STATISTICS FOR MANAGEMENT

Q.1 a) 'Statistics is the backbone of decision making'. Comment.

answer- Due to advanced communication network, rapid changes in consumer behavior, varied expectations of variety of consumers and new market openings, modern managers have a difficult task of making quick and appropriate decisions. Therefore, there is a need for them to depend more upon quantitative techniques like mathematical models, statistics, operations research and econometrics. Decision making is a key part of our day-to-day life. Even when we wish to purchase a television, we like to know the price, quality, durability, and maintainability of various brands and models before buying one. As you can see, in this scenario we are collecting data and making an optimum decision. In other words, we are using Statistics. Again, suppose a company wishes to introduce a new product, it has to collect data on market potential, consumer likings, availability of raw materials, feasibility of producing the product. Hence, data collection is the back-bone of any decision making process. Many organizations find themselves data-rich but poor in drawing information from it. Therefore, it is important to develop the ability to extract meaningful information from raw data to make better decisions. Statistics play an important role in this aspect. Statistics is broadly divided into two main categories. Below Figure illustrates the two categories. The two categories of Statistics are descriptive statistics and inferential statistics. Descriptive Statistics: Descriptive statistics is used to present the general description of data which is summarized quantitatively. This is mostly useful in clinical research, when communicating the results of experiments. Inferential Statistics: Inferential statistics is used to make valid inferences from the data which are helpful in effective decision making for managers or professionals.

Statistical methods such as estimation, prediction and hypothesis testing belong to inferential statistics. The researchers make deductions or conclusions from the collected data samples regarding the characteristics of large population from which the samples are taken. So, we can say Statistics is the backbone of decisionmaking.

b) 'Statistics is as good as the user.' comment.

Answer- Statistics is used for various purposes. It is used to simplify mass data and to make comparisons easier. It is also used to bring out trends and tendencies in the data as well as the hidden relations between variables. All this helps to make decision making much easier. Let us look at each function of Statistics in detail. 1. Statistics simplifies mass data The use of statistical concepts helps in simplification of complex data. Using statistical concepts, the managers can make decisions more easily. The statistical methods help in reducing the complexity of the data and consequently in the understanding of any huge mass of data. 2. Statistics makes comparison easier without using statistical methods and concepts, collection of data and comparison cannot be done easily. Statistics helps us to compare data collected from different sources. Grand totals, measures of central tendency, measures of dispersion, graphs and diagrams, coefficient of correlation all provide ample scopes for comparison. 3. Statistics brings out trends and tendencies in the data after data is collected; it is easy to analyze the trend and tendencies in the data by using the various concepts of Statistics. 4. Statistics brings out the hidden relations between variables Statistical analysis helps in drawing inferences on data. Statistical analysis brings out the hidden relations between variables. 5. Decision making power becomes easier with the proper application of Statistics and statistical software packages on the collected data, managers can take effective decisions, which can increase the profits in a business. Seeing all these functionality we can say Statistics is as good as the user.

Q.2 Distinguish between the following with examplea) Inclusive and Exclusive limits
Inclusive and exclusive limits are relevant from data tabulation and class intervals point of view. Inclusive series is the one which doesn't consider the upper limit, for example, 00-10 10-20 20-30 30-40 40-50 In the first one (00-10), we will consider numbers from 00 to 9.99 only. And 10 will be considered in 10-20. So this is known as inclusive series. Exclusive series is the one which has both the limits included, for example, 00-09 10-19 20-29 30-39 40-49 Here, both 00 and 09 will come under the first one (00-09). And 10 will come under the next one. b) continuous and discrete data-

A type of data is discrete if there are only a finite number of values possible or if there is a space on the number line between each 2 possible values. Ex. A 5 question quiz is given in a Math class. The number of correct answers on a student's quiz is an example of discrete data. The number of correct answers would have to be one of the following : 0, 1, 2, 3, 4, or 5. There are not an infinite number of values, therefore this data is discrete. Also, if we were to draw a number line and place each possible value on it, we would see a space between each pair of values. Ex. In order to obtain a taxi license in Las Vegas, a person must pass a written exam regarding different locations in the city. How many times it would take a person to pass this test is also an example of discrete data. A person could take it once, or twice, or 3 times, or 4 times, or . So, the possible values are 1, 2, 3, . There are infinitely many possible values, but if we were to put them on a number line, we would see a space between each pair of values.

