Bsa s01 s02 Ppt-In-class

Business Statistics and Analysis
Gaurav KS
July 30, 2022
e-mail: gauravks@iima.ac.in
Gaurav KS Business Statistics and Analysis July 30, 2022 1 / 125

Outline
Course overview: components, evaluation, policy

What and why of “Business Statistics” and “Analysis”
Real life examples from business
Data versus Information
Measures of data (variable types)
Approaches to collect data: cross-section, time-series; panel
Example data-set (from the class)
Overview/navigation of Syllabus/Topics with the data-set
Descriptive Statistics

Course Evaluation
Quiz : 20%
Group − Assignments : 30%
MidTerm : 25%
EndTerm : 35%

“Business Statistics” and “Analysis”

Objective/Purpose

Objective/Purpose
Using quantitative modeling to help companies/individuals make better
decisions and improve performance.

Objective/Purpose
Business Statistics
Application of statistical tool to business and managerial problems for the
purpose of decision making.

Objective/Purpose
Business Statistics
Statistics
Study of numerical data, facts, figures and measurements.
Statistics is used to convert raw numerical data into useful information.

Objective/Purpose
Business Statistics
Statistics
Study of numerical data, facts, figures and measurements.
Statistics is used to convert raw numerical data into useful information.
(Data) Analysis
includes data description, data inference, and the search for relationships in
data.
Objective/Purpose
Skills needed as a Business Analytic

Objective/Purpose

Information management skills to manage the data.

Objective/Purpose

Analytics skills and tools to understand the data.

Objective/Purpose

Data-oriented culture to act on data.

Objective/Purpose

Data-oriented culture to act on data.
data

Example data:
Objective
Objective: Let’s say one want to assess the fitness/obesity in a class.

Example data:
Objective
Fitness criteria: Body mass index (BMI)

Example data:
Objective
Survey Questionnaire:
1 Name:
2 Gender:
3 Age:
4 Height (in Meters):
5 Weight (in Kg):
6 Rate you fitness on scale 1(lowest) to 5 (highest):

Variables and Scales of Measurement

Qualitative versus Quantitative
Qualitative
A variable that is described verbally than numerically

Qualitative
Also known as categorical data

Qualitative
Quantitative
Quantitative: a variable that assumes meaningful numerical value

Qualitative: Nominal, Binary, Ordinal
Nominal
Variables that store labelled information without any order or quantitative
value

Nominal
value
The name “nominal” comes from the Latin name “nomen”, which means
“name”

Nominal
value
“name”
We can’t do any numerical tasks or can’t give any order to sort the data

Nominal
value
“name”
These data don’t have any meaningful order

Nominal
value
“name”

Nominal
value
“name”
Examples
Nationality (Indian, German, American)

Nominal
value
“name”
Examples
Relationship status (Single, Live-in, Committed, Complicated, Married, Widowed,
Open)

Nominal
value
“name”
Examples
Open)
Gender (Male, Female, Others)

Nominal
value
“name”
Examples
Open)
Gender (Male, Female, Others)
Eye Color (Black, Brown, etc.)

Nominal
Binary or Dichotomous
A categorical variable that can only take one of two values

Nominal
A categorical variable that can only take one of two values
For example- Male and Female, True and False, Day and Night, Pass and
Fail, etc.

Nominal
Ordinal
Variable has a natural ordering by their position on the scale.

Nominal
Ordinal
Commonly used for observation like customer satisfaction, happiness, etc.

Nominal
Ordinal
Considered as “in-between” the qualitative data and quantitative data.

Nominal
Ordinal
Considered as “in-between” the qualitative data and quantitative data.
Examples
Companies ask for feedback, experience, or satisfaction on a scale of 1 to 10
Letter grades in the exam (A, B, C, D, etc.)
Ranking of peoples in a competition (First, Second, Third, etc.)
Economic Status (High, Medium, and Low)
Education Level (Higher, Secondary, Primary)
Quantitative: Discrete and Continuous
Discrete
Discrete data is a numerical type of data that includes whole, concrete
numbers with specific and fixed data values determined by counting.

Discrete
Discrete data refers to individual and countable items.

