Business Statistics

UNIT :1
What is Statistics?
Statistics is a branch of mathematics that deals with the collection, organization,
presentation, analysis, and interpretation of numerical data for the purpose of decision-
making.

Definitions:
• “Statistics is the science of counting and measuring matters pertaining to the state.” –
G.A. King
• “Statistics is the science which deals with the collection, classification, and tabulation
of numerical facts as the basis for explanation, description and comparison of
phenomena.” – Lovitt

Objectives of Statistics:
1. To collect data systematically
→ Ensures accuracy and reliability.
2. To classify and organize data
→ Makes large data sets easy to understand.
3. To summarize data
→ Helps in understanding data using measures like mean, median, etc.
4. To present data in a meaningful way
→ Through tables, charts, graphs for better understanding.
5. To analyze data
→ Identify patterns, relationships, and trends.
6. To draw valid conclusions
→ Supports logical and fact-based decision-making.
7. To forecast future events
→ Helps in predictions using historical data.

Functions of Statistics:
1. Condensation of data
→ Summarizes bulky data into concise formats.
2. Comparison
→ Enables comparison between groups, regions, time periods.
3. Trend Analysis
→ Analyzes past data to understand future movements.
4. Formulation and testing of hypotheses
→ Helps in research and validation.

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5. Decision-making
→ Assists business and government in policy framing.
6. Establishing relationships
→ Finds correlations and dependencies between variables (e.g., price and demand).

Scope of Statistics:
Statistics is used in a wide variety of fields:
A. In Economics
• Study of national income, inflation, unemployment, etc.
B. In Business and Management
• Sales forecasting, market research, quality control, budgeting, etc.
C. In Government
• Census, resource allocation, health and education planning.
D. In Education
• Exam result analysis, academic performance studies.
E. In Industry
• Production planning, inventory control, defect analysis.
F. In Social Sciences
• Survey studies on social behavior, poverty, literacy.
G. In Research and Development
• Hypothesis testing, product innovation, clinical trials.
Frequency Distribution

Definition:
A frequency distribution is a statistical tool that shows how data is distributed across
different classes or groups. It displays how many times each value (or group of values)
occurs in a dataset.

Key Terms:
• Frequency: Number of times a particular value or class appears.
• Class Interval: Group or range into which data is divided.
• Class Limit: Lower and upper values of a class.
• Tally Marks: Used for counting frequency in raw data.

Example of Frequency Distribution Table:

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Class Interval Tally Marks Frequency

0 – 10

10 – 20

20 – 30

30 – 40

Purpose of Frequency Distribution:

• To simplify raw data
• To easily identify trends or patterns
• To prepare data for graphical presentation (histogram, ogive)
• To calculate averages and measures of dispersion

Tabulation of Data

Definition:
Tabulation is the process of arranging data in the form of rows and columns to make it easy
to read and analyze.
It is a systematic and logical arrangement of data using tables.

Example:

Year Sales (in Rs. Lakhs) Profit (in Rs. Lakhs)

2021 50 10

2022 65 15

2023 80 20

Types of Tabulation:
1. Simple Tabulation: Shows one characteristic (e.g., gender).
2. Complex Tabulation: Shows more than one characteristic (e.g., gender and income
level).

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Objectives of Tabulation:
• To present data in a compact and readable form
• To simplify comparison
• To highlight important features
• To aid in further statistical analysis

Summary Table:

Concept Frequency Distribution Tabulation of Data

Organize data into classes & show

Purpose Present data in rows & columns
frequencies

Focus Shows how often each value appears Displays different characteristics

Year-wise or category-wise sales

Example Class intervals with frequency counts
table

Reports, business documents,

Used in Histogram, statistical analysis
research

‘Presentation of Data’ in Statistics

Definition:
Presentation of data refers to the systematic arrangement and display of statistical
information so that it becomes easy to understand and interpret.
It involves the use of tables, charts, graphs, diagrams, and textual formats to
communicate the data effectively.

Objectives of Data Presentation:

1. To simplify complex data
→ Makes large or raw data easier to understand.
2. To facilitate comparison
→ Between different groups, time periods, or variables.
3. To highlight key facts and trends
→ Brings attention to important findings.
4. To support decision-making
→ Helps managers, researchers, or policymakers make informed decisions.
5. To ensure clarity and accuracy
→ Avoids confusion or misinterpretation of data.

