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BusinessStatistics,7th ed. byKenBlack

Chapter1 Introduction toStatistics

Copyright2011 2011John JohnWiley Wiley& &Sons, Sons,Inc. Inc. Copyright

LearningObjectives
Whatisstatistics? Becomeawareofthevariedapplicationsofstatistics inbusiness. Differentiatebetweendescriptiveandinferential statistics. Identifytypesofvariables.

Copyright 2011 John Wiley & Sons, Inc.

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StatisticsinBusiness
Accounting auditingandcostestimation Economics local,regional,national,andinternational economicperformance Finance investmentsandportfoliomanagement Management humanresources,compensation,andquality management ManagementInformationSystems performanceofsystems whichgather,summarize,anddisseminateinformationto variousmanageriallevels Marketing marketanalysisandconsumerresearch InternationalBusiness marketanddemographicanalysis

Copyright 2011 John Wiley & Sons, Inc.

WhatisStatistics?
Scienceofgathering,presenting,analyzing,and interpretingdata Usesmathematicsandprobability Branchesofstatistics:
Descriptive graphicalornumericalsummariesofdata Inferential makingadecisionbasedondata

Copyright 2011 John Wiley & Sons, Inc.

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PopulationVersusSample
Population thewhole
acollectionofallpersons,objects,oritemsunderstudy

Census gatheringdatafromtheentirepopulation Sample gatheringdataonasubsetofthe population

Useinformationaboutthesampletoinferaboutthe population

Copyright 2011 John Wiley & Sons, Inc.

Population

Copyright 2011 John Wiley & Sons, Inc.

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PopulationandCensusData
Identifier RD1 RD2 RD3 RD4 RD5 BL1 BL2 GR1 GR2 GY1 GY2 GY3 Color Red Red Red Red Red Blue Blue Green Green Gray Gray Gray MPG 12 10 13 10 13 27 24 35 35 15 18 17

Copyright 2011 John Wiley & Sons, Inc.

SampleandSampleData
Identifier Color MPG

RD2

Red

10

RD5

Red

13

GR1

Green

35

GY2

Gray

18

Copyright 2011 John Wiley & Sons, Inc.

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Parametervs.Statistic
Parameter descriptivemeasureofthepopulation
UsuallyrepresentedbyGreekletters

denotes population parameter

2 denotes population variance

denotes population standard deviation Statistic descriptivemeasureofasample

UsuallyrepresentedbyRomanletters
x denotes sample mean
s 2 denotes sample variance

s denotes sample standard deviation

Copyright 2011 John Wiley & Sons, Inc.
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ProcessofInferentialStatistics

1. Population

4. Use x to estimate

3. Sample x (statistic )

(parameter )

2. Select a random sample

Copyright 2011 John Wiley & Sons, Inc.
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StatisticsinBusiness
Inferencesaboutparametersmadeunderconditions ofuncertainty(whicharealwayspresentinstatistics)
Uncertaintycanbecausedby
Randomnessinselectionofasample lackofknowledgeaboutthesourceoftheinferences changeinconditionsnotaccountedfor

Copyright 2011 John Wiley & Sons, Inc.

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StatisticsinBusiness
Probabilityisusedinstatistics
Toestimatethelevelofconfidenceinaconfidence interval Tocalculatethepvalueinhypothesistesting

Copyright 2011 John Wiley & Sons, Inc.

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LevelsofDataMeasurement

F21

Nominal Innominalmeasurementthevaluesjust "name"theattributeuniquely.

Noorderingofthecasesisimplied. Forexample,apersonsgenderisnominal.Itdoesnt matterwhetheryoucallthemboysvs.girlsormalesvs. femalesorXY vs.XXchromosomes. Anotherexampleisreligion Catholic,Protestant, Muslim,etc.

Copyright 2011 John Wiley & Sons, Inc.

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LevelsofDataMeasurement
Ordinal Avariableisordinalmeasurableifrankingis possibleforvaluesofthevariable.
Forexample,agoldmedalreflectssuperiorperformanceto asilverorbronzemedalintheOlympics.Youcantsaya goldandabronzemedalaverageouttoasilvermedal, though. Preferencescalesaretypicallyordinal howmuchdoyou likethiscereal?Likeitalot,somewhatlikeit,neutral, somewhatdislikeit,dislikeitalot.

Copyright 2011 John Wiley & Sons, Inc.

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Slide 13 F21 We have eliminated this entire discussion in our courses. It is not useful to the students atthe introductory level, and it will not be retained. Furthermore, it does not play a role in the rest of the course.
FCB, 3/22/2011

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LevelsofDataMeasurement
Interval Inintervalmeasurementthedistance betweenattributesdoes havemeaning.
Numericaldatatypicallyfallintothiscategory Forexample,whenmeasuringtemperature(inFahrenheit), thedistancefrom3040issameasthedistancefrom7080. Theintervalbetweenvaluesisinterpretable.

Copyright 2011 John Wiley & Sons, Inc.

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LevelsofDataMeasurement
Ratio inratiomeasurementthereisalwaysa referencepointthatismeaningful(either0forrates or1forratios)
Thismeansthatyoucanconstructameaningfulfraction (orratio)witharatiovariable. Inappliedsocialresearchmost"count"variablesareratio, forexample,thenumberofclientsinpastsixmonths.

Copyright 2011 John Wiley & Sons, Inc.

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LevelsofDataMeasurement
Cardinal Avariableiscardinallymeasurableifagiven intervalbetweenmeasureshasaconsistentmeaning, i.e.,ifthemeasurecorrespondstopointsalonga straightline.
Forexample,height,output,andincomearecardinally measurable

Copyright 2011 John Wiley & Sons, Inc.

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NominalLevelData

MAP1

Numbersareusedtoclassifyorcategorize
Example:EmploymentClassification 1forEducator 2forConstructionWorker 3forManufacturingWorker

Copyright 2011 John Wiley & Sons, Inc.

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Slide 18 MAP1 It would be good to add some sort of personal response system (clicker) question here
Michael A. Posner, 8/23/2011

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OrdinalLevelData
Numbersareusedtoindicaterankororder
Relativemagnitudeofnumbersismeaningful Differencesbetweennumbersarenotcomparable

Example:Rankingproductivityofemployees Example:Positionwithinanorganization
1forPresident 2forVicePresident 3forPlantManager 4forDepartmentSupervisor 5forEmployee

Copyright 2011 John Wiley & Sons, Inc.

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OrdinalData
Facultyandstaffshouldreceivepreferential treatmentforparkingspace.
Strongly Agree Agree Neutral Disagree Strongly Disagree

Copyright 2011 John Wiley & Sons, Inc.

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IntervalLevelData
IntervalLeveldata Distancesbetweenconsecutive integersareequal
Relativemagnitudeofnumbersismeaningful Differencesbetweennumbersarecomparable Locationoforigin,zero,isarbitrary Verticalinterceptofunitofmeasuretransformfunctionis notzero

Example:FahrenheitTemperature Example:MonetaryUtility

Copyright 2011 John Wiley & Sons, Inc.

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RatioLevelData
Highestlevelofmeasurement
Relativemagnitudeofnumbersismeaningful Differencesbetweennumbersarecomparable Locationoforigin,zero,isabsolute(natural) Verticalinterceptofunitofmeasuretransformfunction iszero

Examples:Height,Weight,andVolume Example:MonetaryVariables,suchasProfitandLoss, Revenues,Expenses,Financialratios suchasP/E Ratio,InventoryTurnover,andQuickRatio.

Copyright 2011 John Wiley & Sons, Inc.

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RatioLevelData
Parametricstatistics requiresthatthedatabe intervalorration NonParametric usedifdataarenominalorordinal
Nonparametricstatisticscanbeusedtoanalyzeinterval orratiodata

Copyright 2011 John Wiley & Sons, Inc.

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DataLevel,Operations,and StatisticalMethods
Data Level Nominal Ordinal Interval Meaningful Operations Classifying and Counting All of the above plus Ranking All of the above plus Addition, Subtraction, Multiplication, and Division (including means, standard deviations, etc.) All of the above

Ratio

Copyright 2011 John Wiley & Sons, Inc.

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