BASIC Numerical

skills
STUDY MATERIAL

[Link]/BBA

III SEMESTER

GENERAL COURSE

CU CBCSS
(2014 ADMISSION ONWARDS)

UNIVERSITY OF CALICUT
SCHOOL OF DISTANCE EDUCATION
THENJIPALAM, CALICUT UNIVERSITY P.O. MALAPPURAM, KERALA - 693 635

535
UNIVERSTY OF CALICUT
SCHOOL OF DISTANCE EDUCATION

Study Material

III Sem [Link]/BBA

General Course

Basic Numerical Skills

2014 Admission onwards
Prepared by:

Smt Susheela Menon,

Rayirath House,
Kottapuram Road,
Punkunnam. P.O
Thrissur- 680 002
Kerala, India
Scrutinised by:
Sri [Link],
Chairman,
Board of Studies in Commerce UG

Type settings and Lay out

Computer Sectio, SDE
©
Reserved
 Basic Numerical Skills

MODULE I 1

MODULE II 37

MODULES III 49

MODULE IV 81

MODULE V 114
 1
Basic Numerical Skills
MODULE - I

Sets of objects, numbers, departments, job descriptions, etc. are things that we

all deal with every day of our lives. Mathematical Set Theory just puts a structure

around this concept so that sets can be used or manipulated in a logical way. The

type of notation used is a reasonable and simple one.

For example, suppose a company manufactured 5 different products a, b, c, d,

and e. Mathematically, we might identify the whole set of products as P, say, and

write:

P = (a,b,c,d,e)

which is translated as 'the set of company products, P, consists of the members

(or elements) a, b, c, d and e.

The elements of a set are usually put within braces (curly brackets) and the

elements separated by commas, as shown for set P above.

A mathematical set is a collection of distinct objects, normally referred to as

elements or members.

The theory of sets was introduced by the German mathematician Georg Cantor

in 1870. That is, there exists a rule with the help of which we will be able to say

whether a particular object ‘belong to’ the set or does not belong to the set..

The sets are usually denoted by the Capital letters of the English alphabet and

the elements are denoted by small letters. The objects in a set are called its

members or elements of the sets.

Eg. for sets: Vowels in alphabets, students in class, flowers in garden

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Question

In a particular insurance life office, employees Smith, Jones, Williams and Brown
have 'A’ levels, with Smith and Brown also having a degree. Smith, Melville, Williams, Tyler,
Moore and Knight are associate members of the Chartered Insurance Institute (ACII) with Tyler,

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and Moore having 'A’ levels. Identifying set A as those employees with 'A' levels, set C as those
employees who are ACII and set D as graduates:

a) Specify the elements of sets A, C and D.

b) Draw a Venn diagram representing sets A, C and D, together with their known elements.
c) What special relationship exists between sets A and D?
d) Specify the elements of the following sets and for each set, state in words what
information is being conveyed.
i. A∩C ii. D∪C iii. D∩C
e) What would be a suitable universal set for this situation?

Answer
a) A = (Smith, Jones, Williams, Brown, Tyler, Moore);
C = (Smith, Melville, Williams, Tyler, Moore, Knight); D = (Smith,
Brown)
b) The Venn diagram is shown in Figure 1.3.

A
C
Jones
Moore Williams
Tyler
D Melville
Brown Smith Knight

c) From the diagram, it can be seen that D is a subset of A.

d) This information can be obtained either from the Venn diagram

or from the sets listed in, a) above.

i. A∩C = (Williams, Tyler, Smith). This set gives the employees

who have both ‘A' levels and are ACII.

ii. D∪ C = (Brown, Smith, Williams, Tyler, Melville,

Knight). This set gives the employees who are either graduates or
ACII.

iii. D∩C = (Smith). This set gives the single employee who is both
a graduate and ACII qualified.

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e) A suitable universal set for this situation would be the set of all
the employees working in the Life office.

Exercise:

1. Explain the different types of sets?

2. What is venn diagram?
3. If A is { 1,2,3,4} B={2,4,6,8} then find AUB, AnB,A-B
4. Verify Demorgan’s Law for A= {2,3} B ={3,4} and U = {1,2,3,4,5}
5. Define Cartesion Products of two sets
6. Write the Relation ‘a is the squ of b’ in the set {1,3,5,9,10,25}
7. if A={a,b,c} and B= {x,y} then find A*B, B*A, A*A, B*B.
8. A town has a total population of 50,000 out of it 28,000 read hindu and 23,000 read
manorama and the 4000 read [Link] how many read neiher hindu nor
manorama.

