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Statistics for Management

Unit 1

Unit 1

Introduction

Structure:
1.1

Introduction to Statistics
Learning objectives
Importance of Statistics in modern business environment
1.2 Definition of Statistics
1.3 Scope and Applications of Statistics
1.4 Characteristics of Statistics
1.5 Functions of Statistics
1.6 Limitations of Statistics
1.7 Statistical Softwares
1.8 Summary
1.9 Terminal Questions
1.10 Answers to SAQs and TQs
Answers to Self Assessment Questions
Answers to Terminal Questions
1.11 References

1.1 Introduction
Welcome to the unit on Statistics. In this unit, you will study about Statistics, which deals with gathering, organising and analysing data.
Statistics plays an important role in almost every facet of human life. In the business context, managers are required to justify decisions on the basis of data. They need statistical models to support these decisions. Statistical skills enable managers to collect, analyse and interpret data and make relevant decisions. Statistical concepts and statistical thinking enable them to: 

Solve problems in almost any domain



Support their decisions



Reduce guesswork

1.1.1 Learning objectives
By the end of this unit, you should be able to:


Describe the scope of Statistics



Distinguish between statistical data and non-statistical data

Sikkim Manipal University

Page No. 1

Statistics for Management





Unit 1

Recognise the functions of Statistics
Recognise the limitations of Statistics
Recall the computer programs used for analysing Statistics

1.1.2 Importance of Statistics in modern business environment 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.

Caselet 1
The new General Manager Mr. Ravi of a manufacturing company is concerned about the dwindling profits of the company. The Marketing and Production Managers identifies the reason as guarantee period given to customers, since the product has to be replaced if it fails within guarantee period. This replacement lowers the company‟s profits and also causes loss of reputation. The General Manager is now thinking in terms of reducing the percentage of failure of units within a year. This means that he should take action to improve the life of the unit. After preliminary studies he decides to

I. Estimate the average life of the units and their variation. II. Take action to improve the life.
III. Lower the replacement cost as much as possible.
As you can see, what the General Manager is doing here is using Statistics to solve a problem and to increase profits.
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.

Sikkim Manipal University

Page No. 2

Statistics for Management

Unit 1

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. Figure 1.1 illustrates the two categories. The two...
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