Introduction to Business Statistics (Chapter 1)  Descriptive Statistics: Summarizes and describes the

main features of a data set (e.g., mean, median).

1.1 Data
 Statistical Inference: Uses sample data to make
 Data: Facts and figures used to draw conclusions.
conclusions about the population.
 Data Set: Collection of data for a specific study.
1.4 Case Studies on Sampling and Statistical Inference
 Elements: The entities (people, objects, events)
 Cell Phone Case: Estimating cell phone costs using
being studied.
sample data.
 Variable: A characteristic of an element that can be
 Marketing Research Case: Rating a new bottle design
measured.
based on consumer feedback.
o Quantitative Variable: Numerical values
 Car Mileage Case: Estimating average car mileage
representing quantities (e.g., age, income).
using sample data.
o Qualitative Variable: Categorical values (e.g.,
Importance of Random Sampling:
gender, color).
 Ensures that the sample is representative of the
Types of Data:
population, reducing bias.
 Cross-Sectional Data: Collected at the same point in
1.5 Scales of Measurement (Optional)
time.
 Nominal Scale: Categories with no order (e.g.,
 Time Series Data: Collected over different time
gender, colors).
periods (e.g., monthly sales data).
 Ordinal Scale: Categories with a specific order (e.g.,
1.2 Data Sources
rankings, satisfaction levels).
 Existing Sources: Data already collected by others
 Interval Scale: Numerical values with equal intervals
(e.g., government reports, libraries, internet).
but no true zero (e.g., temperature in Celsius).
 Experimental Studies: Data collected by
 Ratio Scale: Numerical values with equal intervals
manipulating independent variables to observe
and a true zero (e.g., weight, income).
effects on a response variable.
Key Takeaways:
 Observational Studies: Data collected without
manipulating variables (e.g., surveys).  Data is the foundation of statistical analysis, and
understanding variables and data types is crucial.
Steps in Initiating a Study:
 Data Sources can be existing or collected through
1. Define the response variable (variable of interest).
experimental/observational studies.
2. Identify independent variables (related factors).
 Populations and Samples help generalize findings
3. Decide if the study is experimental (manipulate from a subset to the entire group.
variables) or observational (no manipulation).
 Random Sampling ensures unbiased and
1.3 Populations and Samples representative data collection.

 Population: The entire set of elements of interest.  Scales of Measurement help classify data for
appropriate analysis.
 Census: Data collected from every element in the
population. Descriptive Statistics - Tabular and Graphical Methods

 Sample: A subset of the population used to draw 1. Summarizing Qualitative Data

conclusions about the entire population.
 Frequency Distribution: A table that summarizes the
Descriptive Statistics vs. Statistical Inference: number (frequency) of items in each category.
 o Relative Frequency: Proportion of items in  Interpretation: Clusters, gaps, and outliers can be
each class (frequency ÷ total observations). easily identified.

o Percent Frequency: Relative frequency 4. Stem-and-Leaf Displays

multiplied by 100.
 Definition: A graphical method that splits each data
 Graphical Methods: point into a "stem" (leading digit(s)) and a "leaf"
(trailing digit).
o Bar Charts: Represent frequencies of
categories using bars.  Use: Display the distribution of data while retaining
the original values.
o Pie Charts: Show proportions of categories
as slices of a pie.  Example: For the number 23, the stem is 2 and the
leaf is 3.
o Pareto Chart: A bar chart where categories
are ordered by frequency, highlighting the 5. Contingency Tables (Optional)
most significant categories.
 Definition: A table that classifies data based on two
2. Summarizing Quantitative Data dimensions (rows and columns).

 Frequency Distribution: Group quantitative data into  Use: Examine relationships between two categorical
classes (intervals) and count the number of variables.
observations in each class.
 Example: Rows could represent gender, and columns
o Steps: could represent product preferences.

1. Determine the number of classes. 6. Scatter Plots (Optional)

2. Calculate class length (range ÷  Definition: A graph that shows the relationship
number of classes). between two quantitative variables.

3. Form non-overlapping classes of o X-axis: Independent variable.

equal width.
o Y-axis: Dependent variable.
4. Tally and count observations in each
 Types of Relationships:
class.
o Linear: Data points form a straight line.
5. Graph the histogram.
 Positive: As one variable increases,
 Graphical Methods:
the other increases.
o Histogram: A bar chart for quantitative data,
 Negative: As one variable increases,
showing the distribution of data across
the other decreases.
classes.
o No Linear Relationship: No clear pattern
o Frequency Polygon: A line graph connecting
between variables.
the midpoints of the tops of the bars in a
histogram. 7. Misleading Graphs and Charts (Optional)

o Ogive: A line graph that shows cumulative  Common Issues:

frequencies.
o Scaling: Manipulating the axis scale to
3. Dot Plots exaggerate or minimize trends.

 Definition: A simple graphical display where each o Truncated Axes: Starting the axis at a value
data point is represented by a dot along a number other than zero to distort proportions.
line.
o 3D Effects: Using 3D visuals that can distort
 Use: Visualize the distribution of small data sets. the perception of data.
 How to Spot: Always check the axes, scales, and o Standard Deviation: The square root of the
context of the graph. variance. Measures the spread of data
around the mean.
Key Concepts
Empirical Rule:
 Frequency Distribution: Summarizes data by
counting occurrences in categories or classes.  For normal distributions:

 Bar Charts & Pie Charts: Used for qualitative data to o ~68% of data falls within ±1 standard
show frequencies or proportions. deviation of the mean.

