ASSIGNMENT 2 FRONT SHEET

Qualification BTEC Level 5 HND Diploma in Business

Unit number and title Unit 31: Statistics for management

Submission date 27/06/2020 Date Received 1st submission

Re-submission Date 21/09/2020 Date Received 2nd submission

Student Name Ha Dinh Nghia Student ID GBH 190340

Class Assessor name Do Thu Trang

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 STASTISTICS APPLICATION IN BUSINESS PLAN

I. INTRODUCTION
The main purpose of this report is to know how to apply statistical methods in business planning, and
know how to analyse and evaluate raw business data by using a number of statistical methods. The
content of this report included two part. First part is apply a range of statistical methods used in business
planning for quality, inventory and capacity management. The second part is using appropriate
charts/tables communicate findings for a number of given variables.
II. APPLICATION FOR RANGE OF STATISTICAL METHODS
The definition of Probability distributions can be understand as a function giving the theoretical probability
of observing a random variable to have a particular value when the variable discrete or to fall whithin a
certain range when the variable is continuous. (Farlex, n.d.)
Normal distribution is a bell-shaped symmetrical frequency distribution curve. It is characteristic of many
economic, natural, social, and other real world phenomenon (such as IQ scores, height variation within a
population, weights of crop yields, variation in quality of manufactured goods) where two or more
variables have direct relationship and high predictability (low variation). In normal distribution, extremely-
large values and extremely-small values are rare and occur near the tail ends. Most-frequent values are
clustered around the mean (which here is same as the median and mode) and fall off smoothly in either
side of it. In normal distribution, 68 percent of all values lie within one standard deviation, 95.45 percent
within two standard deviations, and 99.8 within three standard deviations (called six sigma in quality
control). In other words, only one out of a thousand values will fall outside of six sigma. This distribution
is called 'normal' in the sense of 'ideal' or 'standard' against which other distributions may be compared.
Also called Gaussian distribution. (BusinessDictionary, n.d.)
A Poisson distribution is a tool that helps to predict the probability of certain events from happening when
you know how often the event has occurred. It gives us the probability of a given number of events
happening in a fixed interval of time. The practical uses of the Poisson distribution: A textbook store rents
an average of 200 books every Saturday night. Using this data, you can predict the probability that more
books will sell (perhaps 300 or 400) on the following Saturday nights. Another example is the number of
diners in a certain restaurant every day. If the average number of diners for seven days is 500, you can
predict the probability of a certain day having more customers. Because of this application, Poisson
distributions are used by businessmen to make forecasts about the number of customers or sales on
certain days or seasons of the year. In business, overstocking will sometimes mean losses if the goods are
not sold. Likewise, having too few stocks would still mean a lost business opportunity because you were
not able to maximize your sales due to a shortage of stock. By using this tool, businessmen are able to
estimate the time when demand is unusually higher, so they can purchase more stock. Hotels and
restaurants could prepare for an influx of customers, they could hire extra temporary workers in advance,
purchase more supplies, or make contingency plans just in case they cannot accommodate their guests
coming to the area. With the Poisson distribution, companies can adjust supply to demand in order to
keep their business earning good profit. In addition, waste of resources is prevented. (Glen, 2015)
Descriptive statistics describes data (for example, a chart or graph) and inferential statistics allows you to
make predictions (“inferences”) from that data. With inferential statistics, you take data from samples and
make generalizations about a population. For example, you might stand in a mall and ask a sample of 100
people if they like shopping at Sears. You could make a bar chart of yes or no answers (that would
be descriptive statistics) or you could use your research (and inferential statistics) to reason that around
75-80% of the population (all shoppers in all malls) like shopping at Sears. There are two main areas of
inferential statistics:
Estimating parameters. This means taking a statistic from your sample data (for example the sample
mean) and using it to say something about a population parameter (i.e. the population mean).
Hypothesis tests. This is where you can use sample data to answer research questions. For example, you
might be interested in knowing if a new cancer drug is effective. Or if breakfast helps children perform
better in schools. (Glen, 2014)
Regression is a statistical method used in finance, investing, and other disciplines that attempts to
determine the strength and character of the relationship between one dependent variable (usually
denoted by Y) and a series of other variables (known as independent variables). Regression helps
investment and financial managers to value assets and understand the relationships between variables,
such as commodity prices and the stocks of businesses dealing in those commodities. (Beers, 2020)
 Average sales based on Region and Size of Locacity

