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 populations characteristics by making
inferences from a samples 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

In thispersonal
method, Interviews
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
features of elements in the data

characteristics/silent

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.