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DBM

Quantitative Techniques in Management

Semester - 1

Session - 1

Text

Quantitative Techniques

C.R. Kothari

Quantitative Techniques

Arun Sharma

References

London N.P., Linear Programming, Tata McGraw-Hill

Gupta S.P.& Gupta M.P. 1995, Business Statistics, 10th Ed. Sultan Chand &

Sons

Kapoor V.K. 1997, Operations Research, 5th Ed. Sultan Chand & Sons

Sharma J.K. 1997, Operations Research: Theory & Application, Mac Millan

India Ltd.

Gupta S.P., Statistical Techniques, Sultan Chand & Sons

Grobner D.F. & Shannon P.W., Essential of Business Statistics: A Decision

Making Approach, MacMillan College Publishing Co.

Fleming M.C. & Joseph G.N. 1996, Statistics for management, 2nd Ed. Prentice

Hall of India

Allen R.G.D. 1997, Mathematics Analysis for Economics, AITBS Publishers &

Distributors

INTRODUCTION TO

STATISTICS

ability to read and write. H. G. Wells

For decision makers, it is important to develop the ability

to extract the meaningful information from raw data to

make better decisions.

1. Present and describe information (data) so as to improve decisions.

2. Draw conclusions about the large population based upon

information obtained from samples.

3. Seek out relationship between pair of variables to improve

processes.

4. Obtain reliable forecasts of statistical variables of interest.

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.

Statistics

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.

8. Statistics and war: In war the theory of decision function can be a great assistance to the military and personal to plan

maximum destruction with minimum effort.

Statistics

Statistics in business and management:

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.

4. 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.

5. 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.

6. 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?

7. Accounting: statistical data are also employer in accounting particularly in auditing function, the technique of sampling and destination is frequently used.

8. 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.

PRESENTATION

DESCRIPTION OF DATA

Collection

of Data

Analysis

of Data

Organization

of Data

Presentation

of Data

EXAMPLE:

the classmates favourites. Find the correct

order of the stages of the statistics

procedures.

(a) Organize the data collected in a table.

(b) Set a questionnaire about the favorite food of classmates.

(c) Analyze the collected data and obtain the conclusion by

using the diagram.

(d) Use a suitable statistical diagram to present the data.

b

A)

Collection of Data

1. Previous Information

Search for relevant information from books,

newspapers, magazines, world wide web, etc.

2. Questionnaire

Set a questionnaire and distribute to each member

of the target group to obtain the relevant information.

A)

Collection of Data

3. Observation

Obtain the required information through direct

observation, measurement or counting.

4. Experiment

Obtain the required information by doing real

experiments.

5. Interview

Through household surveys, street surveys or

telephone interviews to obtain the required data.

EXAMPLE:

(a) The weights of 30 students in a certain class.

(b) The amount of pocket money that my sister spends each day.

(c) The number of customers shopping in a store between

7:00 a.m. and 12:00 p.m.

(d) The number of births in Hong Kong from 2000 to 2005.

(a) Questionnaire

(b) Interview

(c) Observation

B)

Classification of Data

1. Discrete Data

Discrete data can only take up certain values and

these values are usually obtained by counting, and

so are often positive integers.

E.g. the number of rotten apples in a box.

Note : Discrete data may NOT be numbers. Some examples are

peoples religions and favourite singers.

These data are called nominal data.

B)

Classification of Data

2. Continuous Data

Continuous data can take up any value within a

reasonable interval and these values are usually

obtained from measurements.

E.g. the weights of the apples in a box.

EXAMPLE:

can have sizes of 5, 5 1 , 6, only, so the

2

sizes of the sports shoes are discrete data.

However, the time (measured in hours)

spent on watching TV per day can be any

value between 0 and 24, e.g. 2, 3.4, 4.15,

etc. Hence the time spent on watching TV

is a kind of continuous data.

EXAMPLE:

continuous.

(a) The number of blue ball pens in a

Discrete data

(b) bag.

The time that a group of students spent

on their individual presentation.

Continuous data

between 6 and 10.

Continuous data

by ferry at a particular time of day.

Discrete data

1. We can use a frequency distribution table to organize

the data that has been collected.

2. The number of tallies recorded for each value is called

the frequency of that value.

For example, the frequency distribution table below

shows the ages of 40 students in Form 1A:

Age

Tally

Number of

students

11

//

12

15

13

17

14

//// /

EXAMPLE:

Form 1 students given on the left below, we can organize them

into a frequency distribution table on the right.

