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11th Edition
Chapter 1 Introduction and Data Collection

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc.

Chap 1-1

Learning Objectives
In this chapter you learn: How Statistics is used in business The sources of data used in business The types of data used in business The basics of Microsoft Excel The basics of Minitab

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-2

Why Learn Statistics?
So you are able to make better sense of the ubiquitous use of numbers: Business memos Business research Technical reports Technical journals Newspaper articles Magazine articles

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-3

What is statistics?
A branch of mathematics taking and transforming numbers into useful information for decision makers Methods for processing & analyzing numbers Methods for helping reduce the uncertainty inherent in decision making

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-4

Why Study Statistics?
Decision Makers Use Statistics To:
Present and describe business data and information properly Draw conclusions about large groups of individuals or items, using information collected from subsets of the individuals or items. Make reliable forecasts about a business activity Improve business processes

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-5

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

Descriptive Statistics
Collecting, summarizing, and describing data

Inferential Statistics
Drawing conclusions and/or making decisions concerning a population based only on sample data

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-6

Descriptive Statistics
Collect data
e.g., Survey

Present data
e.g., Tables and graphs

Characterize data

∑X e.g., Sample mean =
n
Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

i

Chap 1-7

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 subset of the large group.
Basic Business Statistics, 11e 2009 Prentice-Hall, Inc.. Chap 1-8

Basic Vocabulary of Statistics
VARIABLE A variable is a characteristic of an item or individual. 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.

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-9

Basic Vocabulary of Statistics
POPULATION A population consists of all the items or individuals about which you want to draw a conclusion. SAMPLE A sample is the portion of a population selected for analysis. 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.
Basic Business Statistics, 11e 2009 Prentice-Hall, Inc.. Chap 1-10

Population vs. Sample
Population Sample

Measures used to describe the population are called parameters
Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Measures computed from sample data are called statistics
Chap 1-11

Why Collect Data?
A marketing research analyst needs to assess the effectiveness of a new television advertisement. A pharmaceutical manufacturer needs to determine whether a new drug is more effective than those currently in use. An operations manager wants to monitor a manufacturing process to find out whether the quality of the product being manufactured is conforming to company standards. An auditor wants to review the financial transactions of a company in order to determine whether the company is in compliance with generally accepted accounting principles.

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-12

Sources of Data
Primary Sources: The data collector is the one using the data for analysis
Data from a political survey Data collected from an experiment Observed data

Secondary Sources: The person performing data analysis is not the data collector
Analyzing census data Examining data from print journals or data published on the internet.

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-13

Sources of data fall into four categories
Data distributed by an organization or an individual A designed experiment A survey An observational study

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-14

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.

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-15

Types of Data
Data

Categorical
Examples: Marital Status Political Party Eye Color (Defined categories)

Numerical

Discrete
Examples: Number of Children Defects per hour (Counted items)

Continuous
Examples: Weight Voltage (Measured characteristics)
Chap 1-16

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

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

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-17

Levels of Measurement
An ordinal scale classifies data into distinct categories in which ranking is implied
Categorical Variable Student class designation Product satisfaction Faculty rank Standard & Poor's bond ratings Student Grades
Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

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 1-18

Levels of Measurement
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.

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-19

Interval and Ratio Scales

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-20

Personal Computer Programs Used For Statistics
Minitab
A statistical package to perform statistical analysis Designed to perform analysis as accurately as possible

Microsoft Excel
A multi-functional data analysis tool Can perform many functions but none as well as programs that are dedicated to a single function.

Both Minitab and Excel use worksheets to store data

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-21

Minitab & Microsoft Excel Terms
When you use Minitab or Microsoft Excel, you place the data you have collected in worksheets. The intersections of the columns and rows of worksheets form boxes called cells. If you want to refer to a group of cells that forms a contiguous rectangular area, you can use a cell range. Worksheets exist inside a workbook in Excel and inside a Project in Minitab. Both worksheets and projects can contain both data, summaries, and charts.
Basic Business Statistics, 11e 2009 Prentice-Hall, Inc.. Chap 1-22

You are using programs properly if you can
Understand how to operate the program Understand the underlying statistical concepts Understand how to organize and present information Know how to review results for errors Make secure and clearly named backups of your work

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-23

Chapter Summary
In this chapter, we have Reviewed why a manager needs to know statistics Introduced key definitions:
Population vs. Sample Primary vs. Secondary data types Categorical vs. Numerical data

Examined descriptive vs. inferential statistics Reviewed data types and measurement levels Discussed Minitab and Microsoft Excel terms

Basic Business Statistics, 11e 2009 Prentice-Hall, Inc..

Chap 1-24