Let us Sum Up

This Lesson presented described about the set, set theory, Venn Diagrams, and its applications. A set is a
collection of distinct objects, called elements, which are normally enclosed within brackets and separated
by commas. Venn diagram is a pictorial representation of one or more sets. The Union and Intersection of
sets were also discussed in detail. Some examples to understand the concept is also given in the Lesson.

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MATRICES
Aims and Objectives

Matrices have applications in management disciplines like finance, production,

marketing etc. Also in quantitative methods like linear programming, game theory,

input-output models and in many statistical applications matrix algebra is used as

the theoretical base. Matrix algebra can be used to solve simultaneous linear

equations.

Matrices : Definition and Notations

A matrix is a rectangular array or ordered numbers. The term ordered implies that

the position of each number is significant and must be determined carefully to

represent the information contained in the problem. These numbers (also called

elements of the matrix) are arranged in rows and columns of the rectangular array

and enclosed by either square brackets, []; or parantheses ( ), or by pair of double

vertical line || ||.

It is a rectangular presentation of numbers arranged systematically in rows

and columns one number or functions are called the elements of the matrix. The

horizontal lines of elements of the matrix are called rows and vertical lines of

elements of matrix are called columns.

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Multification of two Matrices :

If the number of columns in the first matrix is equal to the number of rows in the second matrix,
then the matrices are compatible for multiplication. That is, if there are n columns in the first
matrix then the number of rows in the second matrix must be n. Otherwise the matrices are said
to be incompatible and their multiplication is not defined.
The matrices A,B are said to be comformable for multification when the number of columns of A =
number of rows of B

a11 a12 a13 b11 b12 b13

When A= a21 a22 a23 and B = b21 b22 b23
a31 a32 a33 b31 b32 b33

then the product of AB is =

a11 b11+ a12 b21+ a13ab31 a11 b12+ a12 b22+ a13ab32 a11 b13+ a12 b23+ a13ab33
a21 b11+ a22 b21+ a23ab31 a21 b12+ a22 b22+ a23ab32 a21 b13+ a22 b23+ a23ab33
a31 b11+ a32 b21+ a33ab31 a31 b12+ a32 b22+ a33ab32 a31 b13+ a32b23+ a33ab33

Note: For multification ,take each row and multiply with all coloumns.

Practice:

Find the product of

132 3 12
1. A= 0 2 1 and B= 4 2 3
053 4 -1 1
Find AB.

2. Two shops have the stock of large , medium and small sizes of a [Link] number of each size
stocked is given by the matrix A, where
Large medium small
150 240 120 Shop no 1
A= 90 300 210 Shop no 2
The cost matrix, B of the different size of the tooth paste is given by

Cost Rs
14 large
B= 10 medium
6 small
Find the investment in tooth paste by each shop

[Link] shop keepers A,B and C go to a store to buy stationery. A purchases 12 dozen note
book, 5 dozen pens and 6 dozen pencils. B purchases 10 dozen note books, 6 dozen pens and 7
dozen pencils. C purchases 11 dozen note book, 13 dozen pens, and 8 dozen pencils. A note
book costs 40 paise, a pen costs 1.25 and pencil costs 35 paise. Use matrix multiplication to
calculate each individual bill ?
Ans : Bill of purchase = Purchase Quantity x Price

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Properties of Matrix Addition

If A,B and C are three matrices of same dimension, then,

1. matrix addition is commutative, i.e. A + B = B + A
2. matrix addition is associative, i.e, (A+B)+C = A+(B+C)
3. zero matrix is the additive identity, i.e, A+0 = A
4. B is an additive inverse if A+B = 0.
Properties of multiplication

1. Matrix multiplication, in general, is not commutative. i.e, AB ≠ BA.

2. Matrix multiplication is associative. i.e., A(BC) =(AB)C
3. Matrix multiplication is distributive, i.e, A(B+C) = AB + AC
Properties of Transpose

1. Transpose of a sum (or difference) of two matrices is the sum (or

T T T
difference) of the transposes, i.e. (A ± B) = A ± B
T T
2. Transpose of transpose is the original matrix. i.e. (A ) = A
3. The transpose of a product of two matrices is the product of their transposes
T T T
taken in reverse order. i.e., (AB) = B A
Properties of determinants

Following are the useful properties of determinants of any order. These properties are very
useful in expanding the determinants.
1. The value of a determinant remains unchanged. If rows are changed into column and
columns into rows, i.e.
t
|A| = |A |
2 If two rows (or columns) of a determinant are interchanged, then the value of the
determinant so obtained is the negative of the original determinant.
3 If each element in any row or column of a determinant is multiplied by a constant
number say K, then the determinant so obtained is K times the original determinant.
4 The value of a determinant in which two rows (or columns) are equal is zero.
5 If any row (or column) of a determinant is replaced by the sum of the row and a linear
combination of other rows (or columns), then the value of the determinant so obtained is
equal to the value of the original determinant.
6 The rows (or columns) of a determinant are said to be linearly dependent if |A|=0,
otherwise independent.

