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Business Statistics

This document provides an overview of key concepts in business statistics including data, data sets, variables, populations, samples, descriptive statistics, and statistical inference. It discusses how statistics are used in various business fields like accounting, economics, marketing, and production. Examples are provided to illustrate concepts like organizing data sets, quantitative vs qualitative data, descriptive statistics for a sample of auto repair part costs, and defining populations and samples.

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676 views26 pages

Business Statistics

This document provides an overview of key concepts in business statistics including data, data sets, variables, populations, samples, descriptive statistics, and statistical inference. It discusses how statistics are used in various business fields like accounting, economics, marketing, and production. Examples are provided to illustrate concepts like organizing data sets, quantitative vs qualitative data, descriptive statistics for a sample of auto repair part costs, and defining populations and samples.

Uploaded by

rain1892002
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Business Statistics I

Chapter I: Data and Statistics


Statistical Analysis in
Business and Economics
• Accounting
Public accounting firms use statistical
sampling procedures when conducting
audits for their clients.

■ Economics
Economists use statistical information
in making forecasts about the future of
the economy or some aspect of it.
Statistical Analysis in
Business and Economics
■ Marketing
Electronic point-of-sale scanners at
retail checkout counters are used to
collect data for a variety of marketing
research applications.

■ Production
A variety of statistical quality
control charts are used to monitor
the output of a production process.
Applications in
Business and Economics
 Finance
Financial advisors use price-earnings ratios and
dividend yields to guide their investment
recommendations.
• Statistics is the science of turning data into
information by collecting, analyzing, and interpreting
the data.

• Data are numbers or qualities recorded from an event


of interest such as a baseball game or a day of stock
trading.

• The collection of data for a particular study is called


the data set. The data set is our starting point when
conducting statistical analysis.
How is a data set organized?
• In order for us to use a data set, it must be
properly organized.

• Elements – the objects that are being observed.


If you are collecting data on Roger Clemens for
each inning in which he pitches, then the
elements for your study are:

• Clemens in inning 1, Clemens in inning 2,…


• A variable is a characteristic of interest
pertaining to the elements.

• For example, the following are variables


that can be measured for the elements
Clemens inning 1, Clemens inning 2, … :

number of pitches thrown, hits allowed,


walks allowed, earned runs allowed, ratio
of fastballs to breaking balls
• For each element, a measurement is taken for
each variable.

• The set of measurements collected for an


element (over each variable) is called an
observation.

• The total number of data values in a data set


is equal to the number of elements times the
number of variables in the data set.

• Seeing a data set will help you understand


what all of these words mean.
Pitches Hits allowed Earned
thrown Runs
allowed
Clemens, 12 0 0
inning 1
Clemens, 14 1 0
inning 2
Clemens, 15 1 0
inning 3
Clemens, 13 1 0
inning 4
Clemens, 17 2 1
inning 5
Data, Data Sets,
Elements, Variables, and Observations
Observatio Variable
Elemen n s
t Stock Annual Earn/
Names
Company Exchange Sales($M) Share($)

Dataram NQ 73.10 0.86


EnergySouth N 74.00 1.67
Keystone N 365.70 0.86
LandCare NQ 111.40 0.33
Psychemedics N 17.60 0.13

Data Set
Types of Data
• Data can be qualitative or quantitative.

• The statistical analysis that is appropriate


depends on whether the data for the
variable are qualitative or quantitative.

• In general, there are more alternatives for


statistical analysis when the data are
quantitative.
Quantitative Data
• Quantitative data indicate how many or how
much of something.

• Discrete if measuring how many. Continuous if


measuring how much.

• Quantitative data are always numeric.

• Ordinary arithmetic operations are meaningful


for such data.
Qualitative data
• Labels or names are used to identify an attribute of
each element.

• Can also be called categorical data, as it varies by


category.

• Integers can be used to represent the categories.


Used as such, integers don’t represent any form of
measurement (as in the case of quantitative data).

• Ordinary arithmetic operations are not meaningful


for qualitative data, as it is used to categorize things
rather than to measure magnitudes.
Integers used to represent qualitative data:

Example:

• A data set might tell us about the quality


of eye color by recording a 1 each time a
person has blue eyes and a 0 each time
they do not. In such a case, 0 and 1 are
used as categories, rather than as
measures, to keep track of a quality.
Another data distinction
• Cross-sectional data are collected at the same time.
They can be qualitative or quantitative.

• Example: Data detailing the number of building permits


issues in June 2007 in each Alabama County.

• Time Series data are collected over several time


periods. They also can be qualitative or quantitative.

• Example: Data detailing the number of building permits in


Montgomery County, AL in each of the last 36 months.
From where does data come?

Data is obtained from existing sources, such


as corporations and government agencies.

Alternatively, it can be collected from scratch


through surveys and experimental studies.
Descriptive Statistics
Descriptive statistics are the tabular, graphical, and numerical methods used to summarize and present data.
•

Descriptive statistics are often used in newspapers such as USA Today. They include bar graphs, line
• graphs, statistical tables, average values, median values.
• For example, many news stories report
median home price in a community. This
is a descriptive statistic. It describes
(helps us understand) the housing market
in a particular town or city.
Example: Hudson Auto Repair

The manager of Hudson Auto


would like to have a better
understanding of the cost
of parts used in the engine
tune-ups performed in the
shop. She examines 50
customer invoices for tune-ups. The costs of
parts,
rounded to the nearest dollar, are listed on the
next
slide.
Example: Hudson Auto Repair

■ Sample of Parts Cost ($) for 50 Tune-


ups
91 78 93 57 75 52 99 80 97 62
71 69 72 89 66 75 79 75 72 76
104 74 62 68 97 105 77 65 80 109
85 97 88 68 83 68 71 69 67 74
62 82 98 101 79 105 79 69 62 73
Tabular Summary:
Frequency and Percent Frequency
Parts Parts Percent
Cost ($) Frequency Frequency
50-59 2 4
60-69 13 26
(2/50)10
70-79 16 32 0
80-89 7 14
90-99 7 14
100-109 5 10
50 100
Graphical Summary: Histogram
Tune-up Parts Cost
18
16
14
Frequency

12
10
8
6
4
2
Parts
Cost ($)
50−59 60−69 70−79 80−89 90−99 100-110
Numerical Descriptive Statistics
 The most common numerical descriptive statistic
is the average (or mean).
 Hudson’s average cost of parts, based on the 50
tune-ups studied, is $79 (found by summing the
50 cost values and then dividing by 50).
Statistical Inference
• Population- the set of all elements of interest in a study.

• Sample- a subset of the population.

• In many studies, the population is comprised of a large


number of elements (people, companies, products).

• It is costly to observe variable values for every element.

• Therefore, statistical inference is often used. In statistical


inference, a sample of elements are studied to infer things
about the overall population.

• Performed correctly, statistical inference can produce the


same basic information (as studying the entire population)
at a fraction of the cost.
• Example: We are studying the 2006 economic
performance for developed economies. To do so,
we examine a sample comprised of 10 developed
economies.

• What is the population for this study? What is the


sample for this study?

• Example: We wish to determine the profitability of


U.S. hospitals. Therefore, we obtain financial
reports for 200 hospitals in various states.

• What is the population for this study? What is the


sample for this study?
• Census- the process of collecting data for
the entire population of the study. The
U.S. Census is a census because it
collects data on all (accounted for) U.S.
residents.

• Survey- the process of collecting data for


a sample of the study. Exit polls in
elections are surveys because they collect
data for only a subset or sample of all
voters.

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