City with population Over 250.000 to 50.000 to Less than

over 1 million 1 million 250.000 50.000
Red River Delta 97.09 0 225.4 294.75
North Central Area & Central 0 0 0 0
Coastal Area
South East 79.53 3.15 284.61 635.105
Mekong River Delta 0 0 0 0

Based on the given table, city with population over 1 million, the average revenue of Red River Delta is
about 97 billion VND. And the average revenue of South East is about 80 billion VND. For the city has over
250.000 to 1 million people, the average revenue of South East is 3.15 billion VND. The average revenue
of Red River Delta is around 225 billion VND and average revenue of South East is 284.61 billion VND in
city with 50.000 to 250.000 people. In the city with population less than 50.000, the average revenue of
Red River Delta is 294.75 billion VND, and the revenue of South East is about 635 billion VND. To conclude,
the higher population the lower total revenue get, this happened because of many factors such as the
number of employees in a business, inventory, and each of individual needs.

HISTOGRAM FOR VARIABLE –

DAYS OF INVENTORY
120

100

80

60

40

20

In this chart, some businesses have between 0 and 9 inventories being the highest. In the contract, the
number of businesses has 150-159, 170-179 and 240-249 inventory is the lowest. So, it can be concluded
 that most of the enterprises managed to well manage their inventories in 2015 and the inventory date of
companies is stable.

Mean 31.82
Standard Error 2.43667
Median 20
Mode 30
Standard Deviation 47.31156
Sample Variance 2238.384
Kurtosis 21.10642
Skewness 4.033059
Range 365
Minimum 0
Maximum 365
Sum 11998
Count 377
Confidence Level(99.0%) 6.308459

Upper Bound 38.13

Lower Bound 25.52
With 99% confidence, it can be drawn that the number of days of inventory is between 25.52 days / Lower bound
and 38.53 days / Upper bound. Minimum inventory day is 0 and Maximum inventory days is 365.

RELATION BETWEEN SALES

AND NUMBER OF EMPLOYEES FOR 2
REGIONS
400
350
300
250
200
150
100
50
0
-50 0 2000 4000 6000 8000 10000 12000 14000 16000 18000

Through the scatter chart, retail businesses cover the entire market, crowding out wholesale businesses. Trend
lines for businesses in these two areas overlap and grow steadily. Since then, the revenue of the business is
proportional to the number of employees. Labor is an essential foundation for the development of Vietnamese
enterprises in particular and the world in general.

Regression Statistics
Multiple R 0.57086829
R Square 0.325890604
Adjusted R
Square 0.324772678
Standard Error 824.5497001
Observations
ANOVA 605
df SS MS F Significance F
Regression 1 198194887.4 198194887.4 291.5135667 1.30558E-53
Residual 603 409968971.4 679882.2079
Total 604 608163858.8

Standard Lower Lower Upper

Coefficients t Stat P-value Upper 95%
Error 95% 95.0% 95.0%
139.19094 33.845088 4.1125891 4.45554E-05 72.722374 205.65951 72.722374 205.65951
Intercept
X
Variable 0.3824849 0.0224019 17.073768 1.30558E-53 0.3384896 0.4264801 0.3384896 0.4264801
1

From this regression table we can see that the correlation between sales and the number of employees owned
by the firm is assumed by the beta variables which are the hypothetical parameters represented in the table. for.
Employee count and sales are thought to be correlated when beta values are not different.

III. CONCLUSION
This report focused on applying statistical methods in business planning and analyse and evaluate raw
business data using a number of statictical methods.
References
Beers, B., 2020. Investopedia. [Online]
Available at: https://www.investopedia.com/

BusinessDictionary, n.d. BusinessDictionary. [Online]

Available at: http://www.businessdictionary.com/

Farlex, n.d. The Free Dictionary. [Online]

Available at: ttps://www.thefreedictionary.com

Glen, S., 2014. Statistic How To. [Online]

Available at: https://www.statisticshowto.com/

Glen, S., 2015. Statistic How To. [Online]

Available at: https://www.statisticshowto.com/