1.

TIME SERIES ANALYSIS:

It is the subject of applied statistics. An important aspect of applied statistics is to
study about the present and future behaviour of the activities performed. The
reliability depends on information collected and represented.
Time series consists of data arranged chronologically.
When quantitative data are arranged in the order of their occurrence, the resulting
series is called the time series. It is used to determine the patterns in data collected for
a period of time. Time series relates to economics, business, commerce, etc. for
example production of a product, cost of a product, sales of a product, national
income, salary of an individual etc. Just by observing time series data one can predict
and plan for future operations in industries and other fields. It has an important
objective to identify the variations and try to eliminate the variations and also help us
to estimate or predict the future values.
Components of Time Series:
Secular Trend, Seasonal Variations, Cyclic Variations and Irregular variations.

Secular Trend:
It is a general tendency of time series to increase or decrease or stagnates over a long
period of time. An upward tendency is usually observed in population of a country
production, sales, price in industries, income of individuals etc., A downward trend is
observed in deaths, epidemics, prices of electronic gadgets, water resources, mortality,
etc. It is not necessarily be the increase or decrease should be in the same direction
throughout the given time period.

Seasonal Variations:
Variations that occurs periodically in every seasons.
It will get repeated in less than a year's time. Seasonal variations may be influenced by
natural force, social customs and traditions. These variations are the results of such
factors which uniformly and regularly rise and fall in the magnitude. For example
selling umbrellas and raincoat in rainy season, cool drinks in summer, crackers in
Diwali, cake in Christmas and New Year.
Cyclic Variations:
This is not necessarily be uniformly periodic in nature. For example every business
cycle will be start- boom - depression - recover. Another example is changes in
government policies and the best example would be World Health Organization
experts statement about the virus was never been constant right from the start and it
kept changing and still changing from person to person and from time to time.

Irregular Variations:
These variations do not have any particular pattern and no regular period of time of
their occurrences. Normally they are short-term variations but its occurrence,
sometime its effect so intense that they may give rise to new cyclic or other
movements of variations. For example lockdowns, masks, vaccines, repeat is the
cyclic scenario of this pLandemic and we have seen all what is going on is the virus
that keeps mutating into a totalitarian dictatorship and nothing about public health. It
simply means that the cyclic occurrence will remain as it is and also the goalpost
keeps moving as long as people comply. Emergency decisions by any government is
only to curb the situation. If the same rules follow for more than two years it is clear
that there is no more emergency but no plans to return freedom back to people. So it is
a good example for irregular variations.

USES OF INTERPOLATION AND EXTRAPOLATION:

Interpolation is filling the data points between data that you already have.
Extrapolation is filling the data points beyond data that you have.
Both the techniques are used to draw a pattern and predict. It is widely used in various
fields.
SYSTEMS ORIENTATION IN DEVELOPING A MODEL:
There is difference between management and business administration.
This gives way for system oriented approach given to us by Hans Ulrich in 1960s.
By focussing on present situation and other external factors in the environment at
which the organization operates and then taking decisions is system orientation
approach.

2. EXPLICIT AND IMPLICIT FUNCTIONS:

Implicit function is a function in which dependent variable is not explicitly given as a
function of independent variables. It is generally given as f(x,y)=0
If you take this example x2+y2-1=0 In this both x and y are on same side, so it doesn't
tell you if y depends on x or x depends on y.
Now solving y, y=+/-sq.rt.(1-x2) this shows that it is actually not a function as there
are 2 values of y for one value of x. This is called the Budget Equation used in
economic models. 'B' is the budget that is assumed to be constant and is to be spent on
two goods x and y. B=PxX+PyY here X, Y are units of goods and Px, Py are price of
goods. In utility equation, it is U=xy. In both cases you see x and y are on same side
making it uncertain of which one is dependent of the other.
Explicit function is a function as dependent variable is explicitly given as a function of
independent variable. y=f(x) In this case for different values of x you will get different
values for y. It is more obvious that x and y are on opposite sides that makes sense.
y=2x+3 in this example see if value of x is given as 6 then you can easily find y by
substituting x value as 6. y= 2(6)+3=15 hence y=15 if x is 5 then the value of y
becomes y=2(5)+3=13 hence y=13.
Consumption function where C=mY+c C is the consumption and dependent variable.
Y is the income and independent variable.
This formula is to show that the consumption depends on the income.

