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MB0040 STATISTICS FOR MANAGEMENT- 4 Credits

Ans. 1 (a) H. G. Wells asserted that, Statistical thinking will one day be as necessary for efficient citizenship as the ability to read and write. For most of us, that day has come. The importance of numbers and statistics to the modern world cannot be overstated. In his book How to Think About Statistics, author John L. Phillips put it succinctly: The culture of any industrialized society is suffused with quantitative information. Some quantitative messages are simple and direct; others involve a relatively complicated process of inference. Knowing how to think statistically makes possible the comprehension of both. Understanding statistics is even more imperative given that numerical results are often used (and misused) to manipulate or distort information. In Statistical Deception at Work, John Maura writes, If you cannot understand simple statistics, you can be fooled by news stories, advertisements and daily encounters with other people. You are likely to be taken in by modern-day medicine men who are out there seeking ways to dupe unsuspecting [individuals] into becoming their agents. And as Cynthia Crossen writes in Tainted Truth, People know enough to be suspicious of some numbers in some contexts, but we are at the mercy of others. We have little personal experience or knowledge of the topics of much modern research, and the methodologies are incomprehensibly arcane. Nevertheless, we respect numbers, and we cannot help believing them. Statistics and statistical methods are of two basic types: Descriptive statistics summarize some facet of a complete population. They are used when an entire population is small or easy enough to measure. For example, the average height or weight of everyone in your family is a descriptive statistic. Because all members of the population are included in the calculation, the result is a totally accurate, and thus completely reliable, measurement. Inferential statistics are used to predict or infer something about a very large population by measuring samples, or subsets, of that population. This is done when it is virtually impossible, or prohibitively expensive, to obtain data about all members of a particular population. Many of the statistics we normally come in contact with while reading the paper, watching TV, or talking to colleagues are of the inferential variety. Examples include the number of people projected to carry the HIV virus in 1998, the average growth rate of maple trees, and the odds of incurring a side effect when taking a new drug.

These types of statistics are thus used to make far-reaching policy decisions regarding everything from the number of street lights needed per city block, to the level of funding allocated to school lunch programs, to the amount of money spent to protect the grizzly bear population of the Western United States. Thus, it is critical that we develop a good understanding of how best to use, and not abuse, inferential statistics. Answer : a) Due to advanced communication network, rapid changes in consumer behaviour, varied expectations of variety of consumers and new market openings, modern managers have a difficult task of making quick and appropriate decisions. Therefore, there is a need for them to depend more upon quantitative techniques like mathematical models, statistics, operations research and econometrics. Decision making is a key part of our day-to-day life. Even when we wish to purchase a television, we like to know the price, quality, durability, and maintainability of various brands and models before buying one. As you can see, in this scenario we are collecting data and making an optimum decision. In other words, we are using Statistics. Again, suppose a company wishes to introduce a new product, it has to collect data on market potential, consumer likings, availability of raw materials, feasibility of producing the product. Hence, data collection is the back-bone of any decision making process. Many organisations find themselves data-rich but poor in drawing information from it. Therefore, it is important to develop the ability to extract meaningful information from raw data to make better decisions. Statistics play an important role in this aspect. Statistics is broadly divided into two main categories. The two categories of Statistics are descriptive statistics and inferential statistics. Descriptive Statistics: Descriptive statistics is used to present the general description of data which is summarised quantitatively. This is mostly useful in clinical research, when communicating the results of experiments. Inferential Statistics: Inferential statistics is used to make valid inferences from the data which are helpful in effective decision making for managers or professionals. Statistical methods such as estimation, prediction and hypothesis testing belong to inferential statistics. The researchers make deductions or conclusions from the collected data samples regarding the characteristics of large population from which the samples are taken. So, we can say Statistics is the backbone of decision-making.

Ans. 1 (b) The word "Statistics" which comes from latin word status, meaning a political state, originally meant information useful to the state, for example,

information about the sizes of population and armed forces. But this word has now acquired different meanings.In the first place, the word statistics refers to "numerical facts systematically arranged". In this sense, the word statistics is always used in the plural. We have, for instance, statistics of prices, statistics of road, accidents, statistics of crimes, statistics of births, statistics of educational institutions, etc. In all these examples, the word statistics denotes a set of numerical data in the respective fields. This is the meaning the man in the street gives to the word statistics and the most people usually use the word data insteadIn the second place, the word statistics is defined as a descipline that includes procedures and techniques used to collect, process and analyse numerical data to make inferences and to reach decisions in the face of uncertainty. In this sense, the word statistics is used in the singular. As it embodies more or less all stages of the general process of learning, sometimes called scientific method, statistics is characterized as a science. Thus the word statistics used in the plural refers to a set of numerical information and in the singular denotes the science of basing decision on numerical data. It should be noted that statistics as a subject is mathematical in character.Thirdly, the word statistics is numerical quantities calculated from sample observations; a single quantity calculated is called a statistic. The mean of a sample for instance is a statistic. The word statistics is plural when used in this sense.

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