Decision Making Techniques for Business

BBA -104
Unit - I

Dr. Eti Jain

Assistant Professor
Management School
[Link]@[Link]
 Program Outcomes

PO1: Apply knowledge of various functional areas of business.

PO2: Develop communication and professional presentation skills.
PO3: Demonstrate critical thinking and Analytical skills for business decision making.
PO4: Illustrate leadership abilities to make effective and productive teams
PO5: Explore the implications and understanding of the process of starting a new venture.
PO6: Imbibe responsible citizenship towards a sustainable society and ecological
environment.
PO7: Appreciate inclusivity towards diverse cultures and imbibe universal values.
PO8: Foster Creative thinking to find innovative solutions for various business situations.
 Course Objectives and Course Outcomes

1. To develop students Familiarity with the concepts of Operational Research

2. To develop understanding about tools of Statistics like Correlation, Regression,
etc.
3. Application of these techniques to solve commercial problems
4. To do efficient decision making.
Syllabus
 Unit Details
[Link]. Topic

1.1 Definition, Importance and Limitations of statistics

1.2 Collection of data and formation of frequency distribution of data

Graphic presentation of frequency distribution - Graphs, Bars (Simple, Sub-divided,
1.3
Multiple, Percentage)

1.4 Graphic presentation of frequency distribution - Histogram, Frequency Polygon, Ogives

Measures of Central Tendency - Mean of Individual, Discrete and Continuous series by

1.5
Direct, Assumed Mean and Step Deviation method
Properties of Arithmetic Mean, Weighted Arithmetic Mean, Geometric Mean, Harmonic
1.6
Mean, Correcting incorrect values
Measures of Central Tendency - Median of Individual, Discrete and Continuous series,
1.7
Median of unequal class intervals
Measures of Central Tendency - Mode of Individual, Discrete and Continuous series, Mode of
1.8
unequal class intervals
 Unit Details

[Link]. Topic
1.9 Partition Values - Quartiles, Deciles and Percentiles of Individual, Discrete and Continuous
series
1.10 Measures of Variation - Range, Inter Quartile, Inter Percentile, Inter Decile Range, Quartile
Deviation
1.11 Measures of Variation - Mean Deviation of Individual, Discrete and Continuous series

1.12 Measures of Variation - Standard Deviation of Individual, Discrete and Continuous series by
Actual Mean, Assumed Mean and Ste deviation Methods

1.13 Measures of Variation - Variance; Correcting incorrect values of Standard Deviation

1.14 Lorenz Curve

1.4 Graphic presentation of frequency distribution -
Histogram, Frequency Polygon, Ogives
 Introduction
• Students shall learn about how to represent frequency distribution pictorially
and graphically using Histograms, Frequency Polygons and Ogives.

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HISTOGRAM
• One of the most commonly used and easily understood methods for graphic
presentation of frequency distribution is histogram.

• A histogram is a series of rectangles having areas that are in the same

proportion as the frequencies of a frequency distribution.

• Most widely used to represent frequency distribution graphically.

• Histogram is a graph that represents the class frequencies in a frequency

distribution vertically adjacent rectangles.

• The class intervals are taken on the X axis and the frequencies are taken in the
Y axis.
• To construct a histogram, on the horizontal axis or X-axis, we take the class

limits of the variable and on the vertical axis or Y-axis, we take the frequencies

of the class intervals shown on the horizontal axis.

• If the class intervals are of equal width, then the vertical bars in the histogram

are also of equal width.

• On the other hand, if the class intervals are unequal, then the frequencies have to

be adjusted according to the width of the class interval.

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3 Situations in Histogram
1. Equal Class Intervals
2. Unequal Class Intervals
3. Mid point is given
• When Class Intervals are unequal, adjustment in frequencies is done.

• We take the class which has the lowest interval and adjust the frequencies of
other classes in the following manner:

• If one interval is twice as wide as one having lowest class-interval, we divide

the height of its rectangle by 2
• If it if three times more, then we divide the height by 3.

• The heights will be proportional to the ratios of the frequencies to the

width of the classes.
To illustrate a histogram when class intervals are equal, let us consider the following example.

