DEPARTMENT :AIT-MBA

Subject Name- Statistical Analysis for Business Decisions

Faculty Name: Ms. Divya Dang
E-Code: E11915

Introduction to Statistics DISCOVER . LEARN . EMPOWER

 Outline
Introduction to statistics:
Introduction to Statistics • Introduction
• Definitions of Statistics
Objective • Importance of Statistics
1. Understand the role of statistical techniques in
business.
• Functions of Statistics
2. Explain the concept of statistical techniques. • Limitation of Statistics
3. Understand the limitations of statistical techniques. • Application of Statistics

2
 Introduction of Statistics
• The word 'Statistics' is derived from Latin word 'Status', German word 'Statistik',
Italian word 'Statista', French word 'Statisttique' each of which means political state.
• In those days Statistics was used only in collecting the information relating to the
population of the state military strength, incomes etc. for framing the military and
the fiscal policies. So, at that time, Statistics was considered only as the science of
statecraft. However with passage of time, the science of statistics has been applied
very widely.
• So, in modern times, the scope of statistics has considerably enlarged. It is used not
only to the state in administration but it is used in Economics, Science, Business,
Research, Bank etc. There is hardly any place of human activity where statistics has
not been used.

3
 Introduction of Statistics
• Statistics and Quantitative Techniques is very broad subject and can be applied in
different fields of not only business management but in all the areas of social
sciences.
• Everything that deals even remotely with the collection, processing, interpretation
and presentation of data belongs to the domain of statistics, and so does the
detailed planning of that precedes all these activities.
• Information so collected by using the various methods in statistics is of wide use. We
know that as a business manager or any stakeholder one should have capability to
take the decisions related to the accounting of Business, Profits, Capital, Labour,
Other Expenses and Investment Policies.

4
 Introduction of Statistics
• For the same one should have strong analytical skills, Statistical and Quantitative
Aptitude provides this ability to develop a concrete base for analysis of the data and
decision making.
• In today’s age, Statistical and Quantitative Methods are applied in almost all the
fields that involve decision making, drawing accurate conclusions or inferences from
so collated data and for making decisions in accordance with the uncertainties based
on statistical practices and methodology.
• Statistical and Quantitative Aptitude activities usually connected with using Linear
Programming, Central Tendency, Correlation, Regression, Probabilities, Hypothesis
testing etc.

5
 Introduction of Statistics
• Stage 1: At the turn of the century, development was led by the work of Francis
Galton and Karl Pearson, who transformed statistics into a demanding mathematical
discipline used for analysis, not just in science, but in industry and politics as well.
• Stage 2: Exclusive development in 1910s and 1920s was initiated by William Gosset,
and reached its conclusion in the insights of Ronald Fisher. This involved the
development of better design of experiments models, hypothesis testing and
techniques for use with small data samples.
• Stage 3: Modification and extension of earlier developments emerged from the
collaborative work between Egon Pearson and Jerzy Neyman in the 1930s.

6
 Definition of Statistics
Following are the widely used definitions of the term statistics:
• Agresti & Finlay: Statistics consists of a body of methods for collecting and analyzing
data.
• Webster: Statistics are the classified facts representing the conditions of the people
in the state, especially those facts which can be stated in tables or numbers or in any
tabular and classified arrangements.
• Ya-Lun-Chou: Statistics is a method of decision making in the face of uncertainty on
the basis of numerical data and calculated risk.
• Harlow: Statistics is the science and art of handling aggregates of facts observing,
enumering, recording classifying and otherwise systematically treating them.

7
 Definition of Statistics
• Statistics is the branch of mathematics related with classification, collection,
analysis, and interpretation of numerical facts, for drawing inferences on the basis of
their quantifiable likelihood (probability).
• Statistics can interpret aggregates of data too large to be intelligible by ordinary
observation because such data (unlike individual quantities) tend to behave in
regular, predictable manner. It is subdivided into descriptive statistics and inferential
statistics. Statistics is a form of mathematical analysis that uses quantified models,
representations and synopses for a given set of experimental data or real- life
studies.
• Statistics studies methodologies together, review, analyze and draw conclusions
from data. Some statistical measures include Mean, Regression analysis, Skewness,
Kurtosis, Variance and Analysis of variance.

8
 Definition of Statistics
A.L. Bowley: Statistics are numerical statement of facts in any department of
enquiry placed in relation to each other.
• Statistics may be called the science of counting in one of the departments due to
Bowley, obviously this is an incomplete definition as it takes into account only the
aspect of collection and ignores other aspects such as analysis, presentation and
interpretation.
• Bowley gives another definition for statistics, which states ‘statistics may be rightly
called the scheme of averages’.
• This definition is also incomplete, as averages play an important role in
understanding and comparing data and statistics provide more measures.

