SCST 121

STATISTICS FOR BUSINESS

First Term

2023/2024

Dr. Nagy Morsy

REFERENCE

• Textbook
James T. McClave, P. George Benson, Terry Sincich.
(2018). Statistics for Business and Economics.
Pearson, 13th Edition.
 RESOURCES
• Course notes: These give the examinable lecture
materials. Non-examinable materials which will be
beneficial for you to know.

• Blackboard: All course materials will be available here

e.g. notes, lecture slides. Additionally there are discussion
board facilities and course announcements.
 ASSESSMENT ACTIVITIES
• Class participation and discussion (through term): 10%.
• Exam 1 (in 6th week): 25%.
• Exam 2 (in 10th week): 25%.
• Final exam (in 16th week): 40%.

CREDIT HOURS
• 3 hours.

Dr. Jumanah Ahmed Darwish

COURSE CONT ENT S
1: Statistics, Data, and Statistical Thinking.
2: Methods for Describing Sets of Data.
3: Probability and Modeling.
4: Categorical and Quantitative Data.
5: Distribution Types.
6: Survey and Sampling Techniques.
7: Inferences.
8: Hypotheses Testing and Confidence Intervals.
9: Correlation and Regression Analysis.
 CHAPTER 1:

Statistics, Data, and

Statistical Thinking
CHAPTER1: STATISTICS, DATA, AND
STATISTICAL THINKING.
PAGE 1 (IN THE TEXT BOOK)
Outlines:
1. The Science of Statistics
2. Types of Statistical
3. Fundamental Elements of Statistics
5. Types of Data
6. Collecting Data: Sampling and Related Issues
7. Business Analytics: Critical Thinking with Statistics
1.1 THE SCIENCE OF STATISTICS

What does statistics mean to you?

STATISTICS
Statistics is the science of data.
It involves collecting, classifying, summarizing,
organizing, analyzing, and interpreting
numerical and categorical information.
 1.2 TYPES OF STATISTICAL
APPLICATIONS IN BUSINESS
 Statistics involves two different processes

Drawing conclusions (making

Describing sets of data estimates, decisions, predictions,
etc)
 Branches (areas/types) of Statistics

Descriptive Inferential
statistic statistic
utilizes numerical and graphical utilizes sample data to make
methods to explore data. estimates, decisions, predictions,
i.e., to look for patterns in a data or other generalizations about a
set, to summarize the information larger set of data.
revealed in a data set, and to
present the information in a
convenient form.
For example: For example:
• the average age of the student is 14 • the relationship between smoking and
years. lung cancer.
• the median household income for • probability.
people aged 25-34 is $35.888.
Example of descriptive statistics:

The figure describes the variety of categories of the boxes

of Girl Scout cookies sold.
EXERCISE:
IN EACH OF THESE STATEMENTS, TELL WHETHER
DESCRIPTIVE OR INFERENTIAL STATISTICS HAVE
BEEN USED.
a- By 2040 at least 3.5 billion people will run short of water
Inferential
b. In a sample of 100 on-the-job fatalities 90% of the victims were
men
Descriptive
c. Expenditures for the cable industry were $5.66 billionin 1996
Descriptive

d. The median household income for people aged

25–34 is $35,888

Descriptive
e. Allergy therapy makes bees go away

Inferential
f. Drinking decaffeinated coffee can raise cholesterol
levels by 7%
Inferential
g. The national average annual medicine expenditure
per person is $1052
Descriptive

h. Experts say that mortgage rates may soon hit bottom

Inferential
I. The United States government reports the population of the United States was
179,323,000 in 1960; 203,302,000 in 1970; 226,542,000 in 1980; 248,709,000 in 1990, and
265,000,000 in 2000.

Descriptive

m. According to the Bureau of Labor Statistics, the average hourly earnings of

production workers was $17.90 for April 2008.

Descriptive
1.3 FUNDAMENTAL
ELEMENTS OF
STATISTICS
Experimental unit:
An experimental unit, is also called observational
unit, which is an object (e.g., person, thing,
transaction, or event) upon which we collect data.
Population:
A population is a set (or collection) of all units (usually
people, objects, transactions, or events) that we are
interested in studying.

For example:
(1) All employed workers in the United States. Sets
(2) All registered voters in California. (groups)
of people.
(3) Everyone who has purchased a particular brand of cellular telephone.
(4) All the cars produced last year by a particular assembly line. Sets of
(5) The entire stock of spare parts at United Airlines’ maintenance facility. objects.
(6)All sales made at the drive-through window of a McDonald’s Set of
restaurant during a given year. transactions

(7) The set of all accidents occurring on a particular stretch of interstate during Set of
a holiday period. events
In studying a population, we focus on one or more
characteristics or properties of the experimental
units in the population called variables.

