Importance and Scope of Statistics.
In
modern times, Statistics is viewed not as a mere device for collecting
numerical data but as a means of developing sound techniques for their handling
and analysis and drawing valid inferences from them. As such it is not confined
to the affairs of the State but is interfering constantly into various
diversified spheres of life-social, economic and political. It is now finding
wide applications in almost all sciences-social as well as physical-such as
biology, psychology, education, economics, business management, etc. It is
hardly possible to enumerate even a single department of human activity where
statistics does not creep in. It has rather become indispensable in all phases
of human endeavour.
1. Statistics and
Planning
Statistics
is indispensable to planning. In the modem age which is termed as 'the age of
planning', almost all over the world governments, particularly of the budding
economies, are resorting to planning for the economic development. In order
that planning is successful, it must be based soundly on the correct analysis
of complex statistical data. In addition to that Modern states being welfare-
oriented states, the collection of statistics is done to solve various problems
and to frame suitable policies to solve these problems.
2. Statistics and Business
Statistics is an indispensable tool of production control also.
Business executives are relying more and more on statistical techniques for
studying the needs and the desires of the consumers and for many other
purposes. The success of a businessman more or less depends upon the accuracy
and precision of his statistical forecasting. Wrong expectations, which may be
the result of faulty and inaccurate analysis of various causes affecting a
particular phenomenon, might lead to his disaster. Suppose a businessman wants
to manufacture readymade garments. Before starting with the production process
he must have an overall idea as to 'how many garments are to be manufactured',
'how much raw material and labour is needed for that', and 'what is the
quality, shape, colour size, etc., of the garments to be manufactured'. Thus
the formulation of a produc tion plan in advance is a must which cannot be done
without having quantitative facts about the details mentioned above.
Following
are some of the typical application areas :
A). Quality Management:
Statistical quality control (SQC) helps in separating the assignable causes
from the chance causes. SQC techniques also help in reducing and stabilizing
process variation that may reduce cost significantly.
B). Process Capability:
It enables us to find out whether the
enterprise is capable of meeting customer specification. If it is not meeting
customer requirements, then management has to take decisions regarding the modernization
of plant, change the technology etc. to achieve process capability. Statistics
plays crucial role in this field.
C). Finance
: Through Financial ratio analysis, Key
financial ratios are worked out, by using the Balance sheet and income
statement data, to know the financial health of an enterprise. Comparative
statistical analysis reveals the performance of the company in the past years
and the emerging trends in the future.
D). Cash Forecasting:
Financial analyst has to forecast cash
requirements to meet short term obligations eg. payment of salary, working
capital, payments to suppliers etc. statistical analysis helps in working out
realistic cash forecasting.
E). Materials Management: Inventory
level, by using appropriate statistical
methods one can maintain optimum inventory levels of raw materials and finished
products and thus savings are made which impact the profit.
F). Quality assessment for incoming
and outgoing items: Statistical sampling techniques help in
ensuring quality of incoming and outgoing items. Raw materials and other items
are checked for quality to meet customer's needs amd inspection of finished
products is done on sample basis to reduce complaints from customers.
G). Marketing:
Marketing research provides solutions to various problems involved in marketing
goods, services or ideas. In this context systematic collection, analysis and
interpretation of marketing data is done by using statistical methods. Marketing
decisions involve the introduction of new product, reaction of consumers to
price like, effectiveness of advertisement campaign etc...
H). Demand Projections:
Short term and long term demand projections are required for the company
products and services. These projections are required both for the domestic and
international markets. Statistical surveys and analysis of the past time series
data relating to industry provides reliable sales and demand projections.
3.
Statistics and Mathematics
Statistics
and mathematics are very intimately related. Recent advancements in statistical
techniques are the outcome of wide applications of advanced mathematics. Main
contributors to statistics, namely, Bernouli, Pascal, Laplace, De-Moivre,
Gauss, R. A. Fisher, to mention only a few. were primarily talented and skilled
mathematicians. Statistics may be regarded as that branch of mathematics which
provided us with systematic methods of analys- ing a large number of related
numerical facts. According to Connor, "Statistics is a branch of Applied
Mathematics which specialises in data." Increasing role of mathematics in
statistical analysis has resulted in a new branch of Statistics called
Mathematical Statistics.
4. Statistics
and Industry
In
industry, Statistics is very widely used in 'Quality Control', in production
engineering, to find whether the product is conforming specifications or not,
statistical tools, viz., inspection plans, control charts, etc., are of extreme
importance. In inspection plans we have to resort to some kind of Sampling a
very important aspect of Statistics.
5. Statistics and Economics
According
to F.C.Mills, "Statistics is an Statistics and
Economics. Statistical data and technique of statistical analysis have proved
im.nensely useful in solving a variety of economic problems, such as wages,
prices, analysis of time series and demand analysis. It has also facilitated
the development of economic theory. Wide applications of mathematics and
Statistics in the study of economics have led to the development of new disciplines
called Economic Statistics and Econometrics. In the field of production,
we can study the effect of certain incentives on production. Again, it is with
the help of statistical techniques that we can know the effectiveness of
economic policies on production.
The
association between statistical methods and biological theories was first
studied by Francis Galton in his work in 'Regression'. According to Prof. Karl
Pearson, the whole 'theory of heredity' rests on statistical basis. He says,
"The whole problem of evolution is a problem of vital statistics, a
problem of longevity, of fertility, of health, of disease and it is impossible
for the Registrar General to discuss the national mortality without an enumeration
of the population, a classification of deaths and knowledge of statistical
theory."
In
astronomy, the theory of Gaussian 'Normal Law of Errors' for the study of the
movement of stars and planets is developed by using the 'Principle of Least
Squares'.
In
medical science also, the statistical tools for the collection, presentation and
analysis of observed facts relating to the causes and incidence of diseases and
the results obtained from the use of various drugs and medicines, are of great importance.
Moreover, the efficacy of a manufactured drug or injection or medicine is
tested by using the 'tests of significance - (t-test).
7. Statistics and Psychology and
Education
In education and psychology, too, Statistics
has found wide applications, e.g., to determine the reliability and validity of
a test, 'Factor Analysis', etc., so much so that a new subject called
'Psychometry has come into existence.
8. Statistics and War
In war, the theory of 'Decision Functions' can
be of great assistance to military and technical personnel to plan 'maximum
destruction with minimum effort'. Thus, we see that the science of Statistics
is associated with almost all the sciences - social as well as physical. Bowley
has rightly said, "A knowledge o Statistics is like a knowledge of foreign
language or of algebra; it may prove of use at any time under any
circumstance."
Reference: Fundamentals of
Mathematical Statistics, S.C. Gupta and V.K. Kapoor
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