Chap 1-1 Copyright 2012 Pearson Education, Inc.

publishing as Prentice Hall Chap 1-1

Basic Business Statistics
12
th
Edition
Chapter 1

Introduction
Chap 1-2 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall Chap 1-2
Learning Objectives
In this chapter you learn:

How businesses use statistics
The basic vocabulary of statistics
The types of data used in business
How to use Microsoft Excel and / or
Minitab with this book
Chap 1-3 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
Why Learn Statistics
Make better sense of the world
Internet articles / reports

Magazine articles

Newspaper articles

Television & radio reports
Make better business decisions
Business memos

Business research

Technical journals

Technical reports
Chap 1-3
Chap 1-4 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
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 1-4
Chap 1-5 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall Chap 1-5
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 1-6 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
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
Chap 1-6
Chap 1-7 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall Chap 1-7
Descriptive Statistics
Collect data
e.g., Survey
Present data
e.g., Tables and graphs
Characterize data
e.g., The sample mean
Chap 1-8 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall Chap 1-8
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.
Chap 1-9 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall Chap 1-9
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 1-10 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall Chap 1-10
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 1-11 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall Chap 1-11
Population vs. Sample
Population Sample
Measures used to describe the
population are called parameters
Measures used to describe the
sample are called statistics
Chap 1-12 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
This Book Is Organized To Show
The Four Uses Of Statistics
To summarize business data (Chapters 2 & 3)

To draw conclusions from business data
(Chapters 4 12)

To make reliable forecasts about business
activities (Chapters 13 16)

To improve business processes (Chapter 18)
Chap 1-12
Chap 1-13 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
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 1-13
Chap 1-14 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
Types of Variables
Chap 1-14
Variables

Categorical


Numerical

Discrete Continuous
Examples:
Marital Status
Political Party
Eye Color
(Defined categories)
Examples:
Number of Children
Defects per hour
(Counted items)
Examples:
Weight
Voltage
(Measured characteristics)
Chap 1-15 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
Levels of Measurement
A nominal scale classifies data into distinct
categories in which no ranking is implied.

Chap 1-15
Categorical Variables Categories
Personal Computer
Ownership

Type of Stocks Owned

Internet Provider
Yes / No
Microsoft Network / AOL/ Other
Growth / Value / Other
Chap 1-16 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
Levels of Measurement (cont.)
An ordinal scale classifies data into distinct
categories in which ranking is implied

Chap 1-16

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 & Poors bond ratings
AAA, AA, A, BBB, BB, B, CCC, CC,
C, DDD, DD, D
Student Grades A, B, C, D, F
Chap 1-17 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
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 1-17
Chap 1-18 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
Interval and Ratio Scales
Chap 1-18
Chap 1-19 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall Chap 1-19
Chapter 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
In this chapter, we have