EXAMPLE:

40 students of Form 1A in an English dictation.

1

11

13

17

10

22

18

11

10

14

20

16

10

the first group, 4 7 into the second group, 8 11 into

the third group, 12 15 into the fourth group, 16 19

into the fifth group and 20 23 into the sixth group.

Now try to organize the given data into a frequency

distribution table.

following frequency distribution table can be obtained.

Number of

mistakes

Tally

Number of

students

03

//// ////

47

13

8 11

//// //// /

11

12 15

//

16 19

///

20 23

//

A

Pie Charts

Broken-line Graphs

Stem-and-leaf Diagrams

Scatter Diagrams

A)

Pie Charts

1. Understanding Pie Charts

i. A pie chart is appropriate to present the various

statistical items as percentages of the whole.

E.g.

by F.1 students in a school

A)

Pie Charts

1. Understanding Pie Chart

ii. Each item can be indicated as a percentage of the

whole set of data or as the angle of the sector.

E.g.

Monthly expenditure

of a family

Monthly expenditure

of a family

A)

Pie Charts

2. Drawing a Pie Chart

i.

then calculate the angle of each sector.

ii. Construct a circle of suitable radius, and draw the

various sectors according to the angles obtained in

(i).

iii. Label clearly the item represented by each sector

and the corresponding percentage (or angle of the

sector).

iv. Give a title to the pie chart.

120 teenagers.

(a) Find the value of x.

(b) What percentage of the teenagers are the

fans of Nick?

x = 360 90 225

= 45

Favourite singers of

120 teenagers

the fans of Nick

= 225 100%

360

= 62.6%

Favourite singers of

120 teenagers

EXAMPLE:

of music they like most.The results are shown in the

following pie chart.

Favourite kinds of music of 400

F.1F.3 students

(b) Find the number of students who love folk music.

(c) Among those students who love folk music, 56

are F.1 students and 49 are F.2 students.

i. Calculate the number of F.3 students who

love folk music.

ii. Draw a pie chart to show, in percentages, the

distribution of students who love folk music

in each form.

(a) 40 + 35 + 5 + x = 100

x = 100 40 35 5

= 20

= 400 35%

= 140

(c) i. Number of F.3 students who love

folk

music

= 140

56 49

= 35

Total:

140

100%

360o

(c) ii.

The distribution of students who love

folk music in each form

B)

Broken-line Graphs

1. Understanding Broken-line Graphs

i. A broken-line graph is used to show the change

in the data over a period of time and their overall

tendency.

E.g.

Year

B)

Broken-line Graphs

2. Drawing a Broken-line Graph

i. List on the horizontal axis, the time of happenings

of the statistical item in order of magnitude.

ii. List the frequencies of the item on the vertical

axis.

iii. All necessary scales, items, values and units

should be shown clearly on the two axes.

iv. Use or x to indicate points that represent the

frequency of the corresponding statistical item.

v. Join adjacent points by line segments.

vi. Give a title to the broken-line graph.

EXAMPLE:

the number of visitors

increase the most? What

was the increase in

visitors?

160

160

Number

Numberof

ofVisitors

Visitorsto

tothe

thePark

Parkin

inaa

Particular

ParticularDay

Day

140

140

Numberof

ofVisitors

Visitors

Number

the number of visitors to the

park in a particular day.

120

120

100

100

80

80

60

60

40

40

20

20

00

12:00

12:00

14:00

14:00

16:00

16:00 18:00

18:00

Time

of

Day

Time of Day

between 14:00 and 18:00 in that particular day.

20:00

20:00

22:00

22:00

160

160

Number

Numberof

ofVisitors

Visitorsto

tothe

thePark

Parkin

inaa

Particular

ParticularDay

Day

Numberof

ofVisitors

Visitors

Number

140

140

120

120

100

100

80

80

60

60

40

40

20

20

00

12:00

12:00

14:00

14:00

16:00

16:00 18:00

18:00

Time

of

Day

Time of Day

20:00

20:00

22:00

22:00

(b) The difference in the number of visitors between 14:00 and

18:00 in that particular day

= 120 80

= 40

EXAMPLE:

the monthly rainfall of a

certain city last year. Paul

lives in that city. The

windows in his home leaked

badly in the four most heavy

rainfall months last year. He

intends to fix the leakage

before those four rainy

months come again this year.

