CHAPTER ONE

AN OVERVIEW OF BASIC STATISTICS

Introduction

Statistics is the science that deals with the method of collection, organization,
analysis of data and interpretation of the results. The term statistics can also be
defined in its plural sense. In the plural sense statistics are collections of numerical
facts, values that are obtained from sample results are called statistics.
The science of statistics is very essential for research and decision processes in all
aspects of human life.
Statistical analysis begins with data collection and the analysis of the data is then
undertaken for one of the following purposes:
• To summarize the finding of some inquiry.
• To obtain a better understanding of the phenomenon under study, primarily
as an aid in generalization or theory validation.
• To make a forecast of some variables, for example, rate of price movements
in the coming ten years in a given area.
• To evaluate the performance of some program.
• To help in selecting a course of action among a number of alternatives.

Statistics is primarily concerned with how to summarize and interpret variables. A

variable is any characteristic of an object that can be represented as a number. The
values that the variable takes will vary when measurements are made on different
objects or at different times.
Each time that we record information about an object we observe a case. We might
include several different variables in the same case. For example, we might measure
the height, weight, and hair color of a group of people in an experiment. We would
have one case for each person, and that case would contain that person's height,
weight, and hair color values. All of our cases put together are called our data set.
Variables can be broken down into two types:

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 • Quantitative variables: are those for which the value has numerical meaning.
The value refers to a specific amount of some quantity. You can do
mathematical operations on the values of quantitative variables (like taking
an average). A good example would be a person's height.
• Categorical variables: are those for which the value indicates deferent
groupings. Objects that have the same value on the variable are the same
with regard to some characteristic, but you can't say that one group has
\more" or \less" of some feature. It doesn't really make sense to do math on
categorical variables. A good example would be a person's gender

To some people, statistics means summarized data, such as unemployment figures

or the number of runs, hits, and errors in a baseball game. To others, it means a
course of study. Neither description is adequate. In presenting the statistics as a
method of getting information from data to help managers make decisions, we will
see that statistics comprises various techniques with a wide range of applications to
practical problems. In this section you will be introduced with the definition of
statistics, classification and applications of statistical methods.

The definitions of statistics are very dynamic, changed from time to time. Some of
the definitions of statistics are given below:
• Statistics can be defined as the collection presentation and interpretation of
numerical data. Statistics are numerical statement of facts in any department
of enquiry placed interrelation to each other.
• Statistics are measurement, enumerations or estimates of natural or social
phenomena systematically arrangement to exhibit their inner relation.
• By Statistics we mean quantitative data affected to a marked extend by a
multiplicity of causes.
• The science of Statistics is essentially a branch of applied mathematics and
can be regarded as a mathematics applied to observation data.
• Statistics is the science of estimates and probability.

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 • Statistics is the collection of numerical facts.
• Statistics refers to either quantitative information or a method of dealing
with quantitative information.

Generally, statistics can be defined from plural and single point of view.
• In plural form Statistics are the collection of information shown in numbers.
They can be stated as aggregate of facts which are numerically described.
Plural definition of Statistics generally expressed Statistics as statistical data.
• In singular form statistics is the science of collecting, presenting, analyzing
and interpretation of the results. It is the science of decision making under
uncertainty. Singular definitions of statistics are expressing statistics as
statistical methods.

Working Definitions of Statistics

• Statistics is a science which deals with the collection, organization, analysis
and interpretation of the results.
• It is the Science of decision making under Uncertainty.

Classification of Statistics
Generally, statistics can be classified as descriptive and inferential statistics based
on their scope of coverage.
• Descriptive Statistics: It is part of statistics which deals with collection,
organization, summarizing, describing and processing of important aspects
of a set of data. It does not try to infer things that edge beyond the collected
data themselves. It employs tools such as graphs, tables, averages, etc to
describe the given data set.
Example: Out of 50 electric light bulbs which are produced by a company
weekly, 12 electric light bulbs are defective.
• Inferential Statistics: It is part of statistics which is concerned with making
generalizations based on sample data by using some concepts of probability.

