Running head: WEEK 1 STATISTICS IN BUSINESS 1

Statistics in Business

Willie L. Vegas, Sr.

QNT/275 Statistics for Decision Making

July 17, 2017

Kim Gravelle
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Statistics in Business

The concept of statistics in business can be deduce from general to specific term. As there

are different areas of business, certain tools and approaches are made to meet each needs (Odoh,

2014). The purpose of this essay is to consider the main elements when using statistics in the

aspect of business decision analysis, such as determining the accuracy of collected data or

information, as well as choice of statistical design or in other words statistical model to analyze

the obtained data, the clear presentation of findings and conclusions, and finally, managerial

recommendations on how to take corrective measures based on the arrived outcome.

Definition of Statistics

Statistics has been a useful tool in all fields of learning. Inasmuch, statistics is not just a

branch of Mathematics, but fully a branch of science which logically refers to collecting,

analyzing, presenting and interpreting data, and in that it helps people in a business organization

to approach problems in a systematic manner. The tool of statistics provides information in

arriving a decision or testing an assumption. (Mann, 2016)

There are two major areas of statistics such as inferential and descriptive statistics.

Descriptive statistics deals with describing the features of the set of data, such as finding the

mean, median and mode, as well as producing graphs to tell what data is all about. Inferential

statistics is much different in some way than descriptive. Since it is impossible to obtained

information from all people, things, or places, a researcher must obtain only a sample to make

inference about the whole or generalize the population. Through inferential statistics, it uses

statistical tools and analysis to test hypothesis of the given data and come up with a decision and

conclusion.
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Quantitative and Qualitative Data

The advent of technology makes us filled with data every day. Large or small scale of

data can be lifted from anyone, anywhere or anything. When we speak of data it basically refers

to objects, things, person, place, or any variable of interest. Generally, there are two types of data

and they are easy to differentiate them. (Surbhi, 2016)

First one, we have qualitative data which refers to the information that speak about

qualities; these are data that cannot be measured or has no numerical sense. The examples of

qualitative data are the color of the eye, the quality of clothes, and gender. (Wyse, 2011)

Second one is quantitative data which is about quantities. It is opposite to qualitative data

because it can be measured and can be written down with numbers. The examples of quantitative

data are height, weight, age and prices of cars. (Wyse, 2011)

Moreover, qualitative data is more of description that can be observed but cannot be

computed, whereas quantitative data is much focus on numbers and mathematical calculations,

and can be calculated and computed. (Surbhi, 2016)

Evaluation of Tables and Charts

Tables and charts are deem necessary and convenient in dealing with data so that the

reader will find data easy to read and understand. Statistics likely utilizes tables and charts to

measure and analyze both quantitative and qualitative data in statistics, in other words a

frequency distribution is commonly found in data presentation.

Frequency distribution displays the observations or elements that are distributed over

categories or intervals. The role of qualitative variables in frequency distribution is to identify

the categories a set of observations belong. (Mann, 2016)

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Moreover, bar graphs and pie chart are among the most common graphs used for

qualitative data. Bar graph makes use parallel bars whose length are in proportion to the

frequencies represented while the pie chart compares part to a whole and displays the percentage

of the distribution (Mann, 2016).

In order to display quantitative data effectively, the use of histogram and frequency

polygons are necessary. Histograms, which looks like bar graph, also makes use of parallel bars

though they differ because histograms are drawn adjacent to each other so there is no gap

between them (Mann, 2016). The histogram is used to assess if the data comes from a normal

curve or distribution and what is the shape of the data. On one hand, a polygon can be formed

from a histogram which is done by connecting the midpoints of each column (Mann, 2016).

An efficient way to display a set of data is through the use of tables and graphs.

Nonetheless, the ease of displaying the data comes with careful preparation in order to avoid

missing information or mislead of facts.

Levels of Data Measurement

Upon learning statistics it is very essential to identify the level of data because it allows

one to decide how to deal or interpret these specific level of data and assigned appropriate

measures, along with methods or statistical test to ensure validity and accuracy of results. There

are four levels of measurement namely: nominal, ordinal, interval and ratio.

Initially, nominal scale is a level of data measurement that possesses identity trait and this

only categorizes a certain data (Garger, 2010). Political party, gender, and eye color are

examples of nominal scale data.

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The next thing, ordinal data is a level of measurement that possesses both identity and

order. This type of data typically found in the ranking of army, class honors and even responses

(Likert scale).

Furthermore, interval scale is a type of level of measurement which comprises of identity,

order and numerical scales in which intervals have the same interpretation, yet no meaningful

zero point. The data which are of interval scale are temperature, IQ and grades.

Finally, ratio scale is a level of measurement that has all of the information of the

previous three levels and contains absolute zero point (Garger, 2010). Some examples car prices

and height, since a these data can have a meaningful zero.

Of the four levels of measurement they may be distinct in description, yet each of these

data is helpful in determining the kind of statistical method to use to come up with statistical

analysis and interpretation.

Role of Statistics in Business Decision Making

Generally, the role of statistics is in fact a vital tool in every areas of interest and field of

discipline. In terms of business, statistics play important role in making decisions, critical

thinking, prediction, quality management and more. Apparently, statistics is important in

businesses because it provides reliable information to which one based the decision. Several

business studies rely on past data and invest time on research and forecast some results to

prevent profit loss and financial dilemma, along with it is devising new strategies and make

innovations to existing brands and products.

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Research Questions or Problem Situations

Suppose we have some situation where for instance a growing company plan to launch a

new quality of whitening toothpaste, as improved to the existing whitening toothpaste product.

The problem here is consumer behavior or motivation to purchase the new toothpaste and would

the toothpaste rises the profit or enlarge the market. This comes the role of making statistical

models and doing research that will help a decision maker to weigh things down, considering the

risk and possible loss when this is not anticipated by consumers.

Another scenario would be when a an owner of a shop wants to know how much to stock

a certain product and when it would be out of stock. Based upon the collection of past data, a

shop owner will be able to determine the days or months when he need to restock or when is the

peak season. For this case, a shop owner would desire to prepare more stocks on the peak season

as this would be the time where customers likely to buy his product.

Conclusion

Understanding the field of statistics is so vast, however we can always direct to the

methods needed for our application. Statistics in decision making comprise of concepts and ideas

on how to deal with issues and problems that relate to business and all. This article achieve its

aim to address about basic knowledge of statistics and the methods contain thereof. Moreover, it

shows some business scenario and how statistics played its role to help us approach decision in a

logical and reasonable basis.

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References

Garger, John. (2017) "John Garger – 4 Levels Of Measurement In Social Science Research,

Professional Copy Editor". Retrieved from

https://johngarger.com/articles/methodology/4-levels-of-measurement-in-social-science-

research

Mann, P. (2016). Introductory Statistics (9th ed.). Danvers, MA: John Wiley & Sons.

Odoh, M. et. al. (2014). The Application of Statistics to the Different Areas of Business. IOSR

Journal of Business and Management Volume 16, Issue 11.Ver. II, PP 43-49.

Surbhi, S. (2016). Difference Between Qualitative and Quantitative Data. Retrieved from

http://keydifferences.com/difference-between-qualitative-and-quantitative-data.html

Wyse, S. (2011). Difference between Qualitative Research vs. Quantitative Research. Snap

Surveys. Retrieved from https://www.snapsurveys.com/blog/what-is-the-difference-

between-qualitative-research-and-quantitative-research/