Statistics for Management-I

By Yilma E. (MBA)
CHAPTER-ONE
Introduction to
Statistics
 Agendas
1. Definition or Meaning of Statistics
2. Basic Terminologies in Statistics
3. Major Classification of Statistics
4. Populations VS Samples
5. Classifications of Variables
6. Business Application of Statistics
 1.1 Meaning and Definition of Statistics
 The word statistics has two meanings.

1. Statistics refers to quantitative or numerical facts or data.

2. Statistics refers to the field or discipline of study (principles

and methods which have been developed for handling numerical
data).

 Statistics is defined as a branch of mathematics or science that deals with the

collection, analysis and interpretation of numerical information.
 The first meaning of statistics refers to numerical facts such as
averages, medians, mode, percent, and range that help us
understand a variety of business and economic situations.

 Example of numerical facts includes:

 Income of a family.
 Age of a student.
 Starting salary of a college graduate.
 The second meaning of statistics refers to the field or discipline of
study. In this sense of the word, statistics is defined as follows:

 Statistics is a group of methods used to collect, analyze, present,

and interpret data and to make decisions.

 Statistics is the science of conducting studies to collect, organizes,

summarize, analyze, and draw conclusions from data.
Furthermore, in a broader sense, statistics is defined
as the art and science of collecting, organizing,
analyzing, presenting, and interpreting data.

Hence, Statistics is the art and science of deciding:

 What are the appropriate data to collect

 How to collect the required data efficiently
 Finally, using the information answer questions
and make the decisions.
Like almost all fields of study, statistics has two aspects: (1)
Theoretical and (2) Applied.

 The Theoretical Statistics: It deals with the development,

derivation, and proof of statistical theorems, formulas, rules,
and laws.

 The Applied Statistics: It involves the applications of those

theorems, formulas, rules, and laws to solve the real-world
problems.
 1.2 Basic Terminologies in Statistics

 Data: A plural noun (the singular form is datum)

which means a set of known or given things, facts.

 Note that data can be numerical (e.g. age of

people) or non-numerical (e.g. gender of people).
 statistics: With a small letter, means the set of numerical
data or figures that have been collected systematically.

 Statistics: With a capital letter, means the set of methods

and theories that can be used to arrange, analyze and
interpret the data.
 Variable: A quantity that varies the opposite of a constant.

 Example: The number of mobile phones sold per day in a shop is

a variable, whereas the number of hours in a day is a constant.

 A capital letter, usually X or Y, will be used to represent a

variable.

 Income, Height, Weight, Sex, Age, etc are some examples of

variables.
 `
 Value: A specific amount that is possible for a
variable to be.

 Example: The number of mobile phones sold per day

could be 25 or 43 or 51.

 These are all possible values of the variable ‘number

of phones sold’.
 Observation: A value of a variable that has actually occurred,
i.e. been counted or measured.
 Example: If 38 phones are sold on a particular day that is an
observation of the variable ‘number of phones sold’.
 It is represented by the small letter used to represent the
variable; for instance ‘x’ represents a single observed value of
the variable ‘X’.
 In a set; x1 would represent the first observed value, x2 the
second and so on.
 Random: This refers to something that occurs in an unplanned
way. A random variable is a variable whose observed values
arise by a matter of chance.

 Example: The number of new accounts a bank opens during a

month is a variable that is random, whereas the number of days
in a month is a constant that is not random.

 Distribution: The observed values of a variable when they are

arranged in order of magnitude.
 Population: Generally this means the total number of persons
residing in a defined geographical area at a given time. In
Statistics a population is the complete set of things we want to
investigate.

 Population can be Finite (limited in its size) or Infinite

(unrestricted).

 Sample: A subset of the population, that is, a smaller number

of items picked from the population.
Statistical Design: It is a process that involves a
decision problem and choosing an approach to
solving the problem.

Frame: It is the list of all the population under

study. Strictly speaking, one cannot present frame
for infinite population.
1.3 Classifications of Statistics

Applied statistics can be divided into

two areas:
A. Descriptive Statistics
B. Inferential Statistics
 A. Descriptive Statistics
It consists of the collection, organization,
summarization, and presentation of data.

It also consists of different methods such as tables,

graphs, and summary measures.
Suppose we have information on the test scores of
students enrolled in a statistics class:

Data Set: The whole set of numbers that represents

the scores of students.

Element: The name of each student.

Observation: The score of each student.

 B. Inferential Statistics
It consists of methods that use sample results to help make
decisions or predictions about a population.

It also consists of generalizing from samples to populations,

performing estimations and hypothesis tests, determining
relationships among variables, and making predictions.

 In statistics, the collection of all elements of interest is called a

population, whereas the selection of a few elements from this
population is called a sample.
 Population vs Sample
 Population: It 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.
 Example:
 Number of students in Dire Dawa University.

 Gross sales of all companies in Dire Dawa City.

 Sample: The portion of the population selected for study is referred

to as a sample.
 Population VS Sample
 Representative Sample:
A sample that represents
the characteristics of the
population as closely as
possible is called a
representative sample.
 Random VS Nonrandom Sample
Random Sample Nonrandom Sample
 Each element of the  Each element of the
population has a population has no a
chance of being chance of being
included in the sample. included in the
 One way to select a sample.
random sample is by
lottery or draw system.
 With Replacement VS Without Replacement
With Replacement Without Replacement
 The first selection put back in  It occurs when the selected
the population before we select element is not replaced in the
the next element. population.

 The population contains the  In this case, the size of the

same number of items each population is reduced by one
time a selection is made. element.

 As a result, we may select the  Thus, we cannot select the same

same item more than once in item more than once in this type
such a sample. of sampling.
 Census, Survey and Sample Survey
A survey that includes every member of the population is
called a census.

The collection of information from the elements of a

population or a sample is called a survey.

The technique of collecting information from a portion of

the population is called a sample survey.
 Example
If we collect information on the 2014 incomes of all
families in Dire Dawa, it will be referred to as a
census.

If we collect information on the 2014 incomes of

only 50 families, it will be called a sample survey.
1.4 Classification of Variables

Variable

Qualitative
Quantitative or
Categorical

Discrete Continuous Eg. Opinion

(eg. Height, of people,
(eg. No of house,
Weight, Age,
cars, peoples, etc. Time, etc. Gender, etc.
Quantitative Variables can be further classified into two
groups: (1) Discrete Variables and (2) Continuous Variables.

Discrete Variables can be assigned values such as 0, 1, 2, 3

and are said to be countable.

Example: The number of children in a family, the number of

students in a classroom, and the number of calls received by the
bank operator each day.
Continuous Variables can assume an infinite number
of values between any two specific values.

They are obtained by measuring. They often include

fractions and decimals.

Example: Height, Weight, Age, Time, Temperature,

etc.
 Business Application of Statistics
 Accounting
 Finance
 Marketing
 Production
 Economics
End of the Chapter

Thank You for Your

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