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GLOBAL
EDITION
Business Statistics
A First Course
8E
David M. Levine
Kathryn A. Szabat
David F. Stephan
To our spouses and children,
Marilyn, Mary, Sharyn, and Mark
9
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Brief Contents
Preface 23
First Things First 31
1 Defining and Collecting Data 48
2 Organizing and Visualizing Variables 74
3 Numerical Descriptive Measures 160
4 Basic Probability 206
5 Discrete Probability Distributions 237
6 The Normal Distribution 291
7 Sampling Distributions 287
8 Confidence Interval Estimation 309
9 Fundamentals of Hypothesis Testing: One-Sample Tests 344
10 Two-Sample Tests and One-Way ANOVA 384
11 Chi-Square Tests 451
12 Simple Linear Regression 480
13 Multiple Regression 532
14 Business Analytics 568
15 Statistical Applications in Quality Management (online) 15-1
Appendices A–H 595
Self-Test Solutions and Answers to Selected Even-Numbered
Problems 645
Index 671
Credits 681
11
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Contents
Preface 23
1 Defining and Collecting
Data 48
First Things First 31
USING STATISTICS: Defining Moments 48
USING STATISTICS: “The Price of Admission” 31 1.1 Defining Variables 49
FTF.1 Think Differently About Statistics 32 Classifying Variables by Type 49
Statistics: A Way of Thinking 32 Measurement Scales 50
Statistics: An Important Part of Your Business Education 33 1.2 Collecting Data 51
FTF.2 Business Analytics: The Changing Face of Statistics 34 Populations and Samples 51
“Big Data” 34 Data Sources 52
FTF.3 Starting Point for Learning Statistics 35 1.3 Types of Sampling Methods 53
Statistic 35 Simple Random Sample 53
Can Statistics (pl., statistic) Lie? 36 Systematic Sample 54
FTF.4 Starting Point for Using Software 36 Stratified Sample 54
Using Software Properly 38 Cluster Sample 54
REFERENCES 39 1.4 Data Cleaning 56
KEY TERMS 39 Invalid Variable Values 56
Coding Errors 56
EXCEL GUIDE 40
Data Integration Errors 56
EG.1 Getting Started with Excel 40
Missing Values 57
EG.2 Entering Data 40
Algorithmic Cleaning of Extreme Numerical Values 57
EG.3 Open or Save a Workbook 40
1.5 Other Data Preprocessing Tasks 57
EG.4 Working with a Workbook 41
Data Formatting 57
EG.5 Print a Worksheet 41
Stacking and Unstacking Data 58
EG.6 Reviewing Worksheets 41
Recoding Variables 58
EG.7 If You use the Workbook Instructions 41
1.6 Types of Survey Errors 59
JMP GUIDE 42
Coverage Error 59
JG.1 Getting Started With JMP 42
Nonresponse Error 59
JG.2 Entering Data 43
Sampling Error 60
JG.3 Create New Project or Data Table 43
Measurement Error 60
JG.4 Open or Save Files 43
Ethical Issues About Surveys 60
JG.5 Print Data Tables or Report Windows 43
JG.6 Jmp Script Files 43 CONSIDER THIS: New Media Surveys/Old Survey Errors 61
MINITAB GUIDE 44 USING STATISTICS: Defining Moments, Revisited 62
MG.1 Getting Started with Minitab 44 SUMMARY 62
MG.2 Entering Data 44
REFERENCES 62
MG.3 Open or Save Files 44
KEY TERMS 63
MG.4 Insert or Copy Worksheets 44
MG.5 Print Worksheets 45 CHECKING YOUR UNDERSTANDING 63
13
14 CONTENTS
5.1 The Probability Distribution for a Discrete Variable 238 CHECKING YOUR UNDERSTANDING 280
Expected Value of a Discrete Variable 238 CHAPTER REVIEW PROBLEMS 280
Variance and Standard Deviation of a Discrete Variable 239 CASES FOR CHAPTER 6 282
5.2 Binomial Distribution 242 Managing Ashland MultiComm Services 282
Histograms for Discrete Variables 245 CardioGood Fitness 282