Discrete
Synonyms for the word discrete are disconnected, separate, and distinct. So,
on plotting one can see them scattered.

Discrete
Discrete data are countable and finite; they are whole numbers or integers.

Discrete
Discrete data are countable and finite; they are whole numbers or integers.
Examples
Total numbers of students present in a class
Numbers of employees in a company
The total number of players who participated in a competition
Days in a week

Discrete

Discrete
Continuous
Continuous data includes complex/fractional numbers and varying data
values that are measured over a specific time interval.

Discrete
Continuous
Continuous data refers to change over time, involving concepts that are not
simply countable but require detailed measurements.

Discrete
Continuous
So, on plotting one can see them like a line.

Discrete
Continuous
So, on plotting one can see them like a line.
Examples
Height of a person
Speed of a vehicle
“Time-taken” to finish the work
Market share price


Quantitative: Continuous: Interval Scale and Ratio Scale
Interval Scale
Can be categorized
Can be ranked
Difference between the scale values are equal
No true zero point as the origin

Interval Scale
Can be categorized
Can be ranked
No true zero point as the origin
Example
Temperature

Interval Scale
Ratio Scale
Can be categorized
Can be ranked
A true zero point as the origin
Ratio scale is essentially an Interval scale with a true zero point.

Example data:
1 Name:
2 Gender:
3 Age:
5 Weight (in Kg):

Example data:
1 Name: Nominal
2 Gender:
3 Age:
5 Weight (in Kg):

Example data:
1 Name: Nominal
2 Gender: Nominal/Binary
3 Age:
5 Weight (in Kg):

Example data:
1 Name: Nominal
3 Age: Continuous/Ratio-scale
5 Weight (in Kg):

Example data:
1 Name: Nominal
4 Height (in Meters): Continuous/Ratio-scale
5 Weight (in Kg):

Example data:
1 Name: Nominal
5 Weight (in Kg): Continuous/Ratio-scale

Example data:
1 Name: Nominal
5 Weight (in Kg): Continuous/Ratio-scale
6 Rate you fitness on scale 1(lowest) to 5 (highest): Ordinal

Types of Data Collection

Cross-section and Time-series
Cross-section
When data is collected by observing many subjects (such as individuals, firms,
countries, or regions) at the one point or period of time
Examples
We want to measure current obesity levels in a population, we could draw a
sample of 1,000 people randomly from that population (also known as a cross
section of that population), measure their weight and height, and calculate
what percentage of that sample is categorized as obese
Student grades at the end of the current semester
Household data of the previous year - expenditure on food, unemployment,
income, etc
Car data - average speed, horsepower, color, etc

Time-series
Time series a series of data points indexed (or listed or graphed) in time order.
India’s Monthly Inflation for past 5 years.
Height of a person, measured once every month.
Note: Time series is different from cross-sectional data because ordering of the
observations conveys important information.

What if both (cross-section, time-series) together?: Panel
Panel data (or longitudinal data), combines both cross-sectional and time
series data ideas and looks at how the subjects (firms, individuals, etc.)
change over a time series.

Panel data differs from pooled cross-sectional data across time, because it
deals with the observations on the same subjects in different times whereas
the latter observes different subjects in different time periods.

Summary - 1

Summary - 2

Quiz

Variable quiz: Howz The Josh

Variable quiz: Howz The Josh
Qualitative
Ordinal

Variable quiz: “Gabbar is back”

Variable quiz: “Gabbar is back”, Answer
Quantitative
Discrete

Variable quiz: Choose the correct response - 1
How does ordinal data differ from nominal data?

1 Nominal data is a name, while ordinal data is a number
2 Nominal data only distinguishes, ordinal data also offers magnitude
information
3 Nominal data can be a name or number, while ordinal data can only be
number
4 Nominal data can only be a name, while ordinal data can be name or number

Variable quiz: Choose the correct response - 1, Answer
How does ordinal data differ from nominal data?

