Master of Business Administration- MBA Semester 1

MB0040 Statistics for Management

(Book ID: B1731)
Assignment Set - 1
. Q1. a. Explain the characteristics of Statistics.
b. What are the components of Statistics? Give a brief description of each of the components.
Answer:
a. Characteristics of Statistics:
Statistics is the study of the collection, organization, analysis, interpretation, and
presentation of data. It deals with all aspects of this, including the planning of data
collection in terms of the design of surveys and experiments.
A statistician is someone who is particularly well-versed in the ways of thinking
necessary to successfully apply statistical analysis. Such people often gain experience
through working in any of a wide number of fields. A discipline called mathematical
statistics studies statistics mathematically.
Some of its important characteristics are given below:

Statistics
Statistics
Statistics
Statistics
Statistics
Statistics
Statistics

are aggregates of facts.

are numerically expressed.
are affected to a marked extent by multiplicity of causes.
are enumerated or estimated according to a reasonable standard of accuracy.
are collected for a predetermine purpose.
are collected in a systemic manner.
must be comparable to each other.

b. components of Statistics? Give a brief description of each of the components.

The Four Components of Statistics:

Gathering
Displaying
Interpretation
Inference

Gathering data, whether in or out of a classroom, occurs on a daily basis. We are always
observing and processing information as we go about the routine of our day. At this level data
is like a pile of clothing that has just come from a dryer. When we sort the clothing we can
see some order; in the same sense we see order in data when it can be displayed.
Displaying information occurs when we wish to communicate our data or when we want to
make decisions about them. These displays can take several forms such as circle graphs, line
graphs, bar charts, stem and leaf charts, or box and whisker plots. Displaying data is both an
art and a science..
Interpreting data can begin by determining measures of central tendency, outliers, symmetry,
and range of a data set. Generally we call such measures the shape of the data, and
determining these measures gives people a good sense for the overall meaning of the data.
Inference is the highest cognitive level of working with data, and generally occurs when we
wish to use data to make decisions based on past information as well as make predictions of
future trends and events. Taking random samples of an event such as rolling dice allows us to

look at past events. When we ask what is likely to happen in the future, we enter the realm of
inference

Q2.Explain the objectives of Statistical Average. What are the requisites of a good average?
Answer:
"An average value is a single value wit'' the range of the data that is used to represent all of
the values in the series. Since an average is somewhere within the range of the data, it is also
call the measure of central value."
The basic purpose of the statistical analysis is to determine the value which represents the
whole series. This value is termed as central value or an average. In other words, average is a
statistical measure representing a group of individual values in simple and comprehensive
manner.
Its Basic objectives are:
To facilitate quick understanding of complex data
To facilitate comparison
To know about universe from a sample
To help in decision making
Requisites of a good Average:

(i) It should be rigidly defined. If an average is left to the estimation of an observer and if
it is not a definite and fixed value it cannot be representative of a series. The bias of the
investigator in such cases would considerably affect the value of the average. If the
average is rigidly defined; this instability in its value would be no more, and it would
always be a definite figure,
(ii) It should be based on all the observations of the series. If some of the items of the
series are not taken into account in its Calculation the average cannot be said to be a
representative one. As we shall see later on there are some averages which do not take
into account all the values of a group and to this extent they are not satisfactory
averages.
(iii) It should be capable of further algebraic treatment. If an average dose not possess
this quality, its use is bound to be very limited. It will not be possible to calculate, say,
the combined average of two or more series from their individual averages; further it will
not be possible to study the average relationship of various parts of a variable if it is
expressed as the sum of two or more variables. Many other similar studies would not be
possible if the average is not capable of further algebraic treatment.
(iv) It should be easy to calculate and simple to follow. If the calculation of the average
involves tedious mathematical processes it will not be readily understood and its use will
be confined only to a limited number of persons. It can never be a popular average. As
such, one of the qualities of a good average is that it should not be too abstract or
mathematical and there should be no difficulty in its calculation. Further, the properties
of the average should be such that they can be easily understood by persons of ordinary
intelligence.
Q3. A. Mention the Characteristics of Chi-square test.
Answer:
The test we use to measure the differences between what is observed and what is
expected according to an assumed hypothesis is called the chi-square test.
Characteristics of Chi-square test:

It is based on frequencies not on parameters.

It is a non-parametric test where no parameters regarding the rigidity of
population of populations are required.
Additive property is also found in this test
It is useful to test the hypothesis about the independence of attributes
It can be used in complex contingency tables.
It is very widely used for research purposes.

b. Two research workers classified some people in income groups on the

basis of sampling studies. Their results are as follow:
Investigators

Income groups

Total

Poor

Middle

Rich

160

30

10

200

140

120

40

300

Total

300

150

50

500

Solution: Let us make the hypothesis that the techniques adopted both the groups are similar
and the data are similar.
Expected frequencies are
Investigator Income groups

Total

Poor Middle Rich

A

120

60

20

200

180

90

30

300

Total

300

150

50

500

(O E) 2
E
2
2
(160 120)
(30 60)
120
60
55.54
2

(10 20)

(140 180)

(120 90)

