Business Statistics

CHAPTER 1

INTRODUCTION

LEARNING OBJECTIVES

In this chapter you learn:

of Statistics

statistics is used in Business

sources of data used in Business types of data used in Business

BASIC CONCEPTS OF STATISTICS Statistics is concerned with: Processing and analyzing data Collecting, presenting, and transforming data to assist decision makers

APPLICATION OF STATISTICS IN VARIOUS AREAS

: Market survey, Sales performance, forecasting sales, market shares and demand for various types of industrial products. Economics : Economical problems, formulation of economic policies Finance : Comparing the performances mutual funds and shares, calculating financial risk and comparing returns on investment in two or more companies and selection of portfolio of stocks etc.

 Insurance

: Insurance is based on the concept of probability and determining the premium of each customers etc. Operations : Sampling inspection, inventory management, statistical quality control, six sigma method and supply chain management. HR or Development : Evaluating the performances, developing rating systems, evolving compensatory rewards and training system etc.

 Information

Technology : problem solving, optimization of server time, assessing performance of a program and testing of the software.

KEY DEFINITIONS
A

population (universe) is the collection of all members of a group A sample is a portion of the population selected for analysis A parameter(census) is a numerical measure that describes a characteristic of a population A statistic is a numerical measure that describes a characteristic of a sample

POPULATION VS. SAMPLE

Sample
b gi o r y
Measures computed from sample data are called statistics

c n u

ef gh i jk l m n o p q rs t u v w x y z

Measures used to describe a population are called parameters

TWO BRANCHES OF STATISTICS

statistics

Collecting, summarizing, and presenting data

Inferential

statistics

Drawing conclusions about a population based only on sample data

DESCRIPTIVE STATISTICS
Collect

data data data

e.g., Survey

Present

e.g., Tables and graphs

Characterize

e.g., Sample mean =

X
n

INFERENTIAL STATISTICS

Estimation

e.g., Estimate the population mean weight using the sample mean weight
e.g., Test the claim that the population mean weight is 120 pounds

Business Statistics, A First Course (4e) 2008 Pearson Education

Hypothesis testing

Drawing conclusions about a population based on Cha p 1sample results.

COLLECTING DATA

Primary Sources
Data Collection

Secondary Sources
Data Compilation
Print or Electronic

Observation

Survey

Experimentation

TYPES OF DATA
Data

Categorical
Examples:

Numerical

Marital Status Political Party Eye Color (Defined categories)

Discrete
Examples:

Continuous
Examples:

Number of Children Defects per hour (Counted items)

Weight Voltage (Measured characteristics)

DATA MEASUREMENT SCALES

scale : Nominal data is called as categorical data. Numbers are used to label an item or category. Example : we could record martial status using the following category : Single, Married , Divorced, Widowed.

 Ordinal

Scale or rank data : are used to rank objects and attributes. Ordinal data appear to be nominal, but their values are in order. For example, at the completion of most colleges and university courses, students are asked to evaluate the course, Suppose in particular college the values are poor, fair good, very good and excellent.

 Interval

Scale : Interval data is quantitative data that can be measured on the numerical scale. However, the zero point does not mean the absence of something. Examples are temperature, time etc. Ratio Scale : Ratio is the quantitative data can be measured on a numerical scale. Here, the zero point does mean the absence of what is being measured. Example, height, weight, production cycle time & no. of trucks sold etc.