Business Statistics - I

Prepared By:
Md. Monowar Uddin Talukdar
Lecturer
Department of Business Administration
Khwaja Yunus Ali University
 Chapter-One
Introduction to Statistics
• Outlines:
• 1. Introduction
• 2. Definition of Statistics
• 3. Characteristics of Statistics
• 4. Statistics: Science or Arts
• 5. Application of Statistics to Business & Industry
• 6. Statistical techniques commonly used in Business Activities
• 7. A few term commonly used in Statistics

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 Introduction
• In ancient times, the governments used to collect information regarding the
population & property or wealth of the state. This information was
necessary to achieve political purpose of rulers-to assess the manpower & to
introduce new taxes & levies. In courses of time the character of quantitative
information extended & details regarding births, deaths, marriages, etc. were
necessary.

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 Introduction
• Quantitative information is not only necessary to run the Government or
semi –government organizations like Corporations etc. but they are the
backbone of the Agriculture, Medicine, Political science, Economics,
Psychology, Sociology, Business & Commerce-in fact, any branch of study
where numerical figures are involved.

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 Definition of Statistics
• Most of the people believe that the term statistics has been derived from the
Latin word “status” meaning political state. Some believe that the German
word statistik comes from the Italian word statista (meaning “statesman”), the
French word “statistique”. It was first used by Gottfried Achenwall (1719-
1772), a professor at Marlborough and Gottingen. Dr. E. A.W. Zimmerman
introduced the word statistics into England. Its use was popularized by Sir
John Sinclair in his work Statistical Account of Scotland (1791-1799). Long
before the eighteenth century, however, people had been recording and using
data.

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 Definition of statistics
• Different author defined Statistics in a number of ways. Among those some of the
important definitions are given below:-
• According to Fisher (1947), the science of statistics is essentially a branch of applied
mathematics and may be regarded as mathematics, applied to observational data.
• Croxton and Cowden (1948) defined statistics as the subject of collection, presentation
and analysis of numerical data.
• Bowly defined statistics as “numerical statement of facts in any department of enquiry
placed in relation to each other”.
• As Yule and Kendal (1950) opened, statistics means quantitative data, which are affected to
a marked extent by multiplicity of causes.

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 Definition of statistics
• Most popular definition of statistics is:
• Statistics is concerned with scientific methods for collecting, organizing,
summarizing, presenting and analyzing sample data as well as drawing valid
conclusions about population characteristics and making reasonable
decisions on the basis of such analysis.
• The definition clearly points out certain characteristics which numerical data
must possess in order that they may be called statistics. They are as follows:

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 Characteristics of Statistics
• Statistics are aggregate of facts: Single and isolated figures are not
statistics for the simple reason that such figures are unrelated and cannot be
compared.
• Statistics are affected to a marked extent by multiplicity of causes: In
general sense, facts and figures are affected to a considerable extent by a
number of forces operating together.
• Example: Statistics of production of rice are affected by the rainfall, soils,
seeds & manure, methods of cultivation etc.

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 Characteristics of Statistics
• Statistics are numerically expressed: All statistics are numerical statements of facts as
expressed in numbers. Example: Textile industry is getting sick does not indicate statistics.
• Statistics are enumerated or estimated according to reasonable standards of accuracy:
Facts & figures about any phenomenon can be derived in two ways as:

Example: an estimate that two lakh College & University teachers participated in a recent strike
does not mean exactly two lakh; it may be a few hundred or thousands more or less. On the other
hand, if we count the no. of employees in an organization and say that there are 60 employees, this
indicates the no. is 100% accurate.
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 Characteristics of Statistics
• Statistics are collected in a systematic manner:
• Statistics should be placed in relation to each other: the purpose of collecting
data must be decided in advance. The purpose should be well defined & specific.
• Statistics should be placed in relation to each other: If numerical facts are to be
called statistics, they should be comparable.
In the absence of the above characteristics numerical data cannot be called statistical
and hence,
“All statistics are numerical statements of facts but all numerical statements of facts
are not statistics.”

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 Uses and importance of Statistics:
• Now a day statistics is not only used for collecting numerical data but also to
develop sound techniques for their handling, analysis and drawing valid
inference from them. It is used widely in different spheres of life-social,
political and also in different fields such as Agriculture, Planning, Biology,
Psychology, Education, Economics, and Business Management etc. In short,
following are the different important fields where statistics can be extensively
used.

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 Uses and importance of Statistics:
• Agriculture: To have information in regards total production of a certain
agriculture production, total cultivable land, consumption of different types
of crops etc. is usually obtained by agricultural census, which mainly follows
statistical methodology.
• Planning: At this age of planning, a government has to take half of the
subject statistics in case of doing any fruitful planning and policy
formulation for building sound economy and economical development. Thus
in every successful planning, sound and correct analysis of complex
statistical data are required.
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 Uses and importance of Statistics:
• Business: In the domain of risk and uncertainties a successful businessman
has to make proper statistics for making business decisions. With the help of
past records provided by statistics, a businessman should correctly estimate
the demand so that the requirement of total raw material for a certain
business period can be determined without uncertainty.
• Industry: In industry, statistics is widely used to provide quality control. In
a production system, the quality of the production should be checked
frequently so that the specification of the production is maintained.
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 Uses and importance of Statistics:
• Psychology and education:
Statistics is widely used in education and psychology too, e.g. to determine the
reliability and validity of a test, factor analysis etc.
• Medicine:
Statistics is also used for the collection, presentation and analysis of observed
facts relating to the causes of incidence of disease and the result obtained from
the use of various drugs and medicine.