Summary Measures for the Binomial Distribution 246 More Descriptive Choices Follow-up 282
5.3 Poisson Distribution 249 Clear Mountain State Student Survey 282
Digital Case 282
USING STATISTICS: Events of Interest …,
Revisited 252 CHAPTER 6 EXCEL GUIDE 283
SUMMARY 252 EG6.2 The Normal Distribution 283
EG6.3 Evaluating Normality 283
REFERENCES 253
CHAPTER 6 JMP GUIDE 284
KEY EQUATIONS 253
JG6.2 The Normal Distribution 284
KEY TERMS 253
JG6.3 Evaluating Normality 284
CHECKING YOUR UNDERSTANDING 253
CHAPTER 6 MINITAB GUIDE 285
CHAPTER REVIEW PROBLEMS 253 MG6.2 The Normal Distribution 285
CASES FOR CHAPTER 5 256 MG6.3 Evaluating Normality 286
Managing Ashland MultiComm Services 256
Digital Case 256
CHAPTER 5 EXCEL GUIDE 257
7 Sampling Distributions 287
CHAPTER 7 MINITAB GUIDE 308 MG8.3 Confidence Interval Estimate for the Proportion 343
MG7.2 Sampling Distribution of the Mean 308 MG8.4 Determining Sample Size 343
USING STATISTICS: Getting Estimates at Ricknel Home USING STATISTICS: Significant Testing at Oxford
Centers 309 Cereals 344
8.1 Confidence Interval Estimate for the Mean 9.1 Fundamentals of Hypothesis Testing 345
(σ Known) 310 The Critical Value of the Test Statistic 346
Sampling Error 311 Regions of Rejection and Nonrejection 347
Can You Ever Know the Population Standard Deviation? 314 Risks in Decision Making Using Hypothesis Testing 347
8.2 Confidence Interval Estimate for the Mean Z Test for the Mean (s Known) 349
(σ Unknown) 315 Hypothesis Testing Using the Critical Value Approach 350
Student’s t Distribution 315 Hypothesis Testing Using the p-Value Approach 353
The Concept of Degrees of Freedom 316 A Connection Between Confidence Interval Estimation and
Hypothesis Testing 355
Properties of the t Distribution 316
Can You Ever Know the Population Standard Deviation? 356
The Confidence Interval Statement 318
9.2 t Test of Hypothesis for the Mean (σ Unknown) 357
8.3 Confidence Interval Estimate for the Proportion 323
Using the Critical Value Approach 358
8.4 Determining Sample Size 326
Using the p-Value Approach 359
Sample Size Determination for the Mean 326
Checking the Normality Assumption 360
Sample Size Determination for the Proportion 328
9.3 One-Tail Tests 363
8.5 Confidence Interval Estimation and Ethical Issues 331
Using the Critical Value Approach 363
USING STATISTICS: Getting Estimates at Ricknel Home Using the p-Value Approach 365
Centers, Revisited 331
9.4 Z Test of Hypothesis for the Proportion 367
SUMMARY 331 Using the Critical Value Approach 369
REFERENCES 332 Using the p-Value Approach 369
KEY EQUATIONS 332 9.5 Potential Hypothesis-Testing Pitfalls and Ethical
Issues 371
KEY TERMS 332
Important Planning Stage Questions 371
CHECKING YOUR UNDERSTANDING 333
Statistical Significance Versus Practical Significance 372
CHAPTER REVIEW PROBLEMS 333 Statistical Insignificance Versus Importance 372
CASES FOR CHAPTER 8 336 Reporting of Findings 372
Managing Ashland MultiComm Services 336 Ethical Issues 372
Digital Case 337
USING STATISTICS: Significant Testing …, Revisited 373
Sure Value Convenience Stores 337
SUMMARY 373
18 CONTENTS
REFERENCES 373 F Test for Differences Among More Than Two Means 416
KEY EQUATIONS 374 One-Way ANOVA F Test Assumptions 421
Levene Test for Homogeneity of Variance 422
KEY TERMS 374
Multiple Comparisons: The Tukey-Kramer Procedure 423
CHECKING YOUR UNDERSTANDING 374
USING STATISTICS I: Differing Means for Selling …,
