BUSINESS STBUSINESS STATISTICSATISTICS

Chapter 1Chapter 1

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1.1 What is Business Statistics 1.1 What is Business Statistics (Page26)(Page26)

Business Statistics – is a collection of tools Business Statistics – is a collection of tools and techniques that are used to convert and techniques that are used to convert data into meaningful information in a data into meaningful information in a business environment.business environment.

Ex: stock prices, crime rates, government Ex: stock prices, crime rates, government budgets, number of production, budgets, number of production, unemployment rates, interest ratesunemployment rates, interest rates

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Descriptive StatisticsDescriptive Statistics – describes data – describes data using charts, graphs and numerical using charts, graphs and numerical measures.measures.

Example: Bar Charts, Histogram, Line Example: Bar Charts, Histogram, Line Graph, Pie Graph, Scatter Diagram, Graph, Pie Graph, Scatter Diagram, Tables showing numerical measuresTables showing numerical measures

Bar ChartBar Chart

HISTOGRAMHISTOGRAM

LINE GRAPHLINE GRAPH

Pie ChartPie Chart

SCATTER DIAGRAMSCATTER DIAGRAM

FREQUENCY FREQUENCY DISTRIBUTIONDISTRIBUTION

numerical measurenumerical measureDVD MoviesDVD Movies FrequencyFrequency Relative Relative

FrequencyFrequency

0 – 3.990 – 3.99 6060 0.3820.382

4 - 7.994 - 7.99 5050 0.3190.319

8 – 11.998 – 11.99 4747 0.2990.299

Inferential StatisticsInferential Statistics – draw inferences or – draw inferences or conclusions from a set of data which conclusions from a set of data which include estimation and hypothesis include estimation and hypothesis testing.testing.

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Statistical Inference ProceduresStatistical Inference Procedures – – procedures that allow a decision maker procedures that allow a decision maker to reach a conclusion about a set of data.to reach a conclusion about a set of data.

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Estimation.Estimation. Knowing about all the data in a Knowing about all the data in a large data set but it is impractical to work large data set but it is impractical to work with all the data, estimation is used to know with all the data, estimation is used to know what the larger data set looks like.what the larger data set looks like.

Example: TV RatingsExample: TV Ratings

(Page 29)(Page 29)Hypothesis Testing.Hypothesis Testing. A method of making A method of making

decisions using experiments.decisions using experiments.Example: Preference between Mc Donalds and Example: Preference between Mc Donalds and

Burger KingBurger King

1.2 Procedures for Collecting Data 1.2 Procedures for Collecting Data (Page 31)(Page 31)

Data Collection MethodsData Collection Methods

1.1. ExperimentExperiment – a process that produces a – a process that produces a single outcome whose result cannot be single outcome whose result cannot be predicted with certainty.predicted with certainty.

Experimental Design – a plan for Experimental Design – a plan for performing an experiment in which the performing an experiment in which the variable of interest is defined.variable of interest is defined.

22. . Telephone SurveysTelephone Surveys – inexpensive and – inexpensive and efficient data collection tool.efficient data collection tool.

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Closed-End Questions – questions that Closed-End Questions – questions that require the respondent to select from a short require the respondent to select from a short list of defined choices.list of defined choices.

Demographic Questions – questions relating Demographic Questions – questions relating to the respondents’ characteristics, to the respondents’ characteristics, backgrounds and attributes.backgrounds and attributes.

Major steps for a Telephone SurveyMajor steps for a Telephone Survey (Page 32)(Page 32)

1.1. Define the issueDefine the issue

2.2. Define the population of interestDefine the population of interest

3.3. Develop survey questionsDevelop survey questions

4.4. Pretest the surveyPretest the survey

5.5. Determine the sample size and sampling Determine the sample size and sampling methodmethod

6.6. Select sample and make callsSelect sample and make calls

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3. 3. Written Questionnaires and SurveysWritten Questionnaires and Surveys – – frequently used method to collect opinions frequently used method to collect opinions and factual data from people.and factual data from people.

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Open-end Questions – questions that allow Open-end Questions – questions that allow respondents the freedom to respond with any respondents the freedom to respond with any value, words, or statements of their own value, words, or statements of their own choosing.choosing.

