APresentation

On“Application of

Statistics In

Business Decision Making”

• Every minute of working day, decisions are made by business around the world that determine whether companies will be profitable or not.

• Most of these decisions are made by the gathered information from market place, the economic & financial environment & also from other fctors.

Introduction to Statistics

What is Statistics?

• “Statistics is a science dealing with the

collection, analysis, interpretation &

presentation of numerical data.”

Scope

• Simplifying complex data.• Conversion of data into information and

make it more useful in decision making.• Quantifies and measures uncertainty and

variability and so helps in measuring risk.

• Discovers past and emerging patterns in a data. It helps in forecasting.

• Helps in estimation and validating assumptions

Basic use of Statistics

• Gathering, analyzing, interpreting & presenting data.

• Course of study.• Measurement taken on a sample.• By analyzing the data, can make

decisions easily.

Branches of Statistics

• Statistics can be divided into two branches:

Statistics

Descriptive statistics

Inferential statistics

Descriptive statistics

• If a business analyst is using data gathered on a group to describe or reach conclusions about that same group, the statistics are called descriptive statistics.

• E.g. The instructor can use these statistics to discuss class average, range of class scores etc.

Inferential statistics

If a researcher gathers data from a sample & uses the statistics generated to reach conclusions about the population from which the sample was taken, the

statistics are inferential statistics.

Statistics in Business

Every area of business uses statistics in decision making. Best way to reach to the market:

survey, direct mail, catalogs etc… Reducing the stress on job:

conducting various types of survey by using various statistical techniques.

Cont…

Taking various types of financial decisions such as, expansion, Merger & acquisitions, new product or service launch, technology upgrade etc..

Economic decisions such as calculating the GDP rate, unemployment rate, predict the future business climates.

Impact of Technology such as, Internet survey, Graph analysis, Inexpensively analysis of data.

Applications of statisticsEconomics: Formulation of economic policies, econometrics

Finance: Helps in value at risk, stock market-derivative

Insurance: Based on concept of probability

Operations: Inventory, SQC, six sigma method

Applications of statisticsHR:

performance evaluations,Feedback of training program

IT:Optimization of server time,Testing software

Data mining:Specialized branch of combination of IT

& StatisticsIt is used in all fields of business

Applications of statistics in various areas

Marketing: Philip Kotler and Gary Armstrong state: “ identifying customer needs and wants,

determines which target markets the organizations can serve best and designs appropriate products, services and programs to serve these markets.”

Statistical methods helps in forecasting sales, market share and demand for various types of industrial products

Some statistical techniques and their applications

Normal distribution

equity research finance marketing production engg project management

risk management performance appraisal six sigma PERT/CPM

Sampling market research consumer survey

Testing of Hypothesis

Agriculture, paramedical, Pharmaceutical

testing a fertilizer, testing a drug, testing of drug, clinical trial

Decision theory Finance Investment and portfolio selection

Forecasting HRD

Insurance

Marketing

manpower planningDetermining premiumDemand forecasting

Discriminant Analysis

Finance, Marketing

Credit risk analysis, Customer profile

Some statistical techniques and their applications

Limitations of statistics

It does play very important role as discussed

but it has to be implemented by well defined objectives, scientific collection of data, appropriate assumptions and analysis.

Scarcity of any of the above leads to wrong conclusion