Name: SANDHYA S

Roll Number: 2214503765

Programme: MBA
Semester: 1st
Course Name: STATISTICS FOR MANAGEMENT
Course Code: DMBA103
1) Define statistics. Explain different characteristics of statistics.
According to Croxton and Cowden, “Statistics is the science of collection, presentation, analysis and
interpretation of numerical data from logical analysis”

 Collection of data: Careful planning is required while collecting data. Two methods used for
collecting data are census method and sampling method. The investigator has to take care while
selecting an appropriate collection method.
 Presentation of data: The collected data is usually presented for further analysis in a tabular,
diagrammatic or graphic form and it is condensed, summarised and visually represented in a tabular
or graphical form.
 Analysis of data: The data presented has to be carefully analysed to make any inference from it. The
inferences can be of various types, for example, as measures of central tendency, dispersion,
correlation or regression.
 Interpretation of data: The final step is to draw conclusions from the analysed data. Interpretation
requires a high degree of skill and experience.
Characteristics of Statistics:
There are several characteristics of Statistics. Not only does it deal with an aggregate of facts, it also gets
affected by multiple causes. Statistics numerically expressed, is estimated with varying degrees of accuracy
and is collected in a systematic manner for pre-determined purposes.
1. Statistics deals with an aggregate of facts: A single figure cannot be analysed. For example, the
fact ‘Mr Kiran is 170 cms tall’ cannot be statistically analysed. On the other hand, if we know the
heights of 60 students in a class, we can comment upon the average height and variation.
2. Statistics gets affected to a great extent by multiplicity of causes: The Statistics of the yield of a
crop is the result of several factors, such as the fertility of soil, amount of rainfall, the quality of seed
used, the quality and quantity of fertilizer used.
3. Statistics are numerically expressed: Only numerical facts can be statistically analysed. Therefore,
facts such as ‘price decreases with increasing production’ cannot be called statistics. The qualitative
data such as, the categorical data cannot be called as statistics, for example, the eye colour of a
person or the brand name of an automobile.
4. Statistics are enumerated or estimated with required degree of accuracy: The facts have to be
collected from the field or estimated (computed) with the required degree of accuracy. The degree of
accuracy differs depending upon the purpose. For example, in measuring the length of screws, an
accuracy of up to a millimetre may be required, whereas while measuring the heights of students in a
class, an accuracy of up to a centimetre is enough.
5. Statistics are collected in a systematic manner: The facts should be collected according to planned
and scientific methods otherwise, they are likely to be wrong and misleading.
6. Statistics are collected for a pre-determined purpose: There must be a definite purpose for
collecting facts. Otherwise, indiscriminate data collection might take place which would lead to
wrong diagnosis.
7. Statistics are placed in relation to each other: The facts must be placed in such a way that a
comparative and analytical study becomes possible. Thus, only related facts which are arranged in a
 logical order can be called Statistics. Statistical analysis cannot be used to compare heterogeneous
data
2) Define statistical survey. Explain different methods of data collection.
A Statistical Survey is a scientific process of collection and analysis of numerical data. Statistical surveys
are used to collect information about units in a population and it involves asking questions to individuals.
Surveys of human populations are common in government, health, social science and marketing sectors.
Methods of Data Collection:
Primary Data: Primary data is the one, which is collected by the investigator for the purpose of a specific
inquiry or study. Such data is original in character and is generated by a survey conducted by individuals or
a research institution or any organisation.
Data collected for the first time keeping in view the objective of the survey is known as primary data.
Interview, questionnaire and telephone/mail are all examples of primary data. They are likely to be more
reliable. However, cost of collection of such data is much higher. Primary data is collected by either a
census method or a sampling method.
Collection of primary data is done by a suitable method as per the following:
1. Direct Personal Observation: In the direct personal observation method, as illustrated in the
investigator collects data by having direct contact with the units of investigation. The accuracy of
data depends upon the ability, training and attitude of the investigator.
2. 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 a witness or the head of an institution. This method
is generally used by the police department in cases related to enquiries on the cause of fires, thefts or
murders.
3. Collecting information through agencies: Methods of collecting information through local
agencies or correspondents is generally adopted by newspapers and television channels. Local agents
are appointed in different parts of the area under investigation. They send the desired information at
regular intervals. This method is used where the area to be covered is very large and periodic
information is required. However, one disadvantage of this method is that the information is likely to
be biased.
