Business Application to Statistics

What is statistics?

Collection of methods for planning experiments, obtaining data, and then organizing, summarizing, presenting, analyzing, interpreting, and drawing conclusions.

There are two main branches of statistics

1. Descriptive Statistics the organization and description of the characteristics of a collection of data. Example: Mean, Median, Mode 2. Inferential Statistics the use of descriptive statistics to make educated guesses about something

The basic fallacies of inferential statistics: They assume that the past is prologue to the future They assume you are going to test your inference an infinite amount of times.

How Statistics Work?

Statistics starts with a question, not with data/information

Every time we use statistic to find the solution for a question. Statistics are what decision makers can use to reduce ambiguity by qualifying it.

Not enough to know Just enough for a better guess Statistics are born

All Statistics are based on data

Data are what we hear, see, smell, taste, touch, etc. Data requires measuring
Good measurement gives good data Good data give better answers than bad data But all data will give you an answer

How Statistics Work?

1. Statistics are designed to transform data into information 2. Make decisions using that information. 3. Statistics are about and used to measure/assess risk of the decision.

Application to Business
You start a business by looking at what is already happening in the field or industry you are interested in. Business trends and statistics can give you a quick, overall glance at the viability of an industry Statistics can be useful in helping you come up with new business ideas, in developing strategies and marketing campaigns Statistics is used either on a daily basis or periodic.

How is Statistics Applied in Business

1. You need t o know your dat a sources.

Components of Business Intelligence and Analytics

BI Preparation
Data Data Data Data Data Visioning Discovery Sourcing Cleaning Mapping

BI

Delivery
Dat a Warehousing Dat a Mining Report ing Analyt ics Dat a Visualizat ion Dat a Delivery

How is Statistics Applied in Business : Practice Areas

Customer Value Intelligence Risk Control Intelligence Financial Resource Intelligence Operations Productivity Intelligence Organizational Performance Intelligence

How is Statistics Applied in Business: Application

CRM To deepen relationships among customers.

SMS

To provide closed-loop monitoring of sales programs.

LMS

To improve loan portfolio quality.

HRM

To monitor progress and contribution of individual employees.

SCM

To increase supply chain efficiency.

How is Statistics Applied in Business

2. You identify variables.

How is Statistics Applied in Business

3. You formulate your hypotheses. Identify what particular issues at hand.

How is Statistics Applied in Business

4. Select the descriptive or inferential statistics applicable in your hypothesis.

On a daily basis descriptive statistics / analytics Periodic inferential Predictive Analytics

How is Statistics Applied in Business

5. Interpreting your results.

Statistical methods how they are applied (day-to-day)?

1.Measures of Central tendency give you an estimate of a particular data. 2.Frequencies, Cross tabulation, proportions count of observations 3.Growth and Cumulative Average Growth measure change 4.Variance / Gap Analysis distance from an assigned value 5.Rankings sorting of data from highest to lowest 6.Trending analyze a pattern in the data 7.Runrates simple forecasting 8.Percent Share percent accounted for by a particular entity / brand 9.Cross Tabulation Frequency or value tabulation 10.Graphical Reports Bar, Pie, Line, Scatterplot

Annual Runrat e = Sum ( sales t o dat e ) x 12 / num ber of m ont hs t o dat e

Sales In Millions Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 2000 3000 1500 6000 4000 2700 N/a N/a N/a N/a N/a N/a YTD SALES 2000 5000 6500 12500 16500 19200 Runrate 38400

Grow t h = (current / previous) 1 x 100%

QURTER LAST YEAR QUARTER THIS YEAR % GROWTH

4,554,724.00 2,394,016.00 3,115,583.00 6,322,128.00 1,305,379.00 2,259,809.00 4,210,979.00 2,405,733.00 1,844,086.00 592,006.00 7,603,971.00 4,176,157.00 5,174,177.00 7,542,993.00 53,501,741.00

4,231,450.00 2,645,645.00 3,124,564.00 6,321,145.00 1,245,311.00 2,312,456.00 4,213,544.00 2,456,412.00 2,154,654.00 564,231.00 7,456,421.00 4,215,464.00 5,321,451.00 7,521,451.00 53,784,199.00

-7.10% 10.51% 0.29% -0.02% -4.60% 2.33% 0.06% 2.11% 16.84% -4.69% -1.94% 0.94% 2.85% -0.29% 0.53%

Statistical methods how they are applied (periodic)?

1.ANOVA / MANOVA Market comparison, Brand comparison 2.Chi squared distribution Association testing of Marketing Attributes, Analyze behavior 3.Multiple regression Measure the degree of effect of an independent variable to a dependent variable 4.Forecasting Techniques used in demand planning, supply and operations planning 5.Exploratory Data Analysis market segmentation, behavioral analysis

6.