Question

One of the demand theory is profound knowledge is knowledge about variation .discuss the concept and explain how it can be applied to real word businesd .provide an example to support your argumemt

Answer 1

Let's first look into variance. In statistical theory, variance is the expectation of the squared deviation of a random variable from its mean. In other words, , it shows the spread of numbe ris an observation around the mean value.  Variance is very important in statistical estimation, hypothesis testing, descriptive statistics etc. Variance can also be computed as the square of the standard deviation.It is represented by the symbol

It can be formulated as   

or

The concept is highly crucial in business planning and excess variation can lead to damage of business Hence business often strive to create products and assembly lines which overcome this issue and offer stability and minimal possibility of deviation form desired product. One famous example is the Six Sigma strategy adopted by Motorola iin 1986. A six sigma process creates a condition where  99.99966% of all poruction output are set to be defect free. It is basically carried out by identifying the different processes and how its variability can have an effect on the final product.

Six Sigma strategies try to improve the quality of the output by eliminating the possible spike of variance by eliminating the defective method . It comprises an amalgamation of  management techniques and infrastructure to achieve a defect free product. Here 6 sigma basically refers to the 6 standard deviations from the mean which gives a possible value of 99.99966 mentioned above. This strategy has been very crucial in business and has been adopted by other companies like General Electric. This shows how crucial statistical tools like variaation can be gamechangers for a business venture.