4. Information collected through mailed questionnaires: Often, information is collected through
questionnaires. The questionnaires are filled with questions pertaining to the investigation. They are
sent to the respondents with a covering letter soliciting cooperation from the respondents
(respondents are the people who respond to questions in the questionnaire). The respondents are
asked to give correct information and to mail the questionnaire back. The objectives of the
investigation are explained in the covering letter along with the assurance to keep the information
confidential.
5. Information through schedule filled by investigator: Information can be collected through
schedules filled by investigators through personal contact. In order to get reliable information, the
investigator should be well trained, tactful, unbiased and hard working. A schedule is suitable for an
extensive area of investigation through investigator’s personal contact. The problem of non-response
is minimised.
Secondary data: Any information, that is used for the current investigation but is obtained from some data,
which has been collected and used by some other agency or person in a separate investigation, or survey, is
known as secondary data. They are available in a published or unpublished form.
In published form, secondary data is available in research papers, newspapers, magazines, government
publication, international publication, and websites. Secondary data is collected for different purposes.
Therefore, care should be exercised while using it.
The accuracy, reliability, objectives and scope of secondary data should be examined thoroughly before use.
Secondary data may be collected either by census or by sampling methods.
1. Published sources: The various sources of published data are:
1. Reports and official publications of international and national organisations as well as central and state
governments.
2. Publications of several local bodies such as municipal corporations and district boards.
3. Financial and economic journals.
4. Annual reports of various companies.
5. Publications brought out by research agencies and research scholars
Some of the journals (both academic and non-academic) are published at regular intervals like yearly,
monthly, weekly whereas, other publications are more ad hoc. Internet is a powerful source of secondary
data, which can be accessed at any time for any further analysis of the study.
2. Unpublished sources: It is not necessary that all statistical contents have to be published.
Unpublished data such as records maintained by various government and private offices, studies
made by research institutions and scholars can also be used where necessary.
Though, use of secondary data is economic in terms of expense, time and manpower requirement,
researcher must be careful in choosing such secondary data. Secondary data must possess the
following characteristic:
 Reliability of data: The reliability related to secondary data can be tested by investigating.
 Suitability of the data: The data that is suitable for one enquiry may not necessarily be
suitable for another enquiry. Hence, if the available data are found to be unsuitable, they
should not be used by the researcher.
 Adequacy of data: If the level of accuracy achieved in the data is found inadequate for the
purpose of present enquiry, they will be considered as inadequate and should not be used by
the researcher. The data will also be considered inadequate, if they are related to an area
which may be either narrower or wider than the area of present enquiry
3) Explain different types of sampling techniques.
The sampling techniques may be broadly classified into the following categories:
1. Probability sampling: Probability sampling provides a scientific technique of drawing samples from
the population. The technique of drawing samples is according to the law in which each unit has a
predetermined probability of being included in the sample. The different ways of assigning probability
are as follows:
 each unit is assigned with the same chance of being selected.
 sampling units are assigned with varying probability depending on priorities.
 units are assigned with probability proportional to the sample size
 Simple random sampling: Under this technique, sample units are drawn in such a way that
each and every unit in the population has an equal and independent chance of being included
in the sample. If a sample unit is replaced before drawing the next unit, then it is known as
simple random sampling with replacement [SRSWR].
o Lottery method – In lottery method, we identify each and every unit with distinct
numbers by allotting an identical card. The cards are put in a drum and thoroughly
shuffled before each unit is drawn.
o The use of table of random numbers – There are several random number tables.
They are Tippet’s random number table, Fisher’s and Yate’s tables, Kendall and
Babington Smiths random tables, Rand Corporation random numbers etc
  Stratified random sampling: This sampling design is most appropriate if the population is
heterogeneous with respect to characteristic under study or the population distribution is
highly skewed.
We subdivide the population into several groups or strata such that:
o Units within each stratum is more homogeneous.
o Units between strata are heterogeneous.
o Strata do not overlap, in other words, every unit of the population belongs to one and
only one stratum
 Systematic sampling: This design is recommended if we have a complete list of sampling
units arranged in some systematic order such as geographical, chronological or alphabetical
order.
 Cluster sampling: The total population is divided into recognisable sub-divisions, known as
clusters such that within each cluster, units are more heterogeneous and between clusters they
are homogenous. The units are selected from each cluster by suitable sampling techniques.
 Multi-stage sampling: The total population is divided into several stages. The sampling
process is carried out through several stages.
