Business Statistics for Decision Making

Unit 1
Chapter 1

Complied by Rooshabhkumar Mehta

 INTRODUCTION
CHAPTER 1
TO STATISTICS
Topics
Introduction
Sample and Population
Parameters and Statistics
Descriptive and Inferential Statistics
Variables and their types
Most Common Decision Dilemma

Normally it is to find out the answer (to a business question/ research

question) scientifically based on the quantitative data.
Scope

Business, Economics, Social Sciences, Medical science, Product

testing

Functions
Calculations for summarisation, Forecasting, drawing inference
for population using sample data, Estimation
• Limitations of statistics
• it can help for the data for which we can gather the
quantitative piece of information .
• Can't help with the individual items it can be used for entire
data.
• It won't help us to predict with 100% accuracy, mathematically
also its not possible
• It should be used with the proper knowledge, hey if you use it
with incomplete knowledge hey then wrong statistics may
mislead
Importance of Statistics
• Hey today first importance of it could be It is helping ask to
simplify the data (quantitative data ). This way simplification
can help anybody to present data in a way that a Lehman
person can understand.
• Decide In what circumstances, how inference can be drawn
based on the partial information.
• It also measures the risk associated with any findings.
Basic Difference in the Sample and Census

When researchers gather data from the whole population ( for a given
measurement of interest), they call it a census.

A sample is a portion of the whole and, if properly taken, is representative of

the whole.

For various reasons, researchers often prefer to work with a sample of the
population instead of the entire population. For example, in conducting
quality control experiments to determine the average life of lightbulbs, a
lightbulb manufacturer might randomly sample only 75 lightbulbs during a
production run. Because of time and money limitations, a human resources
manager might take a random sample of 40 employees instead of using a
census to measure company morale.
For Example: Census of India, Conduct the Full enumeration survey (Census Survey)
by considering each and every individuals.
For Example: NSSO they
conduct Sample Survey.
Content Given in the book:
If a business analyst is using data gathered on a group to describe or reach
conclusions about that same group, the statistics are called descriptive
statistics.

For example, if an instructor produces statistics to summarize a class’s

examination effort and uses those statistics to reach conclusions about that
class only, the statistics are descriptive.

Another type of statistics is called inferential statistics. If a researcher

gathers data from sample and uses the statistics generated to reach
conclusions about the population from which the sample was taken, the
statistics are inferential statistics. The data gathered from the sample are
used to infer something about a larger group. Inferential statistics are
sometimes referred to as inductive statistics. The use and importance of
inferential statistics continue to grow.
Types of Statistics: Descriptive

Let say you are working with Sample data and developed some
insights by summarising it with statistical measure( like mean,
variance, percentile, range etc.). In this way of narration, those
statistical measures can be said Descriptive statistics.

Their aim is to describe the data only.

Example:
https://data.gov.in/catalog/company-master-
data?filters%5Bfield_catalog_reference%5D=354261&format=json&offset=0&limit=6&sort%5Bcreated%5D=desc
Types of Statistics: Inferential

Let say you are working with Sample Data. Actually Your aim is
to narrate the story with population data but you don’t have
Population data/ It is not feasible for you to collect it.

Using Statistical measure if you draw some inference based on

sample data and use it for the narration of Population, then
these statistical measures can be said Inferential Statistics.
Imaginary Illustration
Imagine there are 4,00,000 subscribers of Hotstar in India.

The firm wants to know the most preferred Hotstar program

in India.

Based on their internal data on each of their users, they found

that ‘Hotstar Special’ is mostly preferred (85 % percent of
users ).
This percentage is Parameter.

In one study, they found that age is influencing type of genre.

So, they want to derive median age, from data of 4 lakhs
Indian Users.
Imagine Median age of Hostar users in India is 35 years.

Here, median is Parameter.

If I conduct a research on usage statistics of Hotstar.

Maybe I can afford to approach few hundreds of Hostar users from my personal or
professional spheres.
Say for example I have conducted a study with 100 Hotstar users.

