Aksum University

College of Business and Economics

Department of Management

Degree Program BA in Management

Course Number MGMT1071
Course Title Statistics for Management I
ECTS (credit points) 5
Student workload Lecture Tutorial Home Study Total
45 15 75 135
Course Objectives The course enables students to have an understanding to:
and Competences to the basic concepts of statistics
be Acquired Develop statistical skills and use these skills in the managerial applications.
Equip the student with the ability to apply statistics in managerial decision
making.
Course It is a course in basic statistics with statistical methods, and statistical
Description/Course inference which have become useful tools in every field of knowledge. The
Contents former generally describes the group characteristics of the particular data, and
the latter describes the judgments based on statistical analysis. Besides, it
includes Introduction; data collection and presentation; measures of central
tendency and dispersion; Probability and probability distribution
Pre-requisites No Prerequisite
Status of the Course Core
Week Topics and Sub Topics Course Objectives and Competences to be
Week 1 UNIT1 After completingAcquired
this unit, you will be able
INTRODUCTION to:
1.1. Definition of Statistics  Define Statistics and Identify the
1.2. Classification of Statistics Classification of Statistics
1.3. Application of Statistics  Understand areas of application of
Statistics
Delivery Methods lecture, group discussion and reflection
Week 2, 3 & 4 UNIT 2 After completing this unit, students
DATA COLLECTION AND PRESENTATION will be able to:
2.1. Data Collection  Explain Data Collection
2.1.1. Classification of Data  Identify Classification of Data
2.1.2. Methods of Data Collection  Discuss methods of Data
2.2. Tabular Methods of Data Presentation Collection
2.2.1. Frequency Distributions (Absolute,  Discuss tabular Methods of
Relative and Cumulative Data Presentation
Distributions)  Understand the concepts of
2.3. Graphic Methods of Data Presentation Frequency Distributions Show
(Histograms, Polygons, Ogive, Pie-Charts, Bar the graphic Methods of Data
and Line Graphs) Presentation
Delivery Methods lecture, group discussion, presentation and reflection
 UNIT 3 At the end of this unit, students will
MEASURES OF CENTRAL TENDENCY AND be able to:
Week 5, 6 & DISPERSION  Explain Use of Summation
7 3.1. The Use of Summation Notation Notation
3.2. Central tendency measures  Discuss central tendency
3.3. Measures of dispersion measures
 Discuss measures of
dispersion
Delivery Methods lecture, group discussion, presentation and reflection
UNIT 4 At the end of this chapter students
PROBABILITY AND PROBABILITY will be able to:
Week 8, 9, 10, DISTRIBUTION
11, 12, 13 and 4.1. Probability Theory  Discuss the fundamental
14 4.1.1. Basic definitions concepts probability
4.1.2. Fundamental concepts: - experiment  Explain different
and event, events and their approaches to probability
relationships, conditional, joint, the distribution
probability tree, Baye’s Theorem.
4.2. Probability Distribution
4.2.1. Definition
4.2.2. Basic concepts- discrete and continuous
random variables, expected value and
variance of discrete random variables
4.2.3. Discrete probability distributions
(Binomial, Hyper-geometric and
Poisson Distributions).
4.2.4. Continuous probability distributions
(Normal Distributions.)
Delivery Methods lecture, group discussion and reflection
 Freund, E.J. Modern Elementary Statistics. John Wiley.
 Gupta, C.P. Statistical Methods
 Gupta, C.B. And Gupta, V. An Introduction to Statistical Methods.
 Kohout, F.G. Statistics for Scientists. John Wiley.
Reference:  Monga, G.S. Mathematics And Statistics For Economists
 Leven, J. Elementary Statistics For Economists
 Pine, V.R. Introduction To Social Statistics Its Elements And
Application
 Walpole, Introduction To Statistics
 Yeomans, K.A. Statistics For The Social Scientists: An Introduction
 Churchil, G.A. Marketing Research: Methodological Foundations 5th Ed.
Activities Points
Continuous Assessment 50
Assessment Final Exam 50
Arrangement Total Points 100
Continuous Assignments: can include quizzes, Assignments (individual or /and group)
Final Exam: Final exam will cover ALL material.
 UNIT – 1
BUSINESS STATISTICS
1.1 What is Statistics?
The word “Statistics” has been derived from the Latin word “Status” or Italian word “stato or
Statista” or German word “Statistika”. Each of these words means Political State. The word
stato (Italian word) means state and statista means a person involved in the affairs of the state.
Initially, Statistics was used to collect the information of the people of the state about their
income, health, illiteracy, wealth, taxation, military strength etc. The various government records
in ancient Egypt, Judea and Italy were the main expressions for statistics. Therefore, it was
defined as the collection of facts useful for the state.