1 Nominal data is a name, while ordinal data is a number
2 Nominal data only distinguishes, ordinal data also offers magnitude
information
3 Nominal data can be a name or number, while ordinal data can only be
number
4 Nominal data can only be a name, while ordinal data can be name or number
Nominal data has the identity property and helps to distinguish between
individual data points. Ordinal data has both identity and magnitude
property and helps order the data points in a specific way.

“The sequential list according which the batsmen in a cricket team

would come out to bat” – Which of the following data types does this
data set belong to?
1 Nominal
2 Ordinal
3 Ratio
4 Interval

“The sequential list according which the batsmen in a cricket team

would come out to bat” – Which of the following data types does this
data set belong to?
1 Nominal
2 Ordinal
3 Ratio
4 Interval
A sequential list has an inherent order and, therefore, is ordinal data.

A group of 10 people were shown 15 photographs. Each person was

asked to choose their favourite photo, and the choices were recorded.
What is the data type of the recorded data?
1 Nominal
2 Ordinal
3 Ratio
4 Interval

A group of 10 people were shown 15 photographs. Each person was

asked to choose their favourite photo, and the choices were recorded.
What is the data type of the recorded data?
1 Nominal
2 Ordinal
3 Ratio
4 Interval
The choice of a particular photo conveys no order, and only conveys
identity. Even if the photos are numbered 1-15, the numbers still represent
identity and not magnitude.

What is the type of data scale marked on a measuring tape?

1 Integer
2 Ratio
3 Nominal
4 Discrete

What is the type of data scale marked on a measuring tape?

1 Integer
2 Ratio
3 Nominal
4 Discrete
Ratio scale offers identity, magnitude, equidistant points, as well as a true
zero and the measuring tape scale has all four properties.

A researcher doing a blind experiment got the respondent data coded

with numbers in a column named “Respondent-ID”. What data type
is it?
1 Ordinal
2 Continuous
3 Interval
4 Nominal

A researcher doing a blind experiment got the respondent data coded

with numbers in a column named “Respondent-ID”. What data type
is it?
1 Ordinal
2 Continuous
3 Interval
4 Nominal
The code refers to the identity of the respondent and does not convey any
other information. Even though the “Respondent-ID” is numeric, it is
nominal data.

What is the data type for the Rainfall in mm data?

1 Integer data, numeric
2 Integer data, discrete
3 Ratio scale, continuous
4 Ratio scale, discrete

What is the data type for the Rainfall in mm data?

1 Integer data, numeric
2 Integer data, discrete
3 Ratio scale, continuous
4 Ratio scale, discrete
Rainfall data can take any value on the scale and is, therefore, continuous.
Rainfall in mm has a true zero (indicating no rainfall at all) and is,
therefore, ratio scale.

Variable quiz: Fill in the blanks
For each of the following variables, indicate whether the variable is

continuous, discrete, ordinal, nominal or binary.
1 Importance of political party affiliation to people (very, somewhat, or not very
important): .................
2 Minutes spent reading yesterday: .................
3 Favourite type of book (fiction, nonfiction): .................
4 Average amount of sleep in the last 7 days: .................
5 Number of abnormal cells from a karyotype genetic test: .................
6 Weights of adult men in kg: .................
7 Country of residence in UK (England, Scotland, Wales, Northern Ireland ):
.................
8 Stage of cancer (1,2,3,4,5): .................
9 Number of mistakes in my presentation: .................


important): Ordinal
2 Minutes spent reading yesterday: .................
.................
8 Stage of cancer (1,2,3,4,5): .................


important): Ordinal
2 Minutes spent reading yesterday: Continuous
.................
8 Stage of cancer (1,2,3,4,5): .................


important): Ordinal
3 Favourite type of book (fiction, nonfiction): Binary
.................
8 Stage of cancer (1,2,3,4,5): .................


important): Ordinal
4 Average amount of sleep in the last 7 days: Continuous
.................
8 Stage of cancer (1,2,3,4,5): .................


important): Ordinal
5 Number of abnormal cells from a karyotype genetic test: Discrete
.................
8 Stage of cancer (1,2,3,4,5): .................


important): Ordinal
6 Weights of adult men in kg: Continuous
.................
8 Stage of cancer (1,2,3,4,5): .................


important): Ordinal
Nominal
8 Stage of cancer (1,2,3,4,5): .................


