Business Statistics

1. Sampling is a method of studying from a few selected items, instead of the entire

big number of units. The small selection is called sample. The large number of items
of units of particular characteristic is called population. Example: We check a
sample of rice to see whether the rice well boiled or not. We check a small sample
of solution to decide how much a given solution is concentrated. Thus with the
sample we infer about a population.
Sampling Error
Sampling error is the error that arises in a data collection process as a result of
taking a sample from a population rather than using the whole population. Sampling
error is one of two reasons for the difference between an estimate of a population
parameter and the true, but unknown, value of the population parameter. The other
reason is non-sampling error. Even if a sampling process has no non-sampling errors
then estimates from different random samples (of the same size) will vary from
sample to sample, and each estimate is likely to be different from the true value of
the population parameter.
The sampling error for a given sample is unknown but when the sampling is
random, for some estimates (for example, sample mean, sample proportion)
theoretical methods may be used to measure the extent of the variation caused by
sampling error.
Non Sampling Error
Non-sampling error is the error that arises in a data collection process as a result of
factors other than taking a sample. Non-sampling errors have the potential to cause
bias in polls, surveys or samples. There are many different types of non-sampling
errors and the names used to describe them are not consistent. Examples of nonsampling errors are generally more useful than using names to describe them.
Non-sampling errors can be classified into two groups: random
errors and systematic errors.

Random errors are the unpredictable errors resulting from estimation. They
are generally cancelled out if a large enough sample is used. However, when
these errors do take effect, they often lead to an increased variability in the
characteristic of interest (i.e., the greater the difference between the
population units, the larger the sample size required to achieve a specific
level of reliability).

Systematic errors are those errors that tend to accumulate over the entire
sample. For example, if there is an error in the questionnaire design, this
could cause problems with the respondent's answers, which in turn, can

create processing errors, etc. These types of errors often lead to a bias in the
final results.
Non-sampling errors are extremely difficult, if not impossible, to measure. Since
random errors have the tendency to be cancelled out, systematic errors are the
principal cause for concern. Unlike sampling variance, bias caused by systematic
errors cannot be reduced by increasing the sample size.
Characteristics
Non-sampling errors

can occur in all aspects of the survey process other than sampling

exist in both sample surveys and censuses

are difficult to measure

Non-sampling errors can occur because of problems in coverage, response, nonresponse, data processing, estimation and analysis. Each of these types of errors is
explained below.
Coverage errors
An error in coverage occurs when units are omitted, duplicated or wrongly included
in the population or sample. Omissions are referred to as "undercoverage", while
duplication and wrongful inclusions are called "overcoverage". Coverage errors are
caused by defects in the survey frame, such as inaccuracy, incompleteness,
duplications, inadequacy or obsolescence. Coverage errors may also occur in field
procedures (e.g., while a survey is conducted, the interviewer misses several
households or persons).
Response errors
Response errors result when data is incorrectly requested, provided, received or
recorded. These errors may occur because of inefficiencies with the questionnaire,
the interviewer, the respondent or the survey process.

Poor questionnaire design

it is essential that sample survey or census questions are worded carefully in
order to avoid introducing bias. If questions are misleading or confusing, then
the responses may end up being distorted.

Interview bias
An interviewer can influence how a respondent answers the survey questions.
This may occur when the interviewer is too friendly or aloof or prompts the
respondent. To prevent this, interviewers must be trained to remain neutral
throughout the interview. They must also pay close attention to the way they

ask each question. If an interviewer changes the way a question is worded, it

may impact the respondent's answer.

Respondent errors
Respondents can also provide incorrect answers. Faulty recollections,
tendencies to exaggerate or underplay events, and inclinations to give
answers that appear more 'socially desirable' are several reasons why a
respondent may provide a false answer.

Problems with the survey process

Errors can also occur because of a problem with the actual survey process.
Using proxy responses (taking answers from someone other than the
respondent) or lacking control over the survey procedures are just a few ways
of increasing the possibility for response errors.

Non-response errors
Non-response errors are the result of not having obtained sufficient answers to
survey questions. There are two types of non-response errors: complete and partial.

