Basic Business Statistics
Chapter 1:Introduction and Data Collection
Assoc. Prof. Dr. Mustafa Yüzükırmızı
Learning Objectives
In this chapter you will learn
2
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
The basics of Minitab
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Why Learn Statistics?
Chap 1-3
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
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
What is statistics?
Chap 1-4
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A branch of mathematics taking and transforming
numbers into useful information for decision makers
Methods for processing & analyzing numbers
Methods for helping reduce the uncertainty inherent
in decision making
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Why Study Statistics?
Chap 1-5
Decision Makers Use Statistics To:
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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
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Types of Statistics
Chap 1-6
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
Statistics
The branch of mathematics that transforms data into useful
information for decision makers.
Descriptive Statistics
Collecting, summarizing, and
describing data
Inferential Statistics
Drawing conclusions and/or
making decisions concerning a
population based only on sample
data
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Descriptive Statistics
Chap 1-7

Collect data
 e.g.,
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Present data
 e.g.,
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Survey
Tables and graphs
Characterize data
 e.g.,
Sample mean =
X
i
n
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Inferential Statistics
Chap 1-8

Estimation

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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.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Basic Vocabulary of Statistics
Chap 1-9
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.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Basic Vocabulary of Statistics
Chap 110
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.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Why Collect Data?
Chap 111
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Examples Of Business Objectives:
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.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Collecting Data Correctly Is A Critical
Task
Chap 112
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Need to avoid data flawed by biases, ambiguities,
or other types of errors.
Results from flawed data will be suspect or in error.
Even the most sophisticated statistical methods are
not very useful when the data is flawed.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Sources of Data
Chap 113

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.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Sources of data fall into five categories
Chap 114

Data distributed by an organization or an individual
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The outcomes of a designed experiment
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The responses from a survey
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The results of conducting an observational study
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Data collected by ongoing business activities
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Examples Of Data Distributed By
Organizations or Individuals
Chap 115
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Financial data on a company provided by
investment services.
Industry or market data from market research firms
and trade associations.
Stock prices, weather conditions, and sports statistics
in daily newspapers.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Examples of Data From A Designed
Experiment
Chap 116
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Consumer testing of different versions of a product
to help determine which product should be pursued
further.
Material testing to determine which supplier’s
material should be used in a product.
Market testing on alternative product promotions to
determine which promotion to use more broadly.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Examples of Survey Data
Chap 117
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A survey asking people which laundry detergent
has the best stain-removing abilities
Political polls of registered voters during political
campaigns.
People being surveyed to determine their
satisfaction with a recent product or service
experience.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Examples of Data Collected From
Observational Studies
Chap 118
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Market researchers utilizing focus groups to elicit
unstructured responses to open-ended questions.
Measuring the time it takes for customers to be
served in a fast food establishment.
Measuring the volume of traffic through an
intersection to determine if some form of
advertising at the intersection is justified.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Examples of Data Collected From Ongoing
Business Activities
Chap 119
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A bank studies years of financial transactions to
help them identify patterns of fraud.
Economists utilize data on searches done via
Google to help forecast future economic conditions.
Marketing companies use tracking data to evaluate
the effectiveness of a web site.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Population vs. Sample
Chap 120
Population
Measures used to describe the
population are called parameters
Sample
Measures computed from
sample data are called statistics
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Types of Variables
Chap 121
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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.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Types of Data
Chap 122
Data
Categorical
Numerical
Examples:
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Marital Status
Political Party
Eye Color
(Defined categories)
Discrete
Examples:
Number of Children

Defects per hour
(Counted items)
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı

Continuous
Examples:
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Weight
Voltage
(Measured characteristics)
Levels of Measurement
Chap 123
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A nominal scale classifies data into distinct
categories in which no ranking is implied.
Categorical Variables
Categories
Personal Computer
Ownership
Yes / No
Type of Stocks Owned
Growth Value Other
Internet Provider
Microsoft Network / AOL/ Other
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Levels of Measurement
Chap 124

An ordinal scale classifies data into distinct categories
in which ranking is implied
Categorical Variable
Ordered Categories
Student class designation
Freshman, Sophomore, Junior,
Senior
Product satisfaction
Satisfied, Neutral, Unsatisfied
Faculty rank
Professor, Associate Professor,
Assistant Professor, Instructor
Standard & Poor’s bond ratings
AAA, AA, A, BBB, BB, B, CCC, CC,
C, DDD, DD, D
Student Grades
A, B, C, D, F
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Levels of Measurement
Chap 125
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An interval scale is an ordered scale in which the difference
between measurements is a meaningful quantity but the
measurements do not have a true zero point.
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A ratio scale is an ordered scale in which the difference
between the measurements is a meaningful quantity and the
measurements have a true zero point.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Interval and Ratio Scales
Chap 126
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Personal Computer Programs Used For Statistics
Chap 127
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Minitab
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Microsoft Excel
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A statistical package to perform statistical analysis
Designed to perform analysis as accurately as possible
A multi-functional data analysis tool
Can perform many functions but none as well as programs that are
dedicated to a single function.
Both Minitab and Excel use worksheets to store data
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Minitab & Microsoft Excel Terms
Chap 128
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When you use Minitab or 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 and inside a Project
in Minitab.
Both worksheets and projects can contain both data, summaries, and
charts.
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
You are using programs properly if you can
Chap 129
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Understand how to operate the program
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Understand the underlying statistical concepts
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Understand how to organize and present information
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Know how to review results for errors
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Make secure and clearly named backups of your work
Basic Business Statistics, Assoc. Prof. Dr. Mustafa Yüzükırmızı
Summary Chart
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 and measurement levels
Discussed Minitab and Microsoft Excel terms