Question

(a) Using practical examples, differentiate between the following commercial averages: (i) Moving Average

(ii) Progressive Average (iii) Composite Average

(b) Explain what you understand by a theoretical probability distribution and how it is useful in business decision-making?

(c) Explain the process of hypothesis testing, detailing clearly under which condition the Normal distribution may be used.

(d) Explain the difference between the following four non-probability sampling methods: quota sampling, judgmental sampling, snowball sampling and convenience sampling.

(e) Explain how the sampling methods discussed in (d) may be used in business administration. You are expected to make use of short practical examples to support your answer.

(f) Discuss the difference between permutation and combination. State with practical examples, how these concepts are useful in the context of business administration.

Answer 1

a) Moving average:

It is a method used to find trends in a data set. This is the best method for analysing long term trends. It is an average of any subset of numbers calculated over a period of time. It is popularly used in stoc markets for finding data trends.

Eg. In a textile industry, if you have sales data of 15 years , you can calculate the moving average for a 4 year period, 5 year period and a six year period.

Progressive Average:

It can be treated as a special case of exponentially weighted moving avearge.

Eg: It is recently used in memeory type control charts for monitoring the process location.

Composite Average:

It is an average of the components of other means.

Eg: Dow Jones Composite average is the price weighted index of other averages like industrial average,transportation avaerage, utility average.

b)Theoritical probability distribution:

It is a statistical method used to find the possible outcomes or results of an action or event or a couse of actions.

In business scenarios , it is mostly used in risk evaluation, sales forecasting, business scenario analysis etc.

In risk evaluation , probability distributio tells the percentage of chance for revenue faling behind the expected revenue.

In sales forecasting , probabilty distribution identifies the best case and worst case scenario for the sales so that the company can plan its business in the best scenario.

In scenario analysis , probability distribution identifies the three scenarios: best case, likely case and worst case.

c) A hypothesis test is used to analyse two mutually exclusive statements and to find out which statetement suits the best to the sample data.

Using hypothesis test, we can determine whether our finding is statistically significant or not.

We can perform hypothesis testing in normal distribution only if the value is known.

d) Quota sampling

It is used only when data is taken from homogenous groups. It uses only two variables for filtering data fom the given population . This method is easy to be compared and administered.

Judgemental sampling

As the name indicates this method involves professional judgement. Researches collects the units to be sampled based on their knowledge and some judgements.

Snow ball sampling

It is used only when potential participants are hard to find. Here the researchers use other participants for their study.

Convinience sampling

In this method,sample is drawn from that part of the population that is close to hand.This method is very much useful in pilot testing

e) Quota sampling is used when the buget of the company is limited or when the data accuracy is not so important.

Judegemental sampling is used only when a representative sample can bring more accurate results than any other sampling methods.

Snow ball finding is used in studies involving cheating of exams,prostitution etc.

Examples of convinience sampling are facebook polls, questions etc

f) permutation involves ordering while combination  does not.

For example, if the password of one of your mobile phone is "567" , your mobile wont accept if the order of the number is altered.

5,6,7 can be re written as 576,675,657,765,756,567.

If it is combination, then it would accept,any of the above mentioned forms