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ASSIGNMENT COVER PAGE (Theory)

Assignment No: 2

Programme Name: MBA UID: d21mba16721

Semester: 1 Credit: 4
Course Title: Decision Science - I Course Code: 21MBA-614

Submitted Date: 13 July 2021 Last date of Submission: 21st July 2021

Max. Marks: 30 Weightage: 50% (15 Marks)

Assignment Submission Guidelines: A.

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Fill page numbers as per your theory assignment in the table below:
Question No Sec.A 1 –10 Sec.B-1 Sec.B-2 Sec.B-3 Sec.B- 4 Sec.B-5 Sec.B- 6 Sec.B-7

Page No.
Mansi Sharma

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Section-A

1. Define statistics.List the characteristics of statistics.

Ans: Definition: ‘Statistics is the science which deals with the collection, presentation, analysis and
interpretation of numerical data’ - Croxton and Cowden
Characteristics of statistics:
Aggregate of facts collected in systematic manner for a specific purpose. Affected by large number
of causes to marked extent. Numerically expressed. Enumerated or estimated with a reasonable
degree of accuracy. To be placed in relation to the other.

2.What is discrete frequency distribution?

Ans:Raw data sometimes may contain a limited number of values and each of them appeared many numbers
of times. Such data may be organized in a tabular form termed as a simple or discrete frequency distribution.
A discrete frequency distribution is formed using ‘tally chart’

2. What is meant by measure of central tendency?

Ans: A measure of central tendency is a representative value of the entire group of data. It describes the
characteristic of the entire mass of data which reduces the complexity of data and makes them amenable for
the application of mathematical techniques involved in analysis and interpretation of data.

Various measures of central tendency are: mean, median, mode.

3. Define Median. Discuss its advantages and disadvantages?

Ans:Median is the value of the variable which divides the whole set of data into two equal parts. It is the
value such that in a set of observations, 50% observations are above and 50% observations are below it.
Hence the median is a positional average.
Advantages:
1) It is easy to compute. It can be calculated by mere inspection and by the graphicalmethod.
2) It is not affected by extreme values.
3) It can be easily located even if the class intervals in the series are unequal.
Disadvantages:
1) It is not amenable to further algebraic treatment
2) It is a positional average and is based on the middle item
3) It does not take into account the actual values of the items in the series

5. Define mean deviation. How does it differ from standard deviation?

Ans: The Mean Deviation (MD) is defined as the arithmetic mean of the absolute deviations of the
individual values from a measure of central tendency of the data set. It is also known as the average
deviation.

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Mean deviation about mean is (∑D)/n, where D = x- x

Difference with standard deviation: Standard deviation uses the square of deviations to calculate dispersion
of the data whereas mean deviation uses the mod of deviations in order to calculate the dispersion. Thus
squaring the difference of variable measures the dispersion more accurately than mean deviation.

6. Define Karl Pearson’s coefficient of correlation.How do you interpret the coefficient of correlation, which
lies between 0 and +1?
Ans:Karl Pearson’s coefficient of correlation when X and Y are linearly related and (X, Y) has a bivariate
normal distribution, the co-efficient of correlation between X and Y is defined as

If the coefficient of correlation is 0 then we can infer that there is no correlation between variables and value
more than 0 towards 1 implies higher degree of correlation with +1 termed as perfectly positive correlation.

7. Define regression.What are the types of regression?

Ans: 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).

There are several types of regression - Simple linear correlation, multiple linearcorrelation and non-linear
correlation.

8. Distinguish between linear and non-linear regression.

Ans: Simple Linear Regressioncan be expressed using a straight line equation (linear regression) that best
approximates all the individual data points. Simple linear regression establishes a relationship between a
dependent variable (Y) and one independent variable (X)using a best fitted straight line (also known as
regression line).

If the regression is not linear and is in some other form, then the regression is said to be nonlinearregression.
Some of the non-linear relationships are displayed below.

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9. Define index number?Write the uses of Index numbers.

Ans: An Index Number is defined as a relative measure to compare and describe the average change in
price, quantity value of an item or a group of related items with respect to time,geographic location or other
characteristics accordingly
Uses of Index numbers: Uses of index numbers is based on type of it, as illustrated below:
(i) Price Index Numbers:
Price index is a ‘Special type’ of average which studies net relative change in the prices of commodities,
expressed in different units. Here comparison is made in respect of prices. Priceindex numbers are wholesale
price index numbers and retail price index numbers.
(ii) Quantity Index Numbers: This number measures changes in volume of goods produced, purchased or
consumed. Here, the comparison is made in respect of quantity or volume. Forexample, the volume of
agricultural goods produced, consumed, import, export etc.
(iii) Value Index: Value index numbers study the changes in the total value of a certain period with the
total value of the base period. For example, the indices of stock-in-made,purchase, sales profit etc., are
analysed here.

10. What is circular test?

Ans: Circular Test: It is an extension of time reversal test. The time reversal test takes into account only
twoyears. The current and base years. The circular test would require this property to hold goodfor any two
years. An index number is said to satisfy the circular test when there are threeindices, P01, P12 and P20,
such that P01 × P12 × P20 = 1.Laspeyres, Paasche’s and Fisher’s ideal index numbers do not satisfy this
test.

Section –B

1. Distinguish between inclusive method and exclusive method of forming frequency distribution with
suitable examples.
Ans: Formation of frequency distribution is usually done by two different methods, namely inclusive
method and exclusive method. Inclusive method
In this method, both the lower and upper class limits are included in the classes. Inclusive type of
classification may be used for a grouped frequency distribution for discrete variable like members in a
family, number of workers etc., It cannot be used in the case of continuous variable like height, weight etc.,
where integral as well as fractional values are permissible. Since both upper limit and lower limit of classes
are included for frequency calculation, this method is called inclusive method. Exclusive method
In this method, the values which are equal to upper limit of a class are not included in that class and instead
they would be included in the next class. The upper limit is not at all taken into consideration or in other
words it is always excluded from the consideration. Hence this method is called exclusive method.

