BUSINESS MATHEMATICS &STATISTICS (U19MS2Y4)

Unit II
Introduction to Statistics:
Statistics is a branch of mathematics that involves collecting, analyzing, interpreting, and
presenting data. It is used to gain insights and make informed decisions based on data.
Statistics is a fundamental tool in many fields, including business, finance, healthcare, social
sciences, engineering, and many others.
The process of statistics involves several steps, including data collection, data analysis, and
data interpretation. Data can be collected in various ways, such as surveys, experiments, and
observational studies. Once data is collected, it needs to be organized and analyzed to identify
patterns and trends. This can involve the use of statistical software and techniques such as
regression analysis, hypothesis testing, and probability distributions.
One of the primary goals of statistics is to make inferences about a larger population based on
a smaller sample of data. This can involve using sampling techniques to ensure that the
sample is representative of the population. Statistics is also used to make predictions about
future events or trends based on historical data.
Understanding statistics is essential for making informed decisions in many areas of life. It
allows us to identify trends and patterns, evaluate the reliability of data, and make informed
predictions about the future.
Nature And Scope Of Statistics:
The nature and scope of statistics are vast and varied, and it is used in a wide range of fields
and disciplines. Here are some key aspects of the nature and scope of statistics:
1. Data collection: Statistics involves the collection of data, either through surveys,
experiments, or other methods. This data can be in the form of numerical
measurements, observations, or responses to questions.
2. Data analysis: Once data has been collected, statistics is used to analyze and interpret
the data. This can involve the use of descriptive statistics to summarize the data, or
inferential statistics to draw conclusions about the larger population from a sample.
3. Probability: Probability is a fundamental aspect of statistics, and it is used to model
random events and quantify uncertainty. Probability theory is used to analyze data and
make predictions based on the likelihood of different outcomes.
4. Statistical inference: Statistics is used to make inferences about the population based
on a sample. This can involve estimating population parameters, testing hypotheses,
and making predictions about future events.
5. Applications: Statistics has a wide range of applications in various fields, including
business, finance, healthcare, social sciences, engineering, and many others. It is used
to make informed decisions, evaluate the effectiveness of policies and programs, and
identify trends and patterns in data.
 6. Tools and techniques: Statistics uses a range of tools and techniques, including
probability distributions, regression analysis, hypothesis testing, and data
visualization. These tools and techniques are constantly evolving, as new methods are
developed to handle increasingly complex data.
Overall, the scope of statistics is broad and varied, and it plays an essential role in
understanding and analyzing data in various fields.
Uses of Statistics in Business:
Statistics plays a vital role in business decision-making by providing insights into the
performance and trends of a company. Here are some of the key uses of statistics in business:
1. Forecasting: Statistics is used to forecast future trends and patterns in sales,
production, and other business activities. These forecasts are used to plan production
schedules, manage inventory, and make informed decisions about investments.
2. Market research: Statistics is used in market research to collect and analyze data about
consumer behavior, preferences, and attitudes. This data is used to identify market
segments, develop new products, and target advertising campaigns.
3. Quality control: Statistics is used in quality control to measure the consistency and
reliability of products or services. It is used to detect defects, track defects over time,
and monitor the performance of production processes.
4. Financial analysis: Statistics is used in financial analysis to evaluate the financial
performance of a company. This can involve analyzing financial statements, such as
balance sheets and income statements, and using statistical methods to identify trends
and patterns in financial data.
5. Risk analysis: Statistics is used in risk analysis to assess the probability and potential
impact of risks to a company. This can involve analyzing historical data, conducting
simulations, and using statistical methods to model the potential outcomes of different
risks.
6. Decision-making: Statistics is used to provide quantitative data and insights to support
decision-making in various areas of business, such as marketing, operations, and
finance. This can involve analyzing data from different sources, developing models
and forecasts, and evaluating the impact of different scenarios.
Overall, statistics is an essential tool for businesses to make informed decisions, optimize
their operations, and stay competitive in a rapidly changing business environment.
Statistical Data-primary and secondary:
Statistical data can be broadly classified into two categories: primary data and secondary
data.
1. Primary data: Primary data is the raw data that is collected directly from the source
through surveys, experiments, observations, or other methods. This data is original
and has not been processed or analyzed before. Primary data is collected for a specific
research or investigation and is tailored to answer specific research questions.
 Examples of primary data include responses to survey questions, results of
experiments, and measurements taken during observations.
2. Secondary data: Secondary data is data that has been collected by others for a
different purpose and is available for reuse. This data is collected by government
agencies, research institutions, or private organizations and is made publicly available
for general use. Secondary data can be in the form of published reports, statistical
yearbooks, census reports, and other sources. Secondary data is often used to support
or supplement primary data in research or analysis.
Both primary and secondary data have their advantages and limitations. Primary data allows
researchers to collect data that is tailored to their specific research questions, and to control
the data collection process to ensure the quality of the data. However, primary data collection
can be time-consuming, expensive, and requires a high level of expertise in research design
and data collection methods.
On the other hand, secondary data can be less expensive and less time-consuming than
primary data collection. It can also provide a broader perspective on a particular topic or
issue. However, the quality and reliability of secondary data may vary, and it may not always
be available for specific research questions. Therefore, it is essential to critically evaluate the
quality and reliability of secondary data before using it for analysis or research purposes.
Classification of data:
Data can be classified into various categories based on their nature, type, and measurement.
Here are some of the commonly used classifications of data:
1. Qualitative data: Qualitative data is non-numerical data that is based on observations
or descriptions. It can be further classified into nominal and ordinal data. Nominal
data represents categories that have no order or ranking, such as gender or race.
Ordinal data represents categories that have a natural order or ranking, such as
educational level or income level.
2. Quantitative data: Quantitative data is numerical data that can be measured and
analyzed using statistical methods. It can be further classified into discrete and
continuous data. Discrete data represents values that are distinct and separate, such as
the number of children in a family. Continuous data represents values that are
measured on a continuous scale, such as height or weight.
3. Primary data: Primary data is data that is collected directly from the source for a
specific research or investigation.
4. Secondary data: Secondary data is data that has been collected by others for a
different purpose and is available for reuse.
5. Time-series data: Time-series data is a type of data that is collected over time, such as
monthly sales data.
6. Cross-sectional data: Cross-sectional data is a type of data that is collected at a single
point in time, such as data from a survey.
 7. Categorical data: Categorical data represents data that can be grouped into categories,
such as the type of product or color.
8. Numerical data: Numerical data represents data that can be measured and analyzed
using numbers, such as weight or age.
The classification of data is important as it determines the appropriate statistical techniques
that can be used for data analysis and interpretation. The type of data collected can affect the
selection of appropriate graphs, tables, and statistical measures.
Frequency distribution:
Frequency distribution is a way of organizing data into groups and showing the number of
observations or occurrences in each group. It is a common method used to summarize and
describe a large set of data. The frequency distribution can be presented in a table or graph
format.
To construct a frequency distribution, the data is first divided into groups or intervals called
classes. Each class represents a range of values. The size of each class should be equal or as
close to equal as possible to provide a clear representation of the data. Once the classes are
defined, the number of observations or occurrences in each class is counted and recorded.
For example, consider a data set of exam scores for a class of students. The data set is as
follows:
68, 72, 85, 91, 77, 68, 82, 94, 75, 80
To create a frequency distribution table, we can choose a class interval of 10 and create the
following table:

Class Interval Frequency

60-69 2

70-79 4

80-89 3

90-99 1

In this example, there are 2 observations between 60 and 69, 4 observations between 70 and
79, 3 observations between 80 and 89, and 1 observation between 90 and 99.
A histogram is a common graphical representation of a frequency distribution. How to graph
a frequency distribution
Pie charts, bar charts, and histograms are all ways of graphing frequency distributions. The
best choice depends on the type of variable and what you’re trying to communicate.
Pie chart
A pie chart is a graph that shows the relative frequency distribution of a nominal variable.
A pie chart is a circle that’s divided into one slice for each value. The size of the slices shows
their relative frequency.
This type of graph can be a good choice when you want to emphasize that one variable is
especially frequent or infrequent, or you want to present the overall composition of a
variable.
A disadvantage of pie charts is that it’s difficult to see small differences between frequencies.
As a result, it’s also not a good option if you want to compare the frequencies of different
values.
The histogram provides a visual representation of the shape of the data and can help identify
any patterns or trends in the data.
Frequency distribution is a useful tool in data analysis and provides a summary of the data
that is easy to interpret and communicate. It can be used to identify outliers, check for
normality, and compare different data sets.

Bar chart
A bar chart is a graph that shows the frequency or relative frequency distribution of
a categorical variable (nominal or ordinal).
The y-axis of the bars shows the frequencies or relative frequencies, and the x-axis shows the
values. Each value is represented by a bar, and the length or height of the bar shows the
frequency of the value.
A bar chart is a good choice when you want to compare the frequencies of different values.
It’s much easier to compare the heights of bars than the angles of pie chart slices.
Histogram
A histogram is a graph that shows the frequency or relative frequency distribution of
a quantitative variable. It looks similar to a bar chart.
The continuous variable is grouped into interval classes, just like a grouped frequency table.
The y-axis of the bars shows the frequencies or relative frequencies, and the x-axis shows the
interval classes. Each interval class is represented by a bar, and the height of the bar shows
the frequency or relative frequency of the interval class.
Although bar charts and histograms are similar, there are important differences:
Bar chart Histogram

Type of variable Categorical Quantitative

Value grouping Ungrouped (values) Grouped (interval classes)

Bar spacing Can be a space between bars Never a space between bars

Bar order Can be in any order Can only be ordered from lowest to highest
A histogram is an effective visual summary of several important characteristics of a variable.
At a glance, you can see a variable’s central tendency and variability, as well as
what probability distribution it appears to follow, such as a normal, Poisson, or uniform
distribution.