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 It helps to make generalization, performing hypothesis testing, determining
the degree of relationships that exist among variables, making predications,
etc.
Example: 20% of the students in the University who are currently available
are female.
Basic Terminologies in Statistics
• Population: the entire collection of measurements, not all of which will be
analyzed statistically.
• Sample: a subset of the population that is analyzed statistically. A sample
consists of n measurements.
• Statistic: a numerical attribute of the sample (e.g., mean, median, standard
deviation).
• Parameter: a numerical attribute of the population.

Scope and importance of Statistics

• Statistics and planning: Statistics in indispensable into planning in the
modern age which is termed as “the age of planning”. Almost all over the
world the govt. is re-storing to planning for economic development.
• Statistics and economics: Statistical data and techniques of statistical analysis
have to immensely useful involving economical problem. Such as wages,
price, time series analysis, demand analysis.
• Statistics and business: Statistics is an irresponsible tool of production
control. Business executive are relying more and more on statistical
techniques for studying the much and desire of the valued customers.
• Statistics and industry: In industry statistics is widely used inequality control.
In production engineering to find out whether the product is confirming to
the specifications or not. Statistical tools, such as inspection plan, control
chart etc.

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 • Statistics and mathematics: Statistics are intimately related recent
advancements in statistical technique are the outcome of wide applications
of mathematics.
• Statistics and modern science: In medical science the statistical tools for
collection, presentation and analysis of observed facts relating to causes and
incidence of dieses and the result of application various drugs and medicine
are of great importance.
• Statistics, psychology and education: In education and physiology statistics
has found wide application such as, determining or to determine the
reliability and validity to a test, factor analysis etc.
• Statistics and war: In war the theory of decision function can be a great
assistance to the military and personal to plan “maximum destruction with
minimum effort.”

Uses of Statistics
Statistics is used almost in every day to day activities of human being. We are using
statistics to know our personal possession, to compare and contrast ourselves with
our neighbors, to know advancements which are taken in the world, to announce
deteriorations that we face, etc.

Generally, Statistics can be used:

• As a tool in scientific research. Statistical methods can be applied on the

data which are collected to make conclusions, predictions or inferences.
• As a tool for quality control of a product. There statistical methods which
are designed to check whether a product satisfies a given standard or not.
• As a science of decision making under the scenario of uncertainty.
Statistics helps to facilitate the power of decision making particularly for
managers by providing sufficient information.

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 • Statistics helps identification and determination of functional relationship
among variables.

Statistics in business and management

1. Marketing: Statistical analysis are frequently used in providing information for
making decision in the field of marketing it is necessary first to find out what can
be sold and the to evolve suitable strategy, so that the goods which to the
ultimate consumer. A skill full analysis of data on production purchasing power,
man power, habits of compotators, habits of consumer, transportation cost
should be considered to take any attempt to establish a new market.
2. Production: In the field of production statistical data and method play a very
important role. The decision about what to produce? How to produce? When to
produce? For whom to produce is based largely on statistical analysis.
3. Finance: The financial organization discharging their finance function effectively
depend very heavily on statistical analysis of peat and tigers.
4. Banking: Banking institute have found if increasingly to establish research
department within their organization for the purpose of gathering and analysis
information, not only regarding their own business but also regarding general
economic situation and every segment of business in which they may have
interest.
5. Investment: Statistics greatly assists investors in making clear and valued
judgment in his investment decision in selecting securities which are safe and
have the best prospects of yielding a good income.
6. Purchase: the purchase department in discharging their function makes use of
statistical data to frame suitable purchase policies such as what to buy? What
quantity to buy? What time to buy? Where to buy? Whom to buy?
7. Accounting: statistical data are also employer in accounting particularly in
auditing function, the technique of sampling and destination is frequently used.
8. Control: the management control process combines statistical and accounting
method in making the overall budget for the coming year including sales,
materials, labor and other costs and net profits and capital requirement.