Since data were collected for governmental purposes (such as those stated in the above),
statistics was then described as the science of kings. On the other hand it has been considered as
branch of mathematics because most statistical methods are driven from mathematical theory of
probability. But now a day, Statistics has become an important subject having useful application
in various fields in day to day life.

From these terms, we observe that statistics is both a data or information and a technique or
method of dealing with data.

In the plural sense, Statistics refers to information in terms of numbers or numerical data such as
Population Statistics, Employment Statistics etc. However any numerical information is not
statistics.

Example: Alem gets birr 1000 per month as pocket allowance is not Statistics. It is neither an
aggregate nor an average. Whereas average pocket allowance of the students of Class A is birr
1000 per month and there are 70 students in class A & 50 students in Class B are Statistics.

1.2 Definition of Statistics

According to Bowley - “Statistics are numerical statements of facts in any department of enquiry placed
in relation to each other.”

Statistics is a numerical data because it is;

(1) Aggregate of Facts – A single number does not constitute Statistics. We cannot draw any
conclusion from single number. We can draw any conclusion by the aggregate number of
facts. For example, if it is stated that there are 1,000 students in our college then it has no
significance. But if it is stated that there are 300 students in arts, 400 students in commerce
and 300 in science in our college. It makes statistical sense as this data convey statistical
information.
(2) Numerically Expressed - Statistics are expressed in terms of numbers. Qualitative aspects
like small or big, rich or poor etc. are not statistics. For instance if we say that Abebe is tall
 and Seyoum is short then this statement has no statistical sense. However if it is stated that
height of Abebe is 6 feet and 2 inch and the height of Seyoum is 5 feet and 4 inch then these
numerical will be called Statistics.

(3) Affected by Multiplicity of Causes – Statistics are not affected by any single factor but it is
affected by many factors. For instance 30% rise in prices may have been due to several causes
like reduction in supply, increase in demand, shortage of power, rise in wages, rise in taxes, etc.

(4) Reasonable Accuracy - A reasonable degree of accuracy must be kept in view while
collecting statistical data. This accuracy depends on the purpose of investigation, its nature, size
and available resources.

(5) Pre-determined Purpose - Statistics are collected with some pre-determined objective. Any
information collected without any definite purpose will only be a numerical value and not
Statistics. If data pertaining to the farmers of a village is collected, there must be some pre-
determined objective. Whether the statistics are collected for the purpose of knowing their
economic position or distribution of land among them or their total population. All these
objectives must be pre – determined.

(6) Collected in a Systematic Manner – Statistics should be collected in a systematic manner.

Before collecting the data, a plan must be prepared. No conclusion can be drawn from data
collected in haphazard manner. For instance, data regarding the marks secured by the students of
a college without any reference to the class, subject, examination, or maximum marks, etc. will
lead no conclusion.

Statistics is a collection of statistical methods or techniques because:

It is a branch of mathematics and it refers to techniques or methods relating to collection,

organization, presentation, analysis and interpretation of quantitative data.
From this perspective, statistics is defined as the science of collecting, organizing, presenting,
analyzing and interpreting numerical data for the purpose of assisting in making a more effective
decision.
1.3 Stages in Statistical Investigation
There are five stages or steps in any statistical investigation.
1. Collection of data: the process of measuring, gathering, assembling the raw data up on
which the statistical investigation is to be based. Data can be collected in a variety of ways;
one of the most common methods is through the use of survey. Survey can also be done in
different methods, three of the most common methods are telephone survey, mailed
questionnaire and personal interview.
2. Organization: Data collected from published sources are generally in organized form.
However, a large mass of figures that are collected from a survey frequently needs
 organization. In organizing, there are 3 steps as (A) Editing (B) Classifying and (C)
Tabulation.

(A) Editing: The collected data must be editing very carefully so that the omissions,
inconsistencies irrelevant answers and wrong computation in the returns from a survey may be
corrected or adjusted.

(B) Classification: Classification is the process of arranging the data according to some common
characteristics possessed by the items constituting the data.

(C) Tabulation: To arrange the data in columns and rows. 3. Presentation of the data: The
process of re organization, classification, compilation, and summarization of data to present it in
a meaningful form. Hence collected data is organized properly so that the desire information may
be highlighted and undesirable information avoided.

