Statistics for Management

Ahmed A.(Msc)

DIRE DAWA UNIVERSITY

COLLEGE OF NATURAL AND COMPUTATIONAL SCIENCES
DEPARTMENT OF SATATISTICS

December 18, 2021

Outline

Introduction
Definition of Statistics
Applications, Uses and Limitations of Statistics
Basic Concepts
Classification of Statistics
Types of Data
Purposes and Topics
I Purpose of this Course: The aim of this course is to
introduce basic concepts of statistics and probability so that
one is able to understand and perform simple data analysis.
The emphasis will be on concepts and problem solving rather
than on theory.
I Topics: Descriptive methods, graphs, measures of central
tendency and spread, probability, random variables, mean and
variance, binomial and normal distributions, confidence
intervals, hypotheses testing, correlation and regression.
Introduction

What is statistics ?
Chapter 1 Introduction
Definition of Statistics
I “Statistics may be regarded (i) as the study of populations,
(ii) as the study of variation, (iii) as the study of methods of
the reduction of data.” Fisher [1950].
I “Statistics is the branch of the scientific method which deals
with the data obtained by counting or measuring the
properties of populations of natural phenomena.” Kendall
and Stuart [1963].
I “Statistics is concerned with the inferential process, in
particular with the planning and analysis of experiments or
surveys, and with the efficient summarizing of sets of data.”
Kruskal [1968].
I “Statistics may be defined as a science of collection,
presentation, analysis and interpretation of numerical data.”
Croxton and Cowden.
Cont...

Summarize the above definition of statistics in two sense

Statistics as Numerical Data (Plural Senses)
I in this sense statistics are defined as aggregates of numerically
expressed facts (figures) collected in a systematic manner for
a pre-determined purpose.

Statistics as a Subject (Field of Study) (Singular Sense)

I in this sense statistics is defined as the science of collecting,
organizing, analyzing, Presenting and interpreting numerical
data for understanding a phenomenon or making wise
decisions.
I Hence, statistics is a procedural process performing the five
major activities on numerical data.
Introduction...

I Why study statistics ?

Why Study Statistics?
The first reason is that numerical information is everywhere.
I How we determine if the conclusions reported are reasonable?
Was the sample large enough? How were the sampled units
selected?
I To be an educated consumer of this information, we need to
be able to read the charts and graphs and understand the
discussion of the numerical information.
I An understanding of the concepts of basic statistics will be a
big help.
Introduction...

Why Study Statistics?

A second reason for taking a statistics course is that statistical
techniques are used to make decisions that affect our daily lives.
That is, they affect our personal welfare. Here are a examples:
I Insurance companies use statistical analysis to set rates for
home, automobile, life, and health insurance.
Introduction...

Why Study Statistics?

A third reason for taking a statistics course is that the knowledge
of statistical methods will help you understand how decisions are
made and give you a better understanding of how they affect you.
In order to make an informed decision, you will need to be able to:
I Determine whether the existing information is adequate or
additional information is required.
I Gather additional information, if it is needed, in such a way
that it does not provide misleading results.
I Summarize the information in a useful and informative
manner.
I Analyze the available information.
I Draw conclusions and make inferences while assessing the risk
of an incorrect conclusion.
Applications, Uses and Limitations of Statistics
Applications
I Statistics is applied in almost all fields.
I It has become the scientific framework to analyze data for
education, agriculture, business and economics, industry and
health.

Example
I agricultural problem: Is new grain seed or fertilizer more
productive?
I medical problem: What is the right amount of dosage of
drug to treatment?
I political science: How accurate are the gallups and opinion
polls?
I economics: What will be the unemployment rate next year?
I Marketing data suppliers such as ACNielsen purchase
point-of-sale scanner data from grocery stores process the data
Cont...
Uses
I Presents facts in a summarized and precise form
I Simplifies complex data (data reduction)
I Facilitates comparisons
I Helps in estimating unknown population characteristics
I Helps in studying the relationship between two or more
variables
I Helps in prediction and forecasting future values and
formulating policies

Generally statistics provides methods for

I Design: Planning and carrying out research studies.
I Description: Summarizing and exploring data.
I Inference: Making predictions and generalizing about
phenomena represented by the data.
Cont...

