QUANTITATIVE

TECHNIQUES FOR
MANAGEMENT
BBA - SEMESTER -3

Ramanarayanan Prasad [Date] [Course title]

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ASSIGNMENT

NAME RAMANARAYANAN SREERAMPRASAD

ROLL NO : 2314514888

PROGRAM BACHELOR OF BUSINESS ADMINISTRATION (BBA)

SEMESTER III

COURSE CODE & NAME DBB2102 –QUANTITATIVE TECHNIQUES FOR MANAGEMENT

NUMBER OF ASSIGNMENTS 02 SETS (Assignment set 1 & 2)

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ASSIGNMENT SET -1 ;
1. Describe function of Statistics briefly.
Definition of statistics:
a. “Statistics may be called as the science of counting”, as mentioned by
renowned statistician “Arthur Lyon Bowley”.
b. Merriam -Webster defines statistics as “Classified facts representing the
conditions of a people in a state – especially the facts that can be stated in
numbers or any other tabular classified arrangement.
Based on the above definitions, we can conclude that statistics possess the following
features:
 Aggregation of facts
 Quantitative Expression  Multifaceted influences
 Accuracy & Reliability  Visual representation
Statistics is a powerful tool that makes us explore and sense the world around us.
Consider the following examples mentioned below :
1. The Literacy rate of average Indian youth (15 -24yrs) is 92.7%
2. The average life expectancy in Japan is 87.2 years
3. Google processes 40,000 search queries every second
4. National parks and wildlife reserves cover 13.2% of the planet's land area.
5. The projected GDP growth rate of India in 2024 is expected to be 6.8%
The numerical values or figures or facts that are shown in the examples above are called as
statistics. Statistics cannot exist without numbers and figures, as highlighted by the
examples listed above. However, statistics must be more than just numbers and
graphical data representation. It involves drawing insightful conclusions and important
information from such data.
Let’s discuss some of the key functions of statistics.
 Representation of Facts in Numerical Data :
• Statistics present problems in numerical figures for better understanding.
• Qualitative data is often vague and may be understood differently by different
people.
• Classification of students into groups helps form a more precise understanding
of class performance.
 Condense and Summarize a Mass of Data :
• Statistical methods help reduce large mass of numerical data to totals,
averages, percentages, etc.
• These figures are presented graphically or diagrammatically, reducing mental
strain.

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• Single figures in the form of averages and percentages are easier to grasp than
a mass of statistical data.
 Facilitating Data Comparison :
• Statistical analysis helps compare various phenomena using measures like
mean, variance, ratios, percentages, and coefficients.
• Comparison helps draw conclusions about the standard of living.
 Formation and Testing Hypotheses :
• Hypotheses are statements about population characteristics.
• Statistical techniques can test the validity of these statements.
 Forecasting Future Trends :
• Statistical methods provide a scientific basis for making forecasts.
• Techniques used for forecasting include time series analysis, regression
analysis, etc.
 Formulating Policies :
• Statistical analysis of data is the starting point in formulating policies in
various economic, business, and government activities.
 Statistics' Role in Business and Economics.
• Statistics provide tools for data analysis, presenting data in figures and facts.
• They enable quick decision-making despite large data sets.
• Statistics provide an unbiased view of market conditions, enabling CEOs to
make real-world business strategies.
• They help understand relationships between different variables in business
situations, revealing links between variables like discounted sales offers and
revenue generation.
• Statistics ensure quality in business processes, allowing organizations to
measure and control production processes.
• This helps in minimizing waste and ensuring the quantity of raw material
required.