Variable:
A variable is a characteristic or property of an individual
experimental unit.
Measurement:
Measurement is the process we use to assign numbers to variables
of individual population units.
For example:
(1) Measure the preference for a food product by asking
a consumer to rate the product’s taste on a scale from 1 to 10.

(2) Measure workforce age by simply asking each worker, “How

old are you?”
Census: ‫التعداد‬
Measuring a variable for every experimental unit of a population.

Sample:
A sample is a subset (or portion/part) of the units of a population.

The reason of taking a sample:

Studying all units of Population would be prohibitively time
consuming and/or cost. A reasonable alternative would be to
select and study a subset of all units in the population.
Example:
Suppose a company is being
audited for invoice errors.
Instead of examining all
15,472 invoices produced by
the company during a given
year, an auditor may select
and examine a group of just
100 invoices.
Determine the population
and the sample.
Solution:
Population: 15472.
Sample: 100.
Example:
According to a report in the Washington Post, the average age of viewers of
television programs broadcast on CBS, NBC, and ABC is 54 years.
Suppose a rival network (e.g., FOX) executive hypothesizes that the average
age of FOX viewers is less than 54. To test her hypothesis, she samples 200
FOX viewers and determines the age of each.
Answer the following questions:
1. Describe the population.
2. Describe the sample.
3. Describe the variable of interest.

Solution:
1. The population: is the set of all FOX viewers.
2. The sample: 200 FOX viewers.
3. The variable: age (in years).
Example:
Cola wars is the popular term for the intense competition between Coca-
Cola and Pepsi displayed in their marketing campaigns. Their campaigns
have featured claims of consumer preference based on taste tests.
1,000 cola consumers are given a blind taste test (i.e., a taste test in which
the two brand names are disguised). Each consumer is asked to state a
preference for brand A or brand B.
Answer the following questions:
1. Describe the population.
2. Describe the sample.
3. Describe the variable of interest.

Solution:
1. The population: is the set of all Cola consumers.
2. The sample: 1000 cola consumers.
3. The variable: cola preference.
1.5 TYPES OF DATA
Data:
Data are obtained by measuring the values of
one or more variables on the units in the sample
(or population).

Data Set:
Data set is the Collection of data values.

Data value:
data value is each value in the data set.
For example:

Variable

Age Gender Nationality

20 male Saudi
Data 25 male Yemeni
set 30 female Egypt Data
23 male Jordanian
30 female Lebanese
Data
value
Types of data

Variables (Data)

Qualitative data Quantitative data

Quantitative data:
Quantitative data are measurements that are recorded on a
naturally occurring numerical scale.

Examples of quantitative data:

1.The temperature (in degrees Celsius) at which each unit in a sample of 20
pieces of heat-resistant plastic begins to melt.
2.The current unemployment rate (measured as a percentage) for each of the 50
states.
3. The scores of a sample of 150 MBA applicants on the GMAT, a standardized.
4.The number of female executives employed in each of a sample of 75
manufacturing companies.
Qualitative data:
Qualitative data are measurements that cannot be measured on a
natural numerical scale; they can only be classified into one of a
group of categories. It is also named categorical data.

Examples of qualitative data:

1.The political party affiliation (Democrat, Republican, or Independent) in a
sample of 50 CEOs.
2.The defective status (defective or not) of each of 100 computer chips
manufactured by Intel.
3.The size of a car (subcompact, compact, midsize, or full-size) rented by each
of a sample of 30 business travelers.
4.A taste tester’s ranking (best, worst, etc.) of four brands of barbecue sauce for
a panel of 10 testers.
Example:
Chemical and manufacturing plants sometimes discharge toxic-waste
materials such as DDT into nearby rivers and streams. These toxins can
adversely affect the plants and animals inhabiting the river and the
riverbank. The U.S. Army Corps of Engineers conducted a study of fish in
the Tennessee River (in Alabama) and its three tributary creeks: Flint Creek,
Limestone Creek, and Spring Creek. A total of 144 fish were captured.
Determine the type for each the following variable:
1. River where each fish was captured.
2. Species (channel catfish, largemouth bass, or smallmouth buffalo fish).
3. Length (centimeters).
4. Weight (grams).
5. DDT concentration (parts per million).

Solution:
Length, weight and DDT are (quantitative variables)
River and species are (qualitative variables).
Exercise:
Classify each variable as a qualitative or quantitative
data.
a. The highest wind speed of a hurricane. …………..
b. The weight of baggage on an airplane. ……………
c. The gender of the employee. ……………..
d. The number of pages in a Statistics book. …………..
e. The color of the cars for sale. …………….
f. Amount of income tax paid. …………….
g. Hair color. ……………..
EXERCISE:
CLASSIFY EACH VARIABLE AS QUALITATIVE OR
QUANTITATIVE.
a. Marital status of nurses in a hospital.
Qualitative
b. Time it takes to run a marathon.
Quantitative
c. Weights of lobsters in a tank in a restaurant.
Quantitative

d. Colors of automobiles in a shopping center parking lot.

