MB0040 – Statistics for Management

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Summer 2013

Master of Business Administration- MBA Semester 1

MB0040 – Statistics for Management - 4 Credits

(Book ID: B1731)

Assignment – 60 marks

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q1.Statistics plays a vital role in almost every facet of human life. Describe the functions of Statistics. Explain the applications of statistics.

Answer : Statistics is the study of how to collect, organize, analyze, and interpret numerical information from data. Descriptive statistics involves methods of organizing, picturing and summarizing information from data. Inferential statistics involves methods of using information from a sample to draw conclusions about the population.

Main points :

* Statistical inferences are no more accurate than the data they

are based on (weakest link).

* Statistical results should be interpreted by one who

                                                       

Q2.a. Explain the various measures of Dispersion.

Answer : Measures of dispersion :

Range :

• Defined as the difference between the largest and smallest sample values.
• One of the simplest measures of variability to calculate.

Standard Deviation :

• The standard deviation is the square root of the sample variance.
• Defined so that it can be used to make inferences about the population variance.

b. Obtain the values of the median and the two Quartiles.

391

384

591

407

672

522

777

733

2488

1490

 (Formulas – 2 marks, Calculation/Solution- 3 marks)

Ans :

Arrange the data values in order from the lowest value to the highest value:

384

391

407

522

591

672

733

777

1490

2488

Median :

The number of values in the data set is 10, which is even.  So, the median is the average of the two middle values.

Q3.a. What is correlation? Distinguish between positive and negative correlation.

(Meaning – 2 marks, Differences – 3 marks)

Answer : Correlation :

In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used in advanced portfolio management.

Correlation is computed into what is known as the correlation coefficient, which ranges between -1 and +1.

     

b. Calculate coefficient of correlation from the following data.

X	1	2	3	4	5	6	7	8	9
Y	9	8	10	12	11	13	14	16	15

Answer : Coefficient of correlation :

now using the formula :

Here   n = 9 it is the sample size .

Discussion of result :

The range of the correlation coefficient is from -1 to 1.

Q4.Index number acts as a barometer for measuring the value of money. What are the characteristics of an index number? State its utility.

Answer : Index number :

1. An index number is an economic data figure reflecting price or quantity compared with a standard or base value. The base usually equals 100 and the index number is usually expressed as 100 times the ratio to the base value. For example, if a commodity costs twice as much in 1970 as it did in 1960, its index number would be 200 relative to 1960. Index numbers are used especially to compare business activity, the cost of living, and employment.

Q5.Business forecasting acquires an important place in every field of the economy. Explain the objectives and theories of Business forecasting.

Answer : Business forecasting :

Business Forecasting is an estimate or prediction of future developments in business such as sales, expenditures, and profits. Given the wide swings in economic activity and the drastic effects these fluctuations can have on profit margins, it is not surprising that business forecasting has emerged as one of the most important aspects of corporate planning. Forecasting has become an invaluable tool for businesspeople to anticipate economic trends and prepare themselves either to benefit from or to counteract them. If, for instance, businesspeople envision an economic downturn, they can cut back on their inventories, production quotas, and hiring. If, on the contrary, an economic boom seems probable, those same businesspeople can take necessary measures to attain the maximum benefit from it. Good business forecasts can help business owners and managers adapt to a changing economy.

Objectives of business forecasting :

In the narrow sense, the objective of forecasting is to produce better forecasts. But in the broader sense, the objective is to improve organizational performance—more revenue, more profit, increased customer satisfaction. Better forecasts, by themselves, are of no inherent value if those forecasts are ignored by management or otherwise not used to improve organizational

Q6.The weekly wages of 1000 workers are normally distributed around a mean of Rs.

70 and a standard deviation of Rs. 5. Estimate the number of workers whose weekly wages will be:

a. Between 70 and 72

b. Between 69 and 72

c. More than 75

d. Less than 63

Answer : These values are calculated by finding z scores and the probability values from probability table.

z score = variable - mean value/standard deviation

Given that Mean = 70

 standard deviation = 5

a. between 70 and 72 :

1. Get the z score for 70.

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