Business Decision Making Project Part 2

Business Decision Making Project Part 2 In statistics there is so many different ways to summarize and analyze data when collected through a sample. Descriptive statistics allows an individual to summarize the data collected while inferential statistics allows an individual to analyze the data collected. Although there are four major types of descriptive statistics, measures of frequency seems to fit this particular business decision the best. Measures of frequency focuses on count, percent, frequency, shows how often something occurs, and is typically used when one wants to show how often a particular response is given. By using measures of frequency, Service Caster should have no problem collecting data, analyzing data, and forming a well-rounded decision in regards to purchasing a new lathe or not. Descriptive Statistics Descriptive statistics allows an individual to summarize a sample of data that may have been collected. “Descriptive statistics are brief descriptive coefficients that summarize a given data set, which can be either a representation of the entire population or a sample of it” (Descriptive Statistics, 2017). There are four major types of descriptive statistics; measures of frequency, measures of central tendency, measures of dispersion or variation, and measures of position. “Descriptive statistics are broken down into measures of central tendency and measures of variability, or spread. Measures of central tendency include the mean, median, and mode, while measures of variability include the standard deviation or variance, the minimum and maximum variable, and the kurtosis and skewness” (Descriptive Statistics, 2017). Service Caster Corporation, a global leader in the distribution and manufacturing of casters and wheels, is currently expanding their company tremendously and adding various products, services, employees, and machines. With any business, although expansion can be difficult, it is a problem many would like to have. Although some companies may expand too early, Service Caster is currently in a prime position to expand all aspects of the business. The issue at hand currently is the decision to add a lathe to the manufacturing side of our company versus continuing to outsource our custom machine jobs to local machine shops. Lathes, a very expensive piece of equipment, is capable of machining and producing custom parts for any application, big or small. In order to insure we are making the best and most profitable decision for Service Caster, we must look at the cost of the lathe, the cost of running the lathe, the cost of employing an individual to run the lathe, and how much the lathe is able to produce in terms of profit and be able to understand if this is more profitable for Service Caster than what is currently being done. Although there are four major types of descriptive statistics, measures of frequency seems to fit this particular business decision the best. Measures of frequency focuses on count, percent, frequency, shows how often something occurs, and is typically used when one wants to show how often a particular response is given. Using measures of frequency allows Service Caster to understand how often a lathe would be needed for custom caster and wheel orders. In addition, by using measures of frequency, Service Caster would have the ability to understand what types of custom caster and wheel orders are common and how much profit each order brings in. Overall, by using measures of frequency, Service Caster would have no problem collecting data, analyzing data, and forming a well-rounded decision in regards to purchasing a new lathe or not. Inferential Statistics Inferential statistics allows an individual to analyze a sample of data that may have been collected. “Inferential statistics makes inferences about populations using data drawn from the population. Instead of using the entire population to gather the data, the statistician will collect a sample or samples from the millions of residents and make inferences about the entire population using the sample” (Descriptive & Inferential Statistics: Definition, Differences & Examples, 2017). In addition, inferential statistics infer from the sample to the population, determine probability of characteristics of population based on the characteristics of a particular sample, and also help to assess strength of the relationship between independent variable and dependent variable. Using inferential statistics allows an individual to generalize their findings to the larger population which allows the individual to determine not just what can happen, but also what tends to happen. The following are common types of inferential statistics; one sample test of difference/ one sample hypothesis test, confidence interval, contingency tables and chi square statistic, t-test or anova, pearson correlation, bi-variate regression, and finally multi-variate regression. Bi-variate regression is an analysis of bivariate data. It is one of the simplest forms of statistical analysis and is used to find out if there is a relationship between two sets of values. It typically involves the variables X and Y. Overall, by using bivariate regression, Service Caser would very easily be able to look at the data collected from the sample and understand the amount of custom caster and wheel orders placed in comparison to the amount of total sales. Probability and Trend Analysis The probability of an event refers to the likelihood that the event will occur. In addition to probability, trend analysis is the rampant practice of collecting information and attempting to spot a pattern. In this particular scenario, constructing a probability distribution would be the best way for Service Caster to understand the current business problem and solve it accordingly. “A probability distribution is a statistical model that shows the possible outcomes of a particular event” (Richards, 2017). By constructing a probability distribution, Service Caster would very easily be able to understand the probability that a custom caster and wheel order is placed. By constructing a probability distribution Service Caster would have the ability to create a scenario analysis. A scenario analysis uses probability distributions to create multiple possibilities for the particular business problem trying to be solved. In Service Caster’s situation, one would be able to easily understand the different scenarios and how badly the company would be effected in each situation. Overall, by understanding probability and trend analysis, Service Caster would be able to understand the different scenarios that could occur if a new lathe is purchased for custom caster and wheel orders. Conclusion In statistics there is so many different ways to summarize and analyze data when collected through a sample. Descriptive statistics allows an individual to summarize the data collected while inferential statistics allows an individual to analyze the data collected. Although there are four major types of descriptive statistics, measures of frequency seems to fit this particular business decision the best. Measures of frequency focuses on count, percent, frequency, shows how often something occurs, and is typically used when one wants to show how often a particular response is given. By using measures of frequency, Service Caster should have no problem collecting data, analyzing data, and forming a well-rounded decision in regards to purchasing a new lathe or not.