Statistics for management

Lecture-01, 09sep 09
Sqn Ldr(Retd) Ravindra

Statistics for Management

Introduction
The basics of statistics were covered by Prof. Satish Kumar. This was an introductory
lecture which was given as beginner’s introduction to Statistics, for students with non
Math background and for students who had lost touch with academics.

The Book that has been recommended for this course is “Statistics for management-7th
edition, by Richard I Levin and David S Rubin. It was also recommended that a personal
copy of this book be purchased as a reference, though a few copies were available in
the library.

If a majority of the students chose to purchase this book, some arrangement could be
made for a discounted price procurement of the same from the library.

Approach
Decision making can be broadly depending on Qualitative and Quantitative statistics.
Qualitative statistics are once where decisions are made by virtue of experience etc
which are not base on data and Quantitative statistics are based on data that has be
gathered and analyzed to approach a decision. The approach or method used to give
the students an easy understanding of the basics, was by taking a simple scenario .The
Scenario was as follows.

“A Retail shop of daily provisions was to be opened in an area having 40,000.00

household. The retailer had to stock goods as per the price range that his customers
would be able to afford .Thereby- The inference that a retailer in a Posh locality, would
look for higher end consumer durables like soaps and similarly a retailer in an area that
belongs to a middle income, would stock this price range and similarly a retailer in
lower income locality would stock products of the lower price range—At least the major
stock available with the retailer would depend on the income range of his customer
base, in a radius of approximately half a kilometer radius around his shop/outlet.”

The retailer thereby had to have a dependable estimate of the “house hold income” of
the 40000.00 households in the area of his interest. However taking the household
incomes of all the households would be too much of a large task, and the expense may
not be worth the effort, hence he could go for 100 samples, spread over various streets
of that locality, and by quantifying the resulting data into various charts/spread

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Statistics for management
Lecture-01, 09sep 09
Sqn Ldr(Retd) Ravindra

sheets/tables etc get a pretty good estimate of the income group of the majority of the
households. (Please note: The most accurate method would have been to use all the
40000 house hold incomes, however that may be very tedious and when the statistical
procedure used here are a tried and tested method which would give a good enough
estimate for this scenario- hence the techniques discussed here are approximation s
which enable decision making inputs- if analyzed properly though not 100% accurate.)

The Lecture
Points to keep in mind when using this case:

1. The samples(100) of the data that are collected have to be carefully collected so
as to have an even distribution over almost all parts of the location i.e. samples
from slums, high rise apartments/gated societies etc in that locality have to be all
represented fairly proportional to strength of that population in that locality.

2. Each of the samples is called a Data Point.

3. All the 100 data points put together are called a Data set.

The data gathered in the data set, are then demarcated into various sections to further
ease the decision making, so let us demarcate the data points into various sections of
income where each of this section is called as “classes of classification”

Income (classes of Number of

classification) data points
(house hold
income’s)- f

<20000 (less than) 15

<30000 30

<40000 20

<50000 20

>50000(greater than) 15

Total Number (N)= 100

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Statistics for management
Lecture-01, 09sep 09
Sqn Ldr(Retd) Ravindra

This sort of chart is called a frequency distribution and the standard that applies for the
Number of Classes of classification should be between 6 and 15. (In the above example
I have used only 5 classes of classification, but the standard is 6-15)

This sort of distribution is called “less than” (<) classification of distribution, it could also
be done as greater than classification distribution.

The following were also discussed

1. Percentage frequency distribution

2. Relative frequency distribution

3. Cumulative frequency distribution

Each of them has their own advantages and these were discussed.

Various graphical representation tools such as Pie charts, Histograms etc were also
discussed.

The Cumulative frequency distribution if presented in a graphical form are called

“ogives”

The various terms such as, Average (generally denoted by X bar- the bar on top, don’t
know how to type that) the mean generally represented by µ (mu)

The basics of Mean (µ), mode (max. number of occurrences), median, dispersion,
standard deviation (σ), Quartiles, Inter quartile ranges and co-efficient of variation were
explained in a simple and understandable way.

The topic of consistency and how to compare standard deviations for deciding on
consistency (squaring of the deviations before adding them to avoid cancellation of
negative and positive deviation etc.) were explained and discussed.

Conclusion
The explanation here is nowhere close to what was taught in the lecture, I have
knowingly omitted a lot of details to save time and the typing. A lot of formulae were
also omitted, which looked very simple when explained. I have not included them here
as of now as they would take time to insert all the symbols.

I have tried to mention all the terms/ topics that where covered as some of them are not
included in the syllabus, but were explained for ease in understanding further topics.
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Statistics for management
Lecture-01, 09sep 09
Sqn Ldr(Retd) Ravindra

It was made very imperative that all of us read a few chapters into the book for the class
next week, so that we could follow the topics in ease. The time available as compared
to the syllabus was considered less. Please also note that questions are asked in the
exams at times by OU in the question papers they set, on the above topics- or
dependent on them.