Professional Documents
Culture Documents
Definitions
“Statistics is a numerical statement of facts in any department of
enquiry placed in relation to each other’. -Bowley
“Statistics are the classified facts representing the conditions of the
people in a State specially those facts which can be stated in
numbers or any tabular or classified arrangement”. -Webster
“Statistics can be defined as the aggregate of facts affected to a
marked extent by multiplicity of causes, numerically expressed,
enumerated or estimated according to a reasonable standard of
accuracy, collected in in a systematic manner, for a pre-determined
purpose and placed in relation to each other”. -Secrist
Statistics is the science of collecting, organizing , analyzing,
interpreting and presenting data.
SCOPE OF STATISTICS
1.Social Sciences
-Man Power Planning
-Crime Rates
-Income & Wealth Analysis of Society
-In studying Pricing, Production, Consumption, Investments & Profits etc.
2.Planning
-Agriculture
-Industry
-Textiles
-Education etc.
For ex. Five Year Plans in India.
n
SCOPE OF STATISTICS
contd…
3. Mathematics
-Extensive use of Differentiation, Algebra, Trigonometry, Matrices
etc in modern business analysis.
-Statistics now treated as Applied Mathematics.
4. Economics
- Family Budgeting
-Applied in solving economic problems related to production,
consumption, distribution of products as per income & wealth
related patterns, wages, prices, profits & individual savings,
investments, unemployment & poverty etc.
SCOPE OF STATISTICS
contd…
5. Business Management
- Trend Analysis
- Market Research & Analysis
- Product Life Cycle
i) Marketing
Marketing Policy Decisions depend on forecasting, demand
analysis, time & motion studies, inventory control, investments &
analysis of consumer data for production & sales.
SCOPE OF STATISTICS
contd…
ii) Production
- Designs
- Methods of Production
- Technology Selection
- Quality Control Mechanisms
- Product Mix
- Quantities
- Time Schedules for Manufacturing & Distribution
SCOPE OF STATISTICS
contd…
iii) Finance
-Correlation Analysis of profits & dividends, assets & liabilities
-Analysis of income & expenditure
- Financial forecasts, break-even analysis, investment & risk
analysis
iv) Sales
-Demand Analysis
-Sales Forecasts
v) Personnel
- Wage plans, Incentive plans, Cost of living, Labor turnover ratio,
Employment trends, Accidental Rates, Performance Appraisals
etc.
SCOPE OF STATISTICS
contd…
vi) Accounting & Auditing
-Analysis of Income, Expenditure, Investment, Profits and
Optimization of Production etc
- Forecasting costs of production & price
vii) Other Areas
-Insurance, Astronomy, Social Sciences, Medical Sciences,
Psychology, Education etc.
LIMITATIONS OF STATISTICS
Does not study individual items, deals with
aggregates.
Statistical laws are not exact.
Not suitable for the study of qualitative
phenomenon.
Statistical methods are only means and not
end for solving problems.
ROLE OF STATISTICS IN
MANAGEMENT DECISIONS
A. Marketing & Sales
- Product selection & competence strategies
- Utilization of resources including territory control
- Advertising decisions for cost & time effectiveness
- Forecasting & trend analysis
- Pricing & market research
ROLE OF STATISTICS IN
MANAGEMENT DECISIONS contd…
B. Production Management
- Product mix & product positioning
- Facility & production planning
- Distribution management
- Material handling & facility planning
- Maintenance policies
- Activity planning & resources allocation
- Quality control decisions
ROLE OF STATISTICS IN
MANAGEMENT DECISIONS contd…
C. Materials Management
- Buying policy- Sourcing & Procurement
- Material Planning & Lead Times
D. Finance, Investments & Budgeting
- Profit planning
- Cash Flow Analysis
- Investment decisions
- Dividend policy decisions
- Risk Analysis
- Portfolio Analysis
ROLE OF STATISTICS IN
MANAGEMENT DECISIONS contd…
E. Personnel Management
- Optimum organization level
- Job evaluation & assignment analysis
- Social / habit analysis
- Salary / wage policies
- Recruitment & Training
ROLE OF STATISTICS IN
MANAGEMENT DECISIONS contd…
G. Defense
- Optimization of weapon system
- Force deployment
- Transportation Cost Analysis
- Assignment Suitabilities
Definitions Continued
Observations: Numerical quantities that
measure specific characteristics.