2. Explain Classification of data and all its types.

Data: The Basis for Knowledgeable Choices
The two primary types of data, which are the foundation of information, are as follows:
• Primary Data: Gathered directly from the source by the investigator for a particular
investigation.
o As an illustration, consider surveys, which are questionnaires sent to respondents
directly.
The purpose of experiments is to observe cause-and-effect linkages through controlled
examinations.
Interviews: Face-to-face discussions with people to obtain detailed information
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Observations: Methodical documentation of actions or occurrences.
Secondary data is information that has been gathered by others and then utilized by
researchers for their own objectives.
o As an illustration, consider government publications such as economic reports and
census statistics.
Academic periodicals include conference proceedings and research publications.
Industry reports include financial accounts and data from market research.
Databases are online information stores.
The quality of the data is crucial, regardless of its source. Large volumes of data can be
processed by computers, but the correctness of the results depends only on the caliber
of the input. In order to guarantee dependability, researchers need to thoroughly assess
data by taking into account:
• Data Source: How reliable and trustworthy is the source?
• Bias: Were there any possible biases in the gathering or examination of data?
• Support and Contradictory Evidence: Are there any conflicting conclusions or are the
data backed up by other evidence?
• Representativeness and Sample Size: Is the sample size adequate and typical of the
population?
• Validity of Conclusions: Are the inferences made from the data sound and backed up
by the available evidence?
Classifying Data: Setting Up for Analysis
Data must be arranged into relevant categories in order to be analysed efficiently
Typical categories consist of the following :

Classification of
Data

Cross sectional Geographical

Qualitative Data Quantitative Data
Data Data

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Qualitative data ; It describes attributes or traits that are difficult to quantify
mathematically.
 Examples include: o Nominal: Categories (such colors and brands) that don't have
any intrinsic order.
 The categories are arranged in a ranked manner, such as low, medium, and high
satisfaction levels.
Quantitative Data: This type of data deals with numbers or amounts.
 Illustrations:
a. Discrete: Only accepts certain values, such the number of pupils.
b. Any value inside a range can be continuous, such as height or weight.
c. Time Series Data: Information gathered over an extended period of time
that is frequently utilized to spot patterns and trends.
d. A year's worth of stock values are one example.
e. Monthly data for sales.
Cross-sectional data : It is information gathered from several participants at one time.
 Examples include survey information gathered from a wide range of
respondents.
 Consumer information gleaned via a company's database snapshot.
Geographical Data: Information pertaining to certain places.
 Maps of population density and regional weather data are two examples.
 Techniques for Gathering Primary Data
 Primary data collection necessitates meticulous preparation and implementation.
Typical techniques include of:
• Surveys: Forms that are sent out by mail, the internet, or in person.
• Interviews: Direct discussions with people that enable in-depth discussion of subjects.
• Observations: Methodical documentation of actions or occurrences in unaltered
environments.
• Experiments: Managed research to look at causal linkages.
Selecting the Appropriate Approach:
A number of factors influence the choice of data gathering technique, including:
• Research goals: What particular data are being looked for?
• Resources at hand: Time, money, and manpower limitations.
• Target population: Who is the study's intended audience?
Considerations for ethics: securing informed consent and protecting data privacy.
Researchers may guarantee the validity and dependability of their findings by using
good data collecting practices, proper categorization schemes, and carefully chosen
data sources. This will eventually result in more informed decision-making.
Note: This revised version has better ordered information presentation, pertinent
examples, and more lucid explanations.
.

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3. Calculate the following :
a. Calculate the mean of the following frequency distribution:
Marks X 10 20 30 40 50 60
Frequency f 8 12 20 10 7 3

Formula :

Components :
 x: Variables (Values of marks)
 f : Frequency ( Number of Occurrences)
 ∑𝑓𝑥 : Sum of products of variable and frequency
 ∑𝑓 ∶ 𝑇𝑜𝑡𝑎𝑙 𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦 (𝑆𝑢𝑚 𝑜𝑓 𝑎𝑙𝑙 𝑖𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙 𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑖𝑒𝑠)
Marks (x) Frequency (f) (fx)
10 8 80
20 12 240
30 20 600
40 10 400
50 7 350
60 3 180
Total ∑𝑓 = 60 ∑𝑓𝑥 = 1850

Step -1 : Calculate ∑𝑓𝑥 (sum of products of marks and frequency) :

∑𝒇𝒙 = ( 10*8) + (20 *12) +(30*20) +(40 *10) + (50 *7) + (60 *3)

= 80 +240+600+400+350+180

= 1850

Step -2 : Calculate ∑𝒇 (𝑇he total frequency) :

∑𝒇 = 8 +12 +20 +10+7+3

= 60

∑𝒇𝒙
Step -3 : Calculate the mean ( ∑𝒇 ) :