20

180

90

(40 30)
30

Degree of freedom = (3-1)(2-1)=2

Table value of

for 2 degree of freedom at 5% level of significance is 5.991. Since the

calculated value is bigger than the table value, we conclude the rejection of null hypothesis at
5% level of significance. Technique adopted by one of two groups in data collection is
defective.
Q4. What do you mean by cost of living index? Discuss the methods of construction of cost of
living index with an example for each.
Answer:- The Cost of living index, also known as consumer price index or Cost of living
price index is the countrys principal measure of price change. The Consumer price index
helps us in determining the effect of rise and fall in prices on different classes of consumers
living in different areas. Different people consume different kinds of commodities and the
same commodities in different proportions. The consumer price index helps us in
determining the effect of size. Fall in price index helps us in determining the effect of rise
and fall in prices on different classes of consumers living in different areas. The consumer
price index number is significant because the demand of a higher wage is based on the cost
of living index and the wages and salaries in most nations are adjusted according to this
index number.
The cost of living index does not measure the actual cost of living or the fluctuations in the
cost of living due to causes other than the change in price level. However, its object is to
find out how much the consumers of a particular class have to pay for a certain quantity of
goods and services.
There are two methods for constructing consumer price index number. They are:
I.
Aggregate expenditure method
II.
Family budget method or method of weighted average of price relatives.
I.
II.

Aggregate Expenditure Method: This method is based on Laspeyres method where

the base year quantities are taken as weights (w = Q0).
Family budget method Family budget method or the method of weighted relatives
is the method where weights are the Value (P0Q0) in the base year often denoted
by W.

Q5
.

Define trend. Enumerate the methods of determining trend in time series

Answer:
The trend is the component of a time series that represents variations of low
frequency in a time series, the high and medium frequency fluctuations having been
filtered out. This component can be viewed as those variations with a period longer
than a chosen threshold

The trend is normally referred to as the long-term movement in a cyclical context.

Trends in time-series data were analyzed using simple linear regression. Hydrologic
data were reduced to a single value for each year of the selected time period. The
annual series of values then was related to time by an equation of the form:
Y = B0 + B1(T)
where
Y = a hydrologic variable, such as water level;
T = time, in years; and
B0and B1 = least-squares estimates of the intercept and slope coefficients.
The slope, B1 , indicates the average rate of change in the hydrologic characteristic
during each year of the time period. If the slope is significantly different from zero,
the trend in the hydrologic variable is equal to the magnitude of the slope and the
direction of the trend is defined by the sign of the slope: increasing if the sign is
positive and decreasing if the sign is negative. If the slope is not significantly different
from zero, there is no trend in the hydrologic variable.
One advantage of this method of trend analysis is that it is easy to apply to a large
number of sites. A disadvantage is that it can fail to detect trends that are nonlinear
but still monotonic (generally in one direction). Other methods, such as the MannKendall test, could be used to detect trends that are monotonic but not necessarily
linear, but these only indicate the direction, and not the magnitude, of significant
trends.
The coefficients B0 and B1 were estimated for each selected hydrologic characteristic
individually at each measurement site. These sites included wells, groups of wells,
springs, and stream flow-gaging stations.
TIME-SERIES GRAPHS
In order to illustrate trends at individual sites, values of the hydrologic variables were
plotted by time. The trends were shown by plotting a locally weighted scatter plot
smooth through the data. The smooth is intended to show the natural trend of the
center of mass of the data, not necessarily the trend slope determined by the
regression model. A LOWESS smooth that is approximately linear implies that the
regression slope is a good estimate of change throughout the time period used for
trend analysis. Curves in the LOWESS smooth indicate short-term fluctuations within
the time period. The shape of a LOWESS smooth can be affected by the tension, or ffactor, used in the weighting function. For this report, smooth lines were computed
using an f-factor of 0.5, which means that 50 percent of the annual time-series data
was used to determine the LOWESS plotting position for each year.
MAPPING TREND RESULTS
Results of the trend analyses for each hydrologic characteristic were plotted on maps
of the study area in order to assess the regional distribution of trends. Trends were
categorized by ranges of magnitude. In all cases, one of the selected ranges was

symmetric around zero. Categorization of trend results was based on the magnitude
and statistical significance of the slope coefficient. The actual magnitude of the trend
was used if the significance level was less than 0.25. If the significance level was
greater than 0.75, the trend was considered to be zero. If the significance level was
between 0.25 and 0.75 and the slope was small, the trend was considered to be zero;
however, if the slope was large, the trend was considered indeterminate and was not
included on the map
Q6
.

The following data represent the number of units of production per day turned out by
5 different workmen using different types of machines.
Workmen

Machine type
B
C
38
47
40
52
36
44
38
46
42
49

A
44
46
34
43
38

1
2
3
4
5

D
36
43
32
33
39

i) Test whether the mean productivity is the same for the four different machine types.
ii) Test whether 5 men differ with respect to mean productivity.
Answer:Source of
Variation

sum of
squares

Between

56

degree of
freedom

mean
square

28

Variety

F1= 28 = 1.55
18

Between

498

166

Fertilizer
Residual

variance
ratio

F2= 166 = 9.22

18

108

18

Error

Total

a)

662

11

Fcal = 1.55 is less than its table value f0.05 = 5.14 at df = (2,6) , the null hypothesis is accepted

b) Fcal = 9.22 is more than its table value f0.05 = 4.67 at df = (3,6) , the null hypothesis is rejected