9
 Importance of Statistics in Business
• Making decisions
• Using statistics, production can be planed according to what the customer likes
and wants, also one can check the quality of the products efficiently with the
help of statistical methods.
• Many business activities can be accomplished with statistics together with
deciding a new location, marketing the product and estimating what the profit
will be on a new product.

10
 Importance of Statistics in Mathematics
• Integration
• Differentiation
• Algebra
• Abundant of mathematics is based on probability and its theories, statistical
methods helps in making those mathematical theories that much more accurate.
• Using averages, dispersions, and estimation allows you to come up with
conclusions that are closer to the real answer than just taking a wild guess.

11
 Importance of Statistics in Economics
• To collect information.
• Analyse data.
• Test hypotheses.
• Relationships between supply and demand and imports and exports can be
found using statistical information.
• Figuring out the inflation rate.
• Calculation of per capita income.

12
 Importance of Statistics in Accounting
• Creating accounting reports.
• Balancing and checking accounts.
• Trends within the business.
• Create projections for fiscal years.

13
 Importance of Statistics in Banking
• Banking operations.
• Scale of operations.
• Interest rate calculations and forecasts.
Example
To assess the number of people who will be making deposits compared to the
number of people requesting loans.

14
Importance of Statistics in Management
and Administration

• Government policies.
• Estimating expected expenditures and revenue.
• Minimum wage policies.
• Cost of living.

15
Importance of Statistics in Natural and
Social Sciences
• Biostatistics.
• Biometry or biometrics.
• Design of experiments in medicine.
• Online pharmacy
• Agriculture
• Fishery

16
 Functions of Statistics
• Data collection: Statistics helps persons including individual and corporations to define
various methods with the help of which one can collect the valid data which can be
further processed to draw the meaningful conclusions.
• Use in comparison: Statistics helps comparing two or more than two quantities for
example, if some financial ratio showing profitability or the capacity of an organisation of
Wipro is 7.5 as compared to the industry figure of 5 showing the growth or positive sign
about Wipro.
• Forecasting the results: Statistics assistances in forecast by drawing various trends.
These are essential for planning and decision-making. Predictions based on the gut
feeling or hunch could be harmful for the business. This function of forecasting helps one
to have an idea about the production or any other parameter under study over a
considerable period of time.

17
 Functions of Statistics
• Hypotheses Testing: Hypothesis is a statement about the probability distribution,
illustrating a population on the foundation of the information available from the sample
observations. In the hypothesis formulation and testing, statistical methods are
tremendously beneficial.
• Carefulness: Statistics present facts accurately in quantitative form. Statement of facts
conveyed in exact quantitative terms are always more convincing than vague utterances.
• Expectation: Statistics provides the basic building block for framing suitable policies. For
example, how much capital should be spend on advertisement, how much capacity
should be installed, or manpower recruited, etc., depends upon the expected value of
outcome of decisions.

18
 Limitations of Statistics
• Statistical theories can be applied only when there is variability in the
experimental material.
• Statistics deals with only aggregates or groups and not with individual objects.
• Statistics results are not exact.
• Statistics can be misused.

19
 Applications of Statistics
• Statistics simplifies complexity, presents facts in a definite form, helps in
formulation of suitable policies, facilitates comparison and help in forecasting.
• Statistics has pervaded almost all sphere of human activity activities.
• Statistics is useful in the administration of various states, industry, business
economics, research workers, banking, insurance companies etc.

20
 Summary
• Managerial decision-making can be made well-organized and actual by analyzing
available data using suitable Statistical and Quantitative techniques.
• Statistical and Quantitative Aptitude can be practiced in research and other
functional areas like quality management, inventory management, financial
analysis, human resource planning and so on.
• Historically statistics was intended for collection of facts like taxes, land records,
population demography, etc.
• Important involvement has also been made by Indians in the field of statistics.

21
Self Assessment Questions

1. Define the term Statistics and discuss its development.

2. Discuss the importance of statistics in our daily life.

3. Describe the functions of statistics?

22
 Suggested Reading
1. R. S. Bhardwaj, Mathematics and Statistics fort Business.
2. D. P. Apte, Statistical Tools for Managers using MS Excel.
3. S. Jaisankar, Quantitative Techniques for Management Computer based Problem
Solving.
4. R. Selvaraj, Quantitative Methods in Management, Problems and Solutions.
5. Bierman H., Bonnini C. P. and Hausma W. H., Quantitative Analysis for Business
Decisions.

23
THANK YOU

For queries
Email: [email protected]