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Chapter 0

This chapter introduces statistics and its importance in business decision making. It discusses how modern data and analytics have increased the role of statistics. The chapter also presents the DCOVA framework for applying statistics and defines key statistical terms. Students are advised to follow the DCOVA process of defining problems, collecting data, organizing, visualizing, and analyzing data to draw conclusions.

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Lynn Yu
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16 views16 pages

Chapter 0

This chapter introduces statistics and its importance in business decision making. It discusses how modern data and analytics have increased the role of statistics. The chapter also presents the DCOVA framework for applying statistics and defines key statistical terms. Students are advised to follow the DCOVA process of defining problems, collecting data, organizing, visualizing, and analyzing data to draw conclusions.

Uploaded by

Lynn Yu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter 0

First Things First


Objectives
In this chapter you learn:
• Statistics is a way of thinking that can lead to better decisions making.
• Statistics requires analytics skills and is an important part of your business
education.
• Recent developments such as the use of business analytics and “big data” have
made knowing statistics even more critical.
• The DCOVA framework guides your application of statistics.
• The opportunity business analytics represent for business students.
In Today’s Business World You Need to
Think Differently About Statistics
• Modern-day information technology enables businesses to apply
statistics in new ways to solve business problems utilizing:
• Vast amounts of summarized, unsummarized, numerical, and non-numerical
data (facts about the world).
• Software to perform calculations.
Statistics are the Methods that Allow
People to Effectively Work with Data
• Business statistics provides a formal basis to:

• Summarize and visualize business data.

• Reach conclusions from business data.

• Make reliable predictions about business activities.

• Improve business processes.


To Apply Statistics You Should Follow A
Framework to Minimize Possible Errors
In this book we will use DCOVA
• Define the data you want to study to solve a problem or meet an
objective.
• Collect the data from appropriate sources.
• Organize the data collected by developing tables.
• Visualize the data collected by developing charts.
• Analyze the data collected to reach conclusions and present those
results.
DCOVA
• Trend & Scatter plot
DCOVA
• Pairwise scatter plot
Statistics is Developing so Businesses Can
Use the vast Amount of Data
The emerging field of Business Analytics combines methods from:
• Statistics (exploring & analyzing data).
• Information systems (collecting & processing data).
• Management science (optimization models).
• …
to support fact-based decision making.
The Growth of Data & Unstructured Data
is Changing the Way We Work with Data
• Big Data is data that is collected:
• In huge volumes.
• At very fast rates or velocities.
• Typically in near real time.
• In a variety of forms.
• Unstructured Data:
• Has little or no repeating internal structure.
• Usually requires preprocessing prior to analysis.
• Takes many forms (unstructured text, pictures, videos, audio tracks, etc).
Operational Definition of Some Terms
DCOVA
VARIABLE
A characteristic or property of an item or individual.

DATA
The set of values associated with one or more variables.

STATISTIC
A value that summarizes the data of a particular variable.
Operational Definition of Some Terms
DCOVA
 Descriptive Statistics
• The methods that primarily help summarize and present data.

 Inferential Statistics
• Methods that use data collected from a small group to reach conclusions
about a larger group.
Can Statistics Lie?
• Faulty or invalid statistics can be produced if:
• There is willful misuse or
• Any tasks in the DCOVA framework are applied incorrectly.

• Many statistical methods are valid only if the data being analyzed have
certain properties.

• For inferential methods you should always look for logical causality
(plausibly claim something directly causes something else).
How to Use This Book
• The Using Statistics scenario at the beginning and end of each chapter
provide:
• A real business situation that the chapter’s topics can help address.
• Context which is an important part of the learning process.
• Throughout each chapter you will find Excel, JMP, and Minitab
solutions to example problems.
• Numerous case studies are provided so you can:
• Apply what you have learned.
• Enhance your analytical & communication skills.
Software and Statistics
• Software is used in statistics to assist you in applying statistical
methods.

• This book covers the use of three software packages:


• JMP -- a dedicated statistical analysis package.
• Minitab -- a dedicated statistical analysis package.
• Microsoft Excel – Microsoft Office’s data analysis application.
• Python

• Any of these software packages can be used to learn and practice the
statistical methods in this book.
Basic Computing Skills You Need to Use
Chapter Software Guides
Skill or Operation Specifics
Identify and use standard Title bar, minimize/resize/close buttons, scroll bars,
window objects mouse pointer, menu bars or ribbons, dialog box,
window subdivisions such as areas, panes, or child
windows.

Identify and use Command button, list box, drop-down list, edit box,
common dialog box option button, check box, tabs (tabbed panels).
items

Mouse operations Click, called select in some list or menu contexts and
check or clear in some check box contexts; double-
click; right-click to make a shortcut menu appear; drag
and drad-and-drop.
Chapter Summary
In this chapter we have seen:
• Statistics is a way of thinking that can lead to better decision making.
• Statistics requires analytics skills and is an important part of your business
education.
• Recent developments such as the use of business analytics and “big data” have
made knowing statistics even more critical.
• The DCOVA framework guides your application of statistics.
• The opportunity business analytics represent for business students.

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