Complete non-response errors

These errors occur when the results fail to include the responses of certain
units in the selected sample. Reasons for this type of error may be that the
respondent is unavailable or temporarily absent, the respondent is unable or
refuses to participate in the survey, or the dwelling is vacant. If a significant
number of people do not respond to a survey, then the results may be biased
since the characteristics of the non-respondents may differ from those who
have participated.

Partial non-response errors

This type of error occurs when respondent provide incomplete information.
For certain people, some questions may be difficult to understand. To reduce
this form of bias, care should be taken in designing and testing
questionnaires. Appropriate edit and imputation strategies will also help
minimize this bias.

Processing errors
Processing errors sometimes emerge during the preparation of the final data files.
For example, errors can occur while data are being coded, captured, edited or
imputed. Coder bias is usually a result of poor training or incomplete instructions,
variance in coder performance (i.e., tiredness, illness), data entry errors, or machine
malfunction (some processing errors are caused by errors in the computer
programs). The same thing can be said about captured errors. Sometimes, errors
are incorrectly identified during the editing phase. Even when errors are discovered,
they can be corrected improperly because of poor imputation procedures.
Estimation errors

Data-collecting agencies devote much effort to designing and monitoring surveys in

order to make them as error-free as possible. If an inappropriate estimation method
is used, then bias can still be introduced, regardless of how errorless the survey had
been before estimation.
Analysis errors
Analysis errors are those that occur when using the wrong analytical tools or when
the preliminary results are provided instead of the final ones. Errors that occur
during the publication of data results are also considered analysis errors.
Below are the various sampling Techniques with their limitations
Technique

Descriptions

Simple random

Random sample from

whole population

Stratified random

Random sample from

identifiable groups
(strata), subgroups,
etc.

Cluster

Random samples of
successive clusters of
subjects (e.g., by
institution) until small
groups are chosen as
units

Stage

Combination of cluster
(randomly selecting
clusters) and random
or stratified random
sampling of individuals

Limitations
Not possible without
complete list of population
members; potentially
uneconomical to achieve;
can be disruptive to
isolate members from a
group; time-scale may be
too long, data/sample
could change
More complex, requires
greater effort than simple
random; strata must be
carefully defined
Clusters in a level must be
equivalent and some
natural ones are not for
essential characteristics
(e.g., geographic:
numbers equal, but
unemployment rates
differ)
Complex, combines
limitations of cluster and
stratified random
sampling

Purposive

Hand-pick subjects on
the basis of specific
characteristics

Quota

Select individuals as
they come to fill a
quota by
characteristics
proportional to
populations
Subjects with desired
traits or characteristics
give names of further
appropriate subjects

Snowball

Volunteer,
accidental,
convenience

Either asking for

volunteers, or the
consequence of not all
those selected finally
participating, or a set
of subjects who just
happen to be available

Samples are not easily

defensible as being
representative of
populations due to
potential subjectivity of
researcher
Not possible to prove that
the sample is
representative of
designated population
No way of knowing
whether the sample is
representative of the
population
Can be highly
unrepresentative

2. The No. of workers before was 2400.

The Mean wage (Rs.) was 45.5
The average total expenses = 2400*45.5 = Rs. 109200
The No. of workers after is 2350
The Mean wage (Rs.) is 47.5
The average total expenses = 2350*47.5 =Rs. 111625
Increase in Management Expenses = 111625 109200 = Rs. 2425
Mean is the average value. The mean has increased from Rs. 45.5 to Rs.
47.5 which imply that the average salary of the worker has increased
which is beneficial to worker.
The median wages is reduced from 48 to 45. Median is the middle value. Thus the
middle value of the data is reduced from Rs. 48 to Rs. 45.
In other words, there are more workers in lower salary group and workers
in higher salaries are less.
The standard deviation has decreased from Rs. 12 to Rs. 10.

Standard deviation is a statistic used as a measure of the dispersion or variation in

a distribution.
Since the standard deviation is decreased, it means that there is less
variation, disparity between the salaries of workers.
The overall situation is beneficial for management and also workers, since
the average salary of workers has increased. The affected are those
workers who were paid higher. The increase in salary is proportionately
less for these workers as compared to other workers. The management is
also in profit as there are more number of workers in lower pay scale.