COBB DOUGLAS PRODUCTION FUNCTION:

In economics, production function is calculating what comes out of a production to
what has gone into it. CD production function was proposed by Charles Cobb and
Paul Douglas in 1928. This production function can be used for whole economy
structure. It calculates the ratio of input and output, the relationship between
production input and production output to improve efficiency of production and to
calculate change in production methods. The standard formula is Y=ALαKβ Here,
Y is the total production which is actually the real value of all the goods produced
annually. L is the labour input which is how many hours of work by a person in one
year. K is nothing but capital input which is the measurement of buildings, tools and
machines, capital input value divided by price of capital. A is the total factor
productivity and α and β are nothing but output elasticities of capital and labour.
These values are the constants.
FEASIBLE REGION:
Set of all possible values of the variables which satisfy the constraints.
Feasible sets can be bounded or unbounded. For example take the set x>=0, y>=0 this
set is unbounded because it has no limit and sticking on to feasible region still. Take
the set x>=0, y>=0, x+2y<=4 here there is a limit set and seems bounded.
Because there is a value limited by constraint. Number of constraints must be atleast
n+1 is the necessary condition also insufficient for a bounded feasible set.
3. THEORY OF CORRELATION:
Correlation is the statistical tool that helps to measure and analyse the degree of
relationship between two variables. Correlation analysis deals with the association
between two or more variables. The measure of correlation is called the correlation
coefficient. The relationship being in degree can actually be expressed by coefficient
ranging from (-1<=r>=+1) the direction range is indicated by a sign. Note that this
analysis actually gives us an insight about the degree and direction of the relationship
between two variables that are used for study. Types of correlation are positive and
negative correlation. If both the variable values change with same direction it is
positive correlation. If both the variable values change with opposite direction it is
negative correlation. Example water consumption and temperature, studying time
decreases with increase in time for phone usage are the examples for positive
correlation.
For negative correlation example: alcohol consumption and driving ability.
Karl Pearson's Coefficient of Correlation denoted by 'r'. -1<=r<=+1
Degree of correlation is expressed by a value of coefficient. Direction of change is
indicated by positive or negative sign.
The value of correlation coefficient 'r' ranges from -1 to +1.
 If r=+1, then the correlation between the two variables is said to be perfect and
positive.
 If r=-1, then the correlation between the two variables is said to be perfect and
negative.
 If r=0, then there exists no correlation between the variables.

CONCEPT OF SHADOW PRICE:

Shadow price is the real economical price of essential commodities and various other
goods that don’t have a fixed market price. It is used when prices are difficult to
estimate.
Example: A construction company decides to build a gated community. There is a
meditation park to be setup as planned by the company. Constructing a park for
spiritual purpose or social wellbeing and the cost of the construction project includes
meditation park as shadow price here. Hence shadow price is the monetary value
assigned to currently unknowable to-calculate costs in the absence of correct market
prices. It is based on the willingness to pay as per people's needs and demands.
Inflationary pressures, exchange rate, wage rates and capital costs, imperfect market
mechanism are all the reasons for using shadow pricing. Main uses of shadow pricing
are as follows:
Project Evaluation:
It is an easy tool to evaluate various developmental investment project in various
sectors of economy. As the investment project contribute to the national income of the
country. For cost benefit analysis of projects shadow pricing is used.
Public Policy:
Operations of public policy determines the success of developmental investment
projects. Labour, capital and other input prices, also foreign exchange rate are
determined in shadow prices.
Programming:
Optimum use of investment is programming.

SOLUTION TO DEGENERACY IN TRANSPORTATION PROBLEM:

Degeneracy occurs in transportation problem whenever a number of occupied cells is
less than m+n-1 We can have a maximum of m+n-1 number of positive basic
variables, m is considered origin and n is destination.
The degeneracy transportation problems can happen in two ways.
 Basic feasible solutions may be degenerate from initial stage onward.
 They may become degenerate at any intermediate stage.

4. CONCEPT OF COMPOUND EVENTS:

When we find the probability for two or more events.
Example is rolling a dice or flipping a coin or rolling two different dices.
The set of all possible outcomes of one or more events is called the sample space. You
can use tables and tree diagrams to find the sample space of two or more events.
Examples: You randomly choose a bread and type of sandwich. Find the sample
space. How many different sandwiches are possible? Bread - Wheat, Sourdough
Type - Ham, Turkey, Steak, Chicken. So given two different types of bread and four
different dishes, we can make all four dishes with both the bread types. Which means
the possible outcome is 8 dishes.
Find the total number of possible outcomes of rolling a number cube and flipping a
coin. A normal dice when rolled gives anything between 1 to 6 that has to be rolled six
times for each of its number outcome. When the same number of time a coin is
flipped, coin having a head and a tail two sides can give outcome of head all six times
of flipping or outcome of tail when flipped for all six times. So there are 12 possible
outcomes. How many different outfits can you make from the T-shirts, jeans and
shoes in the closet having 4 pairs of jeans, 7 t-shirts and 3 pairs of shoes?
must be 4X7X3=84 therefore 84 possible outcomes.

