Introduction to Statistics

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“To guess is cheap, to guess wrongly is
expensive.”
-Old Chinese Proverb

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“Statistical thinking will one day be as
necessary for effective citizenship as the
ability to read and write.”
- H.G. Wells

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“ When you can measure what you are
speaking about and express in numbers,
you know something about it; but when
you cannot measure it, cannot express it in
numbers your knowledge is of a meagre
and unsatisfactory kind.”
- Lord Kelvin

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“When the history of modern time is finally
written, we shall read it as beginning with
the age of steam and progressing through
the age of electricity to that of statistics”
- An over-enthusiastic, statistically aware
business executive

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 Need of Statistics
• Variation: Law of Nature
• You cannot Escape from Data
• Business Analytics
• Applications in Business

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 Scope of Statistics
• Statistics increase the field of mental vision just
like the binoculars increases the field of physical
vision.
• Simplifies unwieldy and complex mass of data.
• Quantifies and measures uncertainty and
variability.
• Discovers past and emerging patterns.
• Helps in estimation and validating assumptions.

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Numerical statements of facts which are
highly convenient and meaningful forms
of communication

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 Statements
 The crime rate has gone up by 15% of what it was
last year
 The average salary of a professor in Oxford
University is $75,000 per year
 The rate of inflation in India is expected to remain
above 5% per year for the next 5 years
 60% of car owners in a country consider Japanese
cars superior in quality than American cars

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 Characteristics of Statistics
1. Statistics are aggregate of facts.
2. Statistics, generally are not the outcome of a single
cause, but are affected by multiple causes.
3. Statistics are numerically expressed.
4. Statistical data is collected in a
systematic manner.
5. Statistics are collected for a predetermined purpose.
6. Statistics are enumerated or estimated according to
reasonable standard of accuracy.
7. Statistics must be placed in relation to each other.
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 Functions
 It condenses and summarizes the data
 It facilitates classification and comparison
 It helps in determining functional relationship
between two or more phenomenon
 It helps in predicting future trend
 It helps in policy formulation

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 Limitations
• Cannot take concern of individual items
• Cannot measures qualitative characteristics
• Can be misused

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 Scope
 Government
 Economic
 Physical, Natural and Social sciences
 Research
 Others
 Business and Management

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 Business and Management
• Entrepreneurship
• Production
• Marketing
• Purchasing
• Personnel
• Investment
• Banking
• Quality Control

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 Business and Management
 Best Way to Market (Pitney Bowes)
Studied 302 directors and VPs to understand cost-effective
method to reach customers; direct mail/ catalogues (35%);
internet (11%); method to create brand identity through direct
mail/ catalogues (>25%).
 Stress on the Job (HERO)
Studied 46000 employees to find out ways to reduce healthcare
expenses; depressed Vs non-depressed workers (70% higher
expenses); stressed Vs non-stressed workers (46% higher
expenses); high BP Vs normal workers (just 11% higher expenses).
 Financial Decisions (RHI Management Resources) Studied
CFOs were asked which of the following initiatives they would put
on hold in an uncertain economy; 1. Expansion (32%); 2. Merger or
acquisition (23%); 3. New product or service launch (10%); 4.
Technology upgrade (18%); 5. None (9%); 6. Other (8%).
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Statistics is concerned with proper collection of
data, organizing this data into manageable and
presentable form, analyzing and interpreting the
data into conclusions for useful purposes.

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1. Proper collection of data
2. Organization and classification of data
3. Presentation of data
4. Analysis of data
5. Interpretation of data

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 Types of Statistics
• Descriptive
• Inferential

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 Descriptive: Forbes Magazine’s List of India’s
Billionaires for 2006

Rank Name Net Worth ($ b) Age

1 Lakshmi Mittal 20 55
2 Azim Premji 11 60
3 Mukesh Ambani 7 48
4 Anil Ambani 5.5 46
5 Sunil Mittal 4.9 48
6 Kumar Birla 4.4 38
7 Shiv Nadar 3 60
8 Shashi & Ravi Ruhia 2.7 62
9 Venugopal Dhoot 1.6 52
10 Rahul Bajaj 1.5 67

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Inferential: Number of annual Withdrawals in SB
Accounts (sample of 20 accounts)

38 53
41 45
46 44
47 56
58 62
42 40
44 35
54 48
57 39
51 48

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 Phases of Statistical Study
• Defining Objective
• Specification of the Population & its characteristic(s)
• Planning for data collection-Census Vs Sampling
• Collection of data- Primary Vs Secondary
• Compilation/presentation of data
• Statistical Analysis
• Drawing conclusions, testing assumptions, making
predictions

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