∑𝒇𝒙
∑𝒇 = 1850 / 60 = 30.83

Mean for the given frequency distribution is = 30.83

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b. Find Quartile one Q1 and Quartile three Q3 of the following series:

Size: 4 4.5 5 5.5 6 6.5 7 7.5 8
Frequency: 10 18 22 25 40 15 10 8 7

Mathematical representation :

Q1 : (N/4)th value, where N = Total frequency

Q3 : (3N/4)th value

Formula :
(𝑁 ⁄ 4) − 𝐹
𝑄1 = 𝐿1 + ∗ 𝐶
𝑓1
(3𝑁 ⁄4) − 𝐹
𝑄3 = 𝐿3 + ∗ 𝐶
𝑓3
Components :
1) N – Total Frequency
2) L1 : Lower limit of quartile class
3) F : Cumulative frequency preceding the quartile class
4) f1 : Frequency of the quartile class
5) C: width of the quartile class interval
Step :1 – Calculate the cumulative frequency:

Size Frequency Cumulative Frequency

4 10 10
4.5 18 28
5 22 50
5.5 25 75
6 40 115
6.5 15 130
7 10 140
7.5 8 148
8 7 155

Step :2 -: Calculate the total frequency :

Total frequency (N) = 10 +18+22+25+40+15+10+8+7
= 155

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Step-3 : Calculate the positions of Q1(25th Percentile) & Q3 (75th Percentile)
Q1 = (N) / 4 = (155) / 4

= 38.75 (approx. value -39)

Q3 = 3 * (N) / 4 = 3 (155) / 4

= 116.25

Step :4 – Determine Q1 & Q3 :

Calculation of Q1 : Q1 lies between the class interval 5 -5.5 (since the 39th
observation falls in this range)
(𝑁 ⁄ 4) − 𝐹
𝑄1 = 𝐿1 + ∗ 𝐶
𝑓1
 L1 = (Lower limit of the class) – 5
 N – Total frequency – 155
 F – (Cumulative frequency of preceding class) – 28
 f1 - (Frequency of the class containing the quartile ) – 25
 C – Class width – 0.5
Applying the formula
155
5+( )−28
4
Q1 = × 0.5
25
(38.75−28)
=5+ × 0.5
25

= 5.215
Calculation of Q3 : Q3 lies between the class interval 6 -6.5 (since the 116.25th
observation falls in this range)
(3 𝑁 ⁄4) − 𝐹
𝑸𝟑 = 𝐿3 + ∗ 𝐶
𝑓3
 L3 = (Lower limit of the class) – 6
 N – Total frequency – 155
 F – (Cumulative frequency of preceding class) – 75
 f3 - (Frequency of the class containing the quartile ) – 40
 C – Class width – 0.5
Applying the formula
155
6+[3∗ ( )−75
Q3 = 4
× 0.5 Therefore using the provided formula :
40
(116.25−75) Q1 (first Quartile ) = 5.215
=6+ × 0.5
40
Q3 (Third Quartile) = 6.516
= 6.516

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ASSIGNMENT SET -2 ;
1) Explain coefficient of correlation. Discuss the methods of calculating coefficient of
correlation.
Co-relation :
In correlation analysis, we examine the relationship or connection between two or more
variables. Correlation means connection. Two variables are said to be correlated if their
differences cause changes in one to be accompanied by changes in the other.
Examples include the correlation between a class's height and weight, the family's
income and the amount spent on luxuries, the association between blood sugar and
insulin dosage, etc. There might be "n" variables that influence one another, and there
could be a relationship between all of them. For example, there are three variables, X,
Y, and Z; X is connected to Z and Y, while Z is related to Y.
So, we may say that correlation is a statistical technique for determining how two or
more variables relate to one another.
Definition :
Tuttle defined correlation as: “An analysis of the covariation of two or more variables

is usually called the correlation”.

The degree to which two or more variables are connected is known as correlation.
With the use of statistical tools and methods, it is a procedure to ascertain the degree of

association between variables. In a nutshell, correlation is the degree of the association

between variables, however several writers have defined it differently.

Key characteristics of Correlation:

 Cause-and-effect links are not revealed.