Let us Sum Up
Matrices play an important role in quantitative analysis of managerial
decision. They also provide very convenient and compact methods of writing a system of linear
simultaneous equations and methods of solving them. These tools have also become very useful
in all functional areas of management. Another distinct advantage of matrices is that once the
system of equations can be set up in matrix form, they can be solved quickly using a computer.
A number of basic matrix operations (such as matrix addition, subtraction, multiplication) were
discussed in this Lesson.

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MODULE – III

Aims and Objectives

This Lesson deals with the concepts and applications of sequence and series. Applications
of series like Arithmetic Progression and Geometric Progression and practical
applications
Sequence

If for every positive integer n, there corresponds a number an such that an is related to n by
some rule, then the terms a1, a2,….an…. are said to form a sequence.
A sequence is denoted by bracketing its nth term, i.e. (an) or {an}.
Example of a few sequences are:
1. If an = n2, then sequence {an}is 1,4,9,16….an,…
2. If an = 1/n, then sequence {an} is 1,1/2,1/3,1/4…1/n…
3. If an = n2/n+1, then sequence {an}is ½, 4/3, 9/4,…n2/n+1,….
The concept of sequence is very useful in finance. Some of the major areas where it plays
a vital role are: “instalment buying’; simple and compound interest problems’; ‘annuities
and their present values’, mortgage payments and so on
Series
A series is formed by connecting the terms of a sequences with plus or minus sign. Thus
if an is the nth term of a sequence, then
a1 + a2 + … + an is the given series of n terms.
Arithmetic Progression (AP)
A progression is a sequence whose successive terms indicate the growth or
progress of some characteristics. An arithmetic progression is a sequence whose term
increases or decreases by a constant number called common difference of an A.P. and is
denoted by d. In other words, each term of the arithmetic progression after the fist is
obtained by adding a constant d to the preceding term. The standard form of an A.P. is
written as
a, a+d, a+2d, a+3d,…

where ‘a’ is called the first term. Thus the corresponding standard form of
an arithmetic series becomes
a+(a+d)+(a+2d)+(a+3d)+….
For example
[Link] sequence 1, 3, 5, 7, . . . . . . is an A.P whose first term is 1 and d = 2
[Link] sequence ‐5, ‐2, 1, 4, 7, . . . . , whose ‘a’ = ‐5, d = 3
Suppose we invest Rs. 100 at a simple interest of 15% per annum for 5 years. The
amount at the end of each year is given by

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115,130,145,160,175
This forms an arithmetic progression
The nth Term of an A.P.
The nth term of an A.P. is also called the general term of the standard A.P. it is given by.
Tn = a+(n-1)d; n=1,2,3,…

Geometric Progression (GP)

A geometric progression (GP) is a sequence whose each term increases or decreases by a
constant ratio called common ratio of G.P. and is denoted by r. In other words, each term
of
G.P. is obtained after the first by multiplying the preceding term by a constant r. The
standard from of a G.P. is written as :
a, ar, ar2,….
Where ‘a’ is called the first term. Thus the corresponding geometric series in standard
form becomes
a + ar + ar2 + ….

The nth Term of G.P.

The nth term of G.P. is also called the general term of the standard G.P. It is given
by Tn=arn -1, n=1,2,3,…

It may be noted here that the power of r is one less than the index of Tn, which denotes
the rank of this term in the progression.

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Practical Problems

(1) Find the sum of the first 20 terms of 1 + 4 + 7 + 10 . . . . . . .

(2) Find four numbers in A.P whose sum is 20 and the sum of squares are 120

(3)Find the 9th term of the series 1,4,7................

(4) Find the nth term of the series2,4,6,8...............

(5) if the third term of an AP is 3 and the 7th term is 39. Find the common Difference

(6)Which term of the series is 17+23+29+..........is 551.

(7)7th term and 12th term of an A.P is 10 and 20. Find the first term.

(8) find the G.M between 4 and 16.

(9)The sum of first two terms of a GP is 2 and the sum of 4 GP is [Link] the GP

(10)Find five numbers in GP such that their product is 32 and the product of last two is 108.

(11). Find the 10th trm if 9,6,4....................................