3. Presentation: Arranged data is not capable to influence a layman. Thus, it is necessary that
data may be presented with the help of tables, diagrams and graphs. By these devices facts
can be understood easily.
4. Analysis: A major part of it is developed to the methods used in analyzing the presented
data, mostly in a tabular form. For this analysis, a number of statistical tools are available,
such as averages, correlation, regression etc.
5. Interpretation: the interpretation of a data is a difficult task and necessitates a high degree
of skills and experience in the statistical investigation because certain decisions made on the
basis of conclusions drawn.
1.4 Classifications of Statistics
Depending on how data can be used statistics is divided in to two main areas or branches.
1. Descriptive Statistics: is concerned with summary calculations, graphs, charts and tables.
When the population of interest is small and we can conduct a census of the population, we
can describe the important aspects of the population. So, descriptive statistics includes
procedures used to summarize masses of data and present them in an understandable manner.
Example: the average age of athletes participated in Ethiopian Olympic is 25 years.
2. Inferential Statistics: is a method used to generalize from a sample to a population. For
example: the average income of all families (the population) in Ethiopia can be estimated
from figures obtained from a few hundred (the sample) families. It is important because
statistical data usually arises from sample. Statistical techniques based on probability theory
are required.

1.5 Definitions of key Statistical terms

 Population: It is the collection of all possible observations of a specified characteristic of

interest (possessing certain common property) and being under study.
 Sample: It is a subset of the population, selected using some sampling technique in such a
way that they represent the population.
 Census: Complete enumeration or observation of the elements of the population. Or it is the
collection of data from every element in a population.
 Sampling: The process or method of sample selection from the population.
 Sample size: The number of elements or observation to be included in the sample.
 Parameter: Characteristic or measure obtained from a population.
 Statistic: Characteristic or measure obtained from a sample.
 Variable: It is an item of interest that can take on many different numerical values.

1.6 Types of Variables or Data:

1. Qualitative Variables are nonnumeric variables and can't be measured. Examples include
gender, religious affiliation, and state of birth.
2. Quantitative Variables are numerical variables and can be measured. Examples include
balance in checking account, number of children in family. Note that quantitative variables
are either discrete (which can assume only certain values, and there are usually "gaps"
between the values, such as the number of bedrooms in your house) or continuous (which can
assume any value within a specific range, such as the air pressure in a tire.)

1.7 Applications of statistics:

 In almost all fields of human endeavor.

 Statistics in Business and Management: with growing size and increasing competition, the
problems of business enterprises have become complex. Statistics is now considered as an
indispensable tool in the analysis of activities in the field of business, commerce and
industry. The object can be achieved by properly conducted market survey and research
which greatly depends on statistical methods. The trends in sales and production can be
determined by statistical methods like time-series analysis which are essential for future
planning of the phenomena. Statistical concepts and methods are also used in controlling the
quality of products to satisfaction of consumer and the producer. The bankers use the
objective analysis furnished by statistics and then temper their decisions on the basis of
qualitative information.
 Statistics and Research; statistics is indispensable in research work. Most of the
advancement in knowledge has taken place because of experiments conducted with the help
of statistical methods. Statistical methods also affect research in medicine and public health.
In fact, there is hardly any research work today that one can find complete without statistical
methods. Almost all human beings in their daily life are subjected to obtaining numerical
facts e.g. about price.
 Applicable in some process e.g. invention of certain drugs, extent of environmental
pollution. In industries especially in quality control area.
1.8 Uses of statistics:

The main function of statistics is to enlarge our knowledge of complex phenomena. The following are
some uses of statistics:

1) It presents facts in a definite and precise form.

2) Data reduction.
3) Measuring the magnitude of variations in data.
4) Furnishes a technique of comparison
5) Estimating unknown population characteristics.
6) Testing and formulating of hypothesis.
7) Studying the relationship between two or more variable.
8) Forecasting future events.

1.9 Limitations of Statistics

Newsholme states, “Statistics must be regarded as an instrument of research of great value but having
several limitations which are not possible to overcome and as such they need out careful attention.”

