Scope of Statistics
These are mainly concerned with the following:
- It often becomes necessary to examine how two paired data sets are related. For example, we may have data on the sales of a product and the expenditure incurred on its advertisement for a specified number of years. Given that sales and advertisement expenditure are related to each other, it is useful to examine the nature of relationship between the two and quantify the degree of that relationship. As this requires use of appropriate statistical methods, these falls under the purview of what we call regression and correlation analysis.
- Situations occur quite often when we require averaging (or totaling) of data on prices and/or quantities expressed in different units of measurement. For example, price of cloth may be quoted per meter of length and that of wheat per kilogram of weight. Since ordinary methods of totaling and averaging do not apply to such price/quantity data, special techniques needed for the purpose are developed under index numbers.
- Many a time, it becomes necessary to examine the past performance of an activity with a view to determining its future behavior. For example, when engaged in the production of a commodity, monthly product sales are an important measure of evaluating performance. This requires compilation and analysis of relevant sales data over time. The more complex the activity, the more varied the data requirements. For profit maximizing and future sales planning, forecast of likely sales growth rate is crucial. This needs careful collection and analysis of past sales data. All such concerns are taken care of under time series analysis.
- Obtaining the most likely future estimates on any aspect(s) relating to a business or economic activity has indeed been engaging the minds of all concerned. This is particularly important when it relates to product sales and demand, which serve the necessary basis of production scheduling and planning. The regression, correlation, and time series analyses together help develop the basic methodology to do the needful. Thus, the study of methods and techniques of obtaining the likely estimates on business/economic variables comprises the scope of what we do under business forecasting.