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Mathematics of finance
Aims and Objectives

So far we have discussed about various mathematical functions and theories. This Lesson deals with
the applications of such theories in Finance. In financial management, lot of calculations are involved
in the case of interest, depreciation values, and so on.

1. Some terms used in business calculations

Principal amount (P). This is the amount of money that is initially being considered. It might be an
amount about to be invested or loaned or it may refer to the initial value or cost of plant or
machinery. Thus if a company was considering a bank loan value or cost of plant or machinery. Thus
if a company was considering a bank loan of say Rs.20000, this would be referred to as the principal
amount to be borrowed.

Accrued amount (A). This term is applied generally to a principal amount after some time has
elapsed for which interest has been calculated and added. It is quite common to qualify a precisely
according to time elapsed. Thus A1, A2, etc would mean the amount accrued at the end of the first and
second years and so on. The company referred to in (a) above might owe, say, an accrued amount of
Rs.22000 at the end of the first year and Rs. 24200 at the end of the second year (if no repayments
had been made prior to this time).

Rate of interest (i). Interest is the name given to a proportionate amount of money which is added to
some principal amount (invested or borrowed). It is normally denoted by symbol i and expressed as a
percentage rate per annum. For example if Rs. 100 is invested at interest rate 5% per annum (pa), it
will accrue to Rs. 100 + (5% of Rs. 100) = Rs 100 + Rs.5 = Rs.105 at the end of one year. Note
however, that for calculation purposes, a percentage rate is best written as a proportion. Thus, an
interest rate of 10% would be written as i = 0.1 and 12.5% as i = 0.125 and so on.

Number of time periods (n). The number of time periods over which amounts of money are being
invested or borrowed is normally denoted by the symbol n. although n is usually a number of years, it
could represent other time periods, such as a number of quarters or months.

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MODULE IV

MEANING AND DEFINITIONS OF STATISTICS

The word statistics is derived from the Latin word ‘Status’ or Italian word ‘Statista’ or
German word ‘Statistik’ which means a Political State. It is termed as political state, since in
early years, statics indicates a collection of facts about the people in the state for administration
or political purpose.

Statistics has been defined either as a singular non or as a plural noun.

Definition of Statistics as Plural noun or as numerical facts:‐ According to Horace Secrist,
‘Statistics are aggregates of facts affected to a marked extent by multiplicity of causes
numerically expressed, enumerated or estimated according to a reasonable standard of accuracy,
collected in a systematic manner for a predetermined purpose and placed in relation to each
other’.

Definition of Statistics as a singular noun or as a method:‐ According to Seliman, “

Statistics is the science which deals with the methods of collecting classifying, comparing and
interpreting numerical data collected, to know some light on any sphere of enquiry”.

Characteristics of Statistics
(1) Statistics show be aggregates of facts
(2) They should be affected to a marked extent by multiplicity of causes.
(3) They must be numerically expressed.
(4) They should be enumerated or estimated according to a reasonable standard of
accuracy.
(5) They should be collected in a systematic manner.
(6) They should be collected for a predetermined purpose.
(7) They should be placed in relation to each other.

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Function of Statistics

The following are the important functions of statistics:

1. It simplifies complexity:‐ Statistical methods make facts and figures easily understandable
form. For this purpose Graphs and Diagrams, classification, averages etc are used.
2. It presents facts in a proper form:‐ Statistics presents facts in a precise and definite form.
3. It facilitates for comparison:‐ When date are presented in a simplified form, it is easy to
compare date.
4. It facilitates for formulating policies:‐ Statistics helps for formulating policies for the
companies, individuals, Govt. etc. it is possible only with the help of date presented in a
suitable form.
4. It tests hypothesis:‐ Hypothesis is an important concept in research studies. Statistics
provides various methods for testing the hypothesis. The important tests are Chi – square,
Z‐test, T‐test and F‐test.
5. It helps prediction or forecasting:‐ Statistical methods provide helpful means of
forecasting future events.
6. It enlarges individual’s knowledge:‐When data are presented in a form of comparison, the
individuals try to find out the reasons for the variations of two or more figures. It thereby
helps to enlarge the individual’s knowledge.
7. It measures the trend behavior:‐ Statistics helps for predicting the future with the help of
present and past data. Hence plans, programs, and policies are formulated in advance with
the help of statistical techniques.

Scope of Statistics or importance or utility of statistics.

