BUSINESS

STATISTICS

Saroj Kanta Jena

CONTENT
• What is Statistics ?
• Statistical Method.
• Types of Statistical Methods.
• Statistics in Business Management.
• Reasons for Collecting Data.
• Types of Data.
• Sources of Data.
• Methods to Collect Primary Data.
• Frequency Distribution.
• Constructing a Frequency Distribution.
What is statistics
Definition:
 The word statistics refers to a special discipline
or a collection of procedures and principles
useful as an aid in gathering and analyzing
numerical information for the purpose of
drawing conclusions and making decisions .
 The art and science of
1. collecting
2. organizing
3. analyzing
4. presenting and
5. interpreting data.
Statistical Method
Definition:
 Methods as an aids in the collection and analysis
of numerical information or statistical data for the
purpose of drawing conclusions and making
decisions are called statistical methods /techniques.
There are two branches of statistics:
 Mathematical statistics .
 Applied statistics .
Types of Statistical Method
Descriptive statistics :
Includes statistical methods involving the collection ,
presentation and characterization of a set of data in
order to describe the various features of that set of
data.
It includes :
 Graphical methods .
 Numerical measures.
Inferential statistics:
Includes statistical methods which facilitate
estimating the characteristics of a population or
making decisions concerning a population on the
basis of sample results.
Statistics in Management
“Statistics is a method of decision-making in the face of
uncertainty on the basis of numerical data and calculated
risks.”
1. Marketing : Pilot survey on Purchase power , Habits of
the consumers, Competitors , Pricing .
2. Production : Setting quality control standards , Decision
about the quantity and time , Cost-benefit analysis
3. Finance : Analysis of profits and dividends , Analysis of
data on assets and liabilities and income and exp..
4. Personnel: In the process of manpower planning ,
statistical studies of wage rates , incentive plans , etc.
Reasons for Collecting Data
 To improve necessary inputs to a given phenomenon
or situation under study.
 To measure performance in an ongoing process such
as production , service , and so on.
 To enhance the quality of decision-making by
enumerating alternative courses of action in a decision-
making process, and selecting an appropriate one.
 To satisfy the desire to understand an unknown
phenomenon.
 To assist in guessing the causes and probable effects
of certain characteristics in given situation.
Types of Data
 Statistical data are the outcome of a continuous
process of measuring , counting , and/or
observing.
 It is of two types:
1. Categorical
2. Numerical:
 Discrete
 Continuous
Sources of Data
 The choice of data collection method from a particular
source depends on the facilities available , the extent of
accuracy required in analysis, the expertise of the
investigator , the time span of the study , the amount of
money and other resources required for data collection.
 Data sources are classified as:
 Primary sources :
 Individual
 Focus
 Panel of respondents
 Secondary sources.
Methods to Collect Primary Data
 Direct personal observations.
 Direct or indirect oral interviews.
1. Face-to-face
2. Over telephone
 Administrating questionnaires.
 Types of questionnaires:
 Dichotomous (yes/no type).
 Multiple choice.
 Open-ended.
Frequency Distribution
A frequency distribution divides observations
in the data set into conveniently established ,
numerically ordered classes(groups).
The number of observations in each class is
referred to as frequency denoted as “ f ” .
A tabular summary of data showing the
number (frequency) of observations in each
of several non-overlapping class intervals.
Constructing a Frequency Distribution
 Decide the number of class intervals.
 Determine the width of class intervals .
 Determine class limits.
 Determine the mid-point of class intervals.
Methods of Data Classification:
1. Exclusive method
2. Inclusive method
Types of Frequency Distribution:
 Cumulative frequency distributions .
 Relative frequency distribution.
 Percentage frequency distribution.
Tabulation of data
Definition:
 The logical listing of related quantitative data in
vertical column and horizontal rows of numbers
with sufficient explanatory words in the form of
titles , headings and explanatory notes to make
clear the full meaning , context and the origin of
the data.
 Tables are means of recording ,in permanent
form, the analysis that is made through
classification and by placing in a position just the
things that are similar and should be compared.
Objectives of Tabulation
 To simplify the complex data.
 To economize space.
 To depict trend.
 To facilitate comparisons.
 To facilitate statistical comparisons.
 To help as a reference.
Types of Tables:
 Simple table and Complex table
 Reference table and Summary table
 Original table and Derived table
Graphical presentation of data
 The important function of statistics is to present
complex and unorganized data in such a manner that
they would easily be understandable.
 Diagrams helps us to see the pattern and shape of any
complex situation.
 Charts and graphs represent an extremely useful and
flexible medium for explaining , interpreting and
analyzing numerical facts by means of points, lines,
areas and other geometric forms and symbols.
 They make possible the presentation of quantitative
data in a simple, clear and effective manner and
facilitate comparison of values, trends and
relationships.
Functions of a Graph
 Graphical presentation of frequency distribution
facilitate easy understanding of data presentation
and the interpretation.
 The shape of graph offers easy answers to several
questions.
 The shape of the graph gives an exact idea of the
variations of the distribution tends.
 Serves as an easy technique for quick and effective
comparison between two or more frequency
distributions.
Advantages of Graph
 To permit others to see the results at a glance.
 Diagrams gives an attractive and elegant
presentation.
 Diagrams leave good visual impact.
 Diagrams facilitate comparison.
 Diagrams save time.
 Diagrams simplify complexity and depict the
characteristics of the data.
Limitations of Graph
 They provide only an approximate picture of the
data.
 They cannot be use as alternative to tabulation of
data.
 They can be used only for comparative study.
 They are capable of representing only
homogeneous and comparable data.
Types of Diagrams
 One dimensional diagrams
1. Histogram/Bar diagram
2. Frequency polygon
3. Pie chart
4. Ogive
 Two dimensional diagrams
1. Rectangles
2. Squares
3. Circles
 Three dimensional diagrams
1. Cylinders
2. cubes
Bar Diagram
 A graphical device for depicting data that have been
summarized in a frequency distribution, relative
frequency distribution or percent frequency
distribution.
 Bar diagram are not suitable to represent long period
time series.
Example: Nicest Fruit
A survey of 145 people asked them "Which is the nicest
fruit?":
And here is the bar graph:

Fruit: Apple Orange Banana Kiwifruit Blueberry Grapes

People: 35 30 10 25 40 5
 People:
45
40
35
30
25
20
15
10
5
0
Apple Orange Banana KiwifruitBluebe... Grapes
Example of data structure

QUARTER KENT LINCOLN MERSEY YORK

2020-Q1 44 700 52 800 43 500 38 800

2020-Q2 45 000 36 500 41 000 34 100

2020-Q3 51 200 44 200 39 700 27 000

2020-Q4 56 500 45 300 41 200 48 900

Grouped Bar Chart
Frequency Polygon
 Method of Constructing a Frequency
Polygon with the Help of a Histogram
 We will discuss about the method of constructing a
frequency polygon with the help of a histogram.

 Step I: Draw the histogram for the frequency distribution as

explained above.
 Step II: Locate the midpoint of the top horizontal side of
each rectangle in the histogram.
 Step III: Locate the middle points on the horizontal axis of
two imaginary intervals of common size, one before the
first class interval and the other after the last class interval.
 Step IV: Join all the above midpoints by line segments one
after the other in order.
Example
Example: Draw the frequency polygon for the following
frequency distribution.
Marks
Obtained Under 20 Under 40 Under 60 Under 80 Under 100
Number of
Students 6 10 20 36 50
Solution
Solution: Changing the distribution into a continuous
distribution of overlapping intervals, we have the following
table.
Marks
Obtained 0 – 20 20 – 40 40 – 60 60 – 80 80 - 100

Number of
Students 6 4 10 16 14
(10 - 6) (20 - 10) (36 - 20) (50 - 36)

The histogram of the distribution is shown in the adjacent

figure.
Pie Chart
 This diagram is used to show the total no of
observations of different types in the data set on a
percentage basis rather than on an absolute basis
through a circle.
Sales

1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Pie Chart
People:

3% Apple
24%
28%
Orange
Banana
Kiwifruit
21% Blueberry
17%
7% Grapes
Line Chart
PEOPLE:
45

40

35

30

25

20

15

10

0
APPLE ORANGE BANANAKIWIFRUIT
BLUEBERRYGRAPES
Line Chart
6

3 Series 1
Series 2
2
Series 3
1

0
Category Category Category Category
1 2 3 4
Cylinder Graph
 Cylinder charts are column (or bar chart) that use
cylinder shaped items to show data. Although
cylinder charts do not add any additional data,
sometimes using this shape allows to achieve a
better visual appearance of your data.
Cylinder Graph
Cube Graph