ASSIGNMENT

Course Code : MMPC-005

Course Title : Quantitative Analysis for Managerial Applications
Assignment Code : MMPC-005/TMA/JULY/2022
Coverage : All Blocks

Note: Attempt all the questions and submit this assignment to the coordinator of your study
centre. (Last date of submission for July 2022 session is 31st October, 2022 and for January
2023 session is 30th April, 2023).

1. The income of a group of 10,000 persons was found to be normally distributed with
mean Rs.750 per month and a standard deviation of Rs. 50, show that of this group
about 95% has income exceeding Rs. 668 and only 5% had income exceeding Rs. 832.
(area between 750 and 668 = 0.4495, area between 750 and 832 = 0.4495).

Solution: P(y - µ)/σ > - 1.6449) = 95%

P(y - µ) > - 1.6449σ) =95%

P(y > µ - 1.6449σ) =95%
P(y > 750 – 1.6449(50)) = 95%
P(y > 667.755) = 95%
P(y > 668) ᴝ 95%

P(y - µ)/σ > 1.6449) = 5%

P(y - µ > + 1.6449 σ) = 5%

P(y >µ + 1,6449 σ) = 5%

P(y > 750 + 1.6449(50)) = 5%
P(y > 832.245) = 5%
P(y > 832) ᴝ 5%
 2. Why is forecasting so important in business? Explain the application of forecasting
for long term decisions.

SOLUTION :- Companies conduct business forecasts to determine their goals, targets, and
project plans for each new period, whether quarterly, annually, or even 2–5 year planning.
Forecasting helps managers guide strategy and make informed decisions about critical business
operations such as sales, expenses, revenue, and resource allocation. When done right,
forecasting adds a competitive advantage and can be the difference between successful and
unsuccessful companies.

This business practice helps determine how to allocate resources and plan strategically for upcoming
projects, activities, and costs. Forecasting enables organizations to manage resources, align their goals
with present trends, and increase their chances of surviving and staying competitive.

The purpose of forecasts is to develop better strategies and project plans using available, relevant data
from the past and present to secure your business's future. Good business forecasting allows organizations
to gain unique, proprietary insights into likely future events, leverage their resources, set product team
OKR, and become market leaders.

Managers conduct careful and detailed business forecasts to guarantee sound decision-making based on
data and logic, not emotions or gut feelings.

There are several business forecasting methods. They fall into two main approaches:

 Quantitative forecasting
 Qualitative forecasting

Quantitative and qualitative forecasting techniques use and provide different sets of data and are needed
at different stages of a product's life cycle.

Forecasting is valuable to businesses because it gives the ability to make informed business decisions and
develop data-driven strategies. Financial and operational decisions are made based on current market
conditions and predictions on how the future looks. Past data is aggregated and analyzed to find patterns,
used to predict future trends and changes. Forecasting allows your company to be proactive instead of
reactive. It helps business in various ways and helps business to forecast long term decisions in the
following ways.

1. Helps set goals and plan

Forecasting allows businesses set reasonable and measurable goals based on current and historical data.
Having accurate data and statistics to analyze helps businesses to decide what amount of change, growth
or improvement will be determined as a success. Having these goals helps to evaluate progress, and adapt
business processes where needed to continue on the desired path. There are certain tools such as CRM
which will be discussed later in this blog that help to visual forecasting and give insight into things like
the sales pipeline, opportunities, and more.

2. Helps budget

Having visibility into potential trends and changes help businesses to know where to allocate their budget
and time spent on certain offerings such as products, services, or areas internally such as hiring and
adjusting strategy. Having insights into current business functionality along with later predicted trends
and combining this information into meaningful insights makes for a better allocated and estimated
budget.

3. Helps anticipate change within the market

Having insight into not only current data but projections of what could happen in the future helps
businesses to make adjustments to business strategy and alter current operations in order to change their
outcome.

Forecasting helps position businesses to become active instead of reactive. If there is a trend that is
predicted to take over the market, or data is showing changes in consumer behaviour it is important to
readjust to the market overall and optimize resources to stand out from the competition.

3. What do you understand by Primary Data? What are the various methods of collecting
primary data? Also, mention what points to be kept in mind while designing the
questionnaire?

Answer: One of the major elements and basis of statistical research is data collection, where the most basic
data that can be collected in this process is primary data. In other words, we can say that data is the basis of
all statistical operations and primary data is the simplest of all data.
Primary data is a type of data that is collected by researchers directly from main sources through
interviews, surveys, experiments, etc. Primary data are usually collected from the source—where the data
originally originates from and are regarded as the best kind of data in research.

The sources of primary data are usually chosen and tailored specifically to meet the demands or
requirements of particular research. Also, before choosing a data collection source, things like the aim of
the research and target population need to be identified.

