Statistics is the study of collecting, collating, analysing and interpreting information, patterns, rules or themes from that data.
The two types of statistical analysis that are used to achieve different goals with a set of data are:
• Descriptive statistics; self explanatory as one analyses a piece of data so that certain features and patterns can be ascertained such as averages, curves/movement or ranges within the data. It is generally used to give an overview of the single area the data was taken from and doesn’t attempt to extrapolate the data to a larger demographic (Taylor, 2014).
• Inferential statistics; by looking at a sample set of data in a field that can have a large number of variables one attempts to infer future outcomes and extrapolate this to the rest of the population (Blurtit 2014).
The use of statistics is essential in business; it allows us to both examine current trends to see how a product or idea is faring as well as the ability to collate data and construe a prospective outcome or goal. Without the use of statistics we would have no concept of how things are going or how they could change in the future. For example:
• A restaurant has been open for twelve months and would like to see how business went in it’s first year. We can use descriptive statistics to find an average profit over a period of time (e.g. day, month, season) and see how the restaurant did in comparison to what it was expecting
• A new product has been field tested among a sample group of one hundred individuals of a mixed demographic. Using inferential statistics we can look at the response received from this sample group and extrapolate that to the entirety of the potential customer base to see if the product is worth producing on a larger scale
• A new machine has been installed into a factory production line that was set to up production rates and make the whole process more efficient. Using descriptive statistics we can look at the production rates of the factory since the installation of the new machine and see if there has been any movement on the production curve in comparison to before it was installed.
- Taylor, C. 2014. The Difference Between Descriptive and Inferential Statistics. Retrieved from http://statistics.about.com/od/Descriptive-Statistics/a/Differences-In-Descriptive-And-Inferential-Statistics.htm
- Blurtit. 2014. What Are The Different Types Of Statistics?. Retrieved from http://education.blurtit.com/174311/what-are-the-different-types-of-statistics