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Statistical Methods:
Quantitative Techniques in Business aand
nd Industry
Bhavika Madnani
B.B.A., LL.B (Hons), Indore Institute of Law
Indore, Madhya Pradesh, India
ABSTRACT
The researcher has done the research on Statistical Statistical methods means the analyzing, collecting
Methods-Quantitative
Quantitative Techniques in Business and and over all summarization and interpretation of
Industry. numerical data. Statistical techniques can contrast
with deterministic techniques which are in the sense
Statistical methods mean analyzing, collecting and give appropriate results and sometimes assumed one.
overall summarization and interpretation of numerical Statistical methods can be used in various fields like
data. Statistical techniques can be used in various economics, physical sciences, and in agricultural
fields such as economics, physical
ysical sciences and science, life sciences they also have an important role
cultural sciences, random phenomena such as in the physical sciences in the study of measurement
radioactivity or meteorological events. This research errors, of random phenomena such as radioactivity or
contains the importance of statistical methods in meteorological events, and in obtaining approximate
Business and Industry as well as Classification of results where deterministic solutions are hard to
Quantitative Techniques, Statistical Quantitative apply.
Techniques like-
Statistical analysis relates observed statistical data to
Collection of Data theoretical models, such as probability distributions or
Measures of Central Tendencies, Dispersion, models used in regression analysis. By estimating
Skewness and Kurtosis parameters in the proposed model and testing
Correlation and Regression analysis hypotheses about rival models, one can assess the
Index Numbers value of the information
rmation collected and the extent to
Time Series Analysis which the information can be applied to similar
Interpolation and Extrapolation situations. Statistical prediction is the application of
Statistical Quality Control the model thought to be most appropriate, using the
Ratio Analysis estimated values of the parameters.
Probability Theory
Testing of Hypothesis Further now coming up to Quantitative techniques
these are those techniques which helps us in taking
INTRODUCTION decisions in relation to business and industry. These
Statistical methods are the mathematical formulas, techniques are also use of models, symbols and
models, and techniques that are basically used in expressions. Statistics is the science of designing
analyzing the statistics of raw research data. The studies or experiments, collecting
col data and
application of statistical methods extracts
cts information modelling/analyzing data for the purpose of decision
from research data and provides different ways to making and scientific discovery when the available
assess the robustness of research outputs. information is both limited and variable. That is,
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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
problem was particularly important in the testing of Measures of Central Tendencies, Dispersion,
the Salk vaccine because data from previous years Skewness and Kurtosis
suggested that the incidence rate for polio might be Correlation and Regression analysis
less than 50 cases for every 100,000 children. Hence, Index Numbers
a large number of participants had to be included in Time Series Analysis
the clinical trial in order to detect a difference in the Interpolation and Extrapolation
incidence rates for those treated with the vaccine and Statistical Quality Control
those receiving the placebo. Libel suits related to Ratio Analysis
consumer products have touched each one of us; you Probability Theory
may have been involved as a plaintiff or defendant in Testing of Hypothesis
a suit or you may know of someone who was involved
in such litigation. Certainly we all help to fund the IMPORTANCE OF STATISTICAL METHODS
costs of this litigation indirectly through increased IN BUSINESS AND INDUSTRY
insurance premiums and increased costs of goods. The
testimony in libel suits concerning a particular Role of statistics in BUSINESS and INDUSTRY
product (automobile, drug product, and so on) Statistics plays a vital and essential role in every
frequently leans heavily on the interpretation of data business man’s life. A businessman makes his
from one or more scientific studies involving the strategies, policies, decides about his programmes
product. This is how and why statistics and keeping in view the graphical readings of the people’s
statisticians have been pulled into the courtroom. For tastes and preferences, changing culture and much
example, epidemiologists have used statistical more, quality of the products can also be checked by
concepts applied to data to determine whether there is using statistical methods.
a statistical “association’’ between a specific
characteristic, such as the leakage in silicone breast MANAGEMENT
implants, and a disease condition, such as an Marketing:
autoimmune disease. An epidemiologist who finds an Product selection
association should try to determine whether the Analysis of marketing research information
observed statistical association from the study is due Statistical records for building and maintain an
to random variation or whether it reflects an actual extensive market.
