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Introduction

This document discusses the importance of statistical skills and statistical thinking in business decision making. It states that managers need to base decisions on data and quantitative analysis rather than just opinions or beliefs. The statistical decision making process involves identifying a problem, building a model to represent the problem, testing the model, and using the model to find a solution. Both quantitative and qualitative factors must be considered in decision making, with quantitative providing numerical analysis and qualitative accounting for less tangible human impacts. The eventual decision balances both quantitative financial impacts and qualitative effects on areas like employee morale.

Uploaded by

Fawad Khan Waseem
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© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
41 views

Introduction

This document discusses the importance of statistical skills and statistical thinking in business decision making. It states that managers need to base decisions on data and quantitative analysis rather than just opinions or beliefs. The statistical decision making process involves identifying a problem, building a model to represent the problem, testing the model, and using the model to find a solution. Both quantitative and qualitative factors must be considered in decision making, with quantitative providing numerical analysis and qualitative accounting for less tangible human impacts. The eventual decision balances both quantitative financial impacts and qualitative effects on areas like employee morale.

Uploaded by

Fawad Khan Waseem
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Introduction

 Business managers and professionals are


increasingly required to justify decisions on the basis of
data. They need statistical model-based decision
support systems.

 Statistical skills enable them to intelligently collect,


analyze and interpret data relevant to their decision-
making. Statistical concepts and statistical thinking
enable them to:
 Solve problems in a diversity of contexts.
 Add substance to decisions.
 Reduce guesswork.
Business Statistics is a science assisting you to
make business decisions under uncertainties
  Based on some
1 Numerical
2 Measurable scales.
Decision making processes must be based on
data, not on personal opinion nor on belief.
Statistical Decision-Making Process
 Identification of a problem through (sample)
 Building a decision model
 Testing the model
 Using the model to find the solution:
 It is a simplified representation of the actual situation
 It need not be complete or exact in all respects
 It concentrates on the most essential relationships and
ignores the less essential ones.
 It is more easily understood than the empirical (i.e.,
observed) situation, and hence permits the problem to be
solved more readily with minimum time and effort.
 It can be used again and again for similar problems
or can be modified.
The Decision-Making Process
Quantitative and Qualitative Factors
in Decision Making
Quantitative Factors
Quantitative Factors
 Provide a numerical basis for decision making
– reduces decisions to looking at a monetary
value placed on different choices, e.g.

 Forecasted sales figures


for the next 3 years

 The cost of a series of redundancies


against the longer term financial benefits
to the firm of this process
Qualitative Factors
Qualitative Factors
 Qualitative factors look to take account of
these other issues
that may influence the outcome
of a decision
 Can be wide ranging and especially need to
consider the impact
on human resources and
their response to decisions
Decision Making
 Eventual decision may rest on the balance between
the perceived effects of quantitative and qualitative
 If the long term effect on the workforce for example
was to reduce productivity or increase absence
because of
the impact on motivation and morale,
the fact that a decision
makes financial sense may be shelved!
 Qualitative by its nature, therefore,
is very subjective

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