Month

EXAMPLE:

which month should Paul fix the windows?

(b) Draw a broken-line graph to present the

monthly rainfall of that city in last year.

were April, May, June and July.

Paul should fix the windows before April.

of that city last year is as follows:

Month

C)

Stem-and-leaf Diagrams

1. Understanding Stem-and-leaf Diagrams

i. A stem-and-leaf diagram is used to present the

data in a graphical way and record the values of

all the original data.

E.g.

Stem (10 kg) Leaf (1 kg)

3

4

5

6

8

0

0

1

9

2 3 3 4 6 7 7 8 9

0 1 2 2 2 5 6 8

3 5 7

C)

Stem-and-leaf Diagrams

1. Understanding Stem-and-leaf Diagrams

ii. If we want to compare two groups of related data,

we can use back-to-back stem-and-leaf

E.g.

diagram.

C)

Stem-and-leaf Diagrams

2. Drawing a Stem-and-leaf Diagram

i. Check the range of the collected data and choose

the place values for the stems and the leaves.

ii. Arrange the numbers in the stem from top to

bottom in an ascending order of magnitude.

iii. List each datum to the right of its corresponding

stem.

iv. Arrange the data in the leaves in ascending order.

pocket money of students in Class A.

The amount of daily pocket money of students in Class A

Stem ($10) Leaf ($1)

0

1

2

3

4

5

5

2

0

0

0

1

5

5

0

0

0

3

8

5

2 2 3 4 7

0 5 5 8 8

2 2 4 5

5

EXAMPLE:

(b) It is known that Eric is one of the student

in Class A and he has the largest amount

of daily pocket money. Find the amount

of his daily pocket money.

(b) The amount of Erics daily pocket money is $55.

EXAMPLE:

from F.1A are shown below.

310 430 400 882 790 620 325 622 450 390

730 395 345 560 560 515 481 385 450 390

Using 100 sq. ft. as the stem and

1 sq. ft. as the leaf, construct a

stem-and-leaf diagram to present

the above data.

Stem (100 sq.ft.)

Leaf (1 sq.ft.)

3

10 25 45 85 90 90 95

00 30 50 50 81

15 60 60

20 22

30 90

82

EXAMPLE:

B are as follows:

81

Group A

103 119

100

Group B

93 102

86

113

117

85

98

115

112

102

100

114

120

126

121

127

118

114

120

115

112

121

88

90

101

123

106

107

present the IQ of these two groups of students.

(b) If the IQ of a student is 120 or above, then he/she is

considered as a gifted student.Which group, A or B,

has more gifted students?

(a)

Group B

Leaf (Units digits)

3

7 6 2 2 1 0 0

8 5 4 4 3 2

3 0

8

9

10

11

12

Group A

Leaf (Units digits)

1

0

3

2

0

5 6 8

8

5 7 9

1 1 6 7

(b) From the diagram in (a), there are more students in group A

whose IQ are 120 or above.

Group A has more gifted students.

Scatter Diagrams

1. Understanding Scatter Diagrams

i. A scatter diagram is appropriate to show whether

two variables have close relationship with each other.

E.g.

Expenditure ($)

D)

Income ($)

Example

D)

Scatter Diagrams

1. Understanding Scatter Diagrams

ii. In general, the two variables x and y may relate in

different ways.

values of x increase,

values of y increase

values of x increase,

values of y decrease

have a clear relationship

D)

Scatter Diagrams

2. Drawing a Scatter Diagram

i.

variable that each axis represents.

on the two axes.

iii. Represent the corresponding values of the two

variables on the rectangular coordinate plane using

a point or x.

iv. Give a title to the scatter diagram.

EXAMPLE:

The heights of fathers and their sons are shown in the scatter

diagram.

Sons' height

height (cm)

(cm)

Sons'

195

195

Heights

Heights of

of fathers

fathers and

and their

their sons

sons

190

190

185

185

180

180

175

175

170

170

165

165

160

160

155

155

140

140

150

150

160

160

170

170

180

180

Fathers'

Fathers'height

height (cm)

(cm)

190

190

200

200

fathers and their sons?

heights of their sons.

From the scatter diagram, it can be seen that:

the taller the father is, the taller his son will be.

EXAMPLE:

night for their dictation test today.

The table below shows the time that

each student spent on studying and

the number of mistakes that they

made in todays dictation test.