1) Statistics does not study qualitative facts: Statistics means aggregate of numerical facts. It means
that in statistics only those phenomena are studied which can be expressed in numerical terms directly
or indirectly. Such as- (1) directly in numerical terms like age, weight and income of individual (2) no
directly but indirectly like intelligent of students and achievements of students (3) neither directly nor
directly like morality, affection etc. such type of facts don’t come under the scope of statistics.
2) Statistics doesn’t study individual: According to W.I.King, “Statistics from their very nature of
subject cannot and will never be able to take into account individual causes. When these are
important, other means must be used for their study.” These studied are done to compare the general
behavior of the group at different points of time or the behavior of different groups at a particular
point of time.
3) Statistical results are true only on the average: The statistical laws are not completely true and
accurate like the law of physics. For example – law of gravitational forces is perfectly true &
universal but statistical conclusions are not perfectly true. Such as the average age of a person in India
is 62 years. It does not mean that every person will attain this age. On the basis of statistical methods
we can say only in terms of probability and not certainty.
4) Statistics as lack of complete accuracy: According to Conner, “Statistical data must always be
treated as approximations or estimates and not as precise measurements.” Statistical result are based
on sample or census data, are bound to be true only approximately. For example – according to
population census 2001, country’s population is 1,02,70,15,247 but can real population may not be
more or less by hundred, two hundred and so on.
5) Statistics is liable to be misused: Statistical deals with figures and it can be easily manipulated,
distorted by the inexpert and unskilled persons it is very much likely to be misused in most of the
cases. In other words, the data should be handled by experts. Thus it must be used by technically
sound persons.
6) Statistics is only one of the methods of studying a phenomenon; According to Croxton & Cowden,
“It must not be assumed that the statistical method is the only method to be used in research; neither
this method be considered the best attack for every problem.”
7) Statistical results may be misleading; Without any reference, statistical results may provide
doubtful conclusions. For example – on the basis of increasing no. of prisoners in the prison, it may
be conclude that crime is increasing. But it may be possible that due to rude behavior of police
administration the number of prisoners is increasing but crime is decreasing.

Therefore, it is worth-mentioning that every science based on certain assumption and limitations. This
does not reduce the importance of the subject but lays emphasis on the fact that precautions should be
taken while dealing with statistical analysis and interpretations.

1.10 Scales of measurement

Measurement is the assignment of numbers to objects or events in a systematic fashion. Four

levels of measurement scales are commonly distinguished: nominal, ordinal, interval, and ratio
and each possessed different properties of measurement systems.

1. Nominal Scales

Nominal scales are measurement systems that possess none of the three properties stated above.
Level of measurement which classifies data into mutually exclusive, all inclusive categories in
which no order or ranking can be imposed on the data. No arithmetic and relational operation can
be applied.

Examples: Political party preference (Republican, Democrat, or Other,)

 Sex (Male or Female.)
 Marital status(married, single, widow, divorce)
2. Ordinal Scales
Ordinal Scales are measurement systems that possess the property of order, but not the property
of distance. The property of fixed zero is not important if the property of distance is
not satisfied. Levels of measurement which classifies data into categories that can be ranked
Differences between the ranks do not exist. Arithmetic operations are not applicable but
relational operations are applicable. Ordering is the sole property of ordinal scale.
Examples: Letter grades (A, B, C, D, F) Rating scales (Excellent, Very good, Good, Fair, poor);
Military status.

Interval Scales
Interval scales are measurement systems that possess the properties of Order and distance, but
not the property of fixed zero. Level of measurement which classifies data that can be ranked
and differences are meaningful. However, there is no meaningful zero, so ratios are
meaningless. All arithmetic operations except division are applicable. Relational operations are
also possible.
Examples: IQ, Temperature in degree Fahrenheit
 1.4 Ratio Scales
Ratio scales are measurement systems that possess all three properties: order, distance, and
fixed zero. The added power of a fixed zero allows ratios of numbers to be meaningfully
interpreted; i.e. the ratio of Bekele's height to Martha's height is 1.32, whereas this is not
possible with interval scales.
Level of measurement which classifies data that can be ranked, differences are meaningful, and
there is a true zero. True ratios exist between the different units of measure. All arithmetic and
relational operations are applicable. Examples: weight, height, number of students, age.

Exercises
The following present a list of different attributes and rules for assigning numbers to objects.
Try to classify the different measurement systems into one of the four types of scales.

1. Your checking account balance as a measure of the amount of money you have in that
account.
2. Your score on the first statistics test as a measure of your knowledge of statistics.
3. Your score on an individual intelligence test as a measure of your intelligence.
4. The distance around your forehead measured with a tape measure as a measure of your
intelligence.
5. A response to the statement "Abortion is a woman's right" where "Strongly Disagree" =
1, "Disagree" = 2, "No Opinion" = 3, "Agree" = 4, and "Strongly Agree" = 5, as a
measure of attitude toward abortion.
6. Times for swimmers to complete a 50-meter race
7. Months of the year Meskerm, Tikimit…
8. Socioeconomic status of a family when classified as low, middle and upper classes.
9. Regions numbers of Ethiopia (1, 2, 3 etc.)
10. The number of students in a college;
11. The net wages of a group of workers;
12. The height of the men in the same town