association between the characteristic and the disease. Competitive strategies
Courtroom arguments about the interpretations of Sales forecasting
these types of associations involve data analyses using Advertising strategy
statistical concepts as well as a clinical interpretation
of the data. Many other examples exist in which Production:
statistical models are used in court cases. In salary Production planning, control and analysis
discrimination cases, a lawsuit is filed claiming that Allocation of Resources
an employer underpays employees on the basis of age, Evaluation of machine performance
ethnicity, or sex. Statistical models are developed to Location of factories and their sizes
explain salary differences based on many factors, such Quality control requirements
as work experience, years of education, and work Equipment replacement and maintenance
performance. These techniques can be grouped in two Inventory control measures
categories:
Finance, Accounting and Investment:
Statistical Techniques; and Financial forecast, budget preparation
Operations Research(or programming techniques) Financial investment decisions
Selection of securities
In this research I am going to give brief description Auditing function
mainly about the Statistical techniques which Credit policies, credit risk and delinquent
includes: accounts.
Collection of Data
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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
CLASSIFICATION OF QUANTITATIVE that may lead to credible and conclusive answers to
TECHNIQUES questions that have been posed.
Quantitative techniques can be classified into
Statistical Techniques (or Statistical methods and Accurate data collection is essential to ensure the
measure) and Programming Techniques (or Operation integrity of the research, regardless of the field of
Research) study or data preference (quantitative or qualitative).
The selection of appropriate data collection tools and
Statistical Techniques: instruments, which may be existing, modified or
I. Methods of collecting data totally new, and with clearly defined instructions for
II. Classification and tabulation of collected data their proper use, reduces the chances of errors
III. Probability theory and Sampling Analysis occurring during collection. This is the most integral
IV. Correlation and Regression Analysis and essential part of collection of any kind of
V. Index Numbers information in the research prospectus usually done in
VI. Time Series Analysis any field such as industry, business, humanities, social
VII. Interpolation and Extrapolation sciences or other physical sciences.
VIII. Survey Techniques and Methodology
IX. Ratio Analysis There are basically two methods of collection of data
X. Statistical Quality Control particularly PRIMARY DATA and SECONDARY
XI. Analysis of Variance DATA.
XII. Statistical Interference and Interpretation
XIII. Theory of Attributes PRIMARY DATA
XIV. Curve Fitting and Method of Least square When we obtain data directly from individuals,
objects or processes, we refer to it as primary data.
Programming Techniques: Quantitative or qualitative data can be collected using
I. Linear Programming this approach. Such data is usually collected solely for
II. Decision Theory the research problem to you will study. Primary data
III. Theory of Games has several advantages. First, we tailor it to our
IV. Simulation specific research question, so there are no
V. Monte Carlo Technique customizations needed to make the data usable.
VI. System Simulation Second, primary data is reliable because you control
VII. Queuing Theory how the data is collected and can monitor its quality.
VIII. Inventory Planning Third, by collecting primary data, you spend your
IX. Network Analysis/ PERT resources in collecting only required data. Finally,
X. Integrated Production Models primary data is proprietary, so you enjoy advantages
over those who cannot access the data.
STATISTICAL QUANTITATIVE TECHNIQUES
SECONDARY DATA
1. COLLECTION OF DATA When you collect data after another researcher or
One of the most important data is collection of data. agency that initially gathered it makes it available,
Data collection is the process of gathering and you are gathering secondary data. Examples of
collecting data, information and any variables of secondary data are census data published by the US
interest in a standardized and a well established Census Bureau, stock prices data published by CNN
manner that enables to collect the answer and and salaries data published by the Bureau of Labor
evaluates outcome of the particular collection. Statistics.
Data collection is concerned with the accurate One advantage to using secondary data is that it will
acquisition of data; although methods may differ save you time and money, although some data sets
depending on the field, the emphasis on ensuring require you to pay for access. A second advantage is
accuracy remains the same. The primary goal of any the relative ease with which you can obtain it. You
data collection endeavour is to capture quality data or can easily access secondary data from publications,
evidence that easily translates to rich data analysis government agencies, data aggregation websites and
blogs. A third advantage is that it eliminates effort
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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
duplication since you can identify existing data that index number is usually expressed as 100 times the
matches your needs instead of gather new data. ratio to the base value.
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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
Extrapolation is an estimation of a value based on I. A bar graph (present simple data and easy
extending a known sequence of values or facts beyond understood)
the area that is certainly known. In a general sense, to II. A scatter diagram (relationship between two
extrapolate is to infer something that is not explicitly types of data)
stated from existing information. III. A histogram (distribution of data in term of
frequency)
IV. A Pareto diagram (statistical tool in problem
STATISTICAL QUALITY CONTROL analysis)
Statistical quality control is used for ensuring the RATIO ANALYSIS
quality of items manufactured. The variations in Ratio Analysis is used for analyzing financial
quality because of assignable causes and chance statements of any business or industrial concerns
causes can be known with the help of this tool. which help to take appropriate decisions.
