Management 202: Statistics Uses/Limitations

Statistics: Uses and Limitations

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USES OF STATISTICS IN BUSINESS

  • Decision making: Statistics provides a value base for making decisions
  • Planning: Statistical methods are used in making forecasts which are important components in planning.
  • Quality control: Statistics is used in setting standards within which the business operates
  • Auditing: standards expected verses Actual performance. Statistics helps in determining the deviations of actual performance from expected standards and how to correct them
  • Administration
  • Marketing research: Used in collecting data/ consumer want and how best to satisfy them

LIMITATIONS OF STATISTICS

  • Deals with quantitative characteristics hence Qualitative characteristics cannot be studied directly *Quantitative can be measured > Numerical such as weight, distance
  •            *Qualitative cannot be measured >Non numerical such as honesty
  • Statistics deals with aggregates hence statistical results may not be true for all individuals
  • Statistics does not provide solutions to problems. It only presents the situations as it is or situations as they are.
  • Statistics require expertise to understand hence it can easily be misused.
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