Statistics

 The term statistics can refer to numerical facts such as

averages, medians, percents, and index numbers that
help us understand a variety of business and economic
situations.
 Statistics can also refer to the art and science of
collecting, analyzing, presenting, and interpreting
data.
 Simply, Statistic is a way of getting
information from data. That’s it.
 A feasible Example
A student enrolled in an MBA program is attending his
first class of the required statistics course. The student is
somewhat apprehensive because he believes the myth
that the course is difficult (or easy). To alleviate his
anxiety, the student asks the professor about last year’s
marks. Because this professor is friendly and helpful
(Really??), like all other QT professors ( ), he obliges
the student and provides a list of the final marks, which
are composed of Internal plus the final exam. What
information can the student obtain from the list?
 Historical Data
DA-I History
Total Appeared Supplimentary Given Scored>70 Scored>60

117

104

76

61 63

43

11
8
5 5
1 2

2014 2015 2016

AY
Applications in Business and Economics

 Accounting
Public accounting firms use statistical sampling
procedures when conducting audits for their clients.
 Economics
Economists use statistical information in making
forecasts about the future of the economy or some
aspect of it.
 Finance
Financial advisors use price-earnings ratios and
dividend yields to guide their investment advice.
Applications in
Business and Economics
 Marketing
Electronic point-of-sale scanners at retail checkout
counters are used to collect data for a variety of
marketing research applications.
 Production
A variety of statistical quality control charts are used
to monitor the output of a production process.
 Information Systems
A variety of statistical information helps administrators
assess the performance of computer networks.
Data and Data Sets
 Data are the facts and figures collected, analyzed,
and summarized for presentation and interpretation.

 All the data collected in a particular study are referred

to as the data set for the study.
Elements, Variables, and Observations

 Elements are the entities on which data are collected.

 A variable is a characteristic of interest for the elements.
 The set of measurements obtained for a particular
element is called an observation.
 A data set with n elements contains n observations.
 The total number of data values in a complete data
set is the number of elements multiplied by the
number of variables.
Data, Data Sets,
Elements, Variables, and Observations
Variables
Element
Names Stock Annual Earn/
Company Exchange Sales($M) Share($)

Dataram BSE 73.10 0.86

EnergySouth NSE 74.00 1.67
Keystone N 365.70 0.86
LandCare W 111.40 0.33
Psychemedics E 17.60 0.13

Data Set
 Scales of Measurement
Scales of measurement include:
Nominal Interval

Ordinal Ratio

The scale determines the amount of information

contained in the data.

The scale indicates the data summarization and

statistical analyses that are most appropriate.
Scales of Measurement
 Nominal

Data are labels or names used to identify an

attribute of the element.

A nonnumeric label or numeric code may be used.

Scales of Measurement

 Nominal

Example:
Students of a university are classified by the
school in which they are enrolled using a
nonnumeric label such as Business, Humanities,
Education, and so on.
Alternatively, a numeric code could be used for
the school variable (e.g. 1 denotes Business,
2 denotes Humanities, 3 denotes Education, and
so on).
 Scales of Measurement
 Ordinal

The data have the properties of nominal data and

the order or rank of the data is meaningful.

A nonnumeric label or numeric code may be used.

 Scales of Measurement
 Ordinal

Example:
Students of a university are classified by their
class standing using a nonnumeric label such as
Freshman, Sophomore, Junior, or Senior.
Alternatively, a numeric code could be used for
the class standing variable (e.g. 1 denotes
Freshman, 2 denotes Sophomore, and so on).
Ordinal Data
 Scales of Measurement
 Interval

The data have the properties of ordinal data, and

the interval between observations is expressed in
terms of a fixed unit of measure.

Interval data are always numeric.

A True Zero doesn’t exist

 Scales of Measurement
 Interval

Example:
Melissa has an SAT score of 1985, while Kevin
has an SAT score of 1880. Melissa scored 105
points more than Kevin.
Interval Data

https://en.wikipedia.org/wiki/Madurai
 Scales of Measurement
 Ratio

The data have all the properties of interval data

and the ratio of two values is meaningful.

Variables such as distance, height, weight, and time

use the ratio scale.