Student

Time spent on studying

(min)

No. of mistakes

EXAMPLE:

between the time spent on studying by the 10

students last night and the number of mistakes they

make in the dictation test today.

obtained in (a), do you think there is a

relationship between the time that a

student spent on studying and the number

of mistakes that he makes in the dictation

test?

Number of mistakes

mistakes made in the dictation test

the more time a student spent on studying for the dictation

test, the fewer mistakes he/she makes.

E)

There are many different types of statistical graphs.

The one that should be chosen to present the collected

data depends on the nature and the number of data, the

purpose of the survey, the points to be emphasized,

etc.

EXAMPLE:

year.We can show the relationship between each spending

and the total spending by using a pie chart.

Major spendings for a company last year

EXAMPLE:

secondary school over the last 6 years by using a brokenline graph.

Number of students

Year

EXAMPLE:

students in doing their project and the marks they obtained

from the project by using a scatter diagram.

Mark

from the project

EXAMPLE:

government, 10 different sizes of flats are available. The

distribution of the areas of these flats can be shown in a

stem-and-leaf diagram.

Areas of flats

Stem (100 sq.ft.)

Leaf (1 sq.ft.)

15 24

30 25 70 89

40 48 90

28

EXAMPLE:

Company decided to build a theme

park in Hong Kong.The admission

fee of the theme park would be

around $250 to $350. Some citizens

were interviewed to ask their views

on the admission fees. The

following results were obtained.

Opinion

Number of citizens

Expensive

217

Moderate

285

Cheap

16

EXAMPLE:

data, and at the same time

(a) shows clearly the number of citizens in each category.

(b) shows the number of citizens in each category as a

percentage of the total number.

(a) A bar chart can best present the above data.

(b) A pie chart can best present the above data.

Statistical diagrams are sometimes used deliberately

to exaggerate or conceal the truth, and to mislead the

readers.

diagrams?

Check whether the scales on the two axes have been

drawn correctly.

Check whether the sizes of the groups have been distorted

or exaggerated in such a way to mislead people.

The items of two statistical graphs cannot be compared

by the sizes of the angles in the graphs alone.

EXAMPLE:

of the Hurryson Telecommunications Company.

Telecommunications Company

EXAMPLE:

Hurryson, express the length of the bar of Hurryson

Telecommunications Company as a fraction of that

of HK United.

(b) Now express the actual charges of Hurryson as a

fraction of HK United and compare this result with

that obtained in (a). Do you agree that this bar chart

is misleading? Explain your answer.

1

that of HK United.

5

Actual charge per minute of Hurryson = $3

$3 15

$3.2 16

Since 15 1 , the bar chart has a misleading effect.

16 5

EXAMPLE:

diagram to show the highest monthly salary of their fresh

graduates in the years 2004 and 2005.

Year

EXAMPLE:

statistical diagram shown above. Express the area

of B as a multiple of the area of A.

(b) Find out, from the diagram, the actual

highest monthly salaries in the two

years. Express the one in 2005 as a

multiple of that in 2004.

(a) Suppose each small square in the figure has a side of 1 unit:

Area of triangle B = 1 16 30 sq. units

2

= 240 sq. units

Area of triangle A = 1 8 15 sq. units

2

= 60 sq. units

The required multiple = 240 4

60

Thus, the area of B is 4 times that of A.

the highest monthly salary in 2005 = $12 000

the highest monthly salary in 2004 = $6 000

The required multiple = $12 000 2

$6 000

The highest monthly salary in

2005 was 2 times that in 2004.

EXAMPLE:

2004. In order to show the shareholders that the companys

profit has increased a lot since 1990. The managing director of

the company added the profit of the company in 1990 to the

graph (Fig. B).

Profit of ABC company from

1990 to 2004

Profit ($ million)

Profit ($ million)

2000 to 2004

Fig. A

Year

Year

Fig. B

EXAMPLE:

Fig. B

profit increases rapidly?

(b) Do you think that the managing director is

misleading the readers in Fig. B? Why?

companys profit increases rapidly.

(b) Yes, the managing director is misleading the readers in

Fig. B.

increases rapidly from 1990 to 2000.

Advantages:

graph, then it is more readily understandable.

They are much easier on the eye, being more visually attractive.

They are easier on the brain, in that they are less difficult to

comprehend at a glance.

Disadvantages:

They often do not allow for further analysis.

To: sjain@amity.edu

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