information from the past so, that they can

try to provide them at the right time and can meet their customer expectations (Shikhar

Insurance Company, 2021).

 Statistical Techniques in Business

Reference

Cheung, J. (1999). A probability-based approach to estimating costs of capital for small

business. Small Business Economics, 12(4), 331-336. Retrieved from

https://search.proquest.com/docview/220905438?accountid=158986

CLARKE, R. (1954). THE CONCEPT OF PROBABILITY. Journal of the Institute of Actuaries

(1886-1994), 80(1), 1-31. Retrieved May 16, 2021, from http://www.jstor.org/stable/41139631

Lind, A. D., Marchal, G. W., &Wathen, A. S. (2018). Statistical Techniques in Business &

Economics. New York City: McGraw-Hill.

Nisbet, R., & Yale, K. (2018). Statistical Analysis and Data Mining Applications. Retrieved

from https://www.sciencedirect.com/topics/mathematics/frequency-table

Sharma, K. P., Chaudhary, K. A. (2019). Statistical method. Khanal Publication Pvt.Ltd

TALLET, J. (1976). Probability and Credibility. Dialectica, 30(2/3), 135-143. Retrieved May 16,

2021, from http://www.jstor.org/stable/42970440

Shikhar Insurance Company. (2021). Vision and Goal. https://shikharinsurance.com/shikhar-

insurance/vision-goal