Assignment No.

2
Programme Name :MBA UID: D21MBA16489

Semester: I Course Code:21MBA-614

Course Title :Decision Science - I Credit:4

Submitted Date:17 July 2021 Last date of Submission:21st July 2021

Max. Marks: 30 Weightage: 15 Marks

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Fill page numbers as per your theory assignment in the table below:
Question No Sec.A1 –10 Sec.B-1 Sec.B-2 Sec.B-3 Sec.B-4 Sec.B-5 Sec.B-6 Sec.B-7
Page No. 1-4 5-6 6-7 7 8 8-9

SHUCHIM GUPTA
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 Section-A
1. Define statistics. List the characteristics of statistics.

Ans 1: ‘Statistics is the science which deals with the collection, presentation, analysis and
interpretation of numerical data’ - Croxton and Cowden.

Characteristics of statistics:
(1) Aggregate of facts collected in systematic manner for a specific purpose.
(2) Affected by large number of causes to marked extent.
(3) Numerically expressed.
(4) Enumerated or estimated with a reasonable degree of accuracy.
(5) To be placed in relation to the other.

2. What is discrete frequency distribution?

Ans 2: Raw data sometimes may contain a limited number of values and each of them
appeared many numbers of times. Such data may be organized in a tabular form termed
as a simple or discrete frequency distribution. A discrete frequency distribution is formed
using tally chart.

3. What is meant by measure of central tendency?

Ans 3 : A measure of central tendency is a representative value of the entire group of

data. It describes the characteristic of the entire mass of data which reduces the
complexity of data and makes them amenable for the application of mathematical
techniques involved in analysis and interpretation of data..

4. Define Median. Discuss its advantages and disadvantages?

Ans 4: Median is the value of the variable which divides the whole set of data into two
Equal parts. It is the value such that in a set of observations, 50% observations are above
and 50% observations are below it. Hence the median is a positional average.

Advantages:
1) It is easy to compute. It can be calculated by mere inspection and by the graphical
method.
2) It is not affected by extreme values.
3) It can be easily located even if the class intervals in the series are unequal.

Disadvantages:

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1) It is not amenable to further algebraic treatment
2) It is a positional average and is based on the middle item
3) It does not take into account the actual values of the items in the series

5. Define mean deviation. How does it differ from standard deviation?

Ans 5 : The Mean Deviation (MD) is defined as the arithmetic mean of the absolute
deviations of the individual values from a measure of central tendency of the data set. It
is also known as the average deviation.

Mean deviation about mean is (∑D)/n, where D = x- x

Difference with standard deviation: Standard deviation uses the square of deviations to
calculate dispersion of the data whereas mean deviation uses the mod of deviations in
order to calculate the dispersion. Thus squaring the difference of variable measures the
dispersion more accurately than mean deviation.

6. Define Karl Pearson’s coefficient of correlation. How do you

interpret the coefficient of correlation, which lies between 0 and +1?

Ans 6 :Karl Pearson’s coefficient of correlation when X and Y are linearly related and
(X, Y) has a bivariate normal distribution, the co-efficient of correlation between X and
Y is defined as

If the coefficient of correlation is 0 then we can infer that there is no correlation between
variables and value more than 0 towards 1 implies higher degree of correlation with +1
termed as perfectly positive correlation.

7. Define regression. What are the types of regression?

Ans 7 : Regression is a statistical method used in finance, investing, and other disciplines
that attempts to determine the strength and character of the relationship between one
dependent variable (usually denoted by Y) and a series of other variables (known as
independent variables).

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There are several types of regression - Simple linear correlation, multiple linear
correlation and non-linear correlation.

8. Distinguish between linear and non-linear regression.

Ans 8 : Simple Linear Regression can be expressed using a straight line equation (linear
Regression) that best approximates all the individual data points. Simple linear regression
Establishes a relationship between a dependent variable (Y) and one independent variable
(X) using a best fitted straight line (also known as regression line).

If the regression is not linear and is in some other form, then the regression is said to be
non-linear regression. Some of the non-linear relationships are displayed below.