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 Statistics: Science or Arts
• Whether statistics is a science or an art is often a subject of debate. Science
refers to a systematized body of knowledge. It studies cause & effect
relationship & attempts to make generalizations in the form of scientific
principles or laws. It describes facts objectively and avoids vague judgments
as good or bad.
• Art, on the other hand, refers to the skill of handling facts so as to achieve a
given objective. It is concerned with ways & means of presenting and
handling data, making inferences logically and drawing relevant conclusions.
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 Statistics: Science or Arts
While a century ago there were some misgiving among natural scientists as to whether statistics
had the right to be recognized as a distinct science, now almost all sciences statistical. This
suggests that the design of scientific experiments and the evaluation of their results make use
of principles and practices growing out of the science of statistics. However, statistics as a
science is not similar to exact sciences like Physics, Chemistry, Zoology, etc. this is because
statistical phenomena are generally affected by multiplicity of causes which cannot always be
measured accurately. In other words, the science of statistics by its very nature is less precise
than natural sciences. It is science only in a limited sense.
More appropriately, statistics may be regarded as a scientific method because it is really a tool
which can be used in scientific studies.
If science is knowledge, then art is action. Looking from this angle statistics may also be
regarded as an art. It involves the application of given methods to obtain facts, derives results,
and finally
Md. Monowar give decision.
Uddin Talukdar, In a nutshell,
monowarjkkniu@gmail.com, 01718650131we can say that, statistics is science and art both.
2021
 Application of Statistics to Business &
Industry:
• With the gradual industrialization and expansion of the business world,
businessmen find statistician indispensable tool. Now-a –days the success of
a particular business or industry very much depends on the accuracy &
precision of statistical analysis otherwise business hampered. Before taking a
new venture or for the purpose of improvement of an existing venture the
Executives must have a large number of quantitative facts. All these facts are
to be analyzed statistically before stepping in for a new enterprise or before
fixing the price of a commodity.

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 Application of Statistics to Business &
Industry:
• Used as advertising campaign, for adjustment of production methods and as an aid to establish
standards.
• Business activity follows a definite trend, boom periods being following by periods of depression.
Statistical techniques determine such business cycle and help in forecasting future markets.
• It is useful for any businessman to market research and market surveys.
• In industry, Statistics is widely used in quality control.
• In production engineering, to find whether the product is conforming to specifications, statistical
tools like inspection plans, control charts, etc. are of great use.
• Wide applications of Statistics can be found in Insurance, where the premium rates are fixed on
the basis of mortality, average length of life, possibilities of investments, etc.

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 Statistical techniques commonly used in
Business Activities:
• Various statistical measures like averages, dispersion, skewness, correlation
are necessary to bring out the characteristics of the available data.
• Regression analysis establishes relationship between production and sales,
demand and per capita income, input and output, etc. They are useful for
prediction.
• Time series analysis in isolating various components (trend, seasonal &
cyclical). They are useful for forecasting and consequent planning.

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 Statistical techniques commonly used in
Business Activities:
• Sampling methods are used for conducting business & market surveys or for
checking the accuracy of records.
• Statistical Quality Control is used to find whether the manufactured goods
conform to specifications. Sampling Inspection in this connection is
indispensable in any manufacturing concern.
• For the calculation of mortality rates vital statistics and demography are
useful. These rates and calculation of probabilities of death are used in
insurance for the determination of premium rates.

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 Statistical techniques commonly used in
Business Activities:
• Even for appointment of personnel the efficiency of candidates are
statistically determined by using Test Scores.
• Index numbers are constructed by the use of statistical formulae. They are
extremely useful in Business & Commerce and also helpful to the
Government for making economic decisions.

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 A few term commonly used in Statistics

• Data : A collection of observations expressed in numerical figures obtained by

measuring or counting(see the following chapter in details)
• Population: To a statistician the word population is simply a useful means of
denoting the totality of the set of objects under consideration. A population (also
called Universe) might consist of all workers in a plant, all items produced by a
machine on a particular day, all items that could possibly be produced by a given
process, all shares traded in a particular Stock Exchange in a given month.
• A Sample: A sample is selected number of individual each of which is a number of
the population.

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 A few term commonly used in Statistics

• Characteristics: A quality possessed by an individual person, object or item of a

population is called characteristics of the individual. Heights of a person, age,
nationality are examples of characteristics.
• Variable: The term, ‘variable’ refers to the characteristic that varies in amount or
magnitude in a frequency distribution.
• Constant: When quality possessed by a person is not changed is called constant.
Example: No. of hands, no. of eyes, no of legs, etc. Numerically it is expressed as a, b,
c, etc.
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 • Flash Back

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