Statistics for Management - BMS

Statistics forManagement

Chapter 1

What is Statistics ?

I sleep for about twelve hours per nighton average.

How many hours do you sleep onaverage ?

You are more likelyto pass the exam ifyou start preparingearlier.

Even though you may not have realizedit, you probably have made somestatistical statements in your everydayconversation.

Today statistic has become an importanttool in the work of many academicdisciplines such as medicine, psychology,education, sociology, engineering andphysics.

In the more common usage, statistics refersto numerical facts.

The numbers that represent the income of afamily, the age of a student, the percentageof passes completed by the quarterback ofa football team, and the starting salary of atypical college graduate are examples ofstatistics in this sense of the word.

A 1988 article in U.S. News & World Reportdeclared “Statistics are an Americanobsession.”

During the 1988 football World Seriesbetween the Los Angeles Dodgers and theOakland A’s, the then NBC commentatorJoe Garagiola reported to the viewersnumerical facts about the players’performances. In response, fellowcommentator Vin Scully said, “I love it whenyou talk statistics.” In these examples, theword statistics refers to numbers.

How wonderful numbersare…… Three men go to stay at a motel, and the man at the desk chargesthem $30.00 for a room. They split the cost ten dollars each. Later themanager tells the desk man that he overcharged the men, that theactual cost should have been $25.00. The manager gives the bellboy$5.00 and tells him to give it to the men. The bellboy, however, decidesto cheat the men and pockets $2.00, giving each of the men only onedollar.

Now each man has paid $9.00 to stay in the room and 3 x $9.00 =$27.00. The bellboy has pocketed $2.00. $27.00 + $2.00 = $29.00 - sowhere is the missing $1.00?

$10

$10

$10

$30

$5$1 $1 $1

Classroom Exercise

Have class members write down theaverage time (in hours, to the nearesthalf-hour) they sleep per night. Thencreate a simple graph (called a dot plot)of the data.

Definition of statistic Statistics is a science of collecting,

organizing, presenting, analyzing andinterpreting numerical data for the purposeof assisting in making more effective decisionunder uncertainty.

Collection of data

Organization of data

Presentation of data

Analysis

Interpretation of results

From above, it should be clear thatstatistics is much more than just thetabulation of numbers and thegraphical presentation of thesetabulated numbers. Statistics is thescience of gaining information fromnumerical and categorical data.

Data Process Information

Data are thefacts or details

fromwhich information is derived.

Once data isconverted, it is

calledinformation.

processed,organized,

structured orpresented in agiven context

Statistical methods can be used tofind answers to the questions like:What kind and how much data need to

be collected? How should we organize and summarize

the data? How can we analyze the data and draw

conclusions from it? How can we assess the strength of the

conclusions and evaluate theiruncertainty?

Application of statistics Statistic plays a vital role in every fields of

human activity.

Activity

BusinessStatistics play an important role in thebusiness. A successful businessman must bevery quick and accurate in decisionmaking. He knows that what his customerwants, he should therefore know what toproduce and sell and in what quantities.Statistics help businessman plan productionaccording to the taste of the customers,the quality of the products can also bechecked more efficiently by using statisticalmethods. So all the activities of thebusinessman based on statisticalinformation. He can make correct decisionabout the location of the business,marketing of the products, financial

Important concepts:01. Population Statistical population is used for all

the individuals or objects on whichwe have to make some study.

We may be interested to know thequality of bulbs produced in afactory. The entire product of thefactory in a certain period is calleda population.

We may be interested in the levelof education in primary schools. Allthe children in the primary schoolswill make a population.

The entire lot of anything understudy is called population.

populationFinite Population

• A population is calledfinite if it is possible tocount its individuals. It mayalso be called acountable population. Thenumber of vehiclescrossing a bridge everyday, the number of birthsper year and the numberof words in a book arefinite population.

• The number of units in afinite population isdenoted by N. Thus N isthe size of the population.

Infinite Population

• Sometimes it is not possibleto count the unitscontained in thepopulation. Such apopulation is called infiniteor uncountable. Supposethat you toss a coin verylarge number of times toobserve the number ofheads. All the tosses willmake an infinitepopulation. The number ofgerms in the body isuncountable

2. Sample

A sample is a limited number ofobservations selected from a populationon a systematic basis, which yieldsgeneralization about the population

Types of statistics

Statistics

DescriptiveStatistics

InferentialStatistics

Descriptive Statistics

As the name suggests, the descriptivestatistics merely describe the data consistof methods and techniques used incollection, organization, presentationand analysis of data in order to describethe various features and characteristicsof such data.

Inferential Statistics

Statistical inference deals with methodsof inferring or drawing conclusion aboutthe characteristics of the populationbased upon the results of the sampletaken from the same population.

One Olive Tree

Green Leaves: 3000Black Leaves : 1000

Olive Garden

5 OliveTrees

Green:14070Black :6930

Distinction is based on what you aretrying to do with your data.

Descriptive

•You describeor summarizethings youdefinitelyknow.

Inferential

•Come in toconclusionabout entirepopulation.

Statistical Studies

Studies

ExperimentalStudies

ObservationalStudies

Case Study………

Experimental Study

All of the factors influencing for theresponse are the direct control of theinvestigator.

Observational Studies

Study in which individuals are observed orcertain outcomes are measured.

No step is taken to affect the outcome.

Study on ballet dancers and theirgrades

Researcher should notinterfere with subjects

Subjects must be observedand data must be collectedthroughout the observation.

ObservationalStudy

Limitations of Statistics It does not deal with individual values It cannot deal with qualitative characteristics Statistical conclusions are not universally true Statistical interpretation requires a high degree of

understanding of the subject. Statistics can be misused.

Statisticsfound 50% ofpeoplebored bystatistics