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Example
The marks scored by 50 students in an examination are given as follows:
23, 25, 36, 39, 37, 41, 42, 22, 26, 35, 34, 30, 29, 27, 47, 40, 31, 32, 43, 45, 34, 46, 23, 24, 27, 36, 41, 43, 39,
38, 28, 32, 42, 33, 46, 23, 34, 41, 40, 30, 45, 42, 39, 37, 38, 42, 44, 46, 29, 37. It can be observed from this
data set that the marks of 50 students vary from 22 to 47. If it is decided to divide this group into 6 smaller
groups, we can have the boundary lines fixed as 25, 30, 35, 40, 45 and 50 marks. Then, we form the six
groups with the boundaries as 21 - 25, 26 - 30, 31 - 35, 36 - 40, 41 – 45 and 46 - 50.
The continuous frequency distribution formed by inclusive and exclusive methods are displayed in Tables
below

2. Explain how measures of central tendency and measures of variations arecomplementary to each other in the
context of analysis of data.
Ans: Explanation:
Measures of central tendency are mean, mode and median. Even we have three types of mean, such as
arithmatic mean, geometric mean and harmonic mean.
They tell us the central value around which the data is distributed. For example consider the data set
6,8,2,4,12,5,8,10,3,4. In this sum of numbers is 62 and as they are ten in number, mean is 6210=6.2
Note that smallest number is 2 and largest number is 12. Now, even if we had set of numbers as 5,6,7,5,8
and as sum of numbers is 31 and they are five, mean is still 315=6.2. But 5,6,7,5,8 are far more narrowly
spread and hence nature of data is not very well brought out by just mean.
Similarly, we can have two data sets with same median or mode, but their spread may be different, as mode
is just the more frequent among data points and median is the value of central data point, when the samme is
arranged in increasing or decreasing order.
Measures of dispersion tell us better about the kind of spread. In a way, mean deviation or standard
deviation tell us more about the way data is spread.

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For example, data set 30,40,50,60,70 and data set 10,30,50,70,90 have same mean, mode and median but
while mean deviation of first data set is 12, that of second data set is 24, indicating that second data set is too
wide spread.
What about two data sets 30,40,50,60,70 and 130,140,150,160,170? Their mean deviation is same i.e. 12,
but are they not widely different as mean of first data set is 50, while that of second data set is 150.
It is obvious that measures of central tendency and measures of dispersion are both important and
complementary.

3. Define Partial Correlation.Explain the properties of Spearman’s Rank Correlation. Ans: The study of the
relationship between the dependent variable, say, Xi and any one of the independent variable say,
Xj( j≠i=1,2,….,n) after eliminating the linear effect of the other independent variables constant, is called the
study of partial correlation
Properties of Spearman’s Rank Correlation:

1. When there is a perfect agreement in the order of the ranks i.e., the ranks of the two variables are exactly in
the same order, then Σ D2 = 0(Min.) and R = +1 (Max.).
2. When there is complete disagreement in order of the ranks i.e., ranks of the two variables are exactly in the
reverse order, then Σ D2 = (N3+N) (Max.) and R = -1 (Min.)
3

3. If “n” pairs of variables ‘x’ and ‘y’ are permutations of integers 1,2, 3……n, then the correlation coefficient
by Karl Pearson’s method & Spearman’s method are equal.
4. It is independent of change of origin& magnitude of scale.

4. Explain application of regression analysis. Distinguish between correlation and regression.

Ans:Application of regression analysis: Regression analysis is used to estimate the relationship between a
dependent variable and one or more independent variables. This technique is widely applied to predict the
outputs, forecasting the data, analyzing the time series, and finding the causal effect dependencies between
the variables. Difference between correlation and regression:
1. The main difference in correlation vs regression is that the measures of the degree of a relationship between
two variables.The correlation is for the measurement of degree, whereas regression is a parameter to
determine how one variable affects another.
2. Correlation check the association between variables, and regression check the interdependence between
variables. If the variable have zero correlation there interdependence between those variables is not possible.
We never apply regression on those variables having zero correlation.

5. What is the difference between the price index and quantity index numbers? Write short notes on consumer
price index.

Ans: Difference between the price index and quantity index numbers:

Price Index Quantity Index

Price index measures the relative or quantity index measures the change in the
percentage change in the price level of certain physical volume of production, construction
goods and services and employment.

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Here comparison is made in respect of prices Here, the comparison is made in respect of
quantity or volume
Price index numbers are wholesale price volume of agricultural goods produced,
index numbers and retail price index numbers. consumed, import, export are compared in this
index.

Consumer price index: Consumer Price Index Numbers are computed with a view of study the effect of
changes in prices on the people as consumers. These indices give the average increase in the expenses ifit is
designed to maintain the standard of living of base year. General index numbers fail togive an idea about the
effect of the change in the general price level on the cost of living ofdifferent classes of people since a given
change in the price level affects different classes ofpeople differently.
The consumer price indices are of great significance and is given below
1. This is very useful in wage negotiations, wage contracts and dearness allowance adjustments in many
countries.
2. At Government level the index numbers are used for wage policy, price policy, rent control, taxation and
general economic policies.
3. Change in the purchasing power of money and real income can be measured.
4. Index numbers are also used for analyzing market price for particular kind of goods and service

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