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NotesBusiness ManagementTopic 6.7Using statistics in business decisions
Back to Business Management Topics
6.7.310 min read

Using statistics in business decisions

IB Business Management · Unit 6

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Contents

  1. 1Choosing the right average for the decision
  2. 2Reading the spread before you decide
  3. 3Commenting on a table or chart
  4. 4The limits of the numbers
  5. 5Exam-style question
How many loaves for Station Road?: Station Road opened in September. After its first eleven trading days, Priti asks Lena one question: how many loaves should Mill Lane bake for it each day?

You met these eleven days in 6.7.2. Now the question is which number to trust for the decision.

Station RoadLoaves sold each day
Days 1 to 6390 (opening day, free coffee for every customer), 240, 225, 210, 250, 230
Days 7 to 11260, 245, 265, 230, 260

In 6.7.1 you worked out the three averages. Here they are for these eleven days.

The mean: 2,805 loaves ÷ 11 days = 255. The median, the middle day once they are in order: 245. The mode: 230 and 260 both appear twice, so there are two modes.

Three averages, three different answers. Which one is right depends on the question Priti is asking.

The mean

  • Uses every figure, so one unusual day moves it
  • Right when the total matters: flour for a month, a year's takings
  • Here: 255, pulled up by the 390 on opening day

The median

  • The middle figure, so one unusual day barely moves it
  • Right for a typical day when a few figures are extreme
  • Here: 245, close to what Station Road sells on most days

The mode

  • The most common value or category
  • Right for a choice: which loaf, which box size, which hour is busiest
  • Here: two modes, 230 and 260, from only two days each

Priti's question is about a normal day, and opening day was not one: free coffee and a one-off crowd. If she bakes to the mean, 255, a typical day leaves about 10 loaves unsold, about $9 of ingredients thrown away every day.

The mean also flatters the shop. Against Lena's target of 250 loaves a day, the mean of 255 says Station Road has already made it. The median, 245, says a typical day is still 5 loaves short.

The question picks the measure: Ask first what the decision needs: a total, a typical value or the most common choice. Then use the average that answers it, and say why the others would mislead.

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An average is one number standing in for many. How well it stands in depends on how spread out the figures are.

Using the spread: In 6.7.2 you measured that spread with quartiles and the standard deviation. Here the job is to use it: a small spread means the average is a safe plan for any day; a large one means it is not.
Loaves sold, one week in OctoberHigh Street (Aisha)Park Road (Jonas)
Monday415345
Tuesday420355
Wednesday425340
Thursday410350
Friday430360
Saturday425520
Sunday415530
Mean420400
Standard deviationabout 7about 86

High Street: a small spread

  • Every day is within 10 loaves of the mean.
  • Baking about 420 every day leaves almost nothing over and turns almost nobody away.
  • The mean is a safe plan for any single day.

Park Road: a large spread

  • The weekend sells 520 and 530; weekdays 340 to 360, the same pattern as in September.
  • The mean says 400 a day, yet on no day that week did the shop sell 400.
  • Baking 400 every day is wrong every day: too many on weekdays, too few at the weekend.

Put money on it. On Sunday, 400 loaves leaves Jonas 130 short: 130 × $2.10 = $273 of contribution lost in one day. On Wednesday, 60 loaves are left over: 60 × $0.90 = $54 of ingredients in the bin.

Park Road's plan, from the spread

1

Split the week

Weekdays: 345, 355, 340, 350 and 360, a mean of 350. Weekend: 520 and 530, a mean of 525.

2

Bake to each group

About 350 loaves on weekdays and 525 at the weekend, instead of 400 every day.

3

Check it again

Two months with the same pattern is some evidence, not proof. Keep comparing before Priti fixes the order.

An average alone can mislead: A mean with a large spread describes no real day. Quote the spread with the average, and say what it means for the decision: one fixed plan, or a plan for each kind of day.

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A table or chart often comes with one short instruction: comment on the data.

A comment has two parts

  • First, what the data shows, in words and with a figure.
  • Then one step further: what it means, why it might be, or what the business should make of it.
Loaves sold a day2025September 2026Change
High Street (Aisha)410420+10, about 2%
Market Square (Kofi)390380−10, about 3%
Park Road (Jonas)380400+20, about 5%
Station Road (new)Not open245 (median)Target 250

Building a comment on one row

1

Say what the data shows

Park Road sold 380 loaves a day in 2025 and 400 in September 2026, a rise of about 5%.