Examples include height, weight, gross
sales, net profit, etc.
Some More Definitions
Raw Data: Data collected in original form.
62 18
64 10
66 6
68 4
Illustration – Grouped or Continuous
Frequency Distribution
Exclusive Type Class – Class- Frequency
Intervals Intervals
20-25 8
25-30 2
30-35 40
35-40 23
40-45 9
Illustration – Grouped or Continuous
Frequency Distribution contd…
Inclusive Type Class - Class- Frequency
Intervals Intervals
1-10 2
11-20 6
21-30 10
31-40 15
41-50 12
CONVERSION OF INCLUSIVE TYPE
CLASS-INTERVALS TO EXCLUSIVE
TYPE CLASS INTERVALS
1. Calculate ADJUSTMENT FACTOR as follows:
A.F= Lower Limit of Next C.I – Upper Limit of Previous C.I
2
using the given inclusive type class intervals.
2. Obtain new class intervals as follows:
New Lower Limit = Old Lower limit – A.F
New Upper Limit = Old Upper Limit + A.F
CONVERSION OF INCLUSIVE TYPE
CLASS-INTERVALS TO EXCLUSIVE TYPE
CLASS INTERVALS contd…
Class- Frequency
Intervals
0.5-10.5 2
30.5-40.5 15
40.5-50.5 12
Obtaining Cumulative
Frequency Distribution
Class Frequency Less than type More than type
-Intervals
Cum.frequency cum.frequency
20-25 15 15 60 + 15 = 75
25-30 34 15 +34 =49 26 + 34 = 60
30-35 6 49 + 6 =55 20 + 6 = 26
35-40 10 55 + 10 = 65 10 + 10 = 20
40-45 8 65 + 8 = 73 2 + 8 = 10
45-50 2 73 + 2 = 75 2
Introduction to Measures of
Central Tendency
Also known as averages.
Values show a distinct tendency to cluster or
group around a value.
This behavior is central tendency of data.
The value around which the data clusters is
the measure of central tendency which
represents the whole set of data.
Objectives of Averages
To find out one value that represents the
whole mass of data.
To enable comparison.
To establish relationship.
To derive inferences about universe to which
sample belongs.
To aid decision – making.
Requisites of a Good Average
Should be rigidly defined.
Should be mathematically expressed.
Should be readily comprehensible & easy to
calculate.
Should be calculated on the basis of all the
observations.
Should be least affected by extreme values and
sampling fluctuations.
Should be suitable for further mathematical
treatment.
Common Measures of Central
Tendency
Arithmetic Mean
Geometric Mean
Harmonic Mean
Median
Mode
Partition Values like Deciles ,Quartiles &
Percentiles.
Averages
60 12 60 x 12 = 720
62 18 1116
64 10 640
66 6 396
68 4 272
50 = N 3144 = Σ fx
30-35 6 32.5 10 60
35-40 4 37.5 15 60
70 25 70-80 25-9=16
80 9 80-90 9-2=7
90 2 90-100 2-0=2
100 0
What if…
C.I Frequency
50-59 1
40-49 3
30-39 8
20-29 10 ?
10-19 15
0-9 3
Total N=40
A.F = (L.L of 1st C.I – U.L of 2nd C.I)/2
= (50-49)/2
= 0.5
New C.I
L.L of new C.I = L.L of original C.I – A.F
U.L of new C.I= U.L of original C.I + A.F
For ex. For 1st C.I,new L.L = 50-0.5
= 49.5
new U.L = 59 +0.5
= 59.5 and so on.
