Business Statistics

Dr. S.P. Sarangi, PHD (Economics)

Meaning

 Statistics is the study of the collection, analysis,

interpretation, presentation, and organisation of data.
 Data: A collection of observations of one or more
variables of interest.
 It summarize and describe information more precisely
to understand the process at a glance
 Capture a population’s characteristics by making
inferences from a sample’s characteristic.
 Understand the nature of relationship between pair of
variables in a process to improve its functioning.
 Make reliable forecasts of certain events of interest.
Topics to be covered......
 Introduction to Statistics and Data Collection
 Summarizing and Presenting Statistical Data
 Measures of Central Tendency
 Measures of Dispersion
 Measures of Skewness, Kurtosis and moments
 Fundamentals of Probability
 Probability Distributions
 Sampling and Sampling Distributions
 Hypothesis Testing
 Analysis Variance
 Correlation Analysis
 Regression Analysis
 Basic Calculus
 Definition
 The classified facts representing the conditions of the people
in a state--- especially those facts which can be stated in
numbers or in tables of numbers or in any tabular or
classified arrangement. (Webster)

 Statistics is the science which deals with the methods of

collecting, classifying, presenting, comparing and interpreting
numerical data collected to throw some light on any sphere of
enquiry. (Seligman)
 According to Horace Secrist “ By statistics we mean
aggregates of facts affected to a marked extent by
multiplicity of causes, numerically expressed, enumerated or
estimated to reasonable standard of accuracy, collected in a
systematic manner for a pre-determined purpose and place
in relation to each other.
 It consists of aggregate of facts
 It is liable to be affected to a marked extent by multiplicity of
causes
 It should be numerically expressed
 It should be capable of being either numerated or estimated
 It should be capable of being either numerated or estimated
 It should be collected in a systematic manner
 It should be collected for pre-determined purpose
 It should be capable of being placed in relation to each other
Importance and Scope of Statistics

 Statistics and Business

 Statistics and Economics

 Statistics and State

 Statistics in Physical Science

 Statistics in Social Sciences

 Statistics in medical Sciences

 Statistics and Computers

Statistics and Business
 According to Ya-Lin-Chou Statistics is a method of
decision making in the face of uncertainty on the basis of
numerical data and calculated risks
 Statistical reports provide a summary of business activities
which improves the decision makings in future. Certain
activities where statistics plays an important role are
discussed below.
 Marketing
 Production
 Finance
 Personnel
Types of Statistical Methods
 Statistical methods, broadly classified into two categories
Descriptive Statistics
Inferential Statistics
 Descriptive Statistics includes statistical methods that are
used for collecting, presenting, depicting the centre, spread
and shape of the data.
 Thus, these methods are helpful as preliminary tools to
describe the various features of data.
 In general, methods of descriptive statistics include graphic
methods and numeric measures
 Bar charts, line charts and pie charts comprise graphic
methods, whereas numeric measures include measures of
central tendency, dispersion, skewness and Kurtosis.
Inferential statistics
Inferential statistics includes statistical methods
that are used for estimation of population
characteristics on the basis of sample results and
testing of statistical hypothesis.

The inferential statistics comprise those tools

which help decision-makers to draw inferences
from the data set. This include estimation and
hypothesis estimation
Population and Sampling
 A population refers to entire set of elements being studied.
 Sample is a subset (portion) of the population.
 Descriptive numerical measures like an average or a
percentage that is calculated from the entire population are
called parameters, when such measures, when calculated
from a sample data, are termed as statistics.
 Population refers to the collection of all elements in which
we are interested while a sample is a subset of the
population
 The characteristics of a population are called parameters
while the characteristics of a sample are termed as
statistics.
Limitations of Statistics
 Qualitative data:
 Statistics can be used effectively to study only those
problems that can be stated and expressed quantitatively.

 Its study about aggregate behaviour

 Statistics can be misused

 Statistics results are true only on an average

Sources of Data
 Data sources are classified as
 Primary Sources
 Secondary Sources

 A primary source is one that itself collects the data whereas

a secondary source is one that makes available data which
were collected by some other agency.

 Data originally collected for an investigation are known as

primary data. Such data are original in character and are
generated in large number of surveys conducted mostly by
Government and also by some individuals, institutions and
research bodies.
 Primary data are collected by the immediate user(s) of the
data and exclusively obtained from the experiment or
survey being conducted by him (them). It is the data that
will normally be referred when we talk about “collecting
data”.