Written survey StepsWritten survey Steps (Page 33)(Page 33)

1.1. Define the issueDefine the issue

2.2. Define the population of interestDefine the population of interest

3.3. Design the survey instrumentDesign the survey instrument

4.4. Pretest the surveyPretest the survey

5.5. Determine the sample size and sampling Determine the sample size and sampling methodmethod

6.6. Select sample and send surveysSelect sample and send surveys

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Potential ProblemsPotential Problems1.1. Leading QuestionsLeading Questions

2.2. Poorly Worded QuestionsPoorly Worded Questions

3.3. Inappropriate choice of VocabularyInappropriate choice of Vocabulary

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4. 4. Direct Observation and Personal InterviewDirect Observation and Personal Interview – – requires that the process from which the data requires that the process from which the data are being collected is physically observed.are being collected is physically observed.

Structured Interview – interviews in which Structured Interview – interviews in which the questions are scripted.the questions are scripted.

Unstructured Interview – interviews that Unstructured Interview – interviews that begin with one or more broadly stated begin with one or more broadly stated questions, with further questions being based questions, with further questions being based on the responses.on the responses.

Other Data collection MethodsOther Data collection Methods (Page 35-36)(Page 35-36)

Data collection methods that take advantage of Data collection methods that take advantage of new technologies.new technologies.

► Bar codesBar codes► Credit CardsCredit Cards► Physical MeasurementPhysical Measurement

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BiasBias – an effect which alters a statistical result – an effect which alters a statistical result by systematically distorting it.by systematically distorting it.

Data Collection IssuesData Collection Issues (Page 36-37)(Page 36-37)1.1. Interviewer Bias – interviewer can interject bias Interviewer Bias – interviewer can interject bias

by the way she asks questions, by the tone of her by the way she asks questions, by the tone of her voice or by the way she looked at the subject being voice or by the way she looked at the subject being interviewed.interviewed.

2.2. Non-responsive Bias – people refused to answer or Non-responsive Bias – people refused to answer or to be interviewed.to be interviewed.

3.3. Selection Bias – bias can be interjected through the Selection Bias – bias can be interjected through the way subjects are selected for data collection.way subjects are selected for data collection.

4.4. Observer Bias – people tend to view the same event Observer Bias – people tend to view the same event or item differently.or item differently.

5.5. Measurement Error – uses different measurement Measurement Error – uses different measurement tools.tools.

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Internal Validity – a characteristic of an experiment in Internal Validity – a characteristic of an experiment in which data are collected in such a way as to which data are collected in such a way as to eliminate the effects of variables within the eliminate the effects of variables within the experimental environment that are not of interest to experimental environment that are not of interest to the researcher.the researcher.

External Validity – a characteristic of an experiment External Validity – a characteristic of an experiment whose results can be generalized beyond the test whose results can be generalized beyond the test environment so that the outcomes can be replicated environment so that the outcomes can be replicated when the experiment is repeated.when the experiment is repeated.

(Page 30)(Page 30) Exercises: 1-1, 1-2, 1-3, 1-4, 1-6Exercises: 1-1, 1-2, 1-3, 1-4, 1-6

1-11-1 DescriptiveDescriptive1-21-2 Bar GraphBar Graph1-31-3 Spaces/gaps between barsSpaces/gaps between bars1-41-4 Use experiment Ex. Powder laundry soapUse experiment Ex. Powder laundry soap1-61-6 Decision maker needs to use statistical Decision maker needs to use statistical inference procedure if she wants to test inference procedure if she wants to test claims about products and services or want claims about products and services or want to make an estimateto make an estimate

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Exercises: 1-17, 1-19, 1-21, 1-22, 1-25Exercises: 1-17, 1-19, 1-21, 1-22, 1-25

1-171-17 Written survey or telephone surveyWritten survey or telephone survey

1-191-19 Experiment – process that generates dataExperiment – process that generates data

Experimental design – plan for performing Experimental design – plan for performing

an experimentan experiment

1-211-21 Not reliableNot reliable

1-221-22 a. Written surveysa. Written surveys

b. Direct observation or personal interviewb. Direct observation or personal interview

c. Telephone surveys c. Telephone surveys

1-251-25 Selection Bias/Non responsive BiasSelection Bias/Non responsive Bias