Page 19 - DMGT209_QUANTITATIVE_TECHNIQUES_II

Quantitative Techniques-II

Notes solve every day problems of running a business and industry with greater efficiency and
confidence.
Let us now also look at some of the advantages of the study of statistics:

1. Definiteness: The study of statistics helps us in presenting general statements in a precise
and a definite form. Statements of facts conveyed numerically are more precise and
convincing than those stated qualitatively.

Example: The statement that “literacy rate as per 1981 census was 36% compared to 29%
”
“
for 1971 census is more convincing than stating simply that literacy in our country has increased .
”
2. Condensation: The new data is often unwieldy and complex. The purpose of statistical
methods is to simplify large mass of data and to present meaningful information from
them.

Example: It is difficult to form a precise idea about the income position of the people of
India from the data of individual income in the country. The data will be easy to understand and
more precisely if it can be expressed in the form of per capita income.

3. Comparison: According to Bodding, the object of statistics is to enable comparisons between
past and present results with a view to ascertaining the reasons for change which have
taken place and the effect of such changes in the future. Thus, if one wants to appreciate the
significance of figures, then he must compare them with other of the same kind.

Example: The statement “per capita income has increased considerably” shall not be
meaningful unless some comparison of figures of past is made. This will help in drawing
conclusions as to whether the standard of living of people of India is improving.

4. Formulation of policies: Statistics provides the basic material for framing policies not
only in business but in other fields also.

Example: Data on birth and mortality rate not only help is assessing future growth in
population but also provide necessary data for framing a scheme of family planning.

5. Formulating and testing hypothesis: Statistical methods are useful in formulating and
testing hypothesis or assumption or statement and to develop new theories.

Example: The hypothesis: “whether a student has benefited from a particular media of
instruction”, can be tested by using appropriate statistical method.
6. Prediction: For framing suitable policies or plans, and then for implementation it is
necessary to have the knowledge of future trends. Statistical methods are highly useful for
forecasting future events.

Example: For a businessman to decide how many units of an item should be produced in
the current year, it is necessary for him to analyse the sales data of the past years.

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