Assignment: Advance Statistics for Business

Department of Business Administration (AUB)

(Course Code: MBA-5154)

Submitted To: Muktasha Deena Chowdhury

Assistant Professor (DOB&A, AUB)

Submitted By: Md. Khairul Hasan

ID- 201930508 (MBA, AUB)
Question 1: What do you mean by Business Statistics? Discuss the importance of Business statistics and mention
its limitations of Business statistics?

Answer: Business Statistics – Refers to the application of statistical tools and techniques to business and
managerial problems for the purpose of decision making. It is simply the study of numerical data, facts, figures and
measurements. It is used to convert raw numerical data into useful information for relevant users.

Business statistics is the science of data. It involves collecting, classifying, summarizing, organizing,
analyzing, and interpreting data. The main objective of Business Statistics is to make inferences about
certain characteristics of a population in the business domain whether the population is people, objects, or
collections of information. A population is an entire set of data and any real-life sample is normally only a
subset of data contained in the population. The subject of Business Statistics typically covers statistical
study, descriptive statistics (collection, description, analysis, and summary of data), probability, and the data
distributions, test of hypotheses and confidence intervals, linear regression, and correlation. Statistics is a
science of making decisions with respect to the characteristics of a group of persons or objects on the basis
of numerical information obtained from a randomly selected sample of the group. Statisticians refer to this
numerical observation as realization of a random sample. A random sample is only a sample of a finite
number of outcomes of a random process and one cannot normally see a random sample.

According to Bowley, “Statistics is a science of Average”. He defined statistics as “ Numerical statement of facts in
any department of enquiry placed in relation to each other.”

Business statistics involves the application of statistical tools in the area of marketing, production, finance, research
and development, manpower planning etc. to extract relevant information for the purpose of decision making.

On the basis of the statistical technique used, statistics may be broadly divided into two categories:

 Descriptive Statistics – Descriptive statistics makes use of Graphs, tables, charts and other statistical tools to
make generalizations or to describe a certain phenomenon.

 Inferential Statistics – All generalization made through descriptive statistics may not necessarily be true and
therefore Inferential statistics is used to test the validity of the generalizations made. It involves estimating
and validating facts and figures for the purpose of decision making.

Importance of Business Statistics:

In Business – It helps to make swift decisions by providing useful information about customer trends and variations,
cost customer trends and variations, price customer trends and variations etc.

In Mathematics – It helps in describing measurements and providing accuracy of theories.

In Economics – It helps to find relationship between two variables like demand and supply, cost and revenue, imports
and exports and helps to establish relationship between inflation rate, per capita income, income distribution etc.

In Accounts – It helps to discover trends and create projections for next year.

In Physics – It helps to compute distance between objects in space

Research – It helps in formulating and testing hypothesis.

Government – Government takes help of statistics to make budgets, set minimum wages, estimate cost of
living etc.

Business Statistics helps a business to:

 Deal with uncertainties by forecasting seasonal, cyclic and general economic fluctuations
 Helps in Sound Decision making by providing accurate estimates about costs, demand, prices, sales
etc.
 Helps in business planning on the basis of sound predictions and assumptions
 Helps in measuring variations in performance of products, employees, business units etc.
 It allows comparison of two or more products, business units, sales teams etc.
 Helps in identifying relationship between various variables and their effect on each other like effect
of advertisement on sales
 Helps in validating generalizations and theoretical concepts formulated by managers.

Limitations of Business Statistics: Based on different limitations of statistics following areas are
identified by different research scholars :

1. Statistics deals only with quantitative characteristics: Statistics are numerical statements of facts.
Data which cannot be expressed in numbers are incapable of statistical analysis. Qualitative
characteristics like honesty, efficiency, intelligence etc. cannot be studied directly.

2. Statistics deals with aggregates not with individuals: Since statistics deals with aggregates of facts,
the study of individual measurements lies outside the scope of statistics.

3. Statistical laws are not perfectly accurate: Statistics deals with such characteristics which are
affected by multiplicity of causes and it is not possible to study the effect of these factors. Due to this
limitation, the results obtained are not perfectly accurate but only an approximation.

4. Statistical results are only an average: Statistical results reveal only the average behavior. The
Conclusions obtained statistically are not universally true but they are true only under certain conditions.

5. Statistics is only one of the methods of studying a problem: Statistical tools do not provide the best
solution under all circumstances.

6. Statistics can be misused: The greatest limitation of statistics is that they are liable to be misused.
The data placed to an inexperienced person may reveal wrong results. Only persons having fundamental
knowledge of statistical methods can handle the data properly
Question 2: Why presentation of data is so important? The marks of 25 students of BBA 65th batch of Asian
University of Bangladesh are given below:

65 71 55 68 80

58 45 50 56 82

67 73 75 46 65

68 70 80 60 54

49 46 40 63 68

Present the above data in a suitable statistical table.