 The presence of association could be the result of chance, particularly in small
sample sizes.
 Potential relationships or patterns in observations that are not deliberate.
 Potential associations between several data sets or observations of distinct
variables.
 The linear relationship's strength (0–1) and direction (positive/negative) are
measured.
 Perfect negative is at -1, and perfect positive is at 1.
 The independent variables don't correlate at all.
 A correlation may not necessarily indicate a cause.

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Types of Correlation :
Experts have distinguished between many sorts of correlation. They may all be
broadly classified into three types:

Type-1 Type-2 Type-3

Correlation Correlation
Correlation

Positive Negative Simple Multiple

Correlation Correlation Correlation Correlation Linear Non linear

Partial Total

Lets look into each types in brief :

1. Positive Correlation:
 Increase in one variable leads to increase in another.
 Examples: Height vs. Weight, Study Hours vs. Grades, Exercise vs. Endurance.
2. Negative Correlation:
 Increase in one variable corresponds to decrease in another.
 Examples: Temperature vs. Ice Cream Sales, Rainfall vs. Outdoor Events, Calories
Consumed vs. Weight Loss.
3. Linear Correlation:
 Relationship between variables represented by a straight line.
 Examples: Distance vs. Time, Cost vs. Quantity, Height vs. Proportional
Measurements.
4. Non-Linear Correlation:
 Relationship between variables cannot be represented by a straight line.
 Examples: Age vs. Life Insurance Premiums, Temperature vs. Chemical Reactions,
5. Simple Correlation:
 Relationship between two variables.
 Examples: Height vs. Weight, Study Hours vs. Grades, Age vs. Income.
6. Multiple Correlation:
Relationship between one dependent variable and multiple independent variables.
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Methods of calculating Coefficient of Correlation :
Following are the techniques used to study correlation:
 Scatter diagram technique of correlation
 Karl Pearson’s Coefficient of correlation
 Spearman’s Rank Correlation
1. Scatter diagram technique :
 It is the diagrammatic Representation Technique
 Data plotted on a graph sheet as dots.
 X variable plotted on horizontal axis.
 Y variable plotted on vertical axis.
 Indicates scatter or concentration of points.
 X and Y variables are independent and dependent variables.

LOW DEGREE CORRELATION HIGH DEGREE ZERO

12 CORRELATION CORRELATION
DEPENDANT VARIABLE

10 30 8
DEPENDANT VARIABLE

Dependant variable
8 25
6
20
6
15 4
4
10
2 2
5
0 0 0
0 5 10 0 50 100 150 0 5 10
INDEPENDENT VARIABLE INdEPENDANT VARIABLE independent variable

2. Karl Pearson's Coefficient of Correlation:

o This method is a mathematical method used to measure the degree of linear
relationship between variables.
o It determines the strength and direction of the relationship between variables.
o It is widely used in practice and is commonly known as Pearson's coefficient of
correlation.
There are two ways to measure the Karl Pearson's Coefficient of Correlation
Method-1 : When Deviation is taken from the actual mean, the formula for
measuring this relationship is given as below :
∑𝒙𝒚
𝒓 = 𝒓(𝒙, 𝒚) =
√∑𝒙𝟐 ⋅ 𝜮𝒚𝟐

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Method :2 - When the deviation is taken from the assumed mean, the formula for
measuring this relationship is given as below :
(𝑵 ∑𝒅𝒙𝒅𝒚 − ∑𝒅𝒙 ∑𝒅𝒚)
𝒓 = 𝒓(𝒙, 𝒚) =
√(𝑵∑𝒅𝒙𝟐 − (∑𝒅𝒙)𝟐 √(𝑵∑𝒅𝒚𝟐 − (∑𝒅𝒚)𝟐 )