Sources of Data

The sources of data can be classified into two types: statistical and non-statistical. Statistical sources refer
to data that is gathered for some official purposes, incorporate censuses, and officially administered
surveys. Non-statistical sources refer to the collection of data for other administrative purposes or for the
private sector.

What are the different sources of data?

The following are the two sources of data:

1. Internal sources

 When data is collected from reports and records of the organisation itself, they are known as the internal
sources.
 For example, a company publishes its annual report’ on profit and loss, total sales, loans, wages, etc.

2. External sources

 When data is collected from sources outside the organisation, they are known as the external sources. For
example, if a tour and travel company obtains information on Karnataka tourism from Karnataka Transport
Corporation, it would be known as an external source of data.

Methods of Collecting Primary Data

1. Direct personal investigation

2. Indirect oral investigation
3. Information through correspondents
4. Telephonic interview
5. Mailed questionnaire
 6. The questionnaire filled by enumerators

Direct personal investigation

Under this method, the investigator obtains the first-hand information from the respondents themselves.
He personally visits the respondents to collect the information (data).
Following are the merits of direct personal investigation:
The data collected is first-hand and
original in nature. So, it is more reliable
and accurate.
(1) Relaible and accurate
● In this method, the questions can be modified according
to the level of the respondent or other situations.
(2) Flexibility
● Some additional information may also be collected along
with the required information.
(3) Additional information
● This additional information can be used in future
investigations.
Following are the demerits of direct personal investigation:
● It is not suitable when the area of coverage is
(1) Not suitable for a wide area
considerably wide.
● This method is time-consuming as the investigator
(2) Time-consuming personally visits various places and meets different people to
collect information.
● This method is expensive, particularly when the field of
(3) Expensive
investigation is large.
● The data collected in this method is subjected to personal
(4) Personal bias bias.

Indirect Oral Investigation

Under this method, instead of directly approaching the informants, the investigators interview several other
persons who are directly or indirectly in touch with the informants.
Following are the merits of indirect oral investigation:
(1) Wide coverage ● A wide area can be brought under investigation through this method.
(2) Economical ● It is economical in terms of time, money, and manpower.
(C) Following are the demerits of indirect oral investigation:

(1) Indirect information
(2) Lack of accuracy
(3) Lack of uniformity
(4) Possibility of biased
information
● Since the information is not collected directly from the party, there is a
possibility that it will not be fully true.
● As compared to direct personal investigation, the degree of accuracy of
the data is likely to be lower.
● Information collected from different persons for the same party may not
be homogeneous and comparable.
● Respondent/witness can modify the information according to his
personal interest.

Information through Correspondents

Under this method, local agents or correspondents are appointed and trained to collect the information from
the respondents.
Following are the merits of information through correspondents:
● This method is useful where the field of investigation is very wide and the
(1) Wide coverage
information is to be collected from different parts of the country.
(2) Economical ● This method is quite economical and time-saving.
(3) Suitable for
● This method is suitable for some special purpose investigations.
special purposes
(4) Continuity ● It is very useful for collecting information on a regular basis.

(C) Following are the demerits of information through correspondents:

(1) Lack of ● The information supplied by different correspondents often lacks

uniformity homogeneity; hence it is not comparable.
● Data obtained using this method may not be very reliable because of the
(2) Lack of reliability
possibility of personal bias and prejudice of the enumerator.
(3) Less accuracy ● This method cannot be used where a high degree of accuracy is required.
● A lot of time and money is spent to collect the information through
(4) Costly correspondence.
Telephonic interviews

Under this method, data is collected through interviews over the telephone.
Following are the merits of telephonic interviews:
● This method is useful where the field of investigation is very wide and
(1) Wide coverage
the information is to be collected from different parts of the country.
(2) Economical ● This method is quite economical and time-saving.
(3) Reliability ● The collected data is reliable as it is obtained directly from the party.

(C) Following are the demerits of telephonic interviews:

● The disadvantage of this method is limited accessibility to people. This
(1) Limited use
method is not possible for people who do not own a telephone or mobile.
(2) Visual feedback ● Telephone interviews also obstruct visual reactions of the respondents,
is not possible which become helpful in obtaining information on sensitive issues.

Mailed Questionnaire Method

Under this method, a questionnaire containing a number of questions
related to the investigation is prepared. It is then sent to informants by post
along with the instructions to fill. The informants, after filling up the
questionnaire, send it back to the investigator.
(B) Following are the merits of the mailed questionnaire method:
(1) Wide ● This method is useful where the field of investigation is very wide and
coverage the information is to be collected from different parts of the country.
(2) Economical ● This method is quite economical as it requires less money and labour.
● The data is very much original because informants are directly
(3) Originality
involved in the collection of data.
● Every question is interpreted by the respondent in his own way. Hence,
(4) Free from bias
it is free from the personal bias of the investigator.
(5) Maintains ● This method is suitable for sensitive questions and maintains the
secrecy anonymity of respondents.

