Feb Drive 2011

MBA SEMESTER 1

MB0040 – STATISTICS FOR MANAGEMENT- 4 Credits

(Book ID: B1129)

Assignment Set- 1 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions

Q1. (a) What is the difference between a qualitative and quantitative variable? [5
Marks]
(b) A town has 15 neighbourhoods. If you interviewed everyone living in one
particular neighbourhood, would you be interviewing a population or a sample
from the town? Would this be a random sample? If you had a list of everyone
living in the town, called a frame, and you randomly selected 100 people from all
neighbourhoods, would this a random sample? [5 Marks]

Answer:
(a) Qualitative data deals with meanings while quantitative data deals with numbers.
Qualitative data describes properties or characteristics that are used to identify things.
Quantitative data describes data in terms of quantity using the numerical figure
accompanied by measurement unit. Statistics deals only with quantitative data.

Statistics deals with numerical data, which can be expressed in terms of quantitative
measurements. So, the qualitative phenomenon like beauty, intelligence cannot be
expressed numerically and any statistical analysis cannot be directly applied on these
qualitative phenomena. But Statistical techniques may be applied indirectly by first
reducing the qualitative data to accurate quantitative terms. For example, the
intelligence of a group of students can be studied on the basis of their marks in a
particular examination.

i) The number of transactions occurring in an ATM per day -- Quantitative data

ii) The popular brand name in cars is Maruthi. – Qualitative data

(b) If want to do statistic in a particular area and interviewed everyone then it is called
as population and if you doing statistic analysis for a town and interviewed only 15
neighborhoods then it is called
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Q2. a) Explain the steps involved in planning of a statistical survey? [5 Marks]

b) What are the merits & Demerits of Direct personal observation and Indirect
Oral Interview? [5 Marks]

Answer:
a) The steps involved in planning of a statistical survey are:
The relevance and accuracy of data obtained in a survey depends upon the care
exercised in planning. A properly planned investigation can lead to best results with
least cost and time. The below figure gives the explanation of steps involved in the
planning stage.
The planning stage consists of the following sequence of activities.
1. Nature of the problem to be investigated should be clearly defined in an un
ambiguous manner.
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b) The merits & Demerits of Direct personal observation :

In the direct personal observation method, as shown in figure, the investigator collects
data by having direct contact with units of investigation.
The accuracy of data depends upon the ability, training and attitude of the investigator.
Fig.: Direct personal observation

The direct personal observation method is suitable where,

• The scope of investigation is narrow
• Investigation is confidential and requires personal attention of the investigator
• Accuracy of data is important
The table shows the merits and demerits of direct personal observation method.

Table: Merits and demerits of direct personal observation

Merits Demerits
1. We get the original data which is more 1. This method consumes more cost.
accurate and reliable.

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5. Misinterpretation of questions can be

avoided.

Indirect oral interview

Indirect oral interview is used when the area to be covered is large. The investigator
collects the data from a third party or witness or head of institution. This method is
generally used by police department in cases related to enquiries on causes of fires,
thefts or murders.
In this method, the investigator contacts
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Table: Merits and demerits of indirect oral interview

Merits Demerits
1. Economical in terms of time, cost and 1. The degree of accuracy of information is
man less.
power
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3. Information is likely to be unbiased and

reliable

Q3. a) Draw Ogives from the following data and measure the median value. Verify
it by actual calculations. [5 Marks]

Central size 5 15 25 35 45
Frequency 5 11 21 16 10

b) Complete the following distribution, if its Median is 2,600 and compute the
value of Arithmetic Mean.

Size 1000- 1500- 2000- 2500- 3000- 4000- 5000- Total

1500 2000 2500 3000 4000 5000 6000
Frequency 120 ? 400 500 ? 50 20 1500

Answer:
a)
From the meeting point of these two ogives if we draw a perpendicular to
Q 4. a) What is the main difference between correlation analysis and regression
analysis? [5 Marks]
b) In a multiple regression model with 12 independent variables, what are the
degrees of freedom for error? Explain? [5 Marks]

Answer:
a) Differences between correlation and regression coefficient:

Correlation Coefficient Regression Coefficient

The correlation coefficients, rxy = The regression coefficients, byx =

ryx bxy

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It indirectly helps in estimation. It is meant for estimation.

b) In Multiple regressions analysis is an extension of two variable regression analyses.
In this analysis, two or more independent variables are used to estimate the values of a
dependent variable, instead of one independent variable.

Objectives of multiple regression analysis are:

• To derive an equation, which provides estimates of the dependent variable from
values of the two or more independent variables?
• To obtain the measure of the error involved in using the regression equation as a basis
of estimation

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and we will use “n-1” degrees of freedom, where “n” is the sample size.