Where ‘r’ is the coefficient of correlation

3. Spearman's Rank Correlation Coefficient:

• Developed by British psychologist Charles, Edward Spearman.
• In situations where quantitative measurement is not possible, Spearman's
coefficient of correlation is used.
• The method arranges individuals in a group, obtaining a rank number for each
individual.
• Often referred to as non-metric correlation, it measures correlation for two non-
metric variables based on ranking.
This method can be calculated in 3 ways :
Method -1 : When actual ranks are given, the formula for calculation of
Spearman's Rank Correlation as given below: :
(𝟔 𝜮𝑫𝟐 )
𝑹=𝟏−
𝑵 (𝑵𝟐 − 𝟏)
 R= Rank correlation coefficient
 Difference of rank between paired items in two series
 N = Total number of observations
Method :2 - When ranks are not given:
If ranks aren't provided, assign them to available observations, starting with highest
or lowest, and repeat for all other variables.
(𝟔 𝜮𝑫𝟐 )
𝑹=𝟏−
𝑵 (𝑵𝟑 − 𝑵)

Method :3 - When ranks are equal:

In some cases, two or more data are equal, resulting in equal ranks. Average ranks
are assigned to each data, such as two individuals at fourth place receiving an
𝟒+𝟓
average rank of = 4.5, or three at fourth place receiving an average rank of
𝟐
𝟒+𝟓+𝟔
=5. The formula for calculating Spearman's coefficient of correlation in equal
𝟐
ranks is
𝟏 𝟏
𝟔 { 𝜮𝑫𝟐 + 𝟏𝟐 (𝒎𝟏𝟑 − 𝒎𝟏 ) + 𝟏𝟐 (𝒎𝟐𝟑 − 𝒎𝟐) … … }
𝑹=𝟏−
(𝑵𝟑 − 𝑵)

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2) Describe components of time series analysis :
A time series is a set of measurements of variables that move consistently from past to
future, allowing for freedom of choice in observation times. Data is gathered at regular
intervals on a given variable characteristic over a period of time. Time series data
includes a series of values, a collection of magnitudes, and a common stable reference
point.
Examples of time series include stock price, Sensex, exchange rate, interest rate,
inflation rate, national GDP, retail sales, electric power consumption, and accident
fatalities. Time acts as an independent variable to estimate dependent variables.

Time series analysis involves analysing group statistical information accumulated at

regular intervals, focusing on four types of change or variation.

Components of
Time series

Cyclic Seasonal Irregular

Secular trend
fluctuations variations variations

1. Secular trend : The variable's value tends to either decline or increase in this first
kind of change. or rise over an extended length of time. It is described as "a steady,
long-term shift in the anticipated variable's average level over a certain period of time.
One illustration of a secular tendency is the census department's record of India's
population growth. A secular trend may be defined as a country's population growing
steadily over a number of decades.

Below Table shows a upward secular trend :

Year Population
1970 54,75,69,000
1980 68,73,32,000
1990 84,95,15,000
2000 101,59,23,000

2. Cyclic Fluctuations : The second kind of variation is cyclic fluctuations, which are
often business cycles or the tendency for the values of the variable being studied to
rise and decrease in tandem with business cycle variations.
The economic cycle may be doing extremely well and climbing to the trend line's
apex, or it may be in danger of collapsing and reaching a low point below it. A year
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may pass between reaching a peak and dropping to a low point, or it may take up to
15 or 20 years. Although a common pattern is shown in the figure it should be noted
that cyclic motions move somewhat randomly and do not follow any regular pattern.

Cyclic functions
350
300 300
Sales in millions

250
200 200
150 150
100 100
50 50 40
0
1970 1972 1974 1976 1978 1980
Year

3. Seasonal Variations :

The impact of spring, summer, fall, and winter on business and economic activity is
what causes seasonal changes. Patterns of changes within a year that frequently recur
from year to year are known as seasonal variations. For instance, the hotel sector
may anticipate a significant rise in visitors each year in the spring and fall. In a
similar vein, doctors anticipate a spike in flu infections in the summer. They are
helpful in predicting the future since they have a regular pattern. Seasonal
oscillations are seen in Fig. below shows that sales of ice cream are higher in April
through June than in other months.

Seasonal Variations
600 550

500 420
Sales of Icecream

400

300

200 120 120

60 80
100

0
Jan to Mar - Apr to June - Jul to Sep - Oct to Dec - Jan to Mar - Apr to June -
2020 2020 2020 2020 2021 2021
Months

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4. Irregular variations : According to time series analysis, this is the fourth kind of
change. In certain circumstances, a variable's value may fluctuate randomly and be
entirely unexpected. Such motions are described by irregular fluctuations. Strikes, plant
deterioration, non-seasonal illnesses, inclement weather, etc. can all cause this. These
variations are either too high to reach peaks suddenly or go extremely far downhill.