Following are the demerits of the mailed questionnaire method:

(1) Limited scope ● This method is applicable only where the respondents are educated.
● Most informants do not return the questionnaire.
(2) Less response
● The informants are least interested in the investigation; hence, there is
a lack of response from their side.
● Informants may not understand the correct sense of some questions,
(3) Chance of
and may not answer them. Sometimes, informants may provide vague and
misinterpretation
ambiguous answers.
(4) Time- ● The process is time-consuming, particularly when the information is to
consuming be obtained by post.
Prerequisites of a good questionnaire.
A questionnaire is a list or set of printed questions, which is filled by the informants. If it is filled by the
enumerators, then it is known as a schedule. Investigator should keep following points in mind to frame a
questionairre
A good questionnaire should have the following characteristics:
(1) Simple and short
Questions should be short, simple, and straightforward.
questions
(2) Limited questions in The number of questions should be limited and they should be in a
a proper order logical order.
(3) Clear instructions To assist the informants, clear instructions should be given.
To know the shortcomings of a questionnaire, it should be tried on a
(4) Pre-testing
small selected group.
(5) Avoid mathematical Questions containing mathematical calculations should be completely
calculations avoided.
(6) Avoid personal or Personal questions affecting sentiments and controversial questions
controversial questions related to religion, politics, etc., should be avoided.
Respondents should be given assurance that their response will not be
(7) Secrecy assurance
shared with anyone.
To convey the purpose of how it will help the parties involved, a
(8) Cover letter precise cover letter should be enclosed.

4. The means of two large samples of sizes 1000 and 2000 are 67.5 and 68.0 respectively.
Test the quality of the means of the two populations each with standard deviation of
2.5. (z table value at α0.05= -1.96).

Solution
\:
5. Write short notes on any two of the following:-

(a) Mathematical Properties of Arithmetic Mean

Arithmetic mean represents a number that is obtained by dividing the sum of the elements of a set by the
number of values in the set. So you can use the layman term Average, or be a little bit fancier and use the
word ―Arithmetic mean‖ your call, take your pick -they both mean the same. The arithmetic mean may be
either

 Simple Arithmetic Mean

 Weighted Arithmetic Mean

Some important properties of the arithmetic mean are as follows:

 The sum of deviations of the items from their arithmetic mean is always zero, i.e. ∑(x – X) = 0.
 The sum of the squared deviations of the items from Arithmetic Mean (A.M) is minimum, which
is less than the sum of the squared deviations of the items from any other values.
 If each item in the arithmetic series is substituted by the mean, then the sum of these replacements
will be equal to the sum of the specific items.

(b) Stratified Sampling

Stratified random sampling is a method of sampling that involves the division of a population into
smaller subgroups known as strata. In stratified random sampling, or stratification, the strata are formed
based on members' shared attributes or characteristics, such as income or educational attainment.
Stratified random sampling has numerous applications and benefits, such as studying population
demographics and life expectancy.Stratified random sampling is also called proportional random
sampling, or quota random sampling.

Stratified random sampling allows researchers to obtain a sample population that best represents the
entire population being studied. Sampling involves statistical inference made using a subset of a
population. Stratified random sampling is done by dividing the entire population into homogeneous
groups called strata. Proportional stratified random sampling involves taking random samples from
stratified groups, in proportion to the population. In disproportionate sampling, the strata are not
proportional to the occurrence of the population. Stratified random sampling differs from simple random
sampling, which involves the random selection of data from an entire population, so each possible sample
is equally likely to occur.
 (c) Exponential Distribution

In Probability theory and statistics, the exponential distribution is a continuous probability distribution
that often concerns the amount of time until some specific event happens. It is a process in which events
happen continuously and independently at a constant average rate. The exponential distribution has the
key property of being memoryless. The exponential random variable can be either more small values
or fewer larger variables. For example, the amount of money spent by the customer on one trip to the
supermarket follows an exponential distribution.

(d) Time Series Analysis

Time series analysis is a specific way of analyzing a sequence of data points collected over an interval of
time. In time series analysis, analysts record data points at consistent intervals over a set period of time
rather than just recording the data points intermittently or randomly. However, this type of analysis is not
merely the act of collecting data over time.

What sets time series data apart from other data is that the analysis can show how variables change over
time. In other words, time is a crucial variable because it shows how the data adjusts over the course of
the data points as well as the final results. It provides an additional source of information and a set order
of dependencies between the data.

Time series analysis typically requires a large number of data points to ensure consistency and reliability.
An extensive data set ensures you have a representative sample size and that analysis can cut through
noisy data. It also ensures that any trends or patterns discovered are not outliers and can account for
seasonal variance. Additionally, time series data can be used for forecasting—predicting future data based
on historical data.