Now Continue as usual.
Determining missing frequency when A.M is known –
Illustration Mean = 16.82
20-25 14 22.5 1 14
25-30 10 27.5 2 20
30-35 8 32.5 3 24
N = 70 + f4 Σfd = -12
Determining missing frequency when A.M is known -
Illustration
Soln. μ = A + Σ fd x I
Σf
μ = 16.82 (given) , I = 5
Hence 16.82 = 17.5 + ( -12 )x 5
70 + f4
- 0.68 = - 60
70 + f4
Weight (in kgs) 30-34 35-39 40-44 45-49 50-54 55-59 60-64
Q2
No.of Students 3 5 12 18 14 6 2
Formula Used
μw = x1w1+ x2w2 +…….+xnwn
w1+ w2 +…….+wn
Illustration – Weighted A.M
Designation Monthly No. of
Salary employees wX
(in Rs.) (X) (w)
Class I 1500 10 15000
Officers
Class II 800 20 16000
officers
Subordinate 500 70 35000
Staff
Clerical Staff 250 100 25000
350 = Σw 106000 =
ΣwX
Illustration – Weighted A.M
Weighted A.M = Σ wX
Σw
= 106000
350
= Rs 302.857 Ans.
Median – Positional Average
The value of the middle term of a series
arranged in ascending or descending
order of magnitude.
Its value is the value of the middle item
irrespective of all other values.
Calculation of Median
Individual Series
N = no. of observations or items in the series
- Arrange all the items in ascending or
descending order of magnitude.
Case I N = Odd
Median = Value at (N+1) th position in
2
the arranged series.
Case II N = Even
Median = A.M of values at (N, N+1)th
2 2
position.
Calculation of Median – Illustration
(Individual Series)
Ex.1 Find the median 5, 7, 9, 12, 10, 8, 7, 15,21
Solution: Arranging in ascending order we get
5, 7, 7, 8, 9, 10, 12, 15, 21
Here N = 9 i.e odd
Hence Md = (N+1) th item in the arranged order
2
= (9 +1) th item
2
= 5 th item
= 9 Ans.
Calculation of Median – Illustration
(Individual Series)
64 10 40
66 6 46
68 4 50
N = 50
Calculation of Median
Grouped Frequency Distribution
(i) Find less than type cum.frequency.
(ii) Find N/2.( N = Σf)
(iii) Find the cum.freq. just greater than N/2. Suppose it is
X.
(iv) Look for the cum.freq. preceding X. Find the
corresponding class interval.This is median class
Formula Used Md = L1 + N/2 - C (L2 – L1)
f
0-20 14 14
20-40 ? = f1 14 + f1
40-60 27 41 + f 1
80-100 15 56 + f1 + f2
N = 100
Calculation of Missing Frequencies when median
is known : Illustration
Here median = 50 L1 = 40
N = 100 L2 = 60
N/2 = 50 f = 27
Hence median class 40-60 C = 14 + f1
Md = L1 + N/2 - C (L2 – L1)
f
50 = 40 + 50 – (14 + f1)(60 – 40)
27
10 = 720 – 20 f1
27
f1 = 450/20 = 22.5 = 23 families approx.
N = 56 + f1 + f2
100 = 56 + 23 + f2
f2 = 21 Ans. f1 = 23 and f2 = 21
Practice Numericals - Median
G = antilog ( 1 Σ log x)
n
Geometric Mean
Discrete Frequency Distribution
G = (x1f1.x2f2…….xnfn)1/N
H= n
Σ(1 )
x
Harmonic Mean
H= N
Σ(fi )
xi
Harmonic Mean
Continuous Frequency Distribution
- Formula same as that of Discrete Frequency
Distribution with x (as observations) replaced
by x (as mid values).