Irregular variations
160
150
140
SALES OF ICECREAM

120
100
80 80
60
40 45
20 20 20
0 5 4
Jan to Mar Apr to Jul to Sep - Oct to Dec Jan to Mar Apr to Jul to Sep -
- 2020 June -2020 2020 - 2020 - 2021 June -2021 2020
MONTHS

3) (a) Construct an index number for 2015 taking 2014 as base:

Commodity Price in 2014 Price in 2015

A 90 95
B 40 60
C 90 110
D 30 35
We will compute the price related index for each commodity, then determine the
weighted average or the simple average of these relatives in order to create an index
number for 2015 using 2014 as the foundation. We'll apply the simple average method
because the weights aren't given.
Formula :
∑𝑷𝟏
𝑷𝟎𝟏 = × 𝟏𝟎𝟎
∑𝑷𝟎

Where :
P01 – Index number of the current year (2015)
P1 = Price of the commodity in the current year (2015)
P0 – Price of the commodity in the base year (2014)
n = Number of commodities
𝜮 = Summation symbol indicating the sum of values

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Step -1 : Calculate the private relative index for each commodity :
It is calculated as : Price index in 2015 / Price index in 2014 * 100
Step -2 : Calculate the price relatives :
95
Commodity A : 90 × 100 = 105.56
60
Commodity B : 40 × 100 = 150
110
Commodity C : × 100 = 122.22
90
35
Commodity D : 30 × 100 = 116.67

Step-3 : Calculate the simple average of price relatives :

105.56+150+122.22+116.67
Simple Average =
4
= 123.61

Therefore, the index number for 2015 with 2014 as the base year is 123.61.

3 (b) Write Short note:

1) Parameter
2) Estimator

1. Parameter :
Definition : A parameter is a population's overall numerical characteristic or
quality. It characterizes a particular feature of the population, such as its form,
variability, or central tendency.
 Typically, parameters are: Unknown (since it is uncommon to obtain complete
demographic figures) represented by Greek letters, such as 𝝁, 𝝈, 𝝅
For example: The average height of all UAE citizens is known as the population
mean (μ).
 Population Proportion (π): The proportion of Arabic-speaking citizens in the
United Arab Emirates.
 Variability in the earnings of UAE citizens is represented by the population
standard deviation (σ).

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 Population Mean (μ):Let's consider a population of 'N' individuals with
values denoted by X1, X2, ..., XN.
The population mean (μ) is calculated as:
(𝑋1 +𝑋2 +⋯𝑋𝑁)
 𝜇=
𝑁

 Population Variance (σ²):The population variance is calculated as:

∑(𝑋𝑖 − 𝜇)2
𝜎2 =
𝑁
where Xi is the value of the ith individual in the population, μ is the
population mean, and Σ represents the sum of all values.
 Population Proportion (p):
If a population has a binary characteristic (e.g., success/failure, yes/no), the
population proportion (p) is the fraction of individuals in the population that
possess the characteristic.

Key Characteristics of Population Parameters:

• Fixed Value: Constant, unchanging value.
• Population-Based: Defines entire population, not just sample.
• Often Unknown: Unknown true value in real-world scenarios.

2. Estimator :
Definition : A statistic derived from a sample that is used to estimate or
approximate an unknown population parameter is called an estimator.
For example,
 Sample Mean (x̄): The average height of a randomly selected subset of
the nation's adult male population is the sample mean (x̄). We estimate
the unknown population mean (μ) using this sample mean.
(𝑥1 + 𝑥2 + ⋯ 𝑥𝑁)
𝑥̅ =
𝑁

 Sample Proportion (p̂): The sample proportion (p̂) is the percentage of

voters who favor a certain candidate based on a survey of a random
sample of voters. The unknown population percentage (p) is estimated
using this sample proportion.

𝑝̂ = 𝑘/𝑛

Key Characteristics of Estimators:

• Calculated from sample data.
• Variable due to sampling variability.
• Used for inference about population parameters.
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