MBA – SEM I Assignment

Student Name: Ashehad Faizy

Roll No: 540910773

Subject Code: MB0024

Subject Name: Statistics for Management

Q1. What do you mean by sample survey? What are the different sampling methods? Briefly describe
them.

A.
Sample survey can be described as the technique used to study about a population with the help of a
sample. Population is the totality all objects about which the study is proposed. Sample is only a portion
of this population, which is selected using certain statistical principles called sampling designs (this is for
guaranteeing that a representative sample is obtained for the study). Once the sample decided
information will be collected from this sample, which process is called sample survey.

It is incumbent on the researcher to clearly define the target population. There are no strict rules
to follow, and the researcher must rely on logic and judgment. The population is defined in keeping with
the objectives of the study. Sometimes, the entire population will be sufficiently small, and the
researcher can include the entire population in the study. This type of research is called a census study
because data is gathered on every member of the population

Sampling methods are classified as either probability or non-probability.

In probability samples, each member of the population has a known non-zero probability of being
selected. Probability methods include random sampling, systematic sampling, and stratified sampling.
The advantage of probability sampling is that sampling error can be calculated. Sampling error is the
degree to which a sample might differ from the population. When inferring to the population, results are
reported plus or minus the sampling error.

In non-probability sampling, members are selected from the population in some non-random manner.
These include convenience sampling, judgment sampling, quota sampling, and snowball sampling. In
non-probability sampling, the degree to which the sample differs from the population remains unknown.

Probability Sampling Methods:

1. Random sampling is the purest form of probability sampling. Each member of the population
has an equal and known chance of being selected. When there are very large populations, it is
often difficult or impossible to identify every member of the population, so the pool of available
subjects becomes biased.

2. Systematic sampling is often used instead of random sampling. It is also called an Nth name
selection technique. After the required sample size has been calculated, every Nth record is
selected from a list of population members. As long as the list does not contain any hidden
 order, this sampling method is as good as the random sampling method. Its only advantage over
the random sampling technique is simplicity. Systematic sampling is frequently used to select a
specified number of records from a computer file.

3. Stratified sampling is commonly used probability method that is superior to random sampling
because it reduces sampling error. A stratum is a subset of the population that share at least
one common characteristic. Examples of stratums might be males and females, or managers and
non-managers. The researcher first identifies the relevant stratums and their actual
representation in the population. Random sampling is then used to select a sufficient number of
subjects from each stratum. "Sufficient" refers to a sample size large enough for us to be
reasonably confident that the stratum represents the population. Stratified sampling is often
used when one or more of the stratums in the population have a low incidence relative to the
other stratums.

Non Probability Methods:

1. Convenience sampling is used in exploratory research where the researcher is interested in

getting an inexpensive approximation of the truth. As the name implies, the sample is selected
because they are convenient. This non-probability method is often used during preliminary
research efforts to get a gross estimate of the results, without incurring the cost or time
required to select a random sample.

2. Judgment sampling is a common non-probability method. The researcher selects the sample
based on judgment. This is usually extension of convenience sampling. For example, a
researcher may decide to draw the entire sample from one "representative" city, even though
the population includes all cities. When using this method, the researcher must be confident
that the chosen sample is truly representative of the entire population.

3. Quota sampling is the non-probability equivalent of stratified sampling. Like stratified sampling,
the researcher first identifies the stratums and their proportions as they are represented in the
population. Then convenience or judgment sampling is used to select the required number of
subjects from each stratum. This differs from stratified sampling, where the stratums are filled
by random sampling.

4. Snowball sampling is a special non-probability method used when the desired sample
characteristic is rare. It may be extremely difficult or cost prohibitive to locate respondents in
these situations. Snowball sampling relies on referrals from initial subjects to generate
additional subjects. While this technique can dramatically lower search costs, it comes at the
expense of introducing bias because the technique itself reduces the likelihood that the sample
will represent a good cross section from the population.