2. Non-probability sampling: Depending upon the object of enquiry and other considerations a
predetermined number of sample units is selected purposely so that they represent the true
characteristics of the population. A serious drawback of this sampling design is that it is highly
subjective in nature. The selection of sample units depends entirely upon the personal convenience,
biases, prejudices and beliefs of the investigator. This method will be more successful if the
investigator is thoroughly skilled and experienced.
 Judgment sampling: The choice of sample items depends exclusively on the judgment of the
investigator. The investigator’s experience and knowledge about the population will help to
select the sample units. It is the most suitable method if the population size is less.
 Convenience sampling: The sample units are selected according to the convenience of the
investigator. It is also called “chunk” which refers to the fraction of the population being
investigated, which is selected neither by probability nor by judgment. Moreover, a list or
framework should be available for the selection of the sample. It is used to make pilot studies.
However, there is a high chance of bias being introduced.
 Quota sampling: It is a type of judgment sampling. Under this design, quotas are set up
according to some specified characteristic such as age groups or income groups. From each
group a specified number of units are sampled according to the quota allotted to the group.
Within the group the selection of sample units depends on personal judgment. It has a risk of
personal prejudice and bias entering the process. This method is often used in public opinion
studies.
4) Describe main steps in construction of index numbers.
To follow the steps many problems are encountered which are to be discussed carefully. There are many
difficulties in following the steps involved in the construction of index numbers. The following steps are
discussed in detail.
1. Purpose of index number: The steps which are taken in the construction of index numbers generally
depend on the purpose of the index number. Hence, the purpose of index numbers must be defined
clearly and precisely. For example, the purpose of the general index number of wholesale price index
number is to know the general price level. On the other hand, the purpose of the consumer price index
number is to give an idea of the effect of the change in retail prices on the cost of living in the classes
of people.
2. Selection of base period: The base period of an index number is the period of time against which the
comparisons are made. There are three types of base periods.
a. Fixed base (a single period): In a fixed base (a single period), the base period must be a
normal period. A normal period means that the period must be free from all sorts of
 abnormalities or random causes such as financial crisis, floods, famines, earth quakes, strikes of
labourers, wars, etc. The base period should be a period for which reliable figures are available.
The base period should not be too distant in the past.
b. Fixed base (an average of selected periods): When it is difficult to choose just one single
period as the normal, then a better choice is an average of several periods.
c. Chain base: If the comparisons are required from year to year, a system of chain base is used.
3. Selection of commodities: The following problems can occur while selecting the commodities. First
problem is the selection of commodities because it is not feasible to include all commodities. The
purpose of the index number is to help in deciding the number of commodities.
4. Selection of the representative prices: In the collection of price quotations we have to consider the
following points:
a. The method of quoting prices of the commodities.
b. The type of quotations - whether wholesale prices or retail prices.
c. The place from where the quotations are to be obtained.
5. Assignment of Weights: The term ‘weight’ refers to the relative importance of the different
commodities included in the construction of index numbers. There are two methods of assigning
weights. They are:
a. Implicit method: In this method, several varieties of a certain type of commodity under study
are used. Such weights are called implicit weights.
b. Explicit method: In this method, the weights are laid down on the basis of one outward
evidence of importance of commodities. One of the problems in the selection of appropriate
weight is to decide this evidence. Another problem with regard to the system of weighing is
whether weights should be fixed or fluctuating.
6. Selection of the average: To find composite index number we can use any average such as arithmetic
mean, geometric mean, harmonic mean, median and mode. The use of an average depends on the
relative merits and demerits of the various averages. The average may be weighted or unweighted.
7. Selection of suitable formula: There are various formulae for computing index numbers so the
selection of a suitable formula also poses some problem. A particular formula is suitable in a particular
situation.
5) Explain advantages and disadvantages of business forecasting.
Business forecasting acquires an important place in every field of the economy. Business forecasting helps
the businessmen and industrialists to form the policies and plans related with their activities. On the basis of
the forecasting, businessmen can forecast the demand of the product, price of the product, condition of the
market and so on. The business decisions can also be reviewed on the basis of business forecasting.
Advantages of business forecasting:
1. Helpful in increasing profit and reducing losses: Every business is carried out with the purpose of
earning maximum profits. So, by forecasting the future price of the product and its demand, the
businessman can predetermine the production cost, production and the level of stock to be
determined. Thus, business forecasting is regarded as the key of success of business.