 Histograms & Frequency Polygons: Used for o ~95% within ±2 standard deviations.
quantitative data to show distributions.
o ~99.7% within ±3 standard deviations.
 Dot Plots & Stem-and-Leaf Displays: Simple
Chebyshev’s Theorem:
graphical methods for small data sets.
 Applies to any distribution:
 Contingency Tables: Analyze relationships between
two categorical variables. o At least 75% of data falls within ±2 standard
 Scatter Plots: Visualize relationships between two deviations.
quantitative variables. o At least 89% within ±3 standard deviations.
 Misleading Graphs: Be cautious of graphs that z-Scores:
distort data through scaling or visual effects.
 Measures how many standard deviations a value (x)
Descriptive Statistics - Numerical Methods (Chapter 3) is from the mean.
3.1 Describing Central Tendency o Positive z-score: x is above the mean.
 Central Tendency: Represents the center or middle o Negative z-score: x is below the mean.
of a data set.
o z = 0: x is equal to the mean.
 Measures of Central Tendency:

o Mean (μ): The average value. Calculated as

the sum of all values divided by the number 3.3 Percentiles, Quartiles, and Box-and-Whiskers
of values. Displays

o Median (Md): The middle value when data is  Percentile: A value below which a given percentage
ordered. If there’s an even number of of data falls.
observations, it’s the average of the two o 1st Quartile (Q1): 25th percentile.
middle values.
o 2nd Quartile (Median): 50th percentile.
o Mode (Mo): The most frequently occurring
value in the data set. o 3rd Quartile (Q3): 75th percentile.

3.2 Measures of Variation  Interquartile Range (IQR): Q3 - Q1. Measures the

spread of the middle 50% of data.
 Variation: Describes how spread out the data is.
 Box-and-Whisker Plot: Visualizes the distribution of
 Measures of Variation: data using quartiles, median, and outliers.
o Range: The difference between the largest 3.4 Covariance, Correlation, and Least Squares Line
and smallest values. (Optional)
o Variance: The average of the squared  Covariance: Measures the relationship between two
deviations from the mean. variables (x and y).
 o Positive Covariance: As x increases, y  Covariance and Correlation: Measure relationships
increases. between variables.

o Negative Covariance: As x increases, y  Weighted Mean and Geometric Mean: Useful for
decreases. specialized data analysis.

 Correlation Coefficient (r): Measures the strength

and direction of the linear relationship between two
Probability
variables.

o Ranges from -1 to 1.

o r = 1: Perfect positive correlation.

o r = -1: Perfect negative correlation.

o r = 0: No correlation.

 Least Squares Line: A line that minimizes the sum of

squared differences between observed and predicted
values (used in regression analysis).

3.5 Weighted Means and Grouped Data (Optional)

 Weighted Mean: Used when some data points are

more important than others. Calculated by
multiplying each value by its weight and dividing by
the sum of weights.

 Grouped Data: Data organized into intervals. Mean

and standard deviation can be estimated using
midpoint values and frequencies.

3.6 Geometric Mean (Optional)

 Geometric Mean: Used for rates of return or growth

rates.

o Calculated as the nth root of the product of

(1 + R₁) × (1 + R₂) × ... × (1 + Rₙ), where Rᵢ are
the rates of return.

o Useful for calculating average growth over

multiple periods.

Key Takeaways:

 Central Tendency: Mean, median, and mode

describe the center of data.

 Variation: Range, variance, and standard deviation

measure data spread.

 Percentiles and Quartiles: Help understand data

distribution and identify outliers.
Discrete Random Variable
Continuous Random Variable
Sampling and Sampling Distribution 5. Stratified Random, Cluster, and Systematic Sampling
(Optional)

 Stratified Random Sampling:

o Divide the population into non-overlapping

groups (strata) based on similarity.

o Randomly sample from each stratum.

o Combine the samples to form the full

sample.

o Use: When the population has distinct

subgroups (e.g., age, gender, income).

 Cluster Sampling:

o Divide the population into clusters (e.g.,

schools, neighborhoods).

o Randomly select entire clusters for

sampling.

o Use: When it is difficult to sample

individuals directly.

 Systematic Sampling:

o Select every kk-th element from a list after

a random start.

o Use: When the population is ordered in

some way.

6. Surveys and Errors in Survey Sampling (Optional)

 Types of Survey Questions:

o Dichotomous: Yes/No questions.

o Multiple Choice: List of options to choose

from.

o Open-Ended: Respondents answer in their

own words.

 Sources of Error:

o Sampling Error: Differences between the

sample and the population.

o Non-Sampling Error: Errors due to data

collection, processing, or respondent bias.

Key Concepts

 Random Sampling: Ensures every subset of the

population has an equal chance of being selected.
  Sampling Distribution: The distribution of a statistic
(e.g., mean, proportion) over all possible samples.

 Central Limit Theorem: The sampling distribution of

the mean is approximately normal for large nn.

 Stratified, Cluster, and Systematic Sampling:

Alternative sampling methods for specific scenarios.

 Survey Errors: Sampling and non-sampling errors

can affect the accuracy of survey results.

Confidence Intervals