Daily sales (Rs. thousand) No. of companies

10-20 15
20-30 22
30-40 35
40-50 30
50-60 25
60-70 20
70-80 16

80-90 7

It should be noted that the area of the histogram represents the total frequency as distributed
throughout the different classes. 12
• When the width of the class intervals are not equal, then the frequencies must be adjusted
before constructing the histogram.
• The following example will illustrate the procedure:

• As can be seen, in the above example, the class intervals are of unequal width and hence we have
to find out the adjusted frequency of each class by taking the class with the lowest class interval
as the basis of adjustment.
• For example, in the class 2500-3500, the class interval is 1000 which is twice the size of the
lowest class interval, i.e., 500 and therefore the frequency of this class would be divided by two,
i.e., it would be 18/2 = 9.
• In a similar manner, the other frequencies would be obtained. The adjusted frequencies for
various classes are given below:

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Histogram with Unequal Class Intervals

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Frequency Polygons
Two ways of constructing a frequency polygon.
With Histogram
– Draw a histogram of the given data and then join by straight lines the mid-
points of the upper horizontal side of each rectangle with the adjacent ones.
– It is preferred to close both the ends of the polygon by extending them to
the base line.

Without Histogram
• Take the mid-points of various class intervals and then plot the frequency
corresponding to each point and join all these points by straight line.

• If from the highest point of the frequency polygon a perpendiculars drawn

to the X axis then the value of MODE can be ascertained
The frequency polygon is a graphical presentation of frequency
distribution. A polygon is a many sided closed figure.

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Cumulative Frequency Curve or Ogives
• Sometimes one needs to know the answers to the question like ‘how many workers of a factory
earn less than Rs. 1000 per month’ or ‘how many workers earn more than Rs.1050 per month’.
• To answer these questions it is necessary to add the frequencies. When frequencies are added
they are called Cumulative Frequencies.
• These frequencies are then listed in a table called Cumulative frequency table .
• The graph of such a frequency is called Cumulative frequency graph or Ogive.
• There are two method of constructing the ogive:
Less Than Method
More Than Method

The point of intersection of a Less than Ogive and a More than Ogive of the same data,
gives the value of the MEDIAN
• Less than Ogive- In this method, the upper limit of the various classes are taken on
the X-axis and the frequencies obtained by the process of cumulating the preceding
frequencies on the Y-axis. By joining these points we get less than ogive.

Daily sales No. of Daily sales No. of

(Rs. thousand) companies (Rs. thousand) companies
(cf)
10-20 15 Less than 20 15
20-30 22 Less than 30 37
30-40 35 Less than 40 72
40-50 30 Less than 50 102
50-60 25 Less than 60 127
60-70 20 Less than 70 147
70-80 16 Less than 80 163

80-90 7 Less than 90 170

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 • More than Ogive- Similarly more than ogive or cumulative frequency curve
can be drawn by taking the lower limits on X-axis and cumulative frequencies
on the Y-axis. By joining these points, we get more than ogive. The table and
the curve for this case is shown below:
Daily sales No. of Daily sales No. of companies
(Rs. companies (Rs. (reverse cf)
thousand) thousand)

10-20 15 More than 10 170

20-30 22 More than 20 155
30-40 35 More than 30 133
40-50 30 More than 40 98
50-60 25 More than 50 68
60-70 20 More than 60 43
70-80 16 More than 70 23

80-90 7 More than 80 7

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20
Pie charts
• A pie chart (or a circle chart) is a circular statistical graphic, which
is divided into slices to illustrate numerical proportion. In a pie
chart, the arc length sssssof each slice (and consequently its central
angle and area), is proportional to the quantity it represents.
• While it is named for its resemblance to a pie which has been sliced,
there are variations on the way it can be presented.
• The earliest known pie chart is generally credited to William
Playfair's Statistical Breviary of 1801
• Questions for Practice
Conclusions

• Students learnt about Histogram, frequency polygons and

Cumulative Frequency Curve (Ogives) and its pictorial and
graphical construction.

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Suggested Readings
• Author: Dr. S.P. Gupta and Dr. P.K. Gupta
• Title of the book: Quantitative Techniques and
Operation Research
• Chapter Name: Diagrammatic and Graphic
Presentation
Reference Material (Notes and ebook)
[Link]
jqHa6A3BySc9IEGJn?usp=drive_link

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