The Scope of Statistics in various field are:
(1) Statistics in Business:‐ Statistics is most commonly used in business. It helps to take
decision making of the business. The statistical data regarding the demand and supply of
product can be collected and analyzed to take decisions. The company can also calculate
the cost of production and then the selling price. The existing firms can also make a
comparative study about their performance with the performance of others through
statistical analysis.
(2) Statistics in Management:‐ Most of the managerial decisions are taken with the help of

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statistics. The important managerial activities like planning, directing and controlling are
properly executed with the help of statistical data and statistical analysis. Statistical
techniques can also be used for the payment of wages to the employees of the organization.
(3) Statistics in economics:‐ Statistical data and methods of statistical analysis render valuable
assistance in the proper understanding of the economic problems and the formulation of
economic policy.
(4) Statistics in banking and finance:‐ Banking and financial activities use statistics most
commonly.
(5) Statistics in Administration:‐ The govt. frames polices on the basis of statistical
information.
(6) Statistics in research: Research work are undertaken with the help of statistics.
Limitation of statistics

(1) Statistics studies only numerical data

(2) Statistics does not study individual cases
(3) Statistics does not reveal the entire story of the problem.
(4) Statistics in only one of the methods of study a problem.
(5) Statistics can be misused. Statistical result are true only an average

Statistical Enquires or Investigation

Statistical Investigation is concerned with investigation of some problem with the help of
statistical methods. It implies search for knowledge about some problems through statistical
device.
Different stages in statistical enquiry are:
(1) Planning the enquiry
(2) Collection of data.
(3) Organization of data.
(4) Presentation of data.
(5) Analysis of data.
(6) Interpretation of data.

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(1) Planning the enquiry:‐ The first step in statistical investigation is planning. The investigator
should determine the objective and scope of the investigation. He should decide in advance about
the type of enquiry to be conducted, source of information and the unit of measurement.

Object and scope:‐ The objective of the Statistical enquiry must be clearly defined. Once the
objective of enquiry has been determined, the next step is to decide the scope of enquiry. It refers
to the coverage of the enquiry.

Source of information:‐ After the purpose and scope have been defined, the next step is to decide
about the sources of data. The sources of information may be either primary or secondary.

Types of enquiry:‐ Selection of type of enquiry depends on a number of factors like object and
scope of enquiries, availability of time, money and facilities. Enquiries may be (1) census or
sample (2) original or repetitive (3) direct or indirect (4) open or confidential (5) General or
special purpose.

Statistical unit:‐ The unit of measurements which are applied in the collected data is called
statistical unit. For example ton, gram, meter, hour etc.

Degree of accuracy:‐ The investigator has to decide about the degree of accuracy that he wants to
attain. Degree of accuracy desired primarily depends up on the object of an enquiry.

Cost of plan:‐ An estimate of the cost of the enquiry must be prepaid before the commencement
of enquiry.

(2) Collection of data:‐ Collection of data implies accounting and systematic recoding of the
information gathered in a statistical investigation. Depending on the source, the collected
statistical data are classified under two categories namely primary data and secondary data.

(3) Organization of data:‐ Organization of data implies the arrangement and presentation of data in
such a way that it becomes easy and convenient to use them. Classification and tabulation are the

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two stages of organizing data.

(4) Presentation of data:‐ They are numerous ways in which statistical data may be displayed.
Graphs and diagrams are used for presenting the statistical data.

(5) Analysis data:‐ Analysis of data means critical examination of the data for studying
characteristics of the object under study and for determining the pattern of relationship among the
variables.
(6) Interpretation of data:‐ Interpretation refers to the technique of drawing inference from the
collected facts and explaining the significanceClassification according to variables
Data are classified on the basis of quantitative characteristics such as age, height, weight
etc.

Geographical Classification:‐ Classified according to geographical differences.

Chronological Classification:‐ Classified according to period wise.
Frequency Distribution
A frequency distribution is an orderly arrangement of data classified according to the
magnitude of observations. When data are grouped into classes of appropriate size indicating the
number of observations in each class we get a frequency distribution.
Components of frequency Distribution
(1) Class and class interval
(2) Class limits

Methods of classification
(1) Classification according to attributes.
(2) Classification according to variables.

Classification according to attributes

Under this methods the data are classified on the basis of attributes. For example literacy,
unemployment etc. are attributes.

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Following are the classification under this method.

1. Simple classification
2. Manifold classification
In simple classification the data are divided on the basis of only one attributes.

In manifold classification the data are classified on the basis more than one attributes. For
example

population is divided on the basis of sex and literacy

Class boundaries
Magnitude of class interval
Class frequency.
Tabulation
Tabulation is an orderly arrangement of data in rows and columns. It is a moment of
presentation of data.
Objectives

1. To simplify complex data

2. To facilitate comparison
3. To facilitate statistical analysis
4. To save time
5. To economies space
Part of a table
1. Table number
2. Title of the table
3. Caption ‐‐‐‐‐‐‐‐ i.e. column headings
4. Sub ‐‐‐‐‐‐‐‐‐‐‐‐‐‐ i.e. row heading
5. Body
6. Head note
7. Foot note
8. Source data.