Qualitative
e. Ounces of ice cream in a large milkshake.
Quantitative

f. Capacity of the NFL football stadiums. Quantitative

g. Ages of people living in a personal care home.
Quantitative
 Measurement Scales

Qualitative Quantitative

Nominal Ordinal Interval Ratio

 Measurement Scale of
Qualitative
Nominal Ordinal
level level
Classifies data into mutually Classifies data into categories can
exclusive, (non-overlapping) be ranked. However, precise
categories in which no order or differences between the
ranking can be imposed on ranks do not exist.
the data.
For example:
Grade of course (A,B,C),
Size(S,M,L)
For example: Rating scale (Poor, Good,
Eye color ,gender, Excellent)
political party, blood types. Ranking of tennis players.
 Measurement Scale of
Quantitative
Interval Ratio
level level
Ranks data and precise possesses all the
differences between units of characteristics of interval
measure do exist, however there measurement and there exists
is no meaningful zero a true zero.
True ratios exist when the
same variable is measured on
two different subjects.
For example:
Temperature, IQ tests. For example:
Height, Weight, Time,
Salary, Age.
EXERCISE:
ANSWER T HE FOLLOWING:
1. Blood Type, an example of which type of data?
Qualitative Ordinal
Continuous Discrete

2. Number of stores represents a

Qualitative variable ordinal variable
Quantitative variable nominal variable

3. If you classified the fruit in a basket as apple, orange and banana,

this would be an example of which level of measurement?
Ordinal Ratio
Nominal Interval
4. Which of the following represents ordinal level of
measurement?
Rating scale IQ score
Age Marital status

5. Which one of the following variables is Qualitative?

Amount of fat in a piece of cheese Salary of college
professors
Favorite TV program Age of a person
EXERCISE:
CLASSIFY EACH AS NOMINAL-LEVEL, ORDINAL-LEVEL,
INT ERVAL LEVEL OR RAT IO LEVEL OF MEASUREMENT.

A- Pages in the 25 best-selling mystery novels. Ratio

b. Rankings of golfers in a tournament. Ordinal

c. Temperatures inside 10 pizza ovens.

Interval

d. Weights of selected cell phones Ratio

e. Salaries of the coaches in the NFL. Ratio

f. Times required to complete a chess game. Ratio

g. Ratings of textbooks (poor, fair, good, excellent).
Ordinal
h. Number of lamps delivered by battery chargers.

Ratio
i. Ages of children in a day care center. Ordinal
Ratio
j. Categories of magazines in a physician’s office
(sports, women’s, health, men’s, news).

Nominal
1.6 COLLECTING DATA
Once you decide on the type of data (quantitative or qualitative)
appropriate for the problem at hand, you’ll need to collect the data.

Generally, there are three different ways to obtain the data

(methods of selecting the data/ collecting data):
1. Data from a published source.
2. Data from a designed experiment.
3. Data from an observational study (e.g., a survey) .

1. Published source:
Sometimes, the data set of interest has already been collected for you and is
available in a published source, such as a book, journal, newspaper, or Web site.
For example:
You may want to examine and summarize the unemployment rates (i.e.,
percentages of eligible workers who are unemployed) in the 50 states of the United
States. You can find this data set (as well as numerous other data sets) at the library
in the Statistical Abstract of the United States, published annually by the U.S.
government.
2. Designed experiment:
A designed experiment is a data-collection method where the researcher exerts full
control over the characteristics of the experimental units (people, objects, or
events) in the study.

3. Observational study:
An observational study is a data-collection method where the experimental units
sampled are observed in their natural setting. No attempt is made to control the
characteristics of the experimental units sampled. (Examples include opinion polls
and surveys. )‫)استطالعات الرأي واستبيانات‬

Survey:
Survey is the most common type of observational study, where the researcher
samples a group of people, asks one or more questions, and records the responses.
 Sampling Techniques

Random Systematic Stratified Cluster

Sampling Sampling Sampling Sampling

Types of Random Samples

 1. RANDOM SAMPLING:

• A random sample is a sample in which all members of the

population have an equal chance of being selected.

• Are selected by using chance methods or random numbers.

Example: Select random sample of 15 subjects out of
85 subjects, each subject numbered from 1 to 85
2. SYST EMAT IC SAMPLING:
• Systematic sampling is a probability sampling method where researchers
select members of the population at a regular interval – for example, by
selecting every 15th person on a list of the population.

• Systematic sampling is a sample obtained by selecting

every 𝑘 member of the population where 𝑘 is a counting
number.

𝑘 = N/𝑛

where n is the sample size and N is the population size.