Discrete data usually occurs in a case where there are only a certain number of values, or when we are counting something (using whole numbers). Continuous data makes up the rest of numerical data. This is a type of data that is usually associated with some sort of physical measurement. Ex. The height of trees at a nursery is an example of continuous data. Is it possible for a tree to be 76.2" tall? Sure. How about 76.29"? Yes. How about 76.2914563782"? You betcha! The possibilities depends upon the accuracy of our measuring device. One general way to tell if data is continuous is to ask yourself if it is possible for the data to take on values that are fractions or decimals. If your answer is yes, this is usually continuous data. Ex. The length of time it takes for a light bulb to burn out is an example of continuous data. Could it take 800 hours? How about 800.7? 800.7354? The answer to all 3 is yes.

c) qualitative data and quantitative data The term qualitative is used to describe certain types of information. The term is distinguished from the term quantitative data, in which items are described in terms of quantity and in which a range numerical values are used without implying that a particular numerical value refers to a particular distinct category. However, data originally obtained as qualitative information about individual items may give rise to quantitative data if they are summarised by means of counts; and conversely, data that are originally quantitative are sometimes grouped into categories to become qualitative data (for example, income below $20,000, income between $20,000 and $80,000, and income above $80,000). Qualitative data describe items in terms of some quality or categorization that in some cases may be 'informal' or may use relatively ill-defined characteristics such as warmth and flavor; such subjective data are sometimes of less value to scientific research than quantitative data. However, qualitative data can include well-defined concepts such as gender, nationality or commodity type.[1] Qualitative data can be binary (pass-fail, yes-no, etc.) or categorical data. In regression analysis, dummy variables are a type of qualitative data. For example, if various features are observed about each of various human subjects, one such feature might be gender, in which case a dummy variable can be

constructed that equals 0 if the subject is male and equals 1 if the subject is female. Then this dummy variable can be used as an independent variable (explanatory variable) in an ordinary least squares regression. Dummy variables can also be used as dependent variables, in which case the probit or logistic regression technique would typically be used.

Numerical data (or quantitative data) is data measured or identified on a numerical scale. Numerical data can be analyzed using statistical methods, and results can be displayed using tables, charts, histograms and graphs. For example, a researcher will ask a questions to a participant that include words how often, how many or percentage. The answers from the questions will be numerical. Examples of quantitative data would be:

Counts
o o o

'there are 643 dots on the ceiling' 'there are 25 pieces of bubble gum' 'there are 8 planets in the solar system'

Measurements
o o o

'the length of this table is 1.892m' 'the temperature at 12:00 p.m. was 18.9 Celsius' 'the average flow yesterday in this river was 25 mph (miles per hour)'

After the data is collected the researcher will make an analysis of the quantitative data and produce statistics

d) class limit and class intervalsclass limit is quite a common term used in statistics. it is used to define the highest and lowest value in a class ( or different groups made in the data) for example

the data of height of teens is collected in a particular locality so u group the data in following classes 120 - 140 cms 140 - 160 cms 160 - 180 cms 180 - 200 cms in these groups children with height within a range will be placed in their respective classes the value 120 is called upper class limit and 140 is called the lower class limit for the first class of 120-140cms. In statistics, the range of each class of data, used when arranging large amounts of raw data into grouped data. To obtain an idea of the distribution, the data are broken down into convenient classes (commonly 616), which must be mutually exclusive and are usually equal in width to enable histograms to be drawn. The class boundaries should clearly define the range of each class. When dealing with discrete data, suitable intervals would be, for example, 02, 35, 68, and so on. When dealing with continuous data, suitable intervals might be 170 X < 180, 180 X < 190, 190 X < 200, and so on.

Q.3 In a management class of 100 students three languages are offered as an additional subject viz. Hindi, English and Kannada. There are 28 students taking Hindi, 26 taking Hindi and 16 taking English. There are 12 students taking both Hindi and English, 4 taking Hindi and English and 6 taking English and Kannada. In addition, we know that 2 students are taking all the three languages.

1) If a student is chosen randomly, what is the probability that he or she is taking any of these three languages?

Q.4 List down various measures of central tendency and explain the difference between them. In statistics, the term central tendency relates to the way in which quantitative data is clustered around some value.[1] A measure of central tendency is a way of specifying - central value. In practical statistical analysis, the terms are often used before one has chosen even a preliminary form of analysis: thus an initial objective might be to "choose an appropriate measure of central tendency". In the simplest cases, the measure of central tendency is an average of a set of measurements, the word average being variously construed as mean, median, or other measure of location, depending on the context. However, the term is applied to multidimensional data as well as to univariate data and in situations where a transformation of the data values for some or all dimensions would usually be considered necessary: in the latter cases, the notion of a "central location" is retained in converting an "average" computed for the transformed data back to the original units. In addition, there are several different kinds of calculations for central tendency, where the kind of calculation depends on the type of data (level of measurement). Both "central tendency" and "measure of central tendency" apply to either statistical populations or to samples from a population. Basic measures of central tendency The following may be applied to individual dimensions of multidimensional data, after transformation, although some of these involve their own implicit transformation of the data.

