Basic Business Statistics
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 Inferential Statistics
Collecting, summarizing, and Drawing conclusions and/or
describing data 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 i
e.g., Sample mean = n
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. 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 Measures computed from
population are called parameters sample data are called statistics
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. 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 Numerical
Examples:
Marital Status
Political Party Discrete Continuous
Eye Color
(Defined categories) Examples: Examples:
Number of Children Weight
Defects per hour Voltage
(Counted items) (Measured characteristics)
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 1-16
Levels of Measurement
A nominal scale classifies data into distinct categories in
which no ranking is implied.
Categorical Variables Categories
Personal Computer Yes / No
Ownership
Type of Stocks Owned Growth Value Other
Internet Provider 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 Ordered Categories
Student class designation Freshman, Sophomore, Junior,
Senior
Product satisfaction Satisfied, Neutral, Unsatisfied
Faculty rank Professor, Associate Professor,
Assistant Professor, Instructor
Standard & Poor’s bond ratings AAA, AA, A, BBB, BB, B, CCC, CC,
C, DDD, DD, D
Student Grades A, B, C, D, F
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. 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
