Topic 1

Introduction to Statistics
 Outline
• Introduction to statistics
• History of Statistics
• Why Business Statistics
• Characteristics of Statistics
• Function of Statistics
• Dimension of Statistics
• Types of Statistics
• Terminologies of Statistics
• Methods of Data collection
• Qualitative Vs Quantitative Data
• Application of Statistics
• Advantages and Limitation
 Introduction
• The science of collecting, arranging, analysing and interpreting numerical facts.

• The term ‘statistics’ has been derived from Latin word statisticum collegium,
Italian word statista and German word statistik, all of them mean some political
status.

• The first book to have 'statistics' in its title was "Contributions to Vital
Statistics" (1845) by Francis GP Neison.

• The modern field of statistics emerged in the late nineteenth and early
twentieth century in three stages. The first wave was led by the work of Francis
Galton and Karl Pearson, who transformed statistics into a mathematical
discipline used for analysis in science, industry and politics.
 History
• The second wave of the 1910s and 20s was initiated by William
Sealy Gosset, and reached its culmination in the insights of
Ronald Fisher. This involved the development of better
statistical models, hypothesis testing and estimation based on
samples.

• The final wave, which mainly saw the refinement and

expansion of earlier developments, emerged from the
collaborative work between Egon Pearson and Jerzy Neyman in
the 1930s
 Definitions of Statistics
Croxton and Cowden: The science which deals with the collection,
analysis and interpretation of numerical data.

Spiegal: Statistics is concerned with scientific method for

collecting, organizing, summarizing, presenting and analyzing data
as well as drawing valid conclusions and making reasonable
decisions on the basis of such analysis.

Lovitt: Statistics is the science which deals with collection,

classification and tabulation of numerical facts as the basis for
explanation, description and comparison of phenomenon.
 Definitions of Statistics
Bowley: Numerical statement of facts in any department of
enquiry placed in relation to each other.

King: The science of Statistics is the method of judging collective,

natural or social phenomena from results obtained by the analysis
or enumeration or collection of estimates.
A branch of mathematics dealing with the collection, analysis,
interpretation, and presentation of masses of numerical data.
 Why Study Business Statistics

• Managers need to have the skills to organize, analyse,

conclude and make decisions using the collected data.
• This ability to purposefully collect, organise, analyse,
conclude and make decisions using data is referred as
statistical thinking.
Characteristics of Statistics
Characteristics of Statistics
 Function of Statistics

• It helps in providing a better understanding and

accurate description of nature’s phenomena.
• It helps in the proper and efficient planning of a
statistical inquiry in any field of study.
• It helps in collecting appropriate quantitative data.
Dimensions of Statistics

Statistics

Statistical Data Statistical Methods

* Numerical facts * Formulae and models
* Comparable * Descriptive and inferential
 Type of Statistics

Descriptive Inferential
Statistics statistics
Drawing conclusions
Collecting, and/or making
summarizing and decisions concerning a
describing the data population based only
on sample data
 Business Statistics
• Business statistics takes the analysis tools from elementary statistics and applies them
to business functions, e.g., sales prediction, defects identification, consistency of stock
market, quality management etc.
• Business Statistics can be segregated in the following ways:

Descriptive Inferential Applied

Statistics Statistics Statistics
• Data presentation • Probability theory and • Regression analysis
• Central tendency distribution • Time series and forecasting
• Dispersion • Sampling and distribution • Index numbers
• Skewness and kurtosis • Estimation • Statistical process control
• Association • Hypothesis testing • Decision theory
 Statistics Vocabulary
Terminology Definition
Data • Data are facts and figures collected, analyzed and summarized for
presentation and interpretation.
• e.g., GDP of a country, number of employees in a company, sales in
past 12 months etc.
Population • A population can be defined by any number of characteristics within a
group that statisticians use to draw conclusions about the subjects in
a study.
• A population can be vague or specific, e.g., number of graduates in
Hyderabad, number of IT companies in Hyderabad.
 Statistics Vocabulary
Terminology Definition
Sample • A sample refers to a smaller, manageable version of a larger group.
• It is a subset containing the characteristics of a population.
• Samples are used in statistical testing when population sizes are too large
for the test to include all possible members or observations.
Frequency • The total number of occurrences of any observation or event is termed as
frequency.
• The cumulative frequency is the total of the absolute frequencies of all
events at or below a certain point in an ordered list of events.
• The relative frequency is used to calculate the proportion of the
occurrence of an event in a sample or population.
 Methods used for data
collection in real life
1. Questionnaire Survey: Asking a series of questions to a group of people to
gather information. E.g: Customer satisfaction surveys.
2. Interviews: A more personal data collection method where an interviewer asks
questions directly to respondents.E.g: Job interviews.
3. Observations: watching and recording behaviors or events as they occur in
natural settings. E.g: Monitoring consumer behaviour.
4. Experiments: Data is collected through controlled tests or trials. E.g:Clinical
trials for new medications.
5. Case Studies:In-depth examination of a single instance or event to explore
causation. E.g: Analyzing the success/failure of a particular company or project.
6. Digital Data Collection: collecting data through digital means such as online
forms or apps. E.g:Website analytics, mobile app usage data.
 Quantitative Data Qualitative Data
• These are the data that deal • These data deals with quality.
with quantities, values or • They are descriptive rather than
numbers. numerical in nature.
• Expressed in numerical form. • They can’t be directly
• Directly measurable. measurable.
• Objective approach. • Subjective approach.
• Structured data. • Unstructured data.
• Quantitative surveys, Interviews, • Qualitative surveys, Focus group
Experiments. methods.
 Business Applications of Statistics
Marketing:
• Used in marketing research for product launch and market identification.
• Extensively used in assessing consumer buying behavior.
• Advertising and promotional campaigns depend heavily on statistical data.
• Analysis of buying patterns in e-commerce websites.
• Analysis of consumer behavior in retail stores and shopping malls.
Accounting and Finance:
• Use of sampling techniques while auditing of firms.
• Statistics is extensively used for cost analyses, financial forecasts and budget reports.
• Financial risk assessment is also done with the help of statistical techniques.
• Investment decisions are made on the basis of standard deviation of returns.
• Various statistical techniques are used to check the creditworthiness of companies and
individuals.
Production and Operations:
• Statistical analysis helps in identifying how consumer preferences change with the
seasons, and this aids in planning production based on those preferences.
• A variety of quality control charts are used to monitor the quality of products and
services.
• The concepts of probability sampling are used to estimate the defects in products.
• Six sigma is an internationally recognized quality improvement method.
Human Resource:
• Statistical reliability tests are conducted while recruitment of employees.
• Statistical concepts are used in compensation management, performance management
and employee satisfaction surveys.
• Hypothesis testing concept is used to assess the efficacy of training programs.
• Helps in prediction of employee turnover and make proper arrangements.
Merits and Limitations