Q5. a) Discuss what is meant by Quality control and quality improvement. [5

Marks]
b) What are the limitations of a quality control charts? [5 Marks]

Answer:

a) Quality Control – is defined as the part of quality management focused on fulfilling

quality requirements. Ideally, prevention based controls should prevent problems from
occurring, but in reality, no system is foolproof and problems do occur. Accordingly,
controls to detect quality problems must be established so that customers receive only
products that meet their requirements. ISO 9000 Lead Auditor Training

Detection based controls are reactive – the problem and cost have already occurred
and the company is resorting to damage control. The intent of detection is to evaluate
output from processes and activities by implementing controls to catch problems when
they do occur. For example, final inspection to catch defective product before it gets
shipped.

Quality Improvement – is defined as the part of quality management focused on

increasing the ability to fulfill requirements. Continual improvement results from ongoing
actions taken to enhance product characteristics or increase process effectiveness and
efficiency. This is one of the key characteristics that differentiate a quality management
system from a quality assurance system, i.e., being able to improve the effectiveness
and efficiency and of a process or activity by setting measurable objectives and using
performance data to manage the achievement of these objectives.

Effectiveness is defined as the extent to which planned activities are realized and
planned results are achieved. In determining the effectiveness of quality assurance and
quality improvement activities, the following questions should be asked:
– To what extent have problems in product or processes been prevented?
– To what extent have planned objectives for quality been met?

Efficiency is defined as the relationship between result achieved and resources used.
The measure of efficiency is determined by asking the following:
– Can we get the same output using fewer resources?
– Can we get more output without adding resources?

These questions may be applied to the output of any activity within the quality
management system of an organization.

It should be noted that ISO 9001 requires organizations to achieve QMS effectiveness
through quality assurance and continual improvement activities. QMS efficiency is
desirable, but not currently required by ISO 9001. ISO 9004 provides guidelines that
consider both the effectiveness and efficiency of the QMS.

Quality improvement actions may include:

• Measuring and analyzing situations
• Establishing improvement objectives
• Searching for possible solutions
• Evaluating these solutions
• Implementing the selected solution
• Measuring, verifying, and analyzing results
• Formalizing the changes

b) The limitations of a quality control charts:

• The quality control chart is based on the research of Villefredo Pareto. He found
that approximately 80 percent of all wealth of Italian cities he researched was held
by only 20 percent of the families. The Pareto principle has been found to apply in
other areas, from economics to quality control. Pareto charts have several
disadvantages, however.
Easy to Make but Difficult to Troubleshoot
• Based on the Pareto principle, any process improvement should focus on the 20
percent of issues that cause the majority of problems in order to have the greatest
impact. However, one of the disadvantages of Pareto charts is that they provide no
insight on the root causes. For example, a Pareto chart will demonstrate that half of
all problems occur in shipping and receiving. Failure Modes Effect Analysis,
Statistical Process Control charts, run charts and cause-and-effect charts are
needed to determine the most basic reasons that the major issues identified by the
Pareto chart are occurring.
Multiple Pareto Charts May Be Needed
Pareto charts can show where the major problems are occurring. However,
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• .

Q6. a) Suggest a more suitable average in each of the following cases: [5 Marks]
(i) Average size of ready-made garments.
(ii) Average marks of a student.
b) State the nature of symmetry in the following cases: [5 Marks]
(i) When median is greater than mean, and
(ii) When Mean is greater than median.

Answer:

(i) Average size of ready-made garments. : Arithmetic mean will be used because it is
continuous and additive in nature

(ii) Average marks of a student. : Arithmetic mean will be used because it is the data
are in the interval and the distribution is symmetrical.

b)
(i) When median is greater than mean : the data are "skewed to the left", with a long
tail of low scores pulling the mean down more than the median.

skewness is

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To find Mean Value:

Step 1:

Sum of the given set of data value is

34 + 21 + 70 + 45 + 64 + 12 = 246

Step 2: Count the given set data

Here there are 6 data given.

Step 3: Formula: sum of data/ number of data in set

Step 4: `(246)/(6)` = 41

Hence the mean value of the data is 41

Mean: 41

To find the median value:

Step 1: Arrange the given set data in ascending order.

12, 21, 34, 45, 64, 70

Step 2: Check the total number of data is odd or even. Here the given data are in even
number.

Step 3: Find the middle number of given set of data.

Here 34 and 45 are the middle number.

Step 4: Find the mean value of the two numbers.

`(34+45)/(2)` = 39.5

That the median value of the given set of data is 36.5

Median: 39.5

Compare both mean and median value of the given set of data.

Mean: 41 and median: 39.5

41 > 39.5

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