Chapter 1

Introduction to
Business Analytics
University of Economics
Ho Chi Minh City

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Outline
• Business Analytics
• Basic Statistical Concepts
• Data Measurement

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 Business Analytics
• A survey of 1465 workers by Hotjobs reports
that 55% of workers believe that the quality of
their work is perceived the same when they
work remotely as when they are physically in
the office.
• A Deloitte Retail “Green” survey of 1080
adults revealed that 54% agreed that plastic,
non-compostable shopping bags should be
banned.
• The Experience’s Life After College survey of
320 recent college graduates showed that
58% moved back home after college. Thirty-
two percent then remained at home for
more than a year.
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 Basic Statistical Concepts
• Business analytics is a science dealing with the collection, analysis, interpretation,
and presentation of numerical data. (The use of statistics to analyze data)
• Population: is a collection of persons, objects, or items of interest.
• Sample: is a portion of the whole and, if properly taken, is representative of the
whole population
• Census: When researchers gather data from the whole population for a given
measurement of interest, they call it a census.
Population

Samples

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Basic Statistical Concepts
• Two types of statistics: descriptive statistics and inferential statistics
• Descriptive statistics: If a business analyst is using data gathered on a group to
describe or reach conclusions about that same group, the statistics are called
descriptive statistics.
• Inferential statistics: If a researcher gathers data from a sample and uses the
statistics generated to reach conclusions about the population from which the sample
was taken, the statistics are inferential statistics.
Descriptive statistics
Sample
Describe or reach conclusions
Population

Describe or
Inferential reach
statistics conclusions

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Basic Statistical Concepts
• Parameter: is a descriptive measure of the population. Parameters
are usually denoted by Greek letters.
Examples of parameters are population mean ( μ), population
variance (σ2 ), and population standard deviation (σ).
• Statistic: is a descriptive measure of a sample. Statistics are
usually denoted by Roman letters.
Examples of statistics are sample mean (𝑥), sample variance (s2 ),
and sample standard deviation (s).

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 Basic Statistical Concepts
Process of Inferential Statistics to Calculate 𝑥
Estimate a Population Mean (μ) to estimate μ

Population Sample
1 μ 𝑥
(parameter) (statistic)

Select a
random
sample
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Data Measurement
• Numerous numerical data are not the same. For example,
numbers represent dollar costs of items produced, geographical
locations of retail outlets, weights of shipments, and rankings of
subordinates at yearly reviews.
• Four common levels of data measurement:
1. Nominal
2. Ordinal
3. Interval
4. Ratio

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Data Measurement
• Nominal Level: is the lowest level of data measurement
• Numbers representing nominal level data can be used only to classify or
categorize.
• Example:
Which of the following employment classifications best describes your area of work?
• 1. Educator
• 2. Construction worker
• 3. Manufacturing worker
• 4. Lawyer
• 5. Doctor
• 6. Other

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 Data Measurement
• Ordinal Level: is higher than the
nominal level.
• In addition to the nominal level
capabilities, ordinal-level
measurement can be used to rank or
order objects.
• Example:
QS World University Rankings

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 Data Measurement
• Some questionnaire Likert-type scales are considered by many researchers to be ordinal in level.
The following is an example of one such scale:
This course is: ----- ------ ------ ------ ------
not helpful 1 somewhat helpful 2 moderately helpful 3 very helpful 4 extremely helpful 5

When this survey question is coded for the

computer, only the numbers 1 through 5 will
remain, not the adjectives. Virtually everyone
would agree that a 5 is higher than a 4 on this
scale and that ranking responses is possible.
However, most respondents would not
consider the differences between not helpful,
somewhat helpful, moderately helpful, very
helpful, and extremely helpful to be equal.
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Data Measurement
• Because nominal and ordinal data are often
derived from imprecise measurements such as
demographic questions, the categorization of
people or objects, or the ranking of items, nominal
and ordinal data are nonmetric data and are
sometimes referred to as qualitative data.

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 Data Measurement
• Interval Level: is the next to the highest level of data
• In addition to the ordinal level capabilities, in interval
level data the distances between consecutive numbers
have meaning and the data are always numerical. In
addition, with interval-level data, the zero point is a
matter of convention or convenience and not a natural
or fixed zero point. Zero is just another point on the
scale and does not mean the absence of the
phenomenon.
• Example:
Temperature numbers: the temperatures can be ranked,
and the amounts of heat between consecutive readings,
such as 20, 21, and 22, are the same.
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 Data Measurement
• Ratio Level: is the highest level of data measurement
• Ratio data have the same properties as interval data, but ratio data
have an absolute zero, and the ratio of two numbers is meaningful.
The notion of absolute zero means that zero is fixed, and the zero
value in the data represents the absence of the characteristic being
studied.
• Example:
Height, weight, time, volume

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Data Measurement
• Because interval- and ratio-level data are usually
gathered by precise instruments often used in
production and engineering processes, in national
standardized testing, or in standardized accounting
procedures, they are called metric data and are
sometimes referred to as quantitative data.

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Data Measurement
• Comparison of the Four Levels of Data

Ratio

Interval
Parametric statistics
Ordinal

Nominal
Nonparametric statistics

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