Answer: Statistical data are the basic raw material of business statistics. Data may relate to an activity of our
interest, a phenomenon, or a problem situation under study. They derive as a result of the process of measuring,
counting and/or observing. Statistical data, therefore, refer to those aspects of a problem situation that can be
measured, quantified, counted, or classified. Any object subject phenomenon, or activity that generates data through
this process is termed as a variable. In other words, a variable is one that shows a degree of variability when
successive measurements are recorded. In statistics, data are classified into two broad categories: quantitative data and
qualitative data. This classification is based on the kind of characteristics that are measured.

1. Quantitative data : are those that can be quantified in definite units of measurement. These refer to characteristics
whose successive measurements yield quantifiable observations. Depending on the nature of the variable observed for
measurement, quantitative data can be further categorized as continuous and discrete data. Obviously, a variable may
be a continuous variable or a discrete variable.

(a) Continuous data- represent the numerical values of a continuous variable. A continuous variable is the one that
can assume any value between any two points on a line segment, thus representing an interval of values. The values
are quite precise and close to each other, yet distinguishably different. All characteristics such as weight, length,
height, thickness, velocity, temperature, tensile strength, etc., represent continuous variables. Thus, the data recorded
on these and similar other characteristics are called continuous data. It may be noted that a continuous variable
assumes the finest unit of measurement. Finest in the sense that it enables measurements to the maximum degree of
precision.

(b) Discrete data - are the values assumed by a discrete variable. A discrete variable is the one whose outcomes are
measured in fixed numbers. Such data are essentially count data. These are derived from a process of counting, such
as the number of items possessing or not possessing a certain characteristic. The number of customers visiting a
departmental store every day, the incoming flights at an airport, and the defective items in a consignment received for
sale, are all examples of discrete data.

2. Qualitative data : refer to qualitative characteristics of a subject or an object. A characteristic is qualitative in

nature when its observations are defined and noted in terms of the presence or absence of a certain attribute in discrete
numbers. These data are further classified as nominal and rank data.

(a) Nominal data - are the outcome of classification into two or more categories of items or units comprising a
sample or a population according to some quality characteristic. Classification of students according to sex (as males
and females), of workers according to skill (as skilled, semi-skilled, and unskilled), and of employees according to the
level of education (as matriculates, undergraduates, and post-graduates), all result into nominal data. Given any such
basis of classification, it is always possible to assign each item to a particular class and make a summation of items
belonging to each class. The count data so obtained are called nominal data.

(b) Rank data - on the other hand, are the result of assigning ranks to specify order in terms of the integers 1,2,3, ...,
n. Ranks may be assigned according to the level of performance in a test. a contest, a competition, an interview, or a
show. The candidates appearing in an interview, for example, may be assigned ranks in integers ranging from I to n,
depending on their performance in the interview. Ranks so assigned can be viewed as the continuous values of a
variable involving performance as the quality characteristic. Data sources could be seen as of two types, viz.,
secondary and primary. The two can be defined as under:

(i) Secondary data: They already exist in some form: published or unpublished - in an identifiable secondary source.
They are, generally, available from published source(s), though not necessarily in the form actually required.

(ii) Primary data: Those data which do not already exist in any form, and thus have to be collected for the first time
from the primary source(s). By their very nature, these data require fresh and first-time collection covering the whole
population or a sample drawn from it.

Presentation of Data in business statistics are important to :

 To know how to properly present information

 To know how to draw conclusions about populations based on sample information

 To know how to obtain reliable forecasts

a. Data - are the raw materials for data processing.

b. Information - is data that has been processed.

Collecting Data

 Data can be collected in a number of ways i.e. monthly reports from all their departments on such matters as sales,
purchases, capital expenditure, wages paid, staff employed, and so on.

 Can then be used to compare actual performances with planned performances, and adjustments may be made in
order to achieve better results.
A visual display in the forms of statistical chart: presentation of data and information are formed
in the following different formats of chart/graph to ease the presentation of statistics of population;

 Charts often convey the meaning or significance of data more clearly than would a table

 Line graph

 Bar charts

 Histograms

 Pie charts

Thus to understand and make sure of clear presentation of any details in a very short form presentation of statistics in
a form of data with different charts are therefore very important for development.
Solution of data: The marks of 25 students of BBA 65th batch of Asian University of Bangladesh are given below:

65 71 55 68 80

58 45 50 56 82

67 73 75 46 65

68 70 80 60 54

49 46 40 63 68

Presenting the above data in a suitable statistical table in tally form as follows;

MARKS TALLY FREQUENCY

40 – 50 IIII I 6
50 – 60 IIII 5
60 – 70 I I I I III 8
70 – 80 IIII 5
80 – 90 I 1
TOTAL 25

The above solutions have been identified through data presentation, matches the results of 25 students of Asian
University of Bangladesh.