Statistics could be defined as discipline or science of extracting answers from data or information about situation. Apt statisticians normally construct a picture about situation as a subject of statistical analysis, further applying formulas, tables or graphs to interpret it. Thus, statistical analysis involves constructing models, which break down a difference between objects of analysis known as variation, into predictable patterns (Stine & Foster, 2014).
Since statistics is primarily concerned dealing with data, it classifies its different types and levels of measurement. Statistical data could be categorical or numerical, producing qualitative or nominal variables for the first type and quantitative or continuous variables for the second. Numerical data is explained by measurement units, categorized in nominal, ordinal, interval and ratio scales. Nominal variables define categories without ordering, while ordinal values imply certain grading. Interval variable set some boundaries for the variable while ratio variables assume ranking.
Statistics helps business decision-making in several ways. First, it allows keeping track of vast information collected internally and externally, which is important for evaluation of business initiatives’ success or failure. Second, it helps forecasting business future by providing patterns of previous business activity numerically or categorically. The advantage of using statistics in business is that solutions are fact-based rather than assumption-based, thus using statistics could decrease risks.
Problem situations where statistics could be used are multiple, but here are a few. A production facility needs to estimate the amount of product required to be manufactured for the next 5 years. They should assume different scenarios concerning seasonality trends, consumer preferences or price fluctuations. Statistical time series analysis could help in this problem resolution. Another example is evaluating reasons of economic growth or downfall, where different economic variables like country’s GDP are evaluated against various macro- and micro-economic indicators through constructing statistical models.
Stine, R., & Foster, D. (2014). Statistics for Business: Decision Making and Analysis (2nd edition). Pearson Education, …