Different control charts are used in controlling the
quality of products. A ratio analysis is a quantitative analysis of
information contained in a company’s financial
Statistical quality control refers to the use of statistical statements. Ratio analysis is used to evaluate various
methods in the monitoring and maintaining of the aspects of a company’s operating and financial
quality of products and services. One method, referred performance such as its efficiency, liquidity,
to as acceptance sampling, can be used when a profitability and solvency.
decision must be made to accept or reject a group of
parts or items based on the quality found in a sample. Ratio Analysis is a form of Financial Statement
A second method, referred to as statistical process Analysis that is used to obtain a quick indication of a
control, uses graphical displays known as control firm's financial performance in several key areas. The
charts to determine whether a process should be ratios are categorized as Short-term Solvency Ratios,
continued or should be adjusted to achieve the desired Debt Management Ratios, Asset Management Ratios,
quality. Profitability Ratios, and Market Value Ratios.
TOOLS USED FOR STATISTICAL QUALITY Ratio Analysis as a tool possesses several important
CONTROL features. The data, which are provided by financial
Every process depends on gathering and analysis of statements, are readily available. The computation of
data what are profuse in any organization that is ratios facilitates the comparison of firms which differ
involved in the process problem. The basic tools are: in size. Ratios can be used to compare a firm's
Data Collection financial performance with industry averages. In
Data Display addition, ratios can be used in a form of trend analysis
to identify areas where performance has improved or
Data Collection deteriorated over time.
A check sheet is useful in assembling and compiling
data concerning a problem. It uses for data collection Because Ratio Analysis is based upon accounting
to view for any unwanted element. The functions of a information, its effectiveness is limited by the
check sheet are distortions which arise in financial statements due to
I. Production process distribution checks such things as Historical Cost Accounting and
II. Defective item checks inflation. Therefore, Ratio Analysis should only be
III. Defect location checks used as a first step in financial analysis, to obtain a
IV. Defect cause checks quick indication of a firm's performance and to
V. Checkup confirmation checks identify areas which need to be investigated further.
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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
calculate a probability distribution that can be used to idealized model. A hypothesis is proposed for the
predict future losses. The probability analyst views statistical relationship between the two data sets, and
past losses as a range of outcomes of what might be this is compared as an alternative to an idealized null
expected for the future and assumes that the hypothesis that proposes no relationship between two
environment will remain fairly stable. This technique data sets.
is particularly effective for companies that have a
large amount of data on past losses and that have CONCLUSION
experienced stable operations. This type of analysis is In this web page we outlined the broad areas in which
contrasted to trend analysis. the Institute of Statistical Mathematics takes part. We
hope that you now understand that the activities of the
Probability bounds analysis (PBA) is a collection of Institute of Statistical Mathematics extend over into
methods of uncertainty propagation for making the entire realm of science and culture.
qualitative and quantitative calculations in the face of
uncertainties of various kinds. It is used to project Today, in the information age, an immense amount of
partial information about random variables and other data is being accumulated in every aspect of society.
quantities through mathematical expressions. These data will be useful only when we can pick out
effective information from them. In the near future,
In analysis of algorithms, probabilistic analysis of statistical methods, which aim at putting data and
algorithms is an approach to estimate the information to practical use, will become increasingly
computational complexity of an algorithm or a valuable not only in the areas of science and industry,
computational problem. This assumption is then used but also in public administration. The Institute of
to design an efficient algorithm or to derive the Statistical Mathematics is making efforts to both
complexity of a known algorithm. develop theory for this and extend the range of
application. We are advancing the development of
TESTING OF HYPOTHESIS statistics, the basis of science and culture.
Testing of hypothesis is an important statistical tool to
judge the reliability of inferences drawn on the basis Statistical analysis relates observed statistical data to
of sample studies. theoretical models, such as probability distributions or
models used in regression analysis. By estimating
A statistical hypothesis, sometimes called parameters in the proposed model and testing
confirmatory data analysis, is a hypothesis that is hypotheses about rival models, one can assess the
testable on the basis of observing a process that is value of the information collected and the extent to
modelled via a set of random variables.[1] A which the information can be applied to similar
statistical hypothesis test is a method of statistical situations. Statistical prediction is the application of
inference. Commonly, two statistical data sets are the model thought to be most appropriate, using the
compared, or a data set obtained by sampling is estimated values of the parameters.
compared against a synthetic data set from an
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