PARAMETERS OF BINOMIAL DISTRIBUTION:

Binomial distribution gives info about number of trials made when each trial can
attain one particular value by having the same probability. It determines the
probability of observing a mentioned number of outcomes in a given number of trials
that could turn successful. The binomial distribution formula is calculated as:
P(x:n,p) = nCx x px(1-p)n-x
The expected value, mean of a binomial distribution is calculated simply by
multiplying the number of trials denoted by n and the probability of successes
(p) or n x p.
Here 'n' is the number of trials or the occurrences, 'x' is the number of successful trials,
'p' is the success in a single trial note that the probability, also that nCx is the
combination of n and x.
We shall see an example:
The multiple choice part of SAT exam has 44 questions. If each question has four
responses, find the mean and standard deviation of the distribution.
Substituting the formula, we get mean= 11 and standard deviation = 2.872

OPERATIONS RESEARCH AND ITS FEATURES:

Operation research refers to quantitative approach to decision making based on
scientific method of problem solving.
Features:
 OR applies scientific approach to actually produce the solution or arrive at
conclusion to complex problems.
 By using systematic approach to scientific methods we can improve the
decision making process. Simple.
 It facilitates the available best solution to any problem taken into consideration.
OR tries to find the best solution to the largest possible part of the total
organization.
 We cannot obtain accurate answers to our problems but still improve the
quality of solution that we arrive at.
 By increasing profits and reducing costs, OR tries to increase the total outputs.
  By making use of scientific methods and so many calculations we can provide
the best solution.

5. EVOLUTION OF OPERATIONS RESEARCH:

During the world war-2(1939 to 1945), Britain was having very limited resources.
An urgent need was felt to allocate the scarce resource in an effective manner for the
various military operations. Therefore the British and American military management
invited large number of scientists including psychologist, biologists, statisticians,
mathematician, to apply a scientific approach to the many strategic and tactical
problems. The effort of this team was instrumental in this war. The success of this
team of scientists in Britain encouraged United States, Canada and France to start with
such teams. OR in India originated in the last phase of World War 2 in 1949. A unit of
regional research laboratory started in Hyderabad for using OR in planning, Defence
Science Laboratory (DSL). In 1953, OR unit was formed at Kolkata, Indian Statistical
Unit to apply OR for national planning.
In 1957, OR society of India (ORSI) was setup.
In 1959, ORSI became the member of International Federation of OR society.
In 1961-62, OR was added as part of curriculum with the formation of IIM at
Ahmedabad and Kolkata.
In 1963, University of Delhi started a full time Master degree program in OR.
In 1973, ORSI introduced a graduate program in OR.
OR is basically a decision making or problem solving tool that helps the executive
management to arrive at the optimal solution to any given problem.

DECISION-TREE AND ITS SOLUTION FOR COMPLEX PROBLEMS:

Decision tree can be considered as organized tree structure. It is one of the most
practical methods for various modes of presenting a solution to problems.
 Root Node:
It represents entire population or sample and this further gets divided into two
or more homogeneous sets.
 Splitting:
It is a process of dividing a node into two or more sub-nodes.
 Decision Node:
A sub-node splitting into further sub-nodes can be called a decision node.
 Leaf/Terminal Node:
The node that does not split is called a leaf or terminal node.
  Pruning:
Try to eliminate the sub-nodes of a decision node, this process is called
pruning.
Now let us see an example demo of creating a decision tree from data.
Let's inspect the data set of different colours. For example, here are two simple
decision rules. There are a lot of decision rules we can choose from in real life
situation. So we got to find a path to select the best decision rule that is able to split
the current node beginning from the root node we are going to repeat through all the
decision rules that are being there and calculate the information gain of the current
split.
Calculating information gain is important of this step.
So what is information gain is that if we look at each group within the decision rule.
The group is pure when all of its record belong to the same class.
Here we use Gini impurity to measure how pure the current node is. When the group
is pure Gini impurity is zero.
When the group is half and half mixed Gini impurity is 0.5 for any decision split, a
parent group is split into 2 child groups.
The information gain of this split is the impurity of the parent group minus weighted
average impurity of the child group. Once we calculate the information gain of each
splitted decision rule, we can now select which has the largest information gain to
split the current node. Then we can split the child node recursively and only consider
the decision rule never selected before in the current branch. We stop splitting if there
are no decision rules left of the group impurity is zero. Sometime pruning and early
stop condition are used to prevent a large number of splits and over fitting.
Now the decision tree can predict the probability of each class at the ratio of each
class in the node. In this case for the record, for size greater or equal to 2 and colour is
yellow. There's a 50% chance the class record is a circle.
Hence this is a small example of how to construct the decision tree from data.