Limitation
I Statistics deals with only aggregate of facts and not with
individual data items
I Statistics deals with only with quantitative data (information)
I Statistical data are true only on average (approximately)
I Statistics can be easily misused and therefore should be used
by experts
Basic Concepts
I Population versus Sample
I The population includes all objects of interest.
I Sample is only a portion of the population.
I In other words, a population is the totality of all subjects,
measurements or individuals possessing certain common
characteristics that are being studied.
I Sample is a representative subset (subgroup) of a population
selected by using valid statistical procedures (sampling
techniques)

EXample 1
I An insurance company has insured 30,000 cars over the last
six years. The company would like to know the number of
cars involved in one or more accidents over this period. The
manager selected 500 cars from the files and made a record of
cars that were involved in one or more car accidents.
I What is the population
I What is the sample
Basic Concepts

Example 2
I A given factory produce 200 light bulbs in one day. 50 light
bulbs taken from current production line can be used to make
inference about qualities of light bulbs produced in future.
Basic Concepts

I Parameter versus statistic

I Parameter is numerical measurements obtained from a
population
I denoted by Greek letters (µ, σ)
I statistic is numerical measures obtained from a sample
I Census and Sampling
I Census: Is a statistical investigation that covers each and every
unit in the population.
I Sampling: the method of selecting a sample form population
or sampling is a statistical procedure for studying units of the
sample that come from the population.
Basic Concepts

Advantage of Sampling
I saves time, labor and money
I Good quality of data
I Greater accuracy or precision in results
Basic Concepts

I Variable is a characteristics that can assume different values.

I data are a real value of the variable.
Example

Variables Data
Brand of Pc TOSHIBA,hp,Dell
life of an automobile battery 42 months
NO. children in the family 3
Amount of income $20,145
Classification of Statistics
Descriptive Statistics
I Descriptive statistics deals with collection of data, its
presentation in various forms, such as tables, graphs and
diagrams and findings averages and other measures which
would describe the data.
I Descriptive statistics refers only to the actual data. That is,
the data at hand.
I Descriptive Statistics is basically a kind of Statistics which is
used to describe the features of the data that gathered by the
researcher.

Example
I According to EEA Ethiopian economy is based on subsistence
agriculture that accounts for more than eighty percent (80 %)
of the population
Cont...
Inferential Statistics
I This type of statistics is concerned with drawing statistically
valid conclusions about the characteristics of the population
(large group) based on information obtained from a sample
(small group).

Example
I From the Surveys of 100 civil service workers in Dire Dawa
town, 45 are satisfied in their job. Depend on this the
researcher found that from all civil service workers in Dire
Dawa town 45% are satisfied in their job.
I A random sample of 1,260 marketing graduates from four-year
schools showed their mean starting salary was $42,694. We
therefore estimate the mean starting salary for all marketing
graduates of four-year institutions to be $42,694.
Classification of Variables

Variables/Data classified as Quantitative and Qualitative.

I Qualitative Data: are data which are non-numeric in nature
and can’t be measured. A qualitative data is a data that
cannot be described numerically.
Example
I gender, religious affiliation, type of automobile owned, state of
birth, and eye color
I Quantitative Data: are are data that can be expressed
numerically or are data that are numeric in nature.
Example
I The balance in your checking account, the ages of company
CEOs, the life of an automobile battery (such as 42 months),
and the number of children in a family.
Classification of Variablesa

Quantitative data can be further classified as Discrete or

Continuous.
I Discrete Variable: can assume only certain values, and there
are usually "gaps" between the values.
I Typically, discrete variables result from counting.

Examples:
I the number of bedrooms in a house (1, 2, 3, 4, etc.)
I the number automobile sold
I the number of students in each section of a statistics
Classification of Variables

I Continuous Variable: can assume any value within a specific

range.
I Typically, continuous variables result from measuring.

Example
I price of automobile
I air pressure in a tire
I the weight of a shipment of tomatoes
I the duration of flights from DD to AA
Classification of Variables
I NB: The nature of data we obtain depends on the nature of
the study and the population on the characteristics in interest.
Due to this reason, we have different types of data under
different basis of classification.

A. Classifications of Data by Sources

I Primary Data
I Secondary Data

B. Classification of Data by the Role of Time

I Cross-section data is a set of observations taken at one
point in time.
I Time series data is a set of observations collected for a
sequence of times, usually at equal interval which may be on
weekly, monthly, quarterly, yearly, etc.
Types of Data
C. Classification od Data by Scale of Measurement
I Nominal:Classified into categories in which no order or
ranking can be imposed on the data.
I e.g types of domestic electric customers (residential
customers, commercial customers, industrial customers, and
government customers)
I Ordinal:Classified in to categories that can be ranked.
I e.g Guests staying at a given hotel were asked to rate the
quality of their accommodations as being excellent, above
average, average, below average, or poor
Classification of Variables

C. Classification od Data by Scale of Measurement

I Interval:In interval data there is no meaningful zero (i.e. zero
does not indicate absence of the characteristics)
I e.g Temperature
I Ratio:are data that can be ranked, have a meaningful
differences and as well as meaningful quotients (ratios).
I e.g Income, consumption, wages, units of production, weight,
changes in stock prices, distance between branch offices, and
height....
Classification of Variables
Subdivision of Variables
Group Discussion

What is the level of measure-

ment for each of the following
variables?
1. Distance students travel
to class.
2. A classification of
students by state of
birth.
3. A ranking of students by
freshman, junior, and
senior.
4. Number of hours
students study per week.
Time For Questions