Introduction

Chap 1-1

Why Learn Statistics

Make better sense of the world

Make better business decisions

Internet articles / reports Magazine articles Newspaper articles Television & radio reports

Business memos Business research Technical journals Technical reports

Chap 1-2

In Business, Statistics Has Many Important Uses

To summarize business data

To draw conclusions from business data To make reliable forecasts about business activities To improve business processes

Chap 1-3

Two Different Branches Of Statistics Are Used In Business

Statistics
The branch of mathematics that transforms data into useful information for decision makers.

Descriptive Statistics
Collecting, summarizing, presenting and analyzing data

Inferential Statistics
Using data collected from a small group to draw conclusions about a larger group

Chap 1-4

These Two Branches Are Used In The Important Activities

To summarize business data

Descriptive methods used to create charts & tables

Inferential methods used to reach conclusions about a large group based on data from a smaller group

To draw conclusions from business data

To make reliable forecasts about business activities

Inferential methods used to develop, quantify, and improve the accuracy of predictive models Involves managerial approaches like Six Sigma
Chap 1-5

To improve business processes

Descriptive Statistics

Collect data

e.g., Survey

Present data

e.g., Tables and graphs

Characterize data

e.g., The sample mean

Chap 1-6

Inferential Statistics

Estimation

e.g., Estimate the population mean weight using the sample mean weight
e.g., Test the claim that the population mean weight is 120 pounds

Hypothesis testing

Drawing conclusions about a large group of individuals based on a smaller group.

Chap 1-7

Basic Vocabulary of Statistics

VARIABLES Variables are characteristics of an item or individual and are what you analyze when you use a statistical method. DATA Data are the different values associated with a variable. OPERATIONAL DEFINITIONS Data values are meaningless unless their variables have operational definitions, universally accepted meanings that are clear to all associated with an analysis.

Chap 1-8

Basic Vocabulary of Statistics

POPULATION A population consists of all the items or individuals about which you want to draw a conclusion. The population is the large group. SAMPLE A sample is the portion of a population selected for analysis. The sample is the small group. PARAMETER A parameter is a numerical measure that describes a characteristic of a population. STATISTIC A statistic is a numerical measure that describes a characteristic of a sample.
Chap 1-9

Population vs. Sample

Population Sample

Measures used to describe the population are called parameters

Measures used to describe the sample are called statistics

Chap 1-10

Types of Variables

Categorical (qualitative) variables have values that can only be placed into categories, such as yes and no.
Numerical (quantitative) variables have values that represent quantities.

Discrete variables arise from a counting process Continuous variables arise from a measuring process

Chap 1-11

Types of Variables
Variables

Categorical
Examples:

Numerical

Marital Status Political Party Eye Color (Defined categories)

Discrete
Examples:

Continuous
Examples:

Number of Children Defects per hour (Counted items)

Weight Voltage (Measured characteristics)

Chap 1-12

Levels of Measurement
A nominal scale classifies data into distinct categories in which no ranking is implied.
Categorical Variables
Personal Computer Ownership Type of Stocks Owned Internet Provider

Categories
Yes / No Growth / Value / Other Microsoft Network / AOL/ Other

Chap 1-13

Levels of Measurement (cont.)

An ordinal scale classifies data into distinct categories in which ranking is implied
Categorical Variable Ordered Categories Freshman, Sophomore, Junior, Senior Satisfied, Neutral, Unsatisfied Professor, Associate Professor, Assistant Professor, Instructor AAA, AA, A, BBB, BB, B, CCC, CC, C, DDD, DD, D A, B, C, D, F
Chap 1-14

Student class designation Product satisfaction

Faculty rank
Standard & Poors bond ratings Student Grades

Levels of Measurement (cont.)

An interval scale is an ordered scale in which the difference between measurements is a meaningful quantity but the measurements do not have a true zero point.
A ratio scale is an ordered scale in which the difference between the measurements is a meaningful quantity and the measurements have a true zero point.

Chap 1-15

Interval and Ratio Scales

Chap 1-16

Summary
Introduced the basic vocabulary and definitions of statistics, and the role of statistics in turning data into information to facilitate decision making

Examined the use of statistics to:

Summarize data Draw conclusions from data Make reliable forecasts Improve business processes

Examined descriptive vs. inferential statistics Reviewed data types and measurement level
Chap 1-17