Business Statistics:

A First Course
Fifth Edition

Chapter 1

Introduction and Data Collection

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-1

 Introduction

Quantitative Research Methods (applied statistics for

business)
Nothing about complex econometrics
Course Principles
Students need to be shown the relevance of statistics
Students need ample practice in order to understand how
statistics is used in business
Basic tools to design the presentation, i.e. excel
Prerequisite
Microeconomics, Macroeconomics, Statistics, Probability
Statistics
 Reference Book

Business Statistics: A First Course (5th Edition)

David M. Levine (Author), Timothy C. Krehbiel (Author),
Mark L. Berenson (Author)

http://www.amazon.cn/Business-Statistics-A-First-
Course-Levine-David-
M/dp/0136065805/ref=sr_1_1?ie=UTF8&qid=13480
62877&sr=8-1
 Lecturer

Puyang Sun
B.Sc. Econometrics (University of Nottingham, UK)
Ph.D. Economics (University of Birmingham, UK)

Associate Professor in Economics, School of Economics

Nankai University, China

Guang Yang
Lecturer in Economics

Wei Jiang
Computer Teaching Assistant
Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-4
 Basic Information of the Course
Course Organization
Teaching (Section I; Section II; Computer Practice)
Student presentation
Course assessment
Tests (Choice questions)
Presentation
Exams
 Time
Teaching

Four Tests: multi-choice questions

Student presentation with PPT (20th Dec), 20 minutes

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-6

 Topics for analysis with applied statistics

Any topics related economic activities, including finance, trade,

FDI, pollution and growth
But the presentation and essays must involve statistical methods
to supports your hypothesis
Not necessary to use the methods taught in this module, while it
is free to use any statistical ideas.
It is encouraged to involve various graphs, tables and figures to
show your stories

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-7

 Learning Objectives

In this chapter you learn:

How Statistics is used in business

The sources of data used in business
The types of data used in business
The basics of Microsoft Excel

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-8

 Why Learn Statistics?

So you are able to make better sense of the

ubiquitous use of numbers:
Business memos

Business research

Technical reports

Technical journals

Newspaper articles

Magazine articles

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-9

 What is statistics?

A branch of mathematics taking and

transforming numbers into useful information for
decision makers or economic analysis

Methods for processing number & analyzing

numbers

Methods for helping reduce the uncertainty in

decision making

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-10

 Why Study Statistics?

Decision Makers Use Statistics To:

Present and describe business data and information properly

Draw conclusions about large groups of individuals or items,
using information collected from subsets of the individuals or
items.
Make reliable forecasts about a business activity
Improve business processes

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-11

 Types of Statistics

Statistics
The branch of mathematics that transforms data into
useful information for decision makers.

Descriptive Statistics Inferential Statistics

Collecting, summarizing, and Drawing conclusions and/or

describing data making decisions concerning a
population based only on sample
data

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-12

 Descriptive Statistics

Collect data
e.g., Survey

Present data
e.g., Tables and graphs

Characterize data
e.g., Sample mean =
X i

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-13

 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 subset of the large group.

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-14

 Basic Vocabulary of Statistics

VARIABLE
A variable is a characteristic of an item or individual.

DATA
Data are the different values associated with a variable.

OPERATIONAL DEFINITIONS
Data values are meaningless unless their variables have operational
definitions, universally accepted meanings that are clear to all associated
with an analysis.

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-15

 Basic Vocabulary of Statistics

POPULATION
A population consists of all the items or individuals about which
you want to draw a conclusion.

SAMPLE
A sample is the portion of a population selected for analysis.

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.

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-16

 Population vs. Sample

Population Sample

Measures used to describe the Measures computed from

population are called parameters sample data are called statistics

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-17

 Why Collect Data?
A marketing research analyst needs to assess the effectiveness of
a new television advertisement.

A pharmaceutical manufacturer needs to determine whether a

new drug is more effective than those currently in use.

An operations manager wants to monitor a manufacturing

process to find out whether the quality of the product being
manufactured is conforming to company standards.

An auditor wants to review the financial transactions of a

company in order to determine whether the company is in
compliance with generally accepted accounting principles.

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-18

 Sources of Data

Primary Sources: The data collector is the one using the data
for analysis
Data from a political survey
Data collected from an experiment
Observed data
Secondary Sources: The person performing data analysis is
not the data collector
Analyzing census data
Examining data from print journals or data published on the internet.

World bank data, IMF data, Union Nation data

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-19

 Sources of data fall into four
categories

Data distributed by an organization or an

individual

A designed experiment

A survey

An observational study

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-20

 Types of Variables

Categorical (qualitative) variables have values that

can only be placed into categories, such as yes and
no.

Numerical (quantitative) variables have values that

represent quantities.

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-21

 Types of Data

Data

Categorical Numerical

Examples:
Marital Status
Political Party Discrete Continuous
Eye Color
(Defined categories) Examples: Examples:
Number of Children Weight
Defects per hour Voltage
(Counted items) (Measured characteristics)

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-22

 Personal Computer Programs
Used For Statistics

Microsoft Excel
A multi-functional data analysis tool
Can perform many functions but none as well as
programs that are dedicated to a single function.

Business Statistics: A First

Course, 5e 2009 Prentice-
Hall, Inc. Chap 1-23
 Microsoft Excel Terms
When you use Microsoft Excel, you place the data you have
collected in worksheets.

The intersections of the columns and rows of worksheets form

boxes called cells.

If you want to refer to a group of cells that forms a contiguous

rectangular area, you can use a cell range.

Worksheets exist inside a workbook in Excel

Both worksheets and projects can contain both data, summaries,

and charts.

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-24

 You are using programs properly if
you can

Understand how to operate the program

Understand the underlying statistical concepts

Understand how to organize and present information

Know how to review results for errors

Make secure and clearly named backups of your work

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-25

 Chapter Summary
In this chapter, we have

Reviewed why a manager needs to know statistics

Introduced key definitions:
Population vs. Sample
Primary vs. Secondary data types
Categorical vs. Numerical data

Examined descriptive vs. inferential statistics

Reviewed data types

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-26

 Test Sample

The universe or "totality of items or things" under

consideration is called
a) a sample.
b) a population.
c) a parameter.
d) a statistic.

ANSWER: b
TYPE: MC DIFFICULTY: Easy

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-27

 Test Sample
Which of the following is not an element of descriptive statistical
problems?
a) An inference made about the population based on the sample.
b) The population or sample of interest.
c) Tables, graphs, or numerical summary tools.
d) Identification of patterns in the data.

ANSWER: a
TYPE: MC DIFFICULTY: Moderate
KEYWORDS: descriptive statistics

Business Statistics: A First Course, 5e 2009 Prentice-Hall, Inc. Chap 1-28