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Collection of data
On the basis of source, data can be collected from primary and secondary source.
Primary data

Primary data are those collected by the investigator himself. May are original in character.
May are truthful and suit for the purpose. But the collection is very expensive and time
consuming.
Methods of collection of primary data
1. Direct personal interview:‐ In this method investigator collection the data personally. He was
to meet the people for collecting the data. This method is suitable:

a) When the area of investigation is limited

b) When higher degree of accuracy is leaded.

2. Indirect oral investigation:- :Under this method, information are collected from When the
results of investigation to be kept confidential third parties who are is touch with the facts
under enquiry.
3. Schedules and Questionnaires methods:- Under this method, a list of questions called
questionnaire is prepared and information are called from various sources. It is a printed list
of questions to be filled by the informations. But schedule is filled by the enumerator.
Essentials of a good questionnaire
(1) The person conducting the survey much introduce himself.
(2) The number of questions should be kept to the minimum.
(3) The question should be as short as possible and simple.
(4) The questions must be arranged in logical order.
(5) The questions should be clear.
(6) Personal questions should be avoided.
(7) Questions should be in the nature of yes or no type.
(8) Questions must be of convenient size and easy to handle.
(9) Questions should be attractive.
(10) Instructions should be given for filing up the form. Specimen of questionnaire.

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Secondary data

Secondary data are those data which are collected by someone for this purpose. Secondary
data are usually in the shape of finished product. The collection of secondary data is less
expensive and less time consuming. Secondary data are collected from published and
unpublished sources.
Precautions to be taken before using secondary data

(1) Suitability
(2) Adequacy
(3) Reliability

Difference between Primary and Secondary data

1. Primary data are original character. But secondary data are not original, they are collected by
somebody else.
2. Primary data are in the shape of raw material. But secondary data are in the shape of finished
product.
3. Collection of primary data is expanse and time consuming. But collection of secondary data
is less expensive and less time consuming.
4. Primary data will be usually adequate and suitable. But secondary data need not be adequate
and suitable for the purpose.

Sampling

Sampling is the process obtaining information about an entire population by examining

only a part of it. It is the examination of the regenerative items and conclusion of draw for all
items coming in that group.
Methods of sampling or techniques of sampling

1. Probability sampling or random sampling

2. Non probability sampling

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Probability sampling

Under this method, each items has an equal chance for being selected.
Following are the random sampling.
(1) Simple random sampling

A simple random sample is a sample selected from a population in such a way that every
item of the population has an equal chance of being selected. The selection depends on chance.
Eg. Lottery methods.

(2) Systematic sampling

This method is popularly used in those cases where complete list of the population from which
sample is to be drawn is available. Under this method the items in the population are included in
intervals of magnitude K. From every interval select an item by simple random sample method.

(3) Cluster sampling

Cluster sampling consists in forming suitable clusters of units. All the units is the
sample of clusters selected are surveyed.

(4) Quota sampling

In this method each investigator engaged in the collection of data is assigned a quota
for investigation.

(5) Multi stage sampling

This is a sampling procedure carried but in several stages. In multistage sampling, firstly
units selected by suitable methods of sampling. From among the selected units, sample is drawn
by some suitable methods. Further stages are added to arrive at a sample of the desired units.

Non probability sampling

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1. Judgment sampling:‐ Under this sampling investigator exercise this discretion in the mater
of selecting the items that are to be included in the sample.
2. by selecting such units of the universe which may be conveniently located.

Organization of data
Organizing data mean, the arrangement and presentation of data. Classification and
tabulation are the two stages of organizing data.

Classification
The process of arranging data in groups or classes according to similarities called
classification.
Objects of classification

1. To simplify the complexity of data.

2. To bring out the points of similarity of the various items.
3. To facilitate comparison.
4. To bring out relationship.
5. To provide basis for tabulation.

Graphs and Diagrams

Graphs and diagrams is one of the statistical methods which simplifies the complexity of
quantitative data and make them easily understandable.

Importance of Diagrams & Graphs

1. Attract common people
2. Presenting quantitative facts in simple.
3. They have a great memorizing effect.
4. They facilitate comparison of data.
5. Save time in understanding data.
6. Facts can be a understood without mathematical calculations.

Limitations

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1. They can present only approximate values.

