Why Learn Statistics

Make better sense of the world Make better business decisions

 Internet articles / reports  Business memos

 Magazine articles  Business research

 Newspaper articles  Technical journals

 Television & radio reports  Technical reports

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 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

Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall 1-2

 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 Inferential Statistics

Collecting, summarizing, Using data collected from a

presenting and analyzing data small group to draw conclusions
about a larger group

Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall 1-3

 These Two Branches Are Used
In The Important Activities
 To summarize business data
 Descriptive methods used to create charts & tables
 To draw conclusions from business data
 Inferential methods used to reach conclusions about
a large group based on data from a smaller group
 To make reliable forecasts about business
activities
 Inferential methods used to develop, quantify, and
improve the accuracy of predictive models
 To improve business processes
 Involves managerial approaches like Six Sigma
Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall 1-4
 Descriptive Statistics

 Collect data
 e.g., Survey

 Present data
 e.g., Tables and graphs

 Characterize data
 e.g., The sample mean

Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall 1-5

 Inferential Statistics
 Estimation
 e.g., Estimate the population
mean weight using the sample
mean weight
 Hypothesis testing
 e.g., Test the claim that the
population mean weight is 120
pounds

Drawing conclusions about a large group of

individuals based on a smaller group.

Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall 1-6

 Basic Vocabulary of Statistics

VARIABLES
Variables are a 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.

Copyright ©2011 Pearson Education, Inc. publishing as Prentice Hall 1-7

 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.
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 Population vs. Sample

Population Sample

Measures used to describe the Measures used to describe the

population are called parameters sample are called statistics

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