Chapter 1
Introduction and Data Collection
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-1

In this chapter, you will learn:
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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
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-2

Decision Makers Use Statistics To:
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Present and describe business data and information properly
Draw conclusions about large populations, using information collected from samples
Make reliable forecasts about a business activity
Improve business processes
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-3

 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
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-4

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Collect data
 ex. Survey
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Present data
 ex. Tables and graphs
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Characterize data
 ex. Sample mean =

X i n
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-5

 Estimation
 ex. Estimate the population mean weight using the sample mean weight
 Hypothesis testing
 ex. Test the claim that the population mean weight is
120 pounds
Drawing conclusions and/or making decisions concerning a population based on sample results.
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-6

VARIABLE
A variable is a characteristic of an item or individual.
DATA
Data are the different values associated with a variable.
OPERATIONAL DEFINITIONS
Variable values are meaningless unless their variables have operational definitions, universally accepted meanings that are clear to all associated with an analysis.
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-7

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.
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-8

Population Sample
Measures used to describe the population are called parameters
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Measures computed from sample data are called statistics
Chap 1-9

 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 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.
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-10

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Primary Sources: The data collector is the one using the data for analysis
 Data from a political survey
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Data collected from an experiment
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Observed data
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Secondary Sources: The person performing data analysis is not the data collector
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Analyzing census data
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Examining data from print journals or data published on the internet.
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-11

 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.
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-12

Data
Categorical Numerical
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Examples:
Marital Status
Political Party
Eye Color
(Defined categories)
Discrete
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Examples:
Number of Children
Defects per hour
(Counted items)
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Continuous
Examples:
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
Weight
Voltage
(Measured characteristics)
Chap 1-13

 A nominal scale classifies data into distinct categories in which no ranking is implied.
Categorical Variables Categories
Personal Computer
Ownership
Type of Stocks Owned
Internet Provider
Yes / No
Growth Value Other
Microsoft Network / AOL
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-14

 An ordinal scale classifies data into distinct categories in which ranking is implied
Categorical Variable Ordered Categories
Student class designation
Product satisfaction
Freshman, Sophomore, Junior,
Senior
Satisfied, Neutral, Unsatisfied
Faculty rank
Standard & Poor’s bond ratings
Student Grades
Professor, Associate Professor,
Assistant Professor, Instructor
AAA, AA, A, BBB, BB, B, CCC, CC,
C, DDD, DD, D
A, B, C, D, F
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-15

 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.
 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.
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-16

Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-17

Subject Name Height Income
1 Mary
2 John
3 Jill
62
72
64
10,350
30,500
35,600
4 Donna 59 20,700
5 Sam 73 15,300
6 Bill 70 52,800
7 Mario 71 19,400
8 Carol 73 12,500
9 Betty 70 30,200
10 Linda 68 22,700
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Gender Eye color
Female
Male
Female
Blue
Brown
Green
Female
Male
Male
Male
Brown
Blue
Black
Blue
Female
Female
Female
Brown
Brown
Brown
Chap 1-18

Height
Category Frequency
>54 to

60 1
>60 to

66
>66 to

72
2
5
>72 to

78 2
Income
Category Frequency

20K 4
>20K to

50K 5
> 50K 1
Female
Male
Gender
Category Frequency
6
4
Eye Color
Category Frequency
Black 1
Blue
Brown
Green
3
5
1
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-19

 Categorical data is by nature always grouped
 Classes for categorical data are usually single valued
 Numerical Data can be gathered as grouped or converted after gathering.
 Numerical data is usually grouped for graphical presentation
 Classes for numerical data are usually a range of values
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-20

In this chapter, we have
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Reviewed why a manager needs to know statistics
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Introduced key definitions:
 Population vs. Sample
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Primary vs. Secondary data types
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Categorical vs. Numerical data
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Examined descriptive vs. inferential statistics
 Reviewed data types and measurement levels
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc.