MGT24-M-105

Unit I
Quantitative Techniques in
Management

Bhupendra Tripathi
Assistant Professor
Syllabus
Unit - I: Introduction to Statistics
Definition and Relevance, Characteristics, Functions and Limitations of Statistics,
Scope and Application of Statistics, Types of Data and Data Collection Methods,
Classification and Tabulation of Data, Frequency and Frequency Distribution,
Graphical Presentation of Data, Overview of Descriptive and Inferential Statistics.
Unit - II: Measures of Central Tendency
Measures of Central tendency (Statistical Averages) - Requisites of a Good
Average, Calculation of Mean, Median and Mode, Characteristics, Uses,
Advantages, and Disadvantages of each measure of central tendency, Position of
Mean, Median, and Mode for symmetrical distribution and skewed distribution,
Appropriate Situations for the Use of Various Averages.
Unit - III: Measures of dispersion
Measures of Dispersion- Meaning, Interpretation and Properties of Range, Quartile
Deviation and Mean Deviation. Standard Deviation and Variance, Properties of
standard deviation, Combined Standard Deviation, Coefficient of Variation and its
practical implication.
.
Syllabus Cont…
Unit - IV: Correlation and Regression
Correlation and Regression analysis: Correlation- Meaning and Type, Interpretation
of Scatter Plot, Karl Pearson’s Correlation Coefficient and its Properties,
Spearman’s Rank Correlation Coefficient, Simple linear regression model,
Regression Coefficient, Least square method, Standard Error of Estimate.

Unit - V: Business Forecasting

Business Forecasting -Objectives of Forecasting in business, Characteristics of
Business Forecasting, Steps in Business Forecasting. Theories of Business
Forecasting, Methods of Business Forecasting, Advantages and Limitations of
Business Forecasting.
.
 Unit I
Introduction to Statistics
Definition

According to Seligman, “Statistics is a science which

deals with the method of collecting, classifying,
presenting, comparing and interpreting the
numerical data to throw light on enquiry”.

According to Croxton and Cowden, “Statistics is the

science of collection, presentation, analysis and
interpretation of numerical data from logical
analysis”3
Basic Components of Statistics

Collection of data

According
Interpretation of to Croxton Presentation of
data and data
Cowden

Analysis of data
Definition

Descriptive Statistics
• Descriptive Statistics is used to present the general description of
data which is summarized quantitatively. This is mostly useful in
clinical research, while communicating the results of experiments.

Inferential Statistics
• Inferential Statistics is used to make valid inferences from the data
for effective decision making among managers or professionals.
Statistical methods such as estimation, prediction and hypothesis
testing come under inferential statistics. The researchers make
deductions or conclusions, regarding some characteristics of a
population from the data that is collected from a sample of that
population.
Basic Components of Statistics

Organising Summarising

Descriptive Presenting
Collecting data
Statistics

Statistics

Making Inferential Making

predictions Statistics inference

Determining Hypothesis
relationships testing
 Relevance
The study of Statistics will help in the study of variation in data for
finding patterns and making conclusions.
Importance of statistics in modern business environment

Accounting
• Public accounting firms use statistical sampling procedures when conducting audits for their clients.

Finance
• Financial advisors use a variety of statistical information to guide their investment recommendations.

Marketing
• Electronic scanners at retail checkout counters are being used to collect data for a variety of
marketing research applications.
Production
• Today’s emphasis is on quality. Quality is of utmost importance in production. A variety of statistical
quality control charts are used, to monitor the average output of a production process.
Economics
• Economists are frequently asked to provide forecasts about the future of the economy. For example,
in forecasting inflation index, economists use statistical information on indicators such as the
producer index, the unemployment rate and manufacturing capacity utilisation.
Characteristics
1. Statistics deals with an aggregate of facts

2. Statistics gets affected to a great extent by multiplicity of causes

3. Statistics are numerically expressed

4. Statistics are enumerated or estimated with required degree of accuracy

5. Statistics are collected in a systematic manner

6. Statistics are collected for a pre-determined purpose

7. Statistics are placed in relation to each other

Functions
1. Statistics simplifies mass data

2. Statistics bring out trends and tendencies in the data

3. Statistics brings out the hidden relations between variables

4. Decision-making power becomes easier

5. Statistics make comparison easier

Limitations
1. Statistics does not deal with qualitative data.

2. Statistics does not deal with individual facts.

3. Statistical inferences (conclusions) are not exact.

4. Statistics can be misused and misinterpreted.

5. Common men cannot handle Statistics properly.

Scope and Application of Statistics

Statistical methods are applied to specific problems in various fields such as Biology,
Medicine, Agriculture, Commerce, Business, Economics, Industry, Insurance, Sociology
and Psychology
In the field of medicine, statistical tools like t-tests are used to test the efficiency of the
new drug or medicine.

In the field of economics, statistical tools such as index numbers, estimation theory and
time series analysis are used in solving economic problems related to wages, price,
production and distribution of income.
In the field of agriculture, an important concept of statistics such as analysis of variance
(ANOVA) is used in experiments related to agriculture, to test the significance between
two sample means.
In Biology, Medicine and Agriculture, Statistical methods are applied
Data
Data represents the raw facts and figures which can be used in such a manner
in order to capture useful information out of it.

Information

Data Information

Processing
Data Types
Primary Data
• Primary data is the one, which is collected by the investigator for the purpose
of a specific inquiry or study. Such data is original in character and is
generated by a survey conducted by individuals or a research institution or
any organisation.
• Data collected for the first time keeping in view the objective of the survey is
known as primary data. Interview, questionnaire and telephone/mail are all
examples of primary data.

Collection of primary data

1. Direct personal observation
2. Indirect oral interview
3. Information through agencies
4. Information through mailed questionnaires
5. Information through a schedule filled by investigators
Data Types
Secondary Data
• Any information, that is used for the current investigation but
is obtained from some data, which has been collected and
used by some other agency or person in a separate
investigation, or survey, is known as secondary data. They are
available in a published or unpublished form.

Collection of Secondary data

1. Published sources
2. Unpublished sources
Differences between Primary Data
and Secondary Data

Primary Data Secondary Data

Data is original and thus more accurate Data may not be reliable.
and reliable.
Gathering data is expensive. Gathering data is cheap.
Data is not easily accessible. Data is easily accessible through
internet or other resources.
Most of the data is homogeneous. Data is not homogeneous.
Collection of data requires more time. Collection of data requires less time.

Extra precautionary measures needs to Data selection needs extra care.

be taken.
Data gives detailed information. Data may not be adequate.
Classification
Process of arranging data into sequences and groups
according to their common characteristics or
separating them into different but related parts.
Functions of classification

It condenses the bulk data

It simplifies the data and makes the data more comprehensible

It facilitates comparison of characteristics

It renders the data ready for any statistical analysis

Requisites of a good classification
• It should not lead to any confusion.
Unambiguous
• Every unit should be allotted to one and only one class.
Exhaustive
• There should not be any overlapping.
Mutually exclusive
• It should be capable of adjusting to changing situations.
Flexible
• It should be suitable to the objectives of the survey.
Suitable
• It should remain stable throughout the investigation.
Stable
• There should be similar units in the same class.
Homogeneous
• It should bring out essential features of the collected data.
Revealing
 Tabulation
It is a logical or systematic listing of related data in rows and columns.
The row of a table represents the horizontal arrangement of data and
column represents the vertical arrangement of data. The presentation of
data in tables should be simple, systematic and unambiguous.

Objectives of Tabulation

Simplify complex data

Highlight important characteristics

Present data in minimum space

Facilitate comparison

Bring out trends and tendencies

Facilitate further analysis

Differences between Classification and Tabulation

Classification Tabulation

It is the basis for tabulation It is the basis for further analysis

It is the basis for simplification It is the basis for presentation

Data is divided into groups and Data is listed according to a

sub-groups on the basis of logical sequence of related
similarities and dissimilarities. characteristics.
Parts of a Table
•Table number is to identify the table for
Tab 1:Table number reference.

•Title indicates the scope and the nature of

Tab 2:Title contents in a concise form.

•Captions are the headings and

Tab 3 and Tab 4: Captions subheadings describing the data present
in the columns.

•Stubs are the headings and subheadings

Tab 5 and Tab 6: Stubs of rows.

•Body of the table contains numerical

Tab 7: Body of the table information.

•The sub-totals for each separate

Tab 8: Totals classification .

•Head note is given below the title &

Tab 9: Head note indicate the units of measurement of data
and is enclosed in brackets.

•Source note indicates the source from

Tab 10: Source note which data is taken.
Frequency
The number of units associated with each value of the variable is
called frequency of that value.

Frequency Distribution
A systematic presentation of the values taken by variable together
with corresponding frequencies is called a frequency distribution
of the variable.

According to Croxton and Cowden, “A frequency distribution is

a statistical table which shows the set of all distinct values of
the variable arranged in order of magnitude, either individually
or in groups with their corresponding frequencies”
Frequency distribution can be classified as-

a. Series of individual observation

b. Discrete frequency distribution

c. Continuous frequency distribution

Series of individual observation
Series of individual observation is a series where the items are
listed one after each observation. For statistical calculations, these
observations could be arranged in either ascending or descending
order. This is called as an array.
Discrete frequency distribution

If the data series is presented indicating its exact measurement of

units, then it is called as discrete frequency distribution. Discrete
variable is one where the variates differ from each other by
definite amounts.

Students Age (X) 21 22 23 24 25

Number of Students (f) 6 2 5 4 3
Continuous frequency distribution

According to Boddington, ‘the variable which can take the

intermediate value between the smallest and largest value in the
distribution is a continuous frequency distribution’.

Marks Obtained 0-10 10-20 20-30 30-40 40-50

Number of Students 2 13 9 18 8
(f)
Terms used in formulation of frequency
distribution
a) Class limits: The class limits are the smallest and largest values in the class.
b) Class intervals: The difference between the upper and lower limit of the class
is known as class intervals.
c) Class frequency: The number of observations falling within class interval is
called its class frequency.
d) Magnitude of class interval: The magnitude of the class interval depends on
the range and the number of classes. The range is the difference between the
highest and smallest values in the data series. A class interval is generally in
the multiples of 5, 10, 15, and 20.
Sturges formula to find number of classes is given as follows:
K = 1 + 3.322 log N.
K = No. of classes
log N = Logarithm of total no. of observations

e) Class mid point or class marks: The mid value or central value of the class is
called midpoint.
Mid point of a Class = (Lower limit of Class+ Upper limit of Class)/2

f) Sturges formula to find the size of class interval

Size of class interval (h) = Range / (1 + 3.322 log N)
Constructing a frequency distribution

a) The classes should be clearly defined and each observation must belong to one and only
one class interval. Interval classes must be inclusive and non-overlapping.

b) The number of classes should be neither too large nor too small. Too many small classes
result in greater interval width with loss of accuracy. Too many large class intervals result is
complexity.
c) All intervals should be of the same width. This is preferred for easy computations.

d) Open end classes should be avoided since it creates difficulty in analysis and
interpretation. (Open end class means either lower limit of the first class or upper limit of
the last class will not be specified)
e) Intervals should be continuous throughout the distribution. This is important for
continuous distribution.

f) The lower limits of the class intervals should be simple multiples of the interval.
Derived frequency distributions
i) Relative If ‘f’ is the class frequency and ‘N’ is the total frequency, the relative
frequency
frequency distribution is formed by calculating f/N. Total of all the
distribution
values of relative frequency distribution will always be one.
ii) Percentage The percentage frequency distribution is formed by multiplying the
frequency
ratio f/N by 100.
distribution

iii) Frequency If “c” is the width of the class-interval and “f” is the frequency of
density
the class, then frequency density distribution is formed by
distribution
calculating f/c.
iv) Less than The less than cumulative frequency distribution is formed with a
cumulative
number of observations which are less than a given value.
frequency
distribution
v) More than The more than cumulative distribution is formed with a number of
cumulative
observations, which are more than a given value.
frequency
distribution
 Presentation of Data
It is a diagrammatic and graphical
presentations of tabulated Data.
Diagrammatic presentation
• A diagram is a visual form for presentation of statistical data. The diagram
refers to various types of devices such as bars, circles, maps, pictorials,
cartograms, etc.

Importance of diagrams:
• They are simple, attractive and easily understandable
• They give quick information
• It helps to compare the variables
• Diagrams are more suitable to illustrate discrete data
• It will have more stable effect in the reader’s mind
 Limitations of diagrams

a. Diagrams shows approximate value

b. Diagrams are not suitable for further analysis

c. Some diagrams are limited to experts (multidimensional)

d. Details cannot be provided fully

e. It is useful only for comparison

 General rules for drawing the diagrams
Each diagram should have a suitable title indicating the theme with which the diagram
is intended, at the top or at the bottom.
The size of the diagram should emphasise the important characteristics of the data.

Approximate proposition should be maintained for length and breadth of the diagram.

A proper/suitable scale to be adopted for diagram.

Selection of approximate diagram is important and wrong selection may mislead the
reader.
Source of data should be mentioned at the bottom.

Diagram should be simple and attractive.

Diagram should be effective and not complex.

 Types of diagrams
1. One dimensional diagrams (Line and Bar)
a. Line diagram

Example- Draw the line diagram for the following data

Solution-
 Types of diagrams
1. One dimensional diagrams (Line and Bar)

b. Bar diagram

1. Vertical bar diagram

2. Horizontal bar diagram

3. Multiple (compound) bar diagram

4. Sub-divided (component) bar diagram

5. Percentage subdivided bar diagram

 Types of diagrams
Simple bar diagram

Example- Following table depicts the data regarding the yield/acre of

paddy in Karnataka over the last five years. Represent the data in a bar
diagram.

Solution-
 Types of diagrams
Vertical bar diagram
Example- The annual expenses of maintaining various types of cars are
given as follows. Draw the vertical bar diagram. The annual expenses of
maintenance include (fuel + maintenance + repair + assistance + insurance).

Solution-
 Types of diagrams
Horizontal bar diagram
Example- Following table depicts the data of the world’s top 10 steel
makers. Draw a horizontal bar diagram.

Solution-
 Types of diagrams
Compound bar diagram (Multiple bar diagram)
Example-Following table depicts the resale value of cars (Rs. 1000). Draw
the Compound bar diagram.

Solution-
 Graphical Presentation
Graphical presentations are visual form of
presentation graphs, which are drawn on a special
type of paper known as graph paper. Some of the
types of graphs are:
• Histogram
• Frequency polygon
• Frequency curve
• Ogives [cumulative frequency curves]
 Histogram
Example- Following table depicts the range of marks obtained by the
number of students. Construct a histogram for the given data.

Solution-
 Frequency polygon
Example- Given Table depicts the number of frequencies at which the
marks are obtained. Construct a frequency polygon for this data.

Solution-
 Frequency curve
Example- Following table depicts the distribution of age. Construct a
frequency curve for the data.

Solution-
 Ogives
Less than Ogive – Variables are taken along x-axis and less than
cumulative frequencies are taken along y-axis. Less than cumulative
frequencies are plotted against the upper limit of class interval and joined by
a smooth-curve.

More than Ogive – More than cumulative frequencies are plotted against
lower limit of the class-interval and joined by a smooth-curve.
Example- Construct an Ogive curve for the data depicted in following table
 Ogives
Solution

Less than Ogive Diagram More than Ogive Diagram

 Advantages of graphic
presentation
 It provides an attractive and impressive view

 Simplifies complexity of data

 Helps for direct comparison

 It helps for further statistical analysis

 It is the simplest method of presentation of data

 It shows trend and pattern of data

Differences between Diagrams
and Graphs
Diagram Graph
1. Ordinary paper can be used 1. Graph paper is required
2. It is attractive and easily 2. It is not easily understandable
understandable
3. It is appropriate and effective to 3. It creates problem
measure more variable
4. It cannot be used for further Analysis 4. Can be used for further analysis
5. It gives comparison 5. It shows relationship between
Variables
6. Data are represented by bars, and 6. Points and lines are used to represent
Rectangles data