important): Ordinal
Nominal
8 Stage of cancer (1,2,3,4,5): Ordinal


important): Ordinal
Nominal
8 Stage of cancer (1,2,3,4,5): Ordinal
9 Number of mistakes in my presentation: Discrete

Types of Data Collection

Cross-section and Time-series
Cross-section
When data is collected by observing many subjects (such as individuals, firms,
countries, or regions) at the one point or period of time
Examples

Time-series
Time series a series of data points indexed (or listed or graphed) in time order.
India’s Monthly Inflation for past 5 years.
Height of a person, measured once every month.
Examples

Examples

Business Applications

Applications
1 Demand forecasting

Applications
2 GDP growth

Applications
2 GDP growth
3 Course grading of PRM students

Applications
2 GDP growth
3 Course grading of PRM students
4 Are the grades across the sections are significantly different from each other
A Seven-Step Modeling Process
1 Define the problem
2 Collect and summarize data
3 Develop a model
4 Verify the model
5 Select one of more suitable decisions
6 Present the results to the organization
7 Implement the model and update it over time
Course Overview and Schedule of Sessions
Session 2 & 3: Descriptive Statistics
Objective
To extract meaningful information from data.
Objective
How
Descriptive measure or summary statistic
Visuals (Charts)
Objective
How
Visuals (Charts)
Descriptive measures
30% of the class students are females.
Average height of students is 5.6 ft.
Objective
How
Visuals (Charts)
Descriptive measures
30% of the class students are females.
Average height of students is 5.6 ft.
Visuals
Scatter plot
Frequency plot, Histograms
Pi chart
Session 4: Linear Transformation and Standardization
Objective
To understand the concept of standardization and how it can help in making
comparisons.
Session 5: Correlation and Covariance
Objective
Introduction to bivariate analysis, idea behind correlation and correlation does not
mean causation.
Correlation
Correlation tells the association

How two variables are related with each other
Examples
Temperature and attendance at outdoor events
The age of a car and its value
Years of education and annual earnings
People’s telephone number and their IQs
Miles driven and amount of fuel consumed
Amount of smoking and incidence of lung cancer
Correlation: Plot the Data
Correlation as an association
Correlation: Scatter Plot
From the above three plots, what can we say about the relation between the
two variables?
Correlation: Scatter plot inferences
The relation between the two variables:
Correlation Coefficient
Correlation
Two aspects of (co)relation: Direction and Strength
Session 6 &7: Probability and Probability Distribution
Objective
Introduction to notion of probability and to understand how probability can help
in decision making under uncertainty.
Session 8: Conditional Probability, Bayes’ Theorem, and
Their applications
Objective
To understand the concept of Bayes’ Theorem and probability and how it helps in
better decision making.
Session 9 & 10: Normal, Binomial, Poisson and
Exponential distributions applications
Objective
To get familiar with the concept of distributions and how different distributions
can be used in business world to analyze data.
Session 11: Sampling
Objective
To introduce the different types of probabilistic sampling techniques.
Session 13: Central Limit Theorem
Objective
One useful statistical theorem that helps in approximating distribution of a large
sample towards a normal distribution.
Session 14 & 15: Estimation
Objective
To understand the logic of estimation and how estimation helps in drawing
meaningful conclusion about a population.
Session 16 & 17: Testing of Hypothesis
Objective
To understand how to generate and test hypotheses.
Session 18: ANOVA
Objective
To understand the concept of ANOVA and its real life applications.
Session 19 & 20: Regression Analysis
Objective
To introduce the concept of regression and how it can be used to make
predictions.
Session Summary
QUESTIONS
THANK YOU

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Business Statistics and Analysis

July 30, 2022

Gaurav KS Business Statistics and Analysis July 30, 2022 1 / 125

Course overview: components, evaluation, policy

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Skills needed as a Business Analytic

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Skills needed as a Business Analytic

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Skills needed as a Business Analytic

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Skills needed as a Business Analytic

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Skills needed as a Business Analytic

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Fitness criteria: Body mass index (BMI)

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Ratio scale is essentially an Interval scale with a true zero point.

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