CHAPTER REVIEW PROBLEMS 374
Revisited 428
CASES FOR CHAPTER 9 376
USING STATISTICS II: The Means to Find Differences at
Managing Ashland MultiComm Services 376
Arlingtons, Revisited 429
Digital Case 376
SUMMARY 429
Sure Value Convenience Stores 377
REFERENCES 430
CHAPTER 9 EXCEL GUIDE 378
KEY EQUATIONS 431
EG9.1 Fundamentals of Hypothesis Testing 378
EG9.2 t Test of Hypothesis for the Mean (s Unknown) 378 KEY TERMS 431
EG9.3 One-Tail Tests 379 CHECKING YOUR UNDERSTANDING 432
EG9.4 Z Test of Hypothesis for the Proportion 379 CHAPTER REVIEW PROBLEMS 432
CHAPTER 9 JMP GUIDE 380 CASES FOR CHAPTER 10 434
JG9.1 Fundamentals of Hypothesis Testing 380 Managing Ashland MultiComm Services 434
JG9.2 t Test of Hypothesis for the Mean (s Unknown) 380 Digital Case 435
JG9.3 One-Tail Tests 381 Sure Value Convenience Stores 435
JG9.4 Z Test of Hypothesis for the Proportion 381 CardioGood Fitness 436
CHAPTER 9 MINITAB GUIDE 381 More Descriptive Choices Follow-Up 436
MG9.1 Fundamentals of Hypothesis Testing 381 Clear Mountain State Student Survey 436
MG9.2 t Test of Hypothesis for the Mean (s Unknown) 382 CHAPTER 10 EXCEL GUIDE 437
MG9.3 One-Tail Tests 382 EG10.1 Comparing the Means of Two Independent
MG9.4 Z Test of Hypothesis for the Proportion 382 Populations 437
EG10.2 Comparing the Means of Two Related Populations 439
EG10.3 Comparing the Proportions of Two Independent
10 Two-Sample Tests Populations 440
and One-Way ANOVA 384 EG10.4 F Test for the Ratio of Two Variances 441
EG10.5 One-Way ANOVA 441
USING STATISTICS I: Differing Means for Selling Streaming CHAPTER 10 JMP GUIDE 444
Media Players at Arlingtons? 384 JG10.1 Comparing the Means of Two Independent Populations 444
10.1 Comparing the Means of Two Independent JG10.2 Comparing the Means of Two Related Populations 445
Populations 385 JG10.3 Comparing the Proportions of Two Independent
Pooled-Variance t Test for the Difference Between Two Populations 445
Means Assuming Equal Variances 385 JG10.4 F Test for the Ratio of Two Variances 446
Evaluating the Normality Assumption 388 JG10.5 One-Way ANOVA 446
Confidence Interval Estimate for the Difference Between CHAPTER 10 MINITAB GUIDE 447
Two Means 390 MG10.1 Comparing the Means of Two Independent Populations 447
Separate-Variance t Test for the Difference Between Two
MG10.2 Comparing the Means of Two Related Populations 447
Means, Assuming Unequal Variances 391
MG10.3 Comparing the Proportions of Two Independent
CONSIDER THIS: Do People Really Do This? 392 Populations 448
10.2 Comparing the Means of Two Related Populations 394 MG10.4 F Test for the Ratio of Two Variances 448
Paired t Test 395 MG10.5 One-Way ANOVA 449
Confidence Interval Estimate for the Mean Difference 400
10.3 Comparing the Proportions of Two Independent
Populations 402 11 Chi-Square Tests 451
Z Test for the Difference Between Two Proportions 402
Confidence Interval Estimate for the Difference Between
USING STATISTICS: Avoiding Guesswork About Resort
Two Proportions 406
Guests 451
10.4 F Test for the Ratio of Two Variances 409
11.1 Chi-Square Test for the Difference Between Two
USING STATISTICS II: The Means to Find Differences Proportions 452
at Arlingtons 413 11.2 Chi-Square Test for Differences Among
10.5 One-Way ANOVA 414 More Than Two Proportions 459
Analyzing Variation in One-Way ANOVA 414 11.3 Chi-Square Test of Independence 465
CONTENTS 19
USING STATISTICS: Avoiding Guesswork …, Revisited 471 Residual Plots to Detect Autocorrelation 500