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Forms of Data Presentation:

Textual Presentation:
• Data is described in paragraph or sentence form.
• Used when data is small or simple.
Example:
"The total sales in 2023 increased by 20% compared to 2022."

Tabular Presentation (Tabulation):

• Data is shown in rows and columns.
• Ideal for showing multiple variables and comparisons.
Example:

Year Sales (Rs.) Profit (Rs.)

2022 5,00,000 80,000

2023 6,00,000 1,00,000

Diagrammatic/Graphical Presentation:
• Used to visualize data.
• Attracts attention and enhances understanding.
Common types:

• Bar Diagram – for categorical data

• Pie Chart – shows proportionate distribution

• Line Graph – for trends over time

• Histogram – for frequency distribution

• Ogive – for cumulative frequency

• Pictogram – uses pictures/symbols

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Classification of Data:
Classification means arranging data into different categories or classes based on shared
characteristics.
A. Based on Nature:
1. Qualitative Data – Non-numerical (e.g., gender, caste)
2. Quantitative Data – Numerical (e.g., age, income)
B. Based on Measurement:
1. Nominal – Categories only (e.g., colors)
2. Ordinal – Categories with order (e.g., ranks)
3. Interval – Numerical, but no true zero (e.g., temperature)
4. Ratio – Numerical with absolute zero (e.g., height, weight)
C. Based on Time:
1. Time Series Data – Collected over time (e.g., monthly sales)
2. Cross-Sectional Data – Collected at one point in time (e.g., survey of incomes of 100
families in June 2023)
D. Based on Source:
1. Primary Data – Collected first-hand
2. Secondary Data – Already collected and available

Methods of Collection of Statistical Data

Meaning:
The collection of data is the first and most crucial step in any statistical investigation. The
accuracy of results depends on how data is collected.
Data can be collected through Primary and Secondary sources, using various methods.

Types of Data:
1. Primary Data – Data collected first-hand for the specific purpose.
2. Secondary Data – Data that is already collected by others and is used for a different
purpose.

1. Methods of Collecting Primary Data:

A. Direct Personal Interview
• The investigator personally meets and interviews the respondent.

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Merits:
• Accurate and reliable
• Detailed information possible
• Clarification of doubts
Demerits:
• Time-consuming and expensive
• Not suitable for large areas
• Risk of personal bias
B. Indirect Oral Investigation
• Information is collected from third parties who are closely related to the subject.
Merits:
• Useful where direct data is not possible
• Good for sensitive or confidential topics
Demerits:
• Less reliable
• Third-party bias
C. Information from Local Agents or Enumerators
• Trained investigators collect data using questionnaires/schedules.
Merits:
• Suitable for large-scale surveys
• Reduces respondent burden
Demerits:
• Depends on the quality and honesty of enumerators
• Expensive
D. Mailed Questionnaire Method
• Printed questionnaires are sent via post or email.
Merits:
• Low cost
• Wide geographical coverage
• Respondent has enough time to reply

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Demerits:
• Low response rate
• Cannot clarify doubts
• Suitable only for literate respondents
E. Telephone or Online Survey
• Data is collected via phone calls, emails, or web forms.
Merits:
• Quick and inexpensive
• Good for urgent surveys
Demerits:
• Limited to those with phone/internet access
• May lead to incomplete data
F. Observation Method
• Investigator directly observes the subject in real-time.
Merits:
• Most accurate for behavior-based data
• Objective and unbiased
Demerits:
• Not suitable for opinions or internal feelings
• Observer’s bias possible
• Costly and time-consuming

2. Methods of Collecting Secondary Data:

A. Published Sources
• Government reports, journals, newspapers, books, research studies, etc.
B. Unpublished Sources
• Internal records of organizations, personal diaries, etc.
Merits:
• Time-saving and economical
• Data already available and processed

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Demerits:
• May not be relevant or specific
• Data may be outdated or biased
• Original method of collection may be unknown

Summary Table:

Method Type Merits Demerits

Direct Personal Interview Primary Accurate, detailed Time-consuming, costly

Useful for sensitive

Indirect Oral Investigation Primary Less reliable
topics

Suitable for large

Enumerators Primary Depends on training
surveys

Low cost, wide

Mailed Questionnaire Primary Low response rate
coverage

Limited access,
Telephone/Online Survey Primary Quick, economical
impersonal

Real-time data,
Observation Primary Expensive, limited scope
unbiased

Published/Unpublished May be outdated or

Secondary Quick, low-cost
Source unreliable

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