2. They can represent only limited amount of information.
3. They can be misused very easily.
4. They are not capable of further mathematical treatment.
5. They are generally useful for comparison purpose only

Classification of Statistical Methods

The filed of statistics provides the methods for collecting, presenting and meaningfully
interpreting the given data. Statistical Methods broadly fall into three categories as shown in the
following chart.

Statistical Methods

Descriptive Inductive Statistical

Statistics Statistics Decision Theory

Data Collection Statistical Inference Analysis of Business

Presentation Estimation Decision

Descriptive Statistics
There are statistical methods which are used for re-arranging, grouping and summarising
sets of data to obtain better information of facts and thereby better description of the situation
that can be made. For example, changes in the price- index. Yield by wheat etc. are frequently
illustrated using the different types of charts and graphs. These devices summarise large
quantities of numerical data for easy understanding. Various types of averages, can also reduce a
large mass of data to a single descriptive number. The descriptive statistics include the methods
of collection and presentation of data, measure of Central tendency and dispersion, trends, index
numbers, etc.

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Inductive Statistics

It is concerned with the development of some criteria which can be used to derive
information about the nature of the members of entire groups ( also called population or universe)
from the nature of the small portion (also called sample) of the given group. The specific values
of the population members are called ‘parameters’ and that of sample are called ‘Statistics’.
Thus, inductive statistics is concerned with estimating population parameters from the sample
statistics and deriving a statistical inference.

Samples are drawn instead of a complete enumeration for the following reasons:

• the number of units in the population may not be known

• the population units may be too many in number and/or widely dispersed.
• Thus complete enumeration is extremely time consuming and at the end of a full
enumeration so much time is lost that the data becomes obsolete by that time.
• It may be too expensive to include each population item.
Inductive statistics, includes the methods like: probability and probability distributions;
sampling and sampling distribution; various methods of testing hypothesis; correlation,
regression, factor analysis; time series analysis.

Statistical Decision Theory

Statistical decision theory deals with analysing complex business problems with
alternative course of action ( or strategies) and possible consequences. Basically,. It is to provide
more concrete information concerning these consequences, so that best course of action can be
identified from alternative courses of action.

Statistical decision theory relies heavily not only upon the nature of the problem on hand,
but also upon the decision environment. Basically there are four different states of decision

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environment as given below:

State of decision Consequences

Certainty Deterministic
Risk Probabilistic
Uncertainty Unknown
Conflict Influenced by an opponent

Since statistical decision theory also uses probabilities (subjective or prior) in analysis,
therefore it is also called a subjectivist approach. It is also known as Bayesian approach because
Baye’s theorem, is used to revise prior probabilities in the light of additional information.

Various Statistical Techniques

A brief comment on certain standard techniques of statistics which can be helpful to a

decision- maker in solving problems is given below.

i) Measures of Central Tendency: Obviously for proper understanding of quantitative data, they
should be classified and converted into a frequency distribution ( number of times or frequency
with which a particular data occurs in the given mass of data.). This type of condensation of data
reduces their bulk and gives a clear picture of their structure. If you want to know any specific
characteristics of the given data or if frequency distribution of one set of data is to be compared
with another, then it is necessary that the frequency distribution help us to make useful inferences
about the data and also provide yardstick for comparing different sets of data. Measures of
average or central tendency provide one such yardstick. Different methods of measuring central
tendency, provide us with different kinds of averages. The main three types of averages
commonly used are:
a) Mean: the mean is the common arithmetic average. It is computed by dividing the sum
of the values of the observations by the number of items observed.
b)Median: the median is that item which lies exactly half-way between the lowest and
highest value when the data is arranged in an ascending or descending order. It is not
affected by the value of the observation but by the number of observations. Suppose you

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have the data on monthly income of households in a particular area. The median value
would give you that monthly income which divides the number of households into two
equal parts. Fifty per cent of all the households have a monthly income above the median
value and fifty per cent of households have a monthly income below the median income.

c) Mode: the mode is the central value (or item) that occurs most frequently. When the
data organised as a frequency distribution the mode is that category which has the
maximum number of observations. For example, a shopkeeper ordering fresh stock of
shoes for the season would make use of the mode to determine the size which is most
frequently sold. The advantages of mode are that (a) it is easy to compute, (b) is not
affected by extreme values in the frequency distribution, and (c) is representative if the
observations are clustered at one particular value or class.

