Report 2003: Statistics Group (ST)
Statistics Group: Research Report 2003
In December 2003, the Statistics Group was closed down as an independent Faculty unit. From 2004, the Group will be integrated as a Statistics Center under the Department of Finance. This will evidently impact the future research strategy, etc., and in terms of those aspects the present Report must now be regarded as historical.
In brief, statistics is about drawing conclusions in a business economics context, i.e. making decisions under conditions of uncertainty. Therefore, the discipline, its principles and methods are applicable to all areas of corporate management. The same applies to the fundamental building blocks of the discipline: Stochastic modelling of (business economics) phenomena. Without such stochastic modelling explicitly incorporating the immanent uncertainty of the phenomena, it is impossible to make rational decisions under conditions of uncertainty.
The above has been characteristic of the Group’s work. We have always aimed to formulate and solve concrete problems by using/developing mathematical/statistical models of business economics in a broad sense.
Highlights 2003
- Dynamic systems. In cooperation with the City University of London and Université de Lausanne different aspects of a queuing system were examined by simulation, among other methods. A deterministic queuing model with feedback can produce oscillation, quasi-periodic behaviour and chaos. This means that a fully deterministic queuing system may exhibit apparently unpredictable behaviour. Variability is ignored and instead the focus is on two forms of feedback: (i) the positive correlation between the speed with which service is provided and the queue length, and (ii) the dependence of the arrival rate on the perception of past waiting times. The model is generally interpreted as any situation where increased demand leads to a reduced service level.
- Observational studies are increasingly important in situations where you want to know something about a person’s unconscious behaviour patterns or preferences (e.g. choice of products). Such unconscious preferences often depend on the context and therefore cannot be examined using questionnaires referring to so-called meta preferences or context-seeking focus groups. Methods have therefore been developed to simulate practical situations of choice (comparisons of pairs). Concurrently, the Center developed the statistical analysis of preference measurements theory, including methods to describe individual preferences and their variation over time and/or context.
In practice it conducts practical experiments concerning linguistic formulation (rhetoric), taste, smell and design. The Center cooperates with the Department of Marketing, the Department of French, the Center for Communication Studies, CBS, the Danish Meat Research Institute (including slaughterhouses Danish Crown and TiCan), the University of Salford, UK, and the Illinois Design School, Chicago.
- Benchmark. During the year under review, the Department cooperated with the Universities of Oxford, Toronto and Copenhagen with special emphasis on Multidirectionary Efficiency Analysis and the possibility of describing the degree of inefficiency of a (production) unit using organisational unit characteristics. As a result possible management measures can be identified with a view to improving the efficiency of the unit.
- Hierarchical/Single-source data. Multilevel analysis. Cooperation with the Center for Marketing Communication. The focus is on studies of the effect of advertising on individual consumers via non-conventional models based on conventional logistic regression and on demonstrating that certain methods used in practice may have completely misleading effects.
- New organisation. As mentioned above, the Group will be organised as a centre under the Department of Finance in future. This solves a drawn-out and frustrating situation and creates a good academic environment. The Group looks forward to what will hopefully be a fruitful working relationship with colleagues from the Department of Finance in the field of Risk Management.
Academic profile
The academic profile of the Group naturally reflects the discipline of Theoretical Statistics in which the Group staff are deeply rooted. However, we see it in a somewhat wider perspective, including the application of formal quantitative (i.e. mathematical) methods to solve problems related to the operation of enterprises. Thus we have aimed at a profile which is not only directed towards traditional operations analysis in accordance with the formal element of Operations Management, but also towards proper mathematical models of (business) economics ”phenomena”. Such issues are part of the above highlights and occur in (almost) all business economics disciplines, from modern financial theory via mathematical economics to organisational theory.
Research strategy
The Group’s strategy aimed at the application and development of mathematical/statistical models capable of contributing to the solution of corporate control problems in a general sense. The strategy was rarely implemented by means of major all-inclusive projects but rather through an effort to solve concrete problems. The latter may have been the result of or given rise to PhD projects, and they have often been inspired by contacts with researchers in specific disciplines of business economics.
The research results of 2003 are described summarily in Figure 1 below: There are modest variations compared with previous periods. This reflects the unchanged staff and almost unchanged funding during the period under review (see Figure 2).
Figure 1
Figure 2
Research relations to practice
Relations to practice are important and normal in two respects. For one thing, the problems and solutions that we study will ultimately benefit practice, and for another, practice may give rise to new problems and/or solutions. Considering the nature of the discipline, practice may be interpreted broadly. Thus, the Group receives many requests for advice and guidance from other research environments, not least from graduate and PhD students working on empirical projects. With regard to non-academic environments, we traditionally receive a number of informal requests from enterprises/institutions.
The Group only enters sporadic major and more formal cooperation agreements. At present, we are parties to two such agreements. One, which is very modest, concerns the role of executive board members elected by the employees in connection with company management and involves the Department of Finance, the Statistics Group and a number of trade unions.
The other agreement is much more extensive and ambitious. It covers studies of consumer preferences for various types of foods. It was entered between the Royal Danish Veterinary and Agricultural University, The Directorate for Food, Fisheries and Agri Business under the Danish Ministry of Food, Agriculture and Fisheries, the Danish Meat Research Institute, Danish Crown and TiCan. The Group is in charge of planning and analysis of consumer preference studies. In terms of methodology, it intends to apply and continue the development of models to measure consumer preferences. The interest of external participants was aroused, i.a. by previous work on measuring consumer preferences conducted by the Group.
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