2. Helpful in taking management decisions: Business forecasting provides the basis for management
decisions, because in present times the management has to take the decision in the atmosphere of
uncertainties. Also, business forecasting explains the future conditions and enables the management
to select the best alternative.
3. Useful to administration: On the basis of forecasting, the government can control the circulation of
money. It can also modify the economic, fiscal and monetary policies to avoid adverse effects of
trade cycles. So, with the help of forecasting, the government can control the expected fluctuations in
future.
4. Basis for capital market: Business forecasting helps in estimating the requirement of capital,
position of stock exchange and the nature of investors.
 5. Useful in controlling the business cycles: The trade cycles cause various depressions in business
such as sudden change in price level, increase in the risk of business, increase in unemployment, etc.
By adopting a systematic business forecasting, businessmen and government can handle and control
the depression of trade cycles.
6. Helpful in achieving the goals: Business forecasting helps to achieve the objective of business goals
through proper planning of business improvement activities.
7. Facilitates control: By business forecasting, the tendency of black marketing, speculation,
uneconomic activities and corruption can be controlled.
8. Utility to society: With the help of business forecasting the entire society is also benefited because
the adverse effects of fluctuations in the conditions of business are kept under control.
Limitations of business forecasting: Business forecasting cannot be accurate due to various limitations
which are mentioned below.
 Forecasting cannot be accurate, because it is largely based on future events and there is no
guarantee that they will happen.
 Business forecasting is generally made by using statistical and mathematical methods. However,
these methods cannot claim to make an uncertain future a definite one.
 The underlying assumptions of business forecasting cannot be satisfied simultaneously. In such a
case, the results of forecasting will be misleading.
 The forecasting cannot guarantee the elimination of errors and mistakes. The managerial decision
will be wrong if the forecasting is done in a wrong way.
 Factors responsible for economic changes are often difficult to discover and measure. Hence,
business forecasting becomes an unnecessary exercise.
 Business forecasting does not evaluate risks.
 The forecasting is made on the basis of past information and data and relies on the assumption
that economic events are repeated under the same conditions. But there may be circumstances
where these conditions are not repeated.
 Forecasting is not a continuous process. In order to be effective, it requires continuous attention.
6) Describe utility and components of time series analysis.
Utility of the Time Series: The following are the possible uses of the time series:
 The comparative study of behaviour of the variable over different periods of time can be done. The
variable may be export figures, quantity of industrial production etc.
 Forecasting can be done using the time series. By studying the variations and other behaviour of the
variables over a sufficiently long period of time, it may be possible to forecast the future behaviour
of the variables. However, such a forecast has meaning only if the period of forecast is a normal
period. For example, various five-year plans by the government of India are formulated by studying
the time series and forecasting.
 Study of the time series helps in analysing the post behaviour of the variables. This helps in
identifying the various forces that affect its behaviour.
Components of Time Series: The behaviour of a time series over periods of time is called the movement of
the time series. The time series is classified into the following four components:
i. Long term trend or secular trend
ii. Seasonal variations
iii. Cyclic variations
iv. Random variations

→ Long term trend or secular trend: This refers to the smooth or regular long-term growth or decline of
the series. This movement can be characterised by a trend curve. If this curve is a straight line, then it is
 called a trend line. If the variable increases over a long period of time, then it is called an upward trend.
If the variable decreases over a long period of time, then it is called a downward trend. If the variable
moves upward or downward along a straight line then the trend is called a linear trend, otherwise it is
called a non-linear trend.
→ Seasonal variations: Variations in a time series that are periodic in nature and occur regularly over short
periods of time during a year are called seasonal variations. These variations are precise and can be
forecasted.
The following are examples of seasonal variations in a time series:
i. The prices of vegetables drop down after rainy season or in winter months and they go up during
summer, every year.
ii. The prices of cooking oils reduce after the harvesting of oil seeds and go up after some time.
→ Cyclic variations: The long-term oscillations that represent consistent rise and decline in the values of
the variable are called cyclic variations. Since these are long-term oscillations in the time series, the
period of oscillation is usually greater than one year. The oscillations are either a trend curve or a trend
line. The period of one cycle is the time-distance between two successive peaks or two successive
troughs.
→ Random variations: Random variations are called irregular movements. Movements that occur usually
in brief periods of time, without any pattern and which are unpredictable in nature are called irregular
movements. These movements do not have any regular period or time of occurrences. For example, the
effect of national strikes, floods, earthquakes, etc. It is very difficult to study the behaviour of such a
time series.