Q 2. What is the different between correlation and regression? What do you understand by Rank
Correlation? When we use rank correlation and when we use Pearsonian Correlation Coefficient? Fit a
linear regression line in the following data –

X 12 15 18 20 27 34 28 48
 Y 123 150 158 170 180 184 176 130

A.
Correlation:
When two or more variables move in sympathy with other, then they are said to be correlated. If both
variables move in the same direction then they are said to be positively correlated. If the variables move
in opposite direction then they are said to be negatively correlated. If they move haphazardly then there
is no correlation between them.

Correlation analysis deals with:

1) Measuring the relationship between variables.
2) Testing the relationship for its significance.
3) Giving confidence interval for population correlation measure.

Regression:
Regression is defined as, “the measure of the average relationship between two or more variables in
terms of the original units of the data.” Correlation analysis attempts to study the relationship between
the two variables x and y. Regression analysis attempts to predict the average x for a given y. In
Regression it is attempted to quantify the dependence of one variable on the other. The dependence is
expressed in the form of the equations.

Different between correlation and regression:

 Correlation quantifies the degree to  With regression, you do have to think
which two variables are related. about cause and effect as the
Correlation does not find a best fit regression line is determined as the
line (that is regression). You simply best way to predict Y from X.
are computing a correlation
coefficient (r) that tells you how  With linear regression, the decision of
much one variable tends to change which variable you call "X" and which
when the other one does. you call "Y" matters a lot, as you'll get a
different best-fit line if you swap the
 With correlation you don't have to two. The line that best predicts Y from
think about cause and effect. You X is not the same as the line that
simply quantify how well two predicts X from Y.
variables relate to each other.
 With linear regression, the X variable is
 With correlation, it doesn't matter often something you experimental
which of the two variables you call manipulate (time, concentration...) and
"X" and which you call "Y". You'll get the Y variable is something you
the same correlation coefficient if measure.
you swap the two.
 On the other hand, the regression tells
 Correlation is almost always used us the FORM of linear association that
when you measure both variables. It best predicts Y from the values of X.
rarely is appropriate when one 
variable is something you
experimentally manipulate.
Spearman's rank correlation coefficient or Spearman's rho, named after Charles Spearman and often
denoted by the Greek letter ρ (rho) or as rs, is a nonparametric measure of correlation – that is, it
assesses how well an arbitrary monotonic function could describe the relationship between two
variables, without making any other assumptions about the particular nature of the relationship
between the variables. Certain other measures of correlation are parametric in the sense of being based
on possible relationships of a parameterized form, such as a linear relationship.

In principle, ρ is simply a special case of the Pearson product-moment coefficient in which two sets of
data Xi and Yi are converted to rankings xi and yi before calculating the coefficient. In practice, however,
a simpler procedure is normally used to calculate ρ. The raw scores are converted to ranks, and the
differences di between the ranks of each observation on the two variables are calculated.

If there are no tied ranks, then ρ is given by:

Where:

di = xi − yi = the difference between the ranks of corresponding values Xi and Yi,

and n = the number of values in each data set (same for both sets).

If tied ranks exist, classic Pearson's correlation coefficient between ranks has to be used instead of this
formula.

One has to assign the same rank to each of the equal values. It is an average of their positions in the
ascending order of the values.

Conditions under which P.E can be used:

1. Samples should be drawn from a normal population.
2. The value of “r” must be determined from sample values.
3. Samples must have been selected at random.

X 12 15 18 20 27 34 28 48
Y 123 150 158 170 180 184 176 130
 Total Numbers: 8
Slope (b):0.16701
Y-Intercept (a): 154.65
Regression Equation: 154.66 + 0.17x

Q3. What do you mean by business forecasting? What are the different methods of business
forecasting? Describe the effectiveness of time-series analysis as a mode of business forecasting.
Describe the method of moving averages.

A.
Business forecasting refers to the analysis of past and present economic conditions with the object of
drawing inferences about probable future business conditions. To forecast the future, various data,
information and facts concerning to economic condition of business for past and present are analyzed.
The process of forecasting includes the use of statistical and mathematical methods for long term, short
term, medium term or any specific term.

