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Decision Making is a process of consciously choosing an alternative among several available (examples). Decision making can be with complete certainty, risk & uncertainty and complete uncertainty. QTs assist in decision making in the above situations.
What Is Statistics?
1. Collecting Data
e.g., Survey
Data Analysis
Why?
2. Presenting Data
e.g., Charts & Tables
1984-1994 T/Maker Co.
3. Characterizing Data
e.g., Average
DecisionMaking
What Is Statistics?
Statistics is the science of data. It involves collecting, classifying, summarizing, organizing, analyzing, and interpreting numerical information.
Statistical Methods
Statistical Methods
Descriptive Statistics
Inferential Statistics
Statistical methods
In using statistical methods, a manager may face one or all of the following situations:
when data need to be presented in a form which helps in easy grasping (e.g., presentation of performance data in graphs, charts, and tables, in the annual report of a company). where no specific action is contemplated but it is intended to test some hypotheses and draw inferences.
Statistical methods
when some unknown quantities have to be estimated or relationships established through observed data. when a decision has to be made under uncertainty regarding a course of action to be followed.
Situation (i) falls into descriptive statistics; Situations (ii) and (iii) fall into inductive or inferential statistics; Situation (iv) falls into statistical decision theory.
Descriptive Statistics
1. Involves
Collecting Data Presenting Data Characterizing Data
50
Rs.
25
0 Q1 Q2 Q3 Q4
2. Purpose
Describe Data
X = 30.5 S2 = 113
Inferential Statistics
1. Involves
Estimation (No. of students opting engineering seats) Hypothesis Testing (soft branches by)
Population?
2. Purpose
Make decisions about population characteristics
2011 Pearson Education, Inc
Fundamental Elements
1. Experimental unit
Object upon which we collect data All items of interest Characteristic of an individual experimental unit
2. Population
3. Variable
4. Sample
Subset of the units of a population
Fundamental Elements
1. Statistical Inference
Estimate or prediction or generalization about a population based on information contained in a sample
2. Measure of Reliability
Statement (usually qualified) about the degree of uncertainty associated with a statistical inference
Types of Data
Types of Data
Quantitative Data
Qualitative Data
Types of Data
Quantitative data are measurements that are recorded on a naturally occurring numerical scale.
Qualitative data are measurements that cannot be measured on a natural numerical scale; they can only be classified into one of a group of categories.
Quantitative Data
Measured on a numeric scale. Number of defective items in a lot. Salaries of CEOs of oil companies. Ages of employees at a company.
4 943 21 120 52
12
8
71
Qualitative Data
Classified into categories. College major of each student in a class. Gender of each employee at a company. Method of payment (cash, check, credit card).
Rs Credit
Types of Data
1. 2. 3. 4.
Data from a published source Data from a designed experiment Data from a survey Data collected observationally
Category 1 is a secondary source; 2,3, and 4 fall into Primary source of data
Obtaining Data
Published source: book, journal, newspaper, Web site Designed experiment: researcher exerts strict control over units Survey: a group of people are surveyed and their responses are recorded Observation study: units are observed in natural setting and variables of interest are recorded
Engineering
Construction Materials
Sports
Individual & Team Performance
Business
Consumer Preferences Financial Trends
Some limitations
Statistics does not study qualitative phenomena. Statistics does not study individuals Statistics can be misused (skill & experience are needed to draw useful inferences god or devil)
A technique that provides a quantitative basis for the executives for decision making. Nature of OR models