Chapter 1

An Introduction to Business
Statistics

McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

An Introduction to Business
Statistics
1.1
1.2
1.3
1.4
1.5

Data
Data Sources
Populations and Samples
Three Case Studies that Illustrate
Sampling and Statistical Inference
Ratio, Interval, Ordinal, and Nominative
Scales of Measurement

1-2

LO 1: Explain what a
variable is.

1.1 Data
Data:

facts and figures from which

conclusions can be drawn
Data set: the data that are collected for a
particular study

Elements: may be people, objects, events, or

other entries

Variable:

any characteristic of an element

1-3

LO 2: Describe the
difference between a
quantitative variable
and a qualitative
variable.

Data

Continued

Measurement:

A way to assign a value of a

variable to the element
Quantitative: the possible measurements of
the values of a variable are numbers that
represent quantities
Qualitative (or categorical): the possible
measurements fall into several categories

1-4

LO 3: Describe the
difference between
cross-sectional data
and time series data.

Cross-Sectional Data

Cross-sectional

data: Data collected at the

same or approximately the same point in
time(survey)
Time series data: data collected over
different time periods

1-5

LO 4: Construct and
interpret a time series
(runs) plot.

Time Series Data

1-6

LO 5: Describe the
different types of data
sources.

1.2 Data Sources

Existing sources: data already gathered by public or

private sources

Internet
Library
US Government
Data collection agency

Experimental and observational studies: data we

collect ourselves for a specific purpose

Response variable: variable of interest

Factors: other variables related to response variable

1-7

LO 6: Describe the
difference between a
population and a
sample.

1.3 Populations and

Samples

Population

The set of all elements about which we

wish to draw conclusions (people,
objects or events)

Census

An examination of the entire population

of measurements

Sample

A selected subset of the units of a

population

1-8

LO 7: Distinguish
between descriptive
statistics and statistical
inference.

Descriptive Statistics
and Statistical Inference

Descriptive

statistics: the science of

describing the important aspects of a set of
measurements ex: comparison of 2 males/

Statistical

inference: the science of using a

sample of measurements to make
generalizations about the important aspects
of a population of measurements

1-9

LO 8: Explain the
importance of random
sampling.

1.

2.

3.

1.4 Three Case Studies That

Illustrate Sampling and Statistical
Inference

The Cell Phone Case: Estimating Cell

Phone Costs
The Marketing Research Case: Rating a
New Bottle Design
The Car Mileage Case: Estimating Mileage

1-10

LO8

The Cell Phone Case:

Estimating Cell Phone Costs

Considering

using a company to manage

their cellular resources
Random sample of 100 employees working
in the bank on 500-minute plan last month
Many overages and underage(statistical)
Sample:100
Population: employee /variable
Existing data/ratio
1-11

LO8

The Cell Phone Case: The Data

1-12

LO8

The Marketing Research Case:

Rating a New Bottle Design

Studying

to see if changes should be made in

the bottle design for a popular soft drink
Using mall intercept method
On one Saturday, randomly select a sample
size of 60 shoppers to interview.
Experimental/cross sec/sample: 60
/popu:infinity/qualitative/ordinal convert quali to
quan/ratio
Score:quantitave
1-13

LO8

The Marketing Research

Case: The Form and the Data

1-14

LO8

Terms
Process:

a sequence of operations that

takes inputs and turns them into outputs
Finite population: a population of limited
size
Infinite population: a population of unlimited
size

1-15

LO8

The Care Mileage Case:

Estimating Mileage

Study

of tax credit offered by the federal government

for improving fuel economy
Automaker has introduced a new model and wishes
to demonstrate it qualifies for the tax credit/subject
/mileage /popu:infinite/timeseries/quantititave
/ratio/experimental/mileage already there
There are 50 consecutive production shifts, and each
shift produced 100 cars.
Randomly select one car from each production shifts.
(i.e. a sample of 50 cars).
1-16

LO8

The Care Mileage Case: The

Data

1-17

LO 9: Identify scales of
measurement
(optional).

Quantitative variables

1.5 Ratio, Interval, Ordinal, and

Nominative Scales of
Measurement

Ratio variable: a quantitative variable measured on a scale

such that ratios of its value are meaningful and there is an
inherently defined zero value(grade score)
Interval variable: a quantitative variable where ratios are not
meaningful and there is no defined zero(weather)

Qualitative variables (categorical)

Ordinal variable: a qualitative variable for which there is a

meaningful ranking of the categories(, freshman , senior ,
junior , grade A , B, C) classification
Nominative variable: a qualitative variable for which there is
no meaningful ranking of the categories(m vs f , rainbow)
1-18