ii) Measures of Dispersion: the measures of central tendency measure the most typical value
around which most values in the distribution tend to coverage. However, there are always
extreme values in each distribution. These extreme values indicate the spread or the dispersion of
the distribution. The measures of this spread are called ’measures of dispersion’ or ’variation’ or
‘spread’. Measures of dispersion would tell you the number of values which are substantially
different from the mean, median or mode. The commonly used measures of dispersion are range,
mean deviation and standard deviation. The data may spread around the central tendency in a
symmetrical or an asymmetrical pattern. The measures of the direction and degree of symmetry
are called measures of the skewness. Another characteristic of the frequency distribution is the
shape of the peak, when it is plotted on a graph paper. The measures of the peakedness are called
measures of Kurtosis.

iii) Correlation: Correlation coefficient measures the degree to which the charge in one variable
( the dependent variable) is associated with change in the other variable (independent one). For
example, as a marketing manager, you would like to know if there is any relation between the
amount of money you spend on advertising and the sales you achieve. Here, sales is the
dependent variable and advertising budget is the independent variable. Correlation coefficient, in
this case, would tell you the extent or relationship between these two variables,’ whether the
relationship is directly proportional (i.e. increase or decrease in advertising is associated with

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decrease in sales) or it is an inverse relationship (i.e. increasing advertising is associated with

decrease in sales and vice- versa) or there is no relationship between the two variables. However,
it is important to note that correlation coefficient does not indicate a casual relationship, Sales is
not a direct result of advertising alone, there are many other factors which affect sales.
Correlation only indicates that there is some kind of association-whether it is casual or causal can
be determined only after further investigation. Your may find a correlation between the height of
your salesmen and the sales, but obviously it is of no significance.

iv) Regression Analysis: For determining causal relationship between two variables you may use
regression analysis. Using this technique you can predict the dependent variables on the basis of
the independent variables. In 1970, NCAER ( National Council of Applied and Economic
Research) predicted the annual stock of scooters using a regression model in which real personal
disposable income and relative weighted price index of scooters were used as independent
variable.

The correlation and regression analysis are suitable techniques to find relationship between two
variables only. But in reality you would rarely find a one-to-one causal relationship, rather you
would find that the dependent variables are affected by a number of independent variables. For
example, sales affected by the advertising budget, the media plan, the content of the
advertisements, number of salesmen, price of the product, efficiency of the distribution network
and a host of other variables. For determining causal relationship involving two or more
variables, multi- variable statistical techniques are applicable. The most important of these are the
multiple regression analysis deiscriminant analysis and factor analysis.

v) Time Series Analysis : A time series consists of a set of data ( arranged in some desired
manner) recorded either at successive points in time or over successive periods of time. The
changes in such type of data from time to time are considered as the resultant of the combined
impact of a force that is constantly at work. This force has four components: (i) Editing time
series data, (ii) secular trend, (iii) periodic changes, cyclical changes and seasonal variations, and
(iv) irregular or random variations. With time series analysis, you can isolate and measure the
separate effects of these forces on the variables. Examples of these changes can be seen, if you
start measuring increase in cost of living, increase of population over a period of time, growth of

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agricultural food production in India over the last fifteen years, seasonal requirement of items,
impact of floods, strikes, wars and so on

vi) Index Numbers: Index number is a relative number that is used to represent the net result of
change in a group of related variables that has some over a period of time. Index numbers are
stated in the form of percentages. For example, if we say that the index of prices is 105, it means
that prices have gone up by 5% as compared to a point of reference, called the base year. If the
prices of the year 1985 are compared with those of 1975, the year 1985 would be called “given or
current year” and the year 1975 would be termed as the “base year”. Index numbers are also used
in comparing production, sales price, volume employment, etc. changes over period of time,
relative to a base
.
vii) Sampling and Statistical Inference: In many cases due to shortage of time, cost or non-
availability of data, only limited part or section of the universe (or population) is examined to (i)
get information about the universe as clearly and precisely as possible, and (ii) determine the
reliability of the estimates. This small part or section selected from the universe is called the
sample, and the process of selection such a section (or past) is called sampling.
Schemes of drawing samples from the population can be classified into two broad categories:

1 .Random sampling schemes: In these schemes drawing of elements from the

population is random and selection of an element is made in such a way that every
element has equal change ( probability) of being selected.
2 Non-random sampling schemes: in these schemes, drawing of elements for the
population is based on the choice or purpose of selector.

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20

15

Population (in million)

10

A B C D E

Bar Diagram
In a bar diagram only the length is considered. The width of the bar is not given any importance.
Following are the important types of bar diagrams
(1) Simple bar diagram
Simple bar diagram represents only one variable. For example, height, weight, etc.

Year 2007 2008 2009 2010 2011 2012

Sales (In ‘0000’ 45 55 65 70 50 60

80

70

60
Population (in million)

50

40

30

20

10

0 2007 2008 2009 2010 2011 2012

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