BASIC

STATISTICS

Chapter 1 : Introduction to Statistics

By the end of this chapter, students shall be able to:
◼ Learn how businesses use statistics

◼ Learn the basic vocabulary of statistics

◼ Learn the types of data used in business

INTRODUCTION
WHY LEARN STATISTICS
 IN BUSINESS, STATISTICS HAS MANY
IMPORTANT USES
◼ To summarize business data

◼ To draw conclusions from business data

◼ To make reliable forecasts about business

activities

◼ To improve business processes

 WHAT IS STATISTICS?

Statistics is a group of methods used to collect,

analyze, present, and interpret data and to
make decisions.
 TYPES OF STATISTICS

Descriptive Statistics consists of methods for

organizing, displaying, and describing data
by using tables, graphs, and summary
measures.
DESCRIPTIVE STATISTICS
 DESCRIPTIVE STATISTICS

◼ Collect data
◼ e.g., Survey

◼ Present data
◼ e.g., Tables and graphs

◼ Characterize data
◼ e.g., The sample mean
 TYPE OF STATISTICS

Inferential Statistics consists of methods that

use sample results to help make decisions or
predictions about a population.
INFERENTIAL STATISTICS
 INFERENTIAL STATISTICS
◼ Estimation
◼ e.g., Estimate the population
mean weight using the sample
mean weight
◼ Hypothesis testing
◼ e.g., Test the claim that the
population mean weight is 120
pounds

Drawing conclusions about a large group of

individuals based on a smaller group.
 TERMS IN STATISTICS
VARIABLES
Variables are characteristics of an item or individual and are what you analyze when you
use a statistical method.

DATA
Data are the different values associated with a variable.

POPULATION
A population consists of all the items or individuals about which you want to draw a
conclusion. The population is the “large group.”

SAMPLE
A sample is the portion of a population selected for analysis. The sample is the “small
group.”

PARAMETER
A parameter is a numerical measure that describes a characteristic of a population.

STATISTIC
A statistic is a numerical measure that describes a characteristic of a sample.
 POPULATION VS. SAMPLE
A population consists of all elements –
individuals, items, or objects – whose
characteristics are being studied. The
population that is being studied is also called
the target population.

A portion of the population selected for

study is referred to as a sample.
 POPULATION VS. SAMPLE

Population
Sample
 EXAMPLE
1. Explain whether each of the following constitutes a population or a
sample
a. Pounds of bass caught by all participants in a bass fishing derby
b. Credit card debts of 100 families selected from a city
c. Number of home runs hit by all Major League baseball players in the
2009 season
d. Number of parole violations by all 2147 parolees in a city
e. Amount spent on prescription drugs by 200 senior citizens in a large
city
2. Explain whether each of the following constitutes a population or a
sample
a. Number of personal fouls committed by all NBA players during the
2008–2009 season
b. Yield of potatoes per acre for 10 pieces of land
c. Weekly salaries of all employees of a company
d. Cattle owned by 100 farmers in Iowa
e. Number of computers sold during the past week at all computer
stores in Los Angeles
EXAMPLE
EXERCISE
EXERCISE
 EXERCISE
1. Determine whether the following statement is a
population or a sample:
a. The heights of 100 secondary students in Malaysia.
b. The number of books sold by all bookstores in Melaka.
c. The monthly income for Year 2005.
d. The prices of all houses sold by a developer.
e. The income tax collected from 50 companies in
Malaysia.
f. The time taken by a sample of 85 university students in
an examination.
g. The weights of 14 policemen in a country.
 TYPES OF VARIABLES

Qualitative variables also known as categorical variables

have values that can only be placed into categories, such
as “yes” and “no.”