3. ST RAT IFIED SAMPLES )‫ عينات طبقية (بمواصفات خاصة‬:
• is a sample obtained by dividing the population into
subgroups or (strata) according to some characteristic
relevant to the study. Then subjects are selected from
each subgroup.

For example: A researcher select a random sample

from each gender to check their blood pressure.
 4. CLUST ER SAMPLES: )‫(عينات عنقودية‬

• CLUSTER SAMPLES is obtained by dividing the population into

sections or clusters and then selecting one or more clusters and
using all members in the cluster(s) as the members of the sample.

• The clusters should ideally each be mini-representations of the

population as a whole

For example: In a large school district, all teachers from two

building are interviewed to determine whether they believe the
students have less homework to do now than in previous years.
Randomly Population is
select 2 divided into 4
clusters clusters
SUMMARY OF SAMPLING
TECHNIQUES
Random Sampling: subjects are selected by random number
generator.

Systematic Sampling: select every 𝑘𝑡ℎ subject after the 1st

subject is selected from 1 to 𝑘.

Stratified Sampling: divide population into subgroup called

“strata”. Then subjects are selected randomly within each group.

Cluster Sampling: subjects are selected by using intact

subgroups randomly.
EXERCISE:
DETERMINE THE TYPE OF SAMPLING
TECHNIQUE:
1.Out of 10 hospitals in a municipality, a researcher
selects one and collects records for a 24-hour period on
the types of emergencies that were treated there.
Cluster Sampling

2.A researcher divides a group of students according to

gender, major field, and low, average and high grade.
Then, she randomly selects six students from each group
to answer questions in a survey.
Stratified Sampling
3.The subscribers to magazine are numbered. Then, a
sample of these people is selected using random
numbers.
Random Sampling

4.Every 10th bottle of Cola is selected, and the amount

of liquid in the bottle is measured. The purpose is to
see if the machines that fill the bottles are working
properly.
Systematic Sampling
5. A researcher wanted to know doctors opinion about
herbal therapy in Jeddah. For this study he choose
randomly 3 hospitals out of 20 hospitals in Jeddah,
and all doctors in the 3 hospital were asked.

Cluster Sampling

6. A researcher wanted to do a study about doctor’s

income in Jeddah. He divided hospitals into two
sectors (private and public) then he took a sample
from each sector.

Stratified Sampling
7.What type of sampling has been used if employees were
divided into Education classes and a sample was chosen from
each class to be surveyed?
Stratified Sampling

8.A researcher selected 10 devices from different labs to be

tested .
Random Sampling

9.Every seventh customer entering a shopping mall is asked to

select her or his favorite store.
Systematic Sampling
 Problems with Nonrandom Samples

Selection Nonresponse Measurement

bias bias error
‫التحيز‬

1. occurs when individuals or groups in a study differ systematically from the

population of interest leading to a systematic error in an association or
outcome.

2. Nonresponse bias occurs when survey participants are unwilling or unable

to respond to a survey question or an entire survey.

3. Measurement error causes the recorded values of Variables to be different

from the true ones.
1. SELECT ION BIAS:
Selection bias results when a subset of experimental units in the population
has little or no chance of being selected for the sample.

2. NONRESPONSE BIAS:
Nonresponse bias is a type of selection bias that results when the response
data differ from the potential data for the nonresponders.

3. MEASUREMENT ERROR:
Measurement error refers to inaccuracies in the values of the data collected. In surveys,
the error may be due to ambiguous or leading questions and the interviewer’s effect on the
respondent.
Example:
How do consumers feel about using the Internet for online
shopping? To find out, United Parcel Service (UPS)
commissioned a nationwide survey of 5,118 U.S. adults who
had conducted at least two online transactions in 2015. One
finding from the study is that 74% of online shoppers have used
a smartphone to do their shopping.
Identify the data-collection method.

Solution:
The data-collection method is a survey: 5118 adults completed the questionnaire
1.7 BUSINESS ANALYTICS:
CRITICAL THINKING WITH
STATISTICS
Business analytics:
Business analytics refers to methodologies (e.g., statistical
methods) that extract useful information from data in order to
make better business decisions.
‫تشير تحليالت األعمال إلى المنهجيات (مثل األساليب اإلحصائية) التي تستخرج معلومات مفيدة من البيانات من‬
.‫أجل اتخاذ قرارات عمل أفضل‬

Statistical thinking:
Statistical thinking involves applying rational thought and the
science of statistics to critically assess data and inferences.
Fundamental to the thought process is that variation exists in
populations and process data.

‫من‬. ‫تضمن التفكير اإلحصائي تطبيق الفكر العقالني وعلم اإلحصاء إلجراء تقييم نقدي للبيانات واالستدالالت‬
.‫األمور األساسية لعملية التفكير وجود اختالف في المجموعات السكانية وبيانات العملية‬
Flow diagram showing the role of statistics in business analytics.