Working With Sample Data: Exploration and Inference

Working With Sample Data

Working With Sample Data

Exploration and Inference

Priscilla Chaffe-Stengel

California State University, Fresno

Donald N. Stengel

California State University, Fresno

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Working With Sample Data: Exploration and Inference

Copyright © Business Expert Press, LLC, 2012.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopy, recording, or any other except for brief quotations, not to exceed 400 words, without the prior permission of the publisher.

First published in 2011 by

Business Expert Press, LLC

222 East 46th Street, New York, NY 10017

www.businessexpertpress.com

ISBN-13: 978-1-60649-213-0 (paperback)

ISBN-13: 978-1-60649-214-7 (e-book)

DOI 10.4128/9781606492147

A publication in the Business Expert Press Quantitative Approaches to Decision Making collection

Collection ISSN (print): Forthcoming

Collection ISSN (electronic): Forthcoming

Cover design by Jonathan Pennell

Interior design by Scribe Inc.

First edition: August 2011

Abstract

Managers and analysts routinely collect and examine key performance measures to better understand their operations and make good decisions. Being able to render the complexity of operations data into a coherent account of significant events requires an understanding of how to work well with raw data and to make appropriate inferences.

Although some statistical techniques for analyzing data and making inferences are sophisticated and require specialized expertise, there are methods that are understandable and applicable by anyone with basic algebra skills and the support of a spreadsheet package. By applying these fundamental methods themselves rather than turning over both the data and the responsibility for analysis and interpretation to an expert, managers will develop a richer understanding and potentially gain better control over their environment. This text is intended to describe these fundamental statistical techniques to managers, data analysts, and students.

Statistical analysis of sample data is enhanced by the use of computers. Spreadsheet software is well suited for the methods discussed in this text. Examples in the text detail for the reader how to apply Microsoft Excel.

Keywords

Statistics, sample data, sampling, data analysis, descriptive statistics, statistical inference, hypothesis testing

Contents

About the Authors

Chapter 1: Depicting Data in Telling Ways

Chapter 2: Summarizing Location, Scatter, and Relative Position

Chapter 3: Understanding the Normal Distribution and the t-Distribution

Chapter 4: Using Proof by Contradiction to Draw Conclusions

Chapter 5: Testing Two Population Means and Proportions

Chapter 6: Analysis of Variance From Two or More Populations

Chapter 7: Testing Proportions From Two or More Populations

Chapter 8: Analyzing Bivariate Data

Appendix: z-Table, t-Table, F Table, and Chi-Square Table

Announcing the Business Expert Press Digital Library

About the Authors

Priscilla Chaffe-Stengel

Priscilla Chaffe-Stengel is a Professor of Information Systems and Decision Sciences at California State University, Fresno. She received a PhD in Design and Evaluation of Educational Programs and an Educational Specialist Degree in Program Evaluation from Stanford University, as well as an MA in Mathematics from California State University, Fresno. Dr. Chaffe-Stengel has a wide range of experience teaching mathematics and statistics, ranging from junior high school to graduate-level courses.

Dr. Chaffe-Stengel has taught statistical analysis, quantitative analysis, and sampling at the university level. She coordinates the quantitative and statistical analysis courses in the Craig School of Business and teaches in both the MBA Program and Executive MBA Program. She has served the university and the school as assessment coordinator and as the Faculty Fellow in Institutional Research and Assessment. She has published articles in For the Learning of Mathematics, the Journal of Foodservice Business Research, the Journal of Modelling in Management, and the Journal of Cooperative Education and Internships. She has also created supplementary materials for several business statistics textbooks.

Donald N. Stengel

Donald N. Stengel is a Professor and Chair of the Department of Information Systems and Decision Sciences at California State University, Fresno. Previously he served as the Director of the MBA Program at California State University, Fresno. He received a PhD in Engineering-Economic Systems from Stanford University. Prior to joining the faculty at California State University, Fresno, Dr. Stengel worked for eight years as a management consultant developing planning models for agriculture and energy.

Dr. Stengel has taught managerial economics, business forecasting, statistics, and quantitative methods. He teaches in both the MBA Program and Executive MBA Program. He is a member of the National Association for Business Economics, the Institute for Operations Research and Management Science, and the American Statistical Association.

Chapter 1

Depicting Data in Telling Ways

Data flow from the pulse of business: your operations, your business, your market, your industry. Managers and analysts routinely collect and examine key performance measures to better understand their operations and make good decisions. Statistics is the study of principles and methods for exploring data and making correct conclusions.

Developing a full and articulated understanding of key performance measures often begins with a descriptive summary. Descriptive summaries can be developed graphically, which we address here, or numerically, which we develop in the next chapter.

Descriptive Narration

Graphic summaries provide a picture of key data that can be used to elicit important questions, fuel understanding, and facilitate communication. Important data tell stories worth listening to and worthy of retelling. Good graphics capture the detail in the data as well as the overview of their story. They arise in complex environments, so their summaries should depict their complexity. Good graphics present the actual data and show causality, multiple comparisons, multiple perspectives, the effects of the processes that lead to their creation, or the effects of subsequent changes made to those processes. They should visually reinforce the reason the data are of significance and integrate number, word, and illustration.

Complexity is difficult to display, for obvious reasons. Still, complexity can be thoughtfully captured in sequenced layers that allow the content to unfold, inviting interpretation and developing their meaning in the process. A rich and insightful discussion of graphic excellence can be found in any of the works by Edward Tufte (http://www.edwardtufte.com).

Data are generated either by counts or by measurements. Count data arise in settings where sampled elements are classified by a key attribute and assigned to categories, such as defective versus acceptable products, commodities whose prices rose as opposed to remained the same or even fell, or the number of sales made using credit rather than debit card, check, or cash. These are qualitative, or categorical, variables and their summaries are handled differently from quantitative variables. Quantitative variables capture data arising from measurements that include the dimensions of time, distance, length, volume, rates, percent, and monetary value. Some qualitative sample data can, under certain circumstances, be converted to rates or percents and can then be treated as quantitative sample data. Also, quantitative data can be assigned to intervals of measurement values that serve as categories and can be treated using methods appropriate to qualitative data.

Summarizing Qualitative Variables

Qualitative variables can answer the question: how many or