9. Define index number? Write the uses of Index numbers.

Ans 9 : An Index Number is defined as a relative measure to compare and describe

the average change in price, quantity value of an item or a group of related items with
respect to time, geographic location or other characteristics accordingly.

Uses of Index numbers: Uses of index numbers is based on type of it, as illustrated
below:
(i) Price Index Numbers:
Price index is a ‘Special type’ of average which studies net relative change in the
prices of commodities, expressed in different units. Here comparison is made in
respect of prices. Price index numbers are wholesale price index numbers and retail
price index numbers.
(ii) Quantity Index Numbers: This number measures changes in volume of goods
produced, purchased or consumed. Here, the comparison is made in respect of
quantity or volume. For example, the volume of agricultural goods produced,
consumed, import, export etc.
.

10. What is circular test?

Ans 10 : Circular Test: It is an extension of time reversal test. The time reversal test takes
into account only two years. The current and base years. The circular test would require
this property to hold good for any two years. An index number is said to satisfy the
circular test when there are three indices, P01, P12 and P20, such that P01 × P12 × P20 =
1.

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 Section –B

Q2 .Distinguish between inclusive method and exclusive method of forming

frequency distribution with suitable examples.

Ans 2 : Formation of frequency distribution is usually done by two different methods, namely
inclusive method and exclusive method:

Inclusive method
In this method, both the lower and upper class limits are included in the classes. Inclusive
type of classification may be used for a grouped frequency distribution for discrete variable
like members in a family, number of workers etc., It cannot be used in the case of continuous
variable like height, weight etc., where integral as well as fractional values are permissible.
Since both upper limit and lower limit of classes are included for frequency calculation, this
method is called inclusive method.

Exclusive method
In this method, the values which are equal to upper limit of a class are not included in that
class and instead they would be included in the next class. The upper limit is not at all taken
into consideration or in other words it is always excluded from the consideration. Hence this
method is called exclusive method.

Example
The marks scored by 50 students in an examination are given as follows:
23, 25, 36, 39, 37, 41, 42, 22, 26, 35, 34, 30, 29, 27, 47, 40, 31, 32, 43, 45, 34, 46, 23, 24, 27,
36, 41, 43, 39, 38, 28, 32, 42, 33, 46, 23, 34, 41, 40, 30, 45, 42, 39, 37, 38, 42, 44, 46, 29, 37.
It can be observed from this data set that the marks of 50 students vary from 22 to 47. If it is
decided to divide this group into 6 smaller groups, we can have the boundary lines fixed as
25, 30, 35, 40, 45 and 50 marks. Then, we form the six groups with the boundaries as 21 - 25,
26 - 30, 31 - 35, 36 - 40, 41 – 45 and 46 - 50.
The continuous frequency distribution formed by inclusive and exclusive methods are
displayed in Tables below

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Q3. Explain how measures of central tendency and measures of variations are
complementary to each other in the context of analysis of data.

Ans 3 : Explanation:

Measures of central tendency are mean, mode and median. Even we have three types of mean,
such as arithmetic mean, geometric mean and harmonic mean.
They tell us the central value around which the data is distributed. For example consider the data
set 6,8,2,4,12,5,8,10,3,4. In this sum of numbers is 62 and as they are ten in number, mean
is 6210=6.2
Note that smallest number is 2 and largest number is 12. Now, even if we had set of numbers
as 5,6,7,5,8 and as sum of numbers is 31 and they are five, mean is still 315=6.2.
But 5,6,7,5,8 are far more narrowly spread and hence nature of data is not very well brought out
by just mean.
Similarly, we can have two data sets with same median or mode, but their spread may be
different, as mode is just the more frequent among data points and median is the value of central
data point, when the same is arranged in increasing or decreasing order.
Measures of dispersion tell us better about the kind of spread. In a way, mean deviation or
standard deviation tell us more about the way data is spread.

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 For example, data set 30,40,50,60,70 and data set 10,30,50,70,90 have same mean, mode and
median but while mean deviation of first data set is 12, that of second data set is 24, indicating
that second data set is too wide spread.
What about two data sets 30,40,50,60,70 and 130,140,150,160,170? Their mean deviation is
same i.e. 12, but are they not widely different as mean of first data set is 50, while that of second
data set is 150.
It is obvious that measures of central tendency and measures of dispersion are both important
and complementary.