Following are the main methods of business forecasting:

1. Business Barometers: Business indices are constructed to study and analyze the business
activities on the basis of which future conditions are predetermined. As business indices are the
indicators of future conditions, so they are also known as “Business Barometers” or “Economic
Barometers‟. With the help of these business barometers the trend of fluctuations in business
conditions are made known and by forecasting a decision can be taken relating to the problem.

The business barometers are of three types:

i) Barometers relating to general business activities: it is also known as general index of business activity
which refers to weighted or composite indices of individual index business activities.
ii) Business barometers for specific business or industry: These barometers are used as the supplement
of general index of business activity and these are constructed to measure the future variations in a
specific business or industry.
iii) Business barometers concerning to individual business firm: This type of barometer is constructed to
measure the expected variations in a specific individual firm of an industry.
 2. Time Series Analysis: is also used for the purpose of making business forecasting. The
forecasting through time series analysis is possible only when the business data of various years
are available which reflects a definite trend and seasonal variation.

3. Extrapolation: is the simplest method of business forecasting. By extrapolation, a businessman

finds out the possible trend of demand of his goods and about their future price trends also. The
accuracy of extrapolation depends on two factors:

i) Knowledge about the fluctuations of the figures,

ii) Knowledge about the course of events relating to the problem under
consideration.

4. Regression Analysis: The regression approach offers much valuable contribution to the solution
of the forecasting problem. It is the means by which we select from among the many possible
relationships between variables in a complex economy those which will be useful for
forecasting.

5. Modern Econometric Methods: Econometric techniques, which originated in the eighteenth

century, have recently gained in popularity for forecasting. The term econometrics refers to the
application of mathematical economic theory and statistical procedures to economic data in
order to verify economic theorems.

6. Exponential Smoothing Method: This method is regarded as the best method of business
forecasting as compared to other methods. Exponential smoothing is a special kind of weighted
average and is found extremely useful in short-term forecasting of inventories and sales.

7. Choice of a Method of Forecasting: The selection of an appropriate method depends on many

factors – the context of the forecast, the relevance and availability of historical data, the degree
of accuracy desired, the time period for which forecasts are required, the cost benefit of the
forecast to the company, and the time available for making the analysis.

Effectiveness of Time Series Analysis:

Time series analysis is also used for the purpose of making business forecasting. The forecasting through
time series analysis is possible only when the business data of various years are available which reflects
a definite trend and seasonal variation. By time series analysis the long term trend, secular trend,
seasonal and cyclical variations are ascertained, analyzed and separated from the data of various years.

Merits:
i) It is an easy method of forecasting.
ii) By this method a comparative study of variations can be made.
iii) Reliable results of forecasting are obtained as this method is based on mathematical model.

Method of Moving Averages:

One of the most simple and popular technical analysis indicators is the moving averages method. This
method is known for its flexibility and user-friendliness. This method calculates the average price of the
currency or stock over a period of time. The term “moving average” means that the average moves or
follows a certain trend. The aim of this tool is to indicate to the trader if there is a beginning of any new
trend or if there is a signal of end to the old trend.

Moving average method is supposed to be the simplest one, as it helps to understand the chart patterns
in an easier way. Since the currency’s average price is considered, the price’s volatile movements are
evened. This method rules out the daily fluctuation in the prices and helps the trader to go with the right
trend, thus ensuring that the trader trades in his own good.

We come across different types of moving averages, which are based on the way these averages are
computed. The three basic types of moving averages are viz. simple, linear and exponential.

- A simple moving average is the simplest way to calculate the moving price averages. The
historical closing prices over certain time period are added. This sum is divided by the number of
instances used in summation.
- A linear moving average is the less used one out of all. But it solves the problem of equal
weightage. The difference between simple average and linear average method is the weightage
that is provided to the position of the prices in the latter.
- The exponential moving average method shares some similarity with the linear moving average
method. This method lays emphasis on the smoothing factor, there by weighing recent data
with higher points than the previous data.

Moving averages methods help to identify the correct trends and their respective levels of resistance.

Q4. What is definition of Statistics? What are the different characteristics of statistics? What are the
different functions of Statistics? What are the limitations of Statistics?