SUMMARY 471 The Durbin-Watson Statistic 501
USING STATISTICS: The Multiple Effects of OmniPower USING STATISTICS: Back to Arlingtons for the Future 568
Bars 532 14.1 Business Analytics Categories 569
13.1 Developing a Multiple Regression Model 533 Inferential Statistics and Predictive Analytics 570
Interpreting the Regression Coefficients 534 Supervised and Unsupervised Methods 570
Predicting the Dependent Variable Y 536
CONSIDER THIS: What’s My Major If I Want to Be a Data
13.2 Evaluating Multiple Regression Models 538 Miner? 571
Coefficient of Multiple Determination, r 2 538 14.2 Descriptive Analytics 572
Adjusted r 2 539 Dashboards 572
F Test for the Significance of the Overall Multiple Regression
Data Dimensionality and Descriptive Analytics 573
Model 539
14.3 Predictive Analytics for Prediction 574
13.3 Multiple Regression Residual Analysis 542
14.4 Predictive Analytics for Classification 577
13.4 Inferences About the Population Regression
Coefficients 543 14.5 Predictive Analytics for Clustering 578
Tests of Hypothesis 544 14.6 Predictive Analytics for Association 581
Confidence Interval Estimation 545 Multidimensional Scaling (MDS) 582
13.5 Using Dummy Variables and Interaction Terms 547 14.7 Text Analytics 583
Interactions 549 14.8 Prescriptive Analytics 584
USING STATISTICS: The Multiple Effects …, Revisited 554 USING STATISTICS: Back to Arlingtons …, Revisited 585
SUMMARY 554 REFERENCES 585
REFERENCES 556 KEY EQUATIONS 586
KEY EQUATIONS 556 KEY TERMS 586
KEY TERMS 556 CHECKING YOUR UNDERSTANDING 586
CHECKING YOUR UNDERSTANDING 556 CHAPTER REVIEW PROBLEMS 586
CHAPTER REVIEW PROBLEMS 556 CHAPTER 14 SOFTWARE GUIDE 588
CASES FOR CHAPTER 13 559 Introduction 588
Managing Ashland MultiComm Services 559 SG14.2 Descriptive Analytics 588
Digital Case 559 SG14.3 Predictive Analytics for Prediction 591
SG14.4 Predictive Analytics for Classification 591
CHAPTER 13 EXCEL GUIDE 560
SG14.5 Predictive Analytics for Clustering 592
EG13.1 Developing a Multiple Regression Model 560
SG14.6 Predictive Analytics for Association 594
EG13.2 Evaluating Multiple Regression Models 561
EG13.3 Multiple Regression Residual Analysis 561
EG13.4 Inferences About the Population Regression
Coefficients 562
15 Statistical Applications
EG13.5 Using Dummy Variables and Interaction Terms 562 in Quality Management
CHAPTER 13 JMP GUIDE 562 (online) 15-1
JG13.1 Developing a Multiple Regression Model 562
JG13.2 Evaluating Multiple Regression Models 563 USING STATISTICS: Finding Quality at the
JG13.3 Multiple Regression Residual Analysis 563 Beachcomber 15-1
JG13.4 Inferences About the Population 564 15.1 The Theory of Control Charts 15-2
JG13.5 Using Dummy Variables And Interaction Terms 564 The Causes of Variation 15-2
CHAPTER 13 MINITAB GUIDE 565 15.2 Control Chart for the Proportion: The p Chart 15-4
MG13.1 Developing a Multiple Regression Model 565 15.3 The Red Bead Experiment: Understanding Process
MG13.2 Evaluating Multiple Regression Models 566 Variability 15-10
MG13.3 Multiple Regression Residual Analysis 566 15.4 Control Chart for an Area of Opportunity: The c
MG13.4 Inferences About the Population Regression Chart 15-12
Coefficients 566
15.5 Control Charts for the Range and the Mean 15-15
MG13.5 Using Dummy Variables and Interaction Terms
The R Chart 15-15
In Regression Models 566
The X Chart 15-18
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