Q5. Define Partial Correlation. Explain the properties of Spearman’s Rank Correlation.

Ans 5 : Partial correlation is a method used to describe the relationship between two variables
whilst taking away the effects of another variable, or several other variables, on this relationship. Partial
correlation is best thought of in terms of multiple regression.
A different way to calculate partial correlation coefficients, which does not require a full
multiple regression, is show below for the sake of further explanation of the principles: Consider a
correlation matrix for variables A, B and C (note that the multiple line regression function in Stats Direct
will output correlation matrices for you as one of its options):

A B C
A: *
B: r(AB) *
C: r(AC) r(BC) *

The partial correlation of A and B adjusted for C is:

The same can be done using Spearman's rank correlation co-efficient.

Properties of Spearman’s Rank Correlation:

1. When there is a perfect agreement in the order of the ranks i.e., the ranks of the two
variables are exactly in the same order, then Σ D2 = 0(Min.) and R = +1 (Max.).
2. When there is complete disagreement in order of the ranks i.e., ranks of the two variables
are exactly in the reverse order, then Σ D2 = (N3+N) (Max.) and R = -1 (Min.)
3

3. If “n” pairs of variables ‘x’ and ‘y’ are permutations of integers 1,2, 3……n, then the
correlation coefficient by Karl Pearson’s method & Spearman’s method are equal.
4. It is independent of change of origin& magnitude of scale.

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 Q6. Explain application of regression analysis. Distinguish between correlation and
regression.

Ans 6: Application of regression analysis: Regression analysis is used to estimate the

relationship between a dependent variable and one or more independent variables. This
technique is widely applied to predict the outputs, forecasting the data, analyzing the time series,
and finding the causal effect dependencies between the variables. Regression analysis is a way to
find trends in data. For example, you might guess that there's a connection between how much
you eat and how much you weigh; regression analysis can help you quantify that.

Key Differences Between Correlation and Regression:

The points given below, explains the difference between correlation and regression in detail:

1. A statistical measure which determines the co-relationship or association of two quantities is

known as Correlation. Regression describes how an independent variable is numerically
related to the dependent variable.
2. Correlation is used to represent the linear relationship between two variables. On the
contrary, regression is used to fit the best line and estimate one variable on the basis of
another variable.
3. In correlation, there is no difference between dependent and independent variables i.e.
correlation between x and y is similar to y and x. Conversely, the regression of y on x is
different from x on y.
4. Correlation indicates the strength of association between variables. As opposed to, regression
reflects the impact of the unit change in the independent variable on the dependent variable.
5. Correlation aims at finding a numerical value that expresses the relationship between
variables. Unlike regression whose goal is to predict values of the random variable on the
basis of the values of fixed variable

Q7. What is the difference between the price index and quantity index
numbers? Write short notes on consumer price index.

Ans 7 : Difference between the price index and quantity index numbers:

Price Index Quantity Index

Price index measures the relative or quantity index measures the change in the
percentage change in the price level of certain
physical volume of production, construction
goods and services and employment.
Here comparison is made in respect of prices
Here, the comparison is made in respect of
quantity or volume
Price index numbers are wholesale price volume of agricultural goods produced,

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index numbers and retail price index numbers. consumed, import, export are compared in this
index.

Consumer price index: Consumer Price Index Numbers are computed with a view of study
the effect of changes in prices on the people as consumers. These indices give the average
increase in the expenses if it is designed to maintain the standard of living of base year.
General index numbers fail to give an idea about the effect of the change in the general price
level on the cost of living of different classes of people since a given change in the price level
affects different classes of people differently.

The consumer price indices are of great significance and is given below:

1. This is very useful in wage negotiations, wage contracts and dearness allowance
adjustments in many countries.
2. At Government level the index numbers are used for wage policy, price policy, rent
Control, taxation and general economic policies.
3. Change in the purchasing power of money and real income can be measured.
4. Index numbers are also used for analyzing market price for particular kind of goods and
Service.

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