A true zero exists

This scale must contain a zero value that indicates
that nothing exists for the variable at the zero point.
 Scales of Measurement
 Ratio

Example:
Melissa’s college record shows 36 credit hours
earned, while Kevin’s record shows 72 credit
hours earned. Kevin has twice as many credit
hours earned as Melissa.
Categorical and Quantitative Data

Data can be further classified as being categorical

or quantitative.

The statistical analysis that is appropriate depends

on whether the data for the variable are categorical
or quantitative.

In general, there are more alternatives for statistical

analysis when the data are quantitative.
Categorical Data
Labels or names used to identify an attribute of
each element

Often referred to as qualitative data

Use either the nominal or ordinal scale of

measurement

Can be either numeric or nonnumeric

Appropriate statistical analyses are rather limited

Quantitative Data

Quantitative data indicate how many or how much:

discrete, if measuring how many

continuous, if measuring how much

Quantitative data are always numeric.

Ordinary arithmetic operations are meaningful for

quantitative data.
 Scales of Measurement

Data

Categorical Quantitative

Numeric Non-numeric Numeric

Nominal Ordinal Nominal Ordinal Interval Ratio

Cross-Sectional Data

Cross-sectional data are collected at the same or

approximately the same point in time.

Example: data detailing the number of building

permits issued in November 2012 in each of the
counties of Ohio
Time Series Data

Time series data are collected over several time

periods.

Example: data detailing the number of building

permits issued in Lucas County, Ohio in each of
the last 36 months

Graphs of time series help analysts understand

• what happened in the past,
• identify any trends over time, and
• project future levels for the time series
Time Series Data

 Time Series Data: Plot

U.S. Average Price Per Gallon
For Conventional Regular Gasoline

Source: Energy Information Administration, U.S. Department of Energy, May 2009.

Something called PANEL data. Any idea??

Data Sources
 Existing Sources

Internal company records – almost any department

Business database services – Dow Jones & Co.
Government agencies - India Stat, RBI

Industry associations – CRISIL, CMIE - Prowess

Special-interest organizations – RTI

Internet – firms, company annual report etc

Data Sources

 Data Available From Internal Company Records

Record Some of the Data Available
Employee records name, address, social security number
Production records part number, quantity produced,
direct labor cost, material cost
Inventory records part number, quantity in stock,
reorder level, economic order quantity
Sales records product number, sales volume, sales
volume by region
Credit records customer name, credit limit, accounts
receivable balance
Customer profile age, gender, income, household size
 Data Sources

 Data Available From Selected Government Agencies

Government Agency Some of the Data Available
Census Bureau Population data, number of
www.census.gov households, household income

Federal Reserve Board Data on money supply, exchange

www.federalreserve.gov rates, discount rates

Office of Mgmt. & Budget Data on revenue, expenditures, debt

www.whitehouse.gov/omb of federal government
Department of Commerce Data on business activity, value of
www.doc.gov shipments, profit by industry

Bureau of Labor Statistics Customer spending, unemployment

www.bls.gov rate, hourly earnings, safety record
Data Sources
 Statistical Studies - Experimental
In experimental studies the variable of interest is
first identified. Then one or more other variables
are identified and controlled so that data can be
obtained about how they influence the variable of
interest.

The largest experimental study ever conducted is

believed to be the 1954 Public Health Service
experiment for the Salk polio vaccine. Nearly two
million U.S. children (grades 1- 3) were selected.
Data Sources

 Statistical Studies - Observational

In observational (nonexperimental) studies no
attempt is made to control or influence the
variables of interest.
a survey is a good example

Studies of smokers and nonsmokers are

observational studies because researchers
do not determine or control
who will smoke and who will not smoke.
 Data Acquisition Considerations
Time Requirement
• Searching for information can be time consuming.
• Information may no longer be useful by the time it
is available.
Cost of Acquisition
• Organizations often charge for information even
when it is not their primary business activity.
Data Errors
• Using any data that happen to be available or were
acquired with little care can lead to misleading
information.
Types of Statistical Methods

 Descriptive Statistics

 Inferential Statistics
Descriptive Statistics
 Most of the statistical information in
newspapers, magazines, company reports, and
other publications consists of data that are
summarized and presented in a form that is easy
to understand.

 Such summaries of data, which may be tabular,

graphical, or numerical, are referred to as descriptive
statistics.