Arithmetic mean - the sum of all measurements divided by the number of observations in the data set Median - the middle value that separates the higher half from the lower half of the data set Mode - the most frequent value in the data set

Geometric mean - the nth root of the product of the data values Harmonic mean - the reciprocal of the arithmetic mean of the reciprocals of the data values Weighted mean - an arithmetic mean that incorporates weighting to certain data elements Truncated mean - the arithmetic mean of data values after a certain number or proportion of the highest and lowest data values have been discarded. Midrange - the arithmetic mean of the maximum and minimum values of a data set. Midhinge - the arithmetic mean of the two quartiles. Trimean - the weighted arithmetic mean of the median and two quartiles. Winsorized mean - an arithmetic mean in which extreme values are replaced by values closer to the median.

Q.6 what is a confidence interval, and why is it useful? What is a confidence level? In statistics, a confidence interval (CI) is a particular kind of interval estimate of a population parameter and is used to indicate the reliability of an estimate. It is an observed interval (i.e. it is calculated from the observations), in principle different from sample to sample, that frequently includes the parameter of interest, if the experiment is repeated. How frequently the observed interval contains the parameter is determined by the confidence level or confidence coefficient. A confidence interval with a particular confidence level is intended to give the assurance that, if the statistical model is correct, then taken over all the data that

might have been obtained, the procedure for constructing the interval would deliver a confidence interval that included the true value of the parameter the proportion of the time set by the confidence level. More specifically, the meaning of the term "confidence level" is that, if confidence intervals are constructed across many separate data analyses of repeated (and possibly different) experiments, the proportion of such intervals that contain the true value of the parameter will approximately match the confidence level; this is guaranteed by the reasoning underlying the construction of confidence intervals. A confidence interval does not predict that the true value of the parameter has a particular probability of being in the confidence interval given the data actually obtained. (An interval intended to have such a property, called a credible interval, can be estimated using Bayesian methods; but such methods bring with them their own distinct strengths and weaknesses).

Purpose of Confidence Intervals. Why They Are Used.

The purpose of confidence of intervals is to determine a series of values from recurring samples of data so that the series of values of the specific population parameter is more likely to happen within the specified probability. Heres my Statistics for Dummies interpretation and example. Lets say that the population parameter of matter is the population average and that the series of values has an 80% confidence interval. The confidence of interval is not a probability that there is 80% possibility of the confidence interval being the population average, the confidence interval is the 80% of when sampled data from the specific range of the population parameter happens again and again from the population, thus, the percentage of these intervals will have the population average. Also, another purpose of use and why would be the amount of data that the provider believes as factual with a high degree of Confidence; that is more certain about a part of the data than perhaps some of the secondary data gathered. Confidence Intervals can be the expected range of outcome. Null Hypothesis and Confidence Intervals Confidence intervals are used to reject a null hypothesis. If I set my confidence level for my test at 80%, I have a 20% chance of being wrong about the null hypothesis. Of course I can't completely reject the possibility of being wrong. Toss a penny 100 times and it's a 50/50 chance that it's going to come up heads. The actual results may vary by five one way or the other, but still lie within the parameters. Confidence interval lets me

predict how close to 50/50 the results are going to be and how often.

Confidence Intervals: The Skinny

Confidence Intervals measure the probability of something likely to occur within a population based on the values or data gathered from repeated testing of that specific population. For example, as in a weather prediction, if a certain weather condition presents itself and can illustrate to produce a Thunderstorm, then the confidence interval would be significant that a storm will occur. Another Example: Surfing the Wave In Hawaii, Surfing is a popular sport. The most important factor for a good day of surf is the size of a swell (wave height), the average sizes of swells throughout a given timeframe, and the consistency (ride length and wave direction) of a swell. How are Confidence Intervals used in surfing to determine wave height? Confidence Intervals measure the probability of how high and what wave direction, waves will travel at a given timeframe. By testing and gathering the data and values that a range of waves provides, including atmospheric and climate conditions, the values of these wave intervals will average a numbered wave height, providing a probability that during the same timeframe of the next day, a similar average wave height will occur.