A variable that can be measured numerically is

called a quantitative variable or numerical variables.
A variable whose values are countable is called a
discrete variable. A variable that can assume any
numerical value over a certain interval or intervals is
called a continuous variable.
 QUALITATIVE VARIABLE
The following are the statements the qualitative variables:
a) The colors of cars.
b) The gender.
c) The races.
d) The categories for a contest.
e) The types of foods provided in a buffet.
f) The citizenship of workers in a multinational factory.
g) Opinions of people.
 QUANTITATIVE VARIABLE
The following are the statements for discrete variables:
a) The number of cars sold per month by a car sales
executive.
b) The number of students attending the Statistics class.
c) The number of burgers sold per day in McDonald.
d) The number of books read by Shaun per year.
e) The number of heads occurring when a coin is tossed 3
times.
f) Number of people visiting a bank on any day.
g) Number of cars in a parking lot.
 QUANTITATIVE VARIABLE
The following are the statements for continuous variables:
a) The amounts of milk that cows produce.
b) The heights of children in Sunshine Kindergarten.
c) The weights of IT students.
d) The temperature in a frozen room in a restaurant.
e) The prices of books in a book store.
f) Yield of potatoes (in pounds) per acre.
SUMMARY OF THE TYPES OF VARIABLES
Variable

Quantitative Qualitative or
categorical (e.g.,
make of a computer,
hair color, gender)
Discrete (e.g., Continuous
number of (e.g., length,
houses, cars, age, height,
accidents) weight, time)
 EXERCISE
1. Indicate which of the following variables are quantitative and
which are qualitative:
a. Number of persons in a family
b. Colors of cars
c. Marital status of people
d. Time to commute from home to work
e. Number of errors in a person’s credit report
2. Indicate which of the following variables are quantitative and
which are qualitative:
a. Number of typographical errors in newspapers
b. Monthly TV cable bills
c. Spring break locations favored by college students
d. Number of cars owned by families
e. Lottery revenues of states
3. Classify the quantitative variables in 1 and 2 as discrete or
continuous.
 QUIZ
Data are collected, summarized, and analyzed, and a
decision is made based on instinct. This is a typical use of
statistics.
❑ True
❑ False

Ans: False
 QUIZ
Data from a collection of samples may be used to draw
conclusions about an entire population from which the sample
data are drawn.
❑ True
❑ False

Ans : True
 QUIZ
Celsius and Fahrenheit temperature scales are examples of
interval levels of measurement.
❑True
❑ False

Ans: True
 QUIZ
The number of students on a college campus is a continuous
variable.
❑True
❑ False

Ans: False
Explanation : Even though it is a relatively large number, the
number of students on campus is discrete
 QUIZ
Qualitative variables are restricted to exactly two responses,
such as “Yes” or “No” and “Male” or “Female”.
❑True
❑ False

Ans: False
 QUIZ
Which of the following exhibits the correct relationship
between variables and values?
❑ Red; price of an automobile.
❑ Red; $23,000.
❑ Color of an automobile; price of an automobile.
❑ Color of an automobile; $23,000.

Ans: Color of an automobile; $23,000

 QUIZ
What method is used to sample a population so that it is
representative of the population?
❑ Only the first half of a population is selected.
❑ Samples are chosen at random from the population.
❑ All but the observations that have the lowest and highest
values are selected.
❑ Every other element in a population is chosen.

Ans: Samples are chosen at random from the population.

 QUIZ
If you have a digital scale in your home that only reads in
integers, is your weight a discrete variable?
❑ It depends on your weight.
❑ Yes because the scale reports integers
❑ No because weight is still a continuous variable regardless
of the ability to measure it.
❑ It depends on the accuracy of the scale.

Ans: No because weight is still a continuous variable regardless

of the ability to measure it
 QUIZ
A question on a product registration card asks, “How much
money do you plan to spend on DVD movie purchases during
the next 6 months?” What type of variable and level of
measurement does your response represent?
❑ Continuous variable measured on an interval scale
❑ Continuous variable measured on a ratio scale
❑ Discrete variable measured on an ordinal scale
❑ Discrete variable measured on a nominal scale

Ans: Continuous variable measured on a ratio scale.