Chandigarh Group of Colleges,Jhanjeri
Master of Business Administration
MBA-II Semester
MBA 201-18
Business Analytics for Decision
Making
Topic: Index Number
Dr. Rajinder Kaur Bhogal
Associate Professor
EMAIL:-[Link]@[Link]
CAMPUS: JHANJERI, MOHALI
Objective
• The objective of this paper is to understanding of the
research process, tools and techniques in order to
facilitate managerial decision making.
Chandigarh Group of colleges,Jhanjeri
MBA Batch 2018 onwards
MBA 201-18
Business Analytics for Decision Making
Unit I
•CO1: Explain fundamental concepts of data collection,
classification and tabulation. Understanding (Level2)
•Introduction to Statistics: Meaning, Importance, Applications of inferential
statistics in managerial decision making.
• Collection of Data: concept of primary data and secondary data, sources of
primary data and secondary data,
•Classification and Tabulation of Data: Concept and types of classification,
construction of frequency distributions, tabulation of data: role of tabulation,
parts of table, rules of tabulation, review of table, types of table.
•Sampling: Concept, definitions, census and sampling, probability and non-
probability methods of sampling, relationship between sample size and
errors.
•
Unit II
CO2: Outline the concepts of sampling and sampling
distribution . Understanding (Level2)
• Sampling Distributions: Concept and standard error.
• Hypothesis Testing: Formulation of hypothesis, procedure of
hypothesis testing, errors in testing of hypothesis, tests of
significance for large samples, tests of significance for small
samples, application of t-test, Z-test, F-test and Chi-square test
and Goodness of fit, ANOVA.
Techniques of association of attributes.
Unit-III
• CO3: Apply statistical methods for Hypothesis Testing.
Applying (level 3)
• Business Forecasting: Introduction, Role of forecasting
in business, Steps in forecasting and methods of
forecasting.
• Correlation: Partial and Multiple correlation.
• Regression Analysis: Multiple regression analysis,
Testing the assumptions of regression: multicolinearity,
heteroscedasticity and autocorrelation.
Unit IV
• CO5: Make use of Index Number method in managerial
decision making. Applying (Level 3)
• Index Number: Definition, importance of index number in
managerial decision making, methods of construction, tests
of consistency, base shifting, splicing and deflation, problems
in construction.
• Time Series Analysis: Meaning, component and, methods of
time series analysis. Trend analysis: Least square method,
linear and non linear equations, applications of time series in
business decision making.
Course Outcomes: Upon completion of this course, students will be able to:
SNO DESCRIPTION BLOOM’S TAXONOMY
LEVEL
CO1 Explain fundamental concepts of data collection, classification and tabulation Understanding
(Level 2)
CO2 Outline the concepts of sampling and sampling distribution Understanding
(Level 2)
CO3 Apply statistical methods for Hypothesis Testing .Applying
(level 3)
CO4 Illustrate the concept of multiple correlation and multiple regression in business Understanding
forecasting (Level 2)
CO5 Make use of Index Number method in managerial decision making Applying (Level 3)
CO6 Apply the time series method to predict the future of sales in a concern. Applying
(level 3)
Chandigarh Group of colleges,Jhanjeri
Unit-4
•CO5:-Make use of Index Number method in managerial
decision making
• Index Number: Definition, importance of index number
in managerial decision making, methods of construction,
tests of consistency, base shifting, splicing and deflation,
problems in construction.
Index Number--Dr RAJINDER KAUR BHOGAL
Learning objectives :-After completing this module the
students will be able to :-
• Overview of Index Number
• Meaning of Index number.
• Introduction
• Definition
• Features of Index Number
• Problems in construction of Index numbers
• Conclusion
• References/Text books
• Topic to be covered in the next lecture
Overview: Index Number
Statement : prices are rising during the year 2018.
Three Basic question arises:-
• Compared to which year have the prices risen during
2018?
• How can we handle the situation when the prices of
some goods rise more than others?
• Can prices of different goods can be expressed in terms
of any standard units or different units are to b used to
express prices.
Base year or current year
2018 2017 2011
20 Rs Rs 40 Rs 10
Current
YearP1
Base year P0
Base year (quantity):-q0
Current year(quantity):-q1
P1/p0
Meaning of Index Numbers
• Carli , an Italian statistician , who constructed the first index
number as early as 1764,to compare the prices of year 1750 with
that of year 1500.
• An index number is a statistical device for measuring changes in
the magnitude of group of related variables.
• It measures the changes with respect to time, geographical
location or some other characteristics.
• The comparison may be between categories such as person ,
school , hospitals.
• Also measures the changes in the value of variables.
• Index numbers are known as ‘Barometer of economic Activity’.
Features of Index Number
• Index Numbers are specialized averages.
• Index numbers are expressed in percentages.
• Index numbers measure the effect of changes in relation
to time.
Uses of Index Number
• In studying trend
• In policy formulation.
• In measuring purchasing power of money.
• Acts as economic barometer
Problems in construction of Index
numbers
1).Purpose of Index Numbers.
2).Selecting of Base year
Guidelines for selecting a Base period:
a).The base period should be a normal one.
b).The difference between the base year and current year
should not be too large.
c).Fixed Base or chain base.
Problems in construction of Index
numbers
3).Selection of number of items or commodities.
The following points may be helpful in the selection of
commodities:-
• The commodities selected should be representative.
• Total number of items should be neither too small nor
too large.
• The standardized or graded commodities should be
selected .
4).Selection of sources of data.
Problems in construction of Index
numbers
5).Price Quotations: The places which are well known
for trading of that particular commodity can be selected
for obtaining price quotations.
Methods of Price Quotations:
a).Money Prices:-In this prices are quoted per unit of
commodity ,for example sugar at the rate 40 per kg.
b).Quantity prices:-Quantity prices are quoted per unit of
money. For example 25 grams of sugar for one rupee.
Methods of constructing Index Numbers
Simple Aggregative method
Simple Aggregative method
• Find out the price index by following simple aggregative
method:-
Commodities Prices in 1991 Prices in 1996
A 20 25
B 30 30
C 10 15
D 25 35
E 40 45
F 50 55
Answer
• Simple Aggregative method answer:-117.14
Average of price relatives methods by using both
AM and GM.
Or
Simple Average of Price Relatives
Simple Average of Price Relatives
• Find out the price index by following Simple Average
of Price Relatives:
Commodities Prices in 1991 Prices in 1996
A 20 25
B 30 30
C 10 15
D 25 35
E 40 45
F 50 55
Answer
• Simple Average of Price Relatives:-122.92
B.).Weighted Index Number
Conclusion
• A number showing the variation in a price or value
compared with the price or value at a specified earlier
time (often represented by the number 100).
References/Text books
• Quantitative Techniques, by CR Kothari, Vikas
publication .
• Fundamentals of Statistics by SC Gupta Publisher Sultan
Chand .
• Quantitative Techniques in management by N.D. Vohra
Publisher: Tata McGraw hill.
• Business statistics T.R JAIN S.C AGGARWAL Global
Publication .
• Research Methodology CR Kothari
Topic to be covered in the next
lecture
• Index Number(Weighted Aggregative Method)
Thank You
