BUSSINESS STATISITICS Solution Set

1. Attempt any six Question

a. To design new products, streamlining a production process or evaluating current vs. prospective customers, todays business managers face greater complexities than ever before. Running a shop on instinct no longer suffices. Statistics provide managers with more confidence in dealing with uncertainty in spite of the flood of available data, enabling managers to more quickly make smarter decisions and provide more stable leadership to staff relying on them.

b. Merits and Demerits of Arithmatic mean

Merits: It is rigidly defined. It is easy to calculate and simple to follow. It is based on all the abservations. It is determined for almost every kind of data. It is finite and not indefinite. It is readily put to algebraic treatment. It is least affected by fluctuations of sampling. Demerits: The arithmetic mean is highly affected by extreme values. It cannot average the ratios and precentages properly. It is not an approprite average for highly skewed distributions. It cannot be computed accurately if any item is missing. The mean sometimes does not coincide with any of the abserved value.

c. Relation between Mean Median and Mode

A distribution in which the values of mean, median and mode coincide (i.e. mean = median = mode) is known as a symmetrical distribution. Conversely, when values of mean, median and mode are not equal the distribution is known as asymmetrical or skewed distribution. In moderately skewed or asymmetrical distribution a very important relationship exists among these three measures of central tendency. In such distributions the distance between the mean and median is about one-third of the distance between the mean and mode, as will be clear from the diagrams 1 and 2. Karl Pearson expressed this relationship as: Mode = mean - 3 [mean - median] Mode = 3 median - 2 mean and Median = mode +

Knowing any two values, the third can be computed.

d. D e. Problems faced in constructing index no.

1. Difficulties in the Selection of the Base Period 2. Difficulties in the Selection of Commodities 3. Difficulties in the Collection of Prices 4. Arbitrary Assigning of Weights 5. Difficulty of Selecting the Method of Averaging 6. Difficulties Arising from Changes Overtime 7. Not All Purpose 8. International Comparisons not Possible 9. Comparisons of Different Places not Possible

f.

Index numbers serve as economic barometers

1) Index numbers are used as economic barometers: Index number is a special type of averages which helps to measure the economic fluctuations on price level, money market, economic cycle like inflation, deflation etc. G.Simpson and F.Kafka say that index numbers are today one of the most widely used statistical devices. They are used to take the pulse of economy and they are used as indicators of inflation or deflation tendencies. So index numbers are called economic barometers. 2) Index numbers helps in formulating suitable economic policies and planning etc. Many of the economic and business policies are guided by index numbers. For example while deciding the increase of DA of the employees; the employers have to depend primarily on the cost of living index. If salaries or wages are not increased according to the cost of living it leads to strikes, lock outs etc. The index numbers provide some guide lines that one can use in making decisions. 3) They are used in studying trends and tendencies. Since index numbers are most widely used for measuring changes over a period of time, the time series so formed enable us to study the general trend of the phenomenon under study. For example for last 8 to 10 years we can say that imports are showing upward tendency. 4) They are useful in forecasting future economic activity. Index numbers are used not only in studying the past and present workings of our economy but also important in forecasting future economic activity. 5) Index numbers measure the purchasing power of money. The cost of living index numbers determine whether the real wages are rising or falling or remain constant. The real wages can be obtained by dividing the money wages by the corresponding price index and multiplied by 100. Real wages helps us in determining the purchasing power of money.

6) Index numbers are used in deflating. Index numbers are highly useful in deflating i.e. they are used to adjust the wages for cost of living changes and thus transform nominal wages into real wages, nominal income to real income, nominal sales to real sales etc. through appropriate index numbers.

g.

A t-test is any statistical hypothesis test in which the test statistic follows a Student's tdistribution if the null hypothesis is supported. It can be used to determine if two sets of data are significantly different from each other, and is most commonly applied when the test statistic would follow a normal distribution if the value of a scaling term in the test statistic were known. When thescaling term is unknown and is replaced by an estimate based on the data, the test statistic (under certain conditions) follows a Student's t distribution.

h.

The null hypothesis (H0:) is that there is no difference or no affect or no correlation. If you have a theory that eating pizza makes kids fat, your null hypothesis would be that eating pizza does not make kids fat. The research hypothesis (H1:) is that eating pizza makes kids fat. A statistically significant result does not "prove" anything. It does not show a "cause-effect" relationship, just that there is a relationship. If you use an alpha error of .05, there is just a .05 probability that this data would show a relationship when there is in fact none (due to random chance).

2. Profit per shop Mid Value(x) No of Shops (f) Deviation (dx = x-a) 0-10 10-20 20-30 30-40 40-50 50-60 Total 5 15 25 35 45 55 12 18 27 20 17 6 N=100 -20 -10 0 10 20 30 Step deviation I =Dx/10 -2 -1 0 1 2 3 -24 18 0 20 34 18 72-42 = 30 fI

25+30/100*10 = 28

Or

Arithmetic Mean of Marks of 100 students = 40

Sum of the marks of 100 students = 100 * 40 = 4,000 Correct sum of the marks of 100 student = 4000-misread score + correct score = 4000-83+53 = 3970 Correct a.m. = 3970/100 = 39.7 marks

3. Convert cumulative frequency distribution into ordinary frequency distribution Class Frequency Mid value dx= x-35/10 Fdx 20-30 65-63-=2 25 -1 -2 30-40 63-40=23 35 0 0 40-50 40-40 = 0 45 1 0 50-60 40-18 = 22 55 2 44 60-70 18-7 = 11 65 3 33 70-80 7 75 4 28 Total 65 103 Mean = 35+103/65*10 = 50.85 = = 14.59

Fdx2 2 0 0 88 99 112 301

Standard Deviation =

( (

) xi

) x 10

CV =

Or

X 20 22 19 23 16

City A D = x- 0 2 -1 3 -4

D 0 4 1 9 16

X 10 20 18 12 15

City B D = x- -5 +5 3 -3 0

D2 25 25 9 9 0

City A = CV =

= 2.45/20*100 = 12.25%

City B = CV =

= 3.69/15*100 = 24.6%

Hence City A has more stable price