 Data which are not originally collected rather obtained

from published or unpublished sources are known as
secondary data.

 secondary data refers to any data collected by a person or

organization other than the user(s) of the data and this data
will be provided to actual users and researchers.
Methods of Collecting Primary Ddata
 Direct personal Interviews

 Indirect oral interviews

 Information from correspondents
 Mailed questionnaire method
 Schedules sent through enumerators
Direct personal Interviews
 In this method, there is a face to face contact with the
person from whom the information is to be obtained. The
interviewer asks them questions pertaining to the surveys
and collects the desired observations.
 Example: If a person wants to collect information about the
workers in a Industry, he would go to the industry, contact
the workers and obtain the desired information.
 Responses are more encouraging as most people are willing
to supply information when approach personally.
 Indirect Oral Investigation
 Under this method of collecting data, the investigator contacts
third parties or witness capable of supplying the necessary
information.
 This method is generally adopted where the information to be
obtained is of complex nature and the informants are not inclined
to respond if approached directly.
 Information from Correspondents
 In this method, the investigator appoints local agents or
correspondents in different places to collect information.
 These correspondents collect and transmit the information to the
central office where the data are processed.
 Newspaper agencies generally adopt this method
 Mailed Questionnaire Method

 Under this method, a list of questions pertaining to the survey

(known as questionnaire) is prepared and sent to the various
informants by post.
 The questionnaire contains questions and provides space for
answers.
 A request is made to the informants through a covering letter to
fill up the questionnaire and send it back within a specified time.
 Schedules sent through Enumerators

 The essential difference between the mailed questionnaire method

and this method is that whereas in the former the questionnaire is
sent to the informants by post, in the latter the interviewers carry the
schedule personally to the informants.
Secondary Source of Data
 Secondary data refers to those data which have been
collected earlier for some purpose other than the analysis
currently undertaken.
 External Secondary Sources:
 Government Publications
 Non-Government Publications include publications of
various industrial and trade association
 Various syndicate services such as Operations Research
Group (ORG). The Indian Market Research Bureau
(IMRB) also collects and tabulates abundant marketing
information to suit the requirement of individuals firms,
making the same available at regular intervals
 International Organisations which Publish data are as
follows

 The International Labour organisation (ILO) which publishes

data on the total and active population, employment,
unemployment, wages and consumer prices.
 The Organisation for Economics Cooperation and
Development (OECD) which publishes data on foreign trade,
industry, food, transport, and science and technology
 The International Monetary Fund (IMF) which publishers
reports on national and international foreign exchange
regulations and other trade barriers, foreign trade, and
economic developments
 Internal Secondary Data

The data generated within an organisation in the process

of routine business activities are referred to as internal
secondary data.

Financial accounts, production, quality control and sales

records are examples of such data.
 Classification of Data
 Arranging the raw data in groups/classes on the basis of
certain properties is referred as data classification.
 The classification of statistical data is helpful in
 Condensing the raw data in some compact and orderly form
suitable for statistical analysis
 Revealing the pattern of variations and highlights the
characteristics of any variable present in India.
 Facilitating comparison and drawing inferences from the
data.
 Providing information about the relationship among
elements of a data set
 Statistical analysis to reveal characteristics/silent
features of elements in the data
Basis of Calculation
 Geographical Classification:

 Chronological Classification:

 Qualitative Classification:

 Quantitative Classification:
Variable
A variable may be defined as a characteristic which
varies in amount of magnitude under different times and
places e.g. marks, age, height etc. This again, can be of
two types i.e., (i) Discrete variable, (ii) Continuous
variable.
Discrete variable: A discrete variable is one which
always takes an integral values viz: 10, 15, 20, 12, 18 etc.
and can never assume any fractional value such as,
10.7, 19.33, etc.
These variables are characterized by discontinuity or
jumps and gaps between each other.
Continuous variable : A continuous variable, on the
other hand, is one which can assume any value of both
integral and-. fractional nature within a specified range of
numbers. Such values are characterized by continuity and
are capable of passing from any given value to the next
value by infinitely small gradation. The examples of such
variables are age, height, weight, marks etc. which can
assume any value within a specified range.
 Frequency Distribution
A frequency distribution refers to data classified on the
basis of some variable that can be measured such as
prices, wages, age, number of units produced or
consumed.
More precisely, A frequency distribution or frequency
table is simply a table in which the data are grouped into
classes and the number of cases which fall in each class
are recorded. The numbers in each class are referred to as
frequencies hence frequency distribution.
Discrete Frequency Distribution
Continuous Frequency Distribution
Discrete Frequency Distribution
 Step 1: Count the number of times a particular value is
repeated which is called the frequency of that class.
 Step 2: In order to facilitate counting prepare a column of
“tallies”
 Step 3: In another column, place all possible values from
the lowest to highest.
 Step 4: To facilitate counting, blocks of five bars are
prepared and some space is left in between each block .
 Finally count the number of bars corresponding to each
value of the variable and place it in the column entitled
frequency.