A.
According to Croxton and Cowden, ‘Statistics is the science of collection, presentation, analysis and
interpretation of numerical data.’ Thus, Statistics contains the tools and techniques required for the
collection, presentation, analysis and interpretation of data. This definition is precise and
comprehensive.

Characteristic of Statistics:

a. Statistics Deals with aggregate of facts: Single figure cannot be analyzed.

b. Statistics are affected to a marked extent by multiplicity of causes: The statistics of yield of paddy is
the result of factors such as fertility of soil, amount of rainfall, quality of seed used, quality and quantity
of fertilizer used, etc.

c. Statistics are numerically expressed: Only numerical facts can be statistically analyzed, therefore, facts
as ‘price decreases with increasing production’ cannot be called statistics.

d. Statistics are enumerated or estimated according to reasonable standards of accuracy: The acts
should be enumerated (collected from the field) or estimated (computed) with required degree of
accuracy.
e. Statistics are collected in a systematic manner: The facts should be collected according to planned and
scientific methods. Otherwise, they are likely to be wrong and misleading.

f. Statistics are collected for a pre-determined purpose: There must be a definite purpose for collecting
facts. E.g. Movement of wholesale price of a commodity.

g. Statistics are placed in relation to each other: The facts must be placed in such a way that a
comparative and analytical study becomes possible. Thus, only related facts which are arranged in
logical order can be called statistics.

Functions of Statistics

1. It simplifies mass data

2. It makes comparison easier
3. It brings out trends and tendencies in the data
4. It brings out hidden relations between variables.
5. Decision making process becomes easier.

Major limitations of Statistics are:

1. Statistics does not deal with qualitative data. It deals only with quantitative data.

2. Statistics does not deal with individual fact: Statistical methods can be applied only to aggregate to
facts.

3. Statistical inferences (conclusions) are not exact: Statistical inferences are true only on an average.
They are probabilistic statements.

4. Statistics can be misused and misinterpreted: Increasing misuse of Statistics has led to increasing
distrust in statistics.

5. Common men cannot handle Statistics properly: Only statisticians can handle statistics properly.

Q5. What are the different stages of planning a statistical survey? Describe the various methods for
collecting data in a statistical survey.

A.
The planning stage consists of the following sequence of activities:

1. Nature of the problem to be investigated should be clearly defined in an un- ambiguous manner.

2. Objectives of investigation should be stated at the outset. Objectives could be to obtain certain
estimates or to establish a theory or to verify a existing statement to find relationship between
characteristics etc.
3. The scope of investigation has to be made clear. It refers to area to be covered, identification of units
to be studied, nature of characteristics to be observed, accuracy of measurements, analytical methods,
time, cost and other resources required.

4. Whether to use data collected from primary or secondary source should be determined in advance.

5. The organization of investigation is the final step in the process. It encompasses the determination of
number of investigators required, their training, supervision work needed, funds required etc.

Collection of primary data can be done by anyone of the following methods:

i. Direct personal observation

ii. Indirect oral interview
iii. Information through agencies
iv. Information through mailed questionnaires
v. Information through schedule filled by investigators

Q6. What are the functions of classification? What are the requisites of a good classification? What is
Table and describe the usefulness of a table in mode of presentation of data?

A.
The functions of classification are:
a. It reduce the bulk data
b. It simplifies the data and makes the data more comprehensible
c. It facilitates comparison of characteristics
d. It renders the data ready for any statistical analysis

Requisites of good classification are:

i. Unambiguous: It should not lead to any confusion
ii. Exhaustive: every unit should be allotted to one and only one class
iii. Mutually exclusive: There should not be any overlapping.
iv. Flexibility: It should be capable of being adjusted to changing situation.
v. Suitability: It should be suitable to objectives of survey.
vi. Stability: It should remain stable throughout the investigation
vii. Homogeneity: Similar units are placed in the same class.
viii. Revealing: Should bring out essential features of the collected data.

Table is nothing but logical listing of related data in rows and columns

Objectives of tabulation are:

i. To simplify complex data
ii. To highlight important characteristics
iii. To present data in minimum space
iv. To facilitate comparison
v. To bring out trends and tendencies
vi. To facilitate further analysis