2

Say what it means

The 300 new homes on the old dairy site seem to be bringing new customers, so Park Road's daily order can grow with them.

Restating

  • Market Square sold 390 loaves a day in 2025 and 380 in 2026.
  • High Street went from 410 to 420.
  • Correct, but it only puts the table into words.

Commenting

  • Market Square is the only shop to sell less, down about 3%, while the others grew.
  • It is the shop nearest Goldcrust's cheaper bakery, which may be taking its customers.
  • A figure, then one step beyond it.

Some data links two things. On days 7 to 11, Marco counted the people walking past Station Road between 7 and 9 each morning, next to the loaves sold that day.

Station RoadPeople passing, 7 to 9 a.m.Loaves sold
Day 71,300260
Day 81,220245
Day 91,330265
Day 101,150230
Day 111,310260

Reading a relationship

1

Say the direction

The more people pass, the more loaves are sold. Both rise together, so the relationship is positive (when one rises as the other falls, it is negative).

2

Say how close it is, with figures

Every day, about 1 passer-by in 5 buys a loaf, from 230 loaves on the quietest morning to 265 on the busiest. The days fall close to a straight line, so the link is strong.

Lena now has a daily bake for Station Road, a plan for Park Road and a strong link between people passing and loaves sold. Before she acts on any of it, she asks what the numbers cannot tell her.

The limitAt Lena's BakeryWhat to do about it
Too few figuresEleven days, from the first two weeks of a new shopKeep counting for a few months before fixing the order
An unusual periodSeptember only: no winter, no school holidays, no ChristmasCompare the same months later, and the older shops' pattern
Sales are not demandThe opening-day shelves were empty by 2 p.m., so 390 is what Priti baked, not what people wantedNote the time a shop sells out next to its sales
A link is not a causePassers-by and loaves rise together, but a dry morning could lift bothTest it: change one thing, such as a sign by the station, and watch sales
The past is not the futureA 900-worker office block opens next to the station in 2027Adjust the figures for changes you already know about
Numbers say what, not whyThe table does not say why Market Square fellAsk customers; a few short conversations can explain a figure
Prices changeIf the loaf goes from $3 to $3.20, takings rise with no extra loaves soldCompare loaves, not only money, or take the price rise out first
Lena's decision: Priti bakes 245 loaves a day for Station Road, the median, and notes the time the shelves empty. Park Road gets two orders, about 350 on weekdays and 525 at the weekend.

Marco looks at both again in December, with three months of figures, and asks a few Market Square customers why they now buy less.

Before you act on a number

  • The right measure. It answers the decision's question: a total, a typical day, or the most common choice.
  • The spread. How far the figures sit from the average, and whether one plan fits every day.
  • Enough data, from a normal time. Not a handful of figures, not only an unusual week.
  • The context. What else changed: prices, a rival, new homes, the season.
  • The why. What customers or staff say, next to what the figures show.
A number without its limits: An answer that trusts a figure completely stays weak. Name the limit that matters most for this decision, and what the business should do about it.

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How this comes up: A table or chart from the case, often a survey or two years side by side, comes with a short instruction. Each is a two-mark answer.

The instructions you may see

  • Comment on the data.
  • Comment on one of the data sets.
  • Explain the relationship between two figures.
Longer answers: Longer answers use the same habits: the right measure, the figure in words, what it means, and what it cannot show.

The comment pattern

  • Pick one row, one set or one pair of figures. You do not need the whole table.
  • Put it in words, with the number. Only 46% are satisfied with freshness.
  • Go one step further. A comparison, a change, a likely reason, or what it means for the business.
  • Stop. Two clear sentences answer it.
The trap: copying the table out: Writing every figure of the table out in words is still only restating it. The second mark needs one step beyond the data.

The opposite trap: an opinion with no figure from the table at all.
IB-style questionComment[2 marks]

Comment on the survey results in Table 1.

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A business reports that its sales revenue grew by 18% last year, while its customer satisfaction score fell for the third year running. one reason why this may be a concern for the business. [2 marks]

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