Data revels that 85 % people prefer to watch ‘ Hotstar Special’. Here Percentage is
Statistics
Median age of the sample is 35 years. Here, Median is Statistics.
Example of descriptive statistics: A sample study on 100 WhatsApp users in
India, reveals the following with respect to usage of WhatsApp in a typical
day.
Usage category Number of
Respondents
Less than one
15
hour
1 to 2 Hours 35
more than 2
50
Hours
Here, statistics can help to describe the WhatsApp usages of sample-respondents.
• 15 out of 100 sample respondents use WhatsApp for less than one hour a day
• 35 out of 100 sample respondents use WhatsApp for 1 to 2 Hours day
• 50 out of 100 sample respondents use WhatsApp for more than 2 Hours a day
Example of Inferential statistics: A sample study on 100 WhatsApp users in
India, helps us to infer the following as far as usage hours of Indian-
WhatsApp users are concerned.
Usage category Number of
Respondents
Less than one
15
hour
1 to 2 Hours 35
more than 2
50
Hours
Here, population of study is ‘all Indian WhatsApp user. From the above following can be inferred
for entire population of study.
• 15 % of the Indian-WhatsApp users utilise WhatsApp for less than 1 Hour a day
• 35 % of the Indian-WhatsApp users utilise WhatsApp for 1 to 2 Hours a day
• 50 % of the Indian-WhatsApp users utilise WhatsApp for More than 2 Hours a day
A descriptive measure of the population is called a parameter. Parameters
are usually denoted by Greek letters. Examples of parameters are population
mean ( 𝜇), populationvariance ( 𝜎 2 ), and population standard deviation (𝜎 ). A
descriptive measure of a sample is called a statistic. Statistics are usually
denoted by Roman letters. Examples of statistics are sample mean ( 𝑥), ҧ
sample variance (𝑠 2 ), and sample standard deviation (s)
Let say My Senior Ask me to Prepare the report (summarised report of four ppt
slides) on the Active registered companies of Uttarakhand based on the data released
by Ministry of Corporate affairs in 2019

Average Of Paid-up capital

1,80,95,355.35
ACTV INR

Note: Here, average is Paratmeter

Row Labels Count of CORPORATE_IDENTIFICATION_NUMBER
Company Limited by
Guarantee 28
Company limited by
Shares 8883
NA 8
Unlimited Company 5
Private 5499
Private(One Person
Company) 242
Public 397
 Business Activity No of Companies
Activities of private households as employers and
undifferentiated production activities of private households 3
Agriculture & allied 375
Construction 758
Active Education 216
Companies of Electricity gas and water supply 167
Extraterritorial organizations and bodies 8
Uttarakhand Financial intermediation 486
Health and social work 192
Hotels and restaurants 351
Manufacturing 1799
Mining and quarrying 73
Other community social and personal service activities 377
Public administration and defence compulsory social security 4
Real estate renting and business activities 3182
Transport storage and communications 239
Unclassified 1
Wholesale and retail trade repair of motor vehicles
motorcycles and personal and household goods 693
 This way in last four slides We have seen how Frequency, average can be
used as Parameter because they helped us to describe the population of all
active registered companies’ Data.
Variable

In statistics, It can be a measurement, quantification of certain

characteristics, Received from either sample units/ Population
units.

There are two ways such information being collected.

It can be in a form of categories (categorical variables)

It can be in a form of numerical quantities (numeric variable)

Numerical Variable (quantitative Variable)

If you ask me a simple question about my age.

Being super honest If I say its 32 years. ’32’ is discrete

observation. A variable (age) having such observations can be
said ‘Discrete’ variable

Let say if ask me that question again and this time I don’t want
to give precise answer and if I say “ my age is somewhere
between 30-35”.
This is continuous observation.
In Categorical Variables, Observation list can be prepared by
identifying distinct categories/ characteristics.

Such Attributes can help to count frequency.

 Please Remember

Population (Please perceive it as population of study) Collection of

Information about subjects/ Objects, for achieving research goal.

Research Goal may be your attempt to solve research question/

business question.

Sample: It is a tiny part of your ‘Population’ (don’t miss ‘of study’)

Sample can be said ‘Good Boy’ when you form sample using
appropriate sampling technique.
 Please Remember

Parameters: when Measure (mathematical, statistical) adopted for population data for
the purpose of narrating a story on population they can be said Parameters.

Statistics: Measures used for preparing a story on sample data then such measures can
be said Statistics.

Descriptive Statistics: Help to describe the Sample data

Inferential statistics: Help to narrate the story about population based on sample data

Variable: Measuring/ collecting information about certain Aspect/Aspects of study

 Please Remember
Qualitative Variable: Variable observations are in a form of
words, Pictures etc.

Quantitative Variable: Variable observations are in form of

numbers

Discrete Variable (quantitative) : observations are precise

numbers (it may be integer/ integer + decimals )

Continuous Variable (quantitative) : observations are ranges of

numbers ( actual must be falling into motioned range)
 References
Black, K., 2013. Applied business statistics. 6th ed. Hoboken, N.J.: Wiley.
Keller, G., 2014. Statistics for management and economics. 10th ed. stamford, USA: Cengage Learning.
Kumar, R., 2011. Research methodology. 3rd ed. london: SAGE.
Malhotra, N., 2010. Marketing research. 6th ed. Boston: Pearson.