Q.1) Define Statistics and explain its importance in Business.

Answer: Statistics is a branch of mathematics dealing with data collection, organization,

analysis, interpretation and presentation. In addition to being the name of a field of study, the
word "statistics" also refers to numbers that are used to describe data or relationships. Its play
an important role in business. A successful businessman must be very quick and accurate in
decision making. He knows that what his customers wants, he should therefore, know what
to produce and sell and in what quantities. Statistics helps businessman to plan production
according to the taste of the costumers, the quality of the products can also be checked
more efficiently by using statistical methods. So all the activities of the businessman based
on statistical information. He can make correct decision about the location of business,
marketing of the products, financial resources etc. Statistics is an important field of study
because of its application in almost all walks of life. It is an important branch of mathematics. It
is the analysis, interpretation, preservation, and presentation of data. The role of statistics
in business management is pivotal. It comes in handy, especially for rating organzation, financial
markets, financial organizations, etc. The uses of statistics in business and management are
limitless; with the proper skill to implement statistical methods, the managers can increase the
production capacity of any plant or find out the optimum production capacity, efficient
management of work and employee performance, limit the wastage of resource, etc.

Uses Of Statistics In Business Organization

Even the most basic of statistics that a student learns in school like the mean, mode, and
median can go a long way in the world of business. Finding the mean or the average of a
group of numbers is quite significant in business. There are several ways in which statistics
plays a role in business.

 Management Of Performance – As mentioned earlier, the importance of statistics in

management is significant; with the help of statistics, a manager can analyse the
performance or the productivity of employees like the units produced or the task
completed. The manager can use the data in sync with statistical techniques to improve
the productivity of the workforce and multiply the production.

 Alternative Scenarios – The task or the function of a manager does not end after
increasing the productivity of the employees. A manager has to participate with the other
managers from different department for decision making. The decision can be on the
choice of particular software, systems for customer automatic ordering systems, etc.

 Data Collection – The data that is collected for the purpose of processing with the
statistical tools must be done in an ethical manner, otherwise, the result of the analysis
will be false and non-beneficial. With the help of these data, comparisons can be drawn if
the actual sales were less or more than the projected sales or the future capital
requirement for the fulfilment of a huge order.
 Research And Development – The scope of statistics in business also extends to market
research and product development. This is one of the most important functions of
statistics, as a sample group is observed and their response to a product is tested and
data collected. This data is essential in the determination of the launch of new products
and the development of it.
Q.3) Write Short Notes on (ANY TWO)
a) Scatter Diagram
Answer: A scatter diagram (Also known as scatter plot, scatter graph, and correlation chart)
is a tool for analyzing relationships between two variables for determining how closely the
two variables are related. One variable is plotted on the horizontal axis and the other is
plotted on the vertical axis. The pattern of their intersecting points can graphically show
relationship patterns.
Most often a scatter diagram is used to prove or disprove cause-and-effect relationships.
While the diagram shows relationships, it does not by itself prove that one variable causes
the other. Thus, we can use a scatter diagram to examine theories about cause-and-effect
relationships and to search for root causes of an identified problem.
For example, we can analyze the pattern of motorcycle accidents on a highway. You select
the two variables: motorcycle speed and number of accidents, and draw the diagram. Once
the diagram is completed, you notice that as the speed of vehicle increases, the number of
accidents also goes up. This shows that there is a relationship between the speed of vehicles
and accidents happening on the highway.

Scatter Diagram Correlation Patterns

The degree to which the variables are related to each other depends on how the points are
scattered over the chart. The more the points plotted are scattered over the chart, the lesser is
the degree of correlation between the variables. The more the points plotted are closer to the
line, the higher is the degree of correlation. The degree of correlation is denoted by “r”.

The following types of scatter diagrams show in the table tell about the degree of correlation
between variable X and variable Y.

Correlation Pattern X / Y Values

Strong Positive Correlation
Strong Negative Correlation
Weak Positive Correlation
Weak Negative Correlation
Complex Correlation
No Correlation
The value of Y increases as the value of X increases.
The value of Y decreases as the value of X increases.
The value of Y increases slightly as the value of X
increases.
The value of Y decreases slightly as the value of X
increases.
The value of Y seems to be related to the value of X,
but the relationship is not easily determined.
There is no demonstrated connection between the two
variables.
b) Skewness and Kurtosis
Answer: Skewness It is the degree of distortion from the symmetrical bell curve or the
normal distribution. It measures the lack of symmetry in data distribution. It differentiates
extreme values in one versus the other tail. A symmetrical distribution will have a skewness
of 0. There are two types of Skewness: Positive and Negative
Positive Skewness means when the tail on the right side of the distribution is longer or
fatter. The mean and median will be greater than the mode.
Negative Skewness is when the tail of the left side of the distribution is longer or fatter
than the tail on the right side. The mean and median will be less than the mode.

Kurtosis
Kurtosis is all about the tails of the distribution — not the peakedness or flatness. It is used
to describe the extreme values in one versus the other tail. It is actually the measure of
outliers present in the distribution.
High kurtosis in a data set is an indicator that data has heavy tails or outliers. If there is a
high kurtosis, then, we need to investigate why do we have so many outliers. It indicates a
lot of things, maybe wrong data entry or other things. Investigate!
Low kurtosis in a data set is an indicator that data has light tails or lack of outliers. If we get
low kurtosis(too good to be true), then also we need to investigate and trim the dataset of
unwanted results.
Mesokurtic: This distribution has kurtosis statistic similar to that of the normal
distribution. It means that the extreme values of the distribution are similar to that of a
normal distribution characteristic. This definition is used so that the standard normal
distribution has a kurtosis of three.
Leptokurtic (Kurtosis > 3): Distribution is longer, tails are fatter. Peak is higher and
sharper than Mesokurtic, which means that data are heavy-tailed or profusion of outliers.
Outliers stretch the horizontal axis of the histogram graph, which makes the bulk of the data
appear in a narrow (“skinny”) vertical range, thereby giving the “skinniness” of a
leptokurtic distribution.
Platykurtic: (Kurtosis < 3): Distribution is shorter, tails are thinner than the normal
distribution. The peak is lower and broader than Mesokurtic, which means that data are
light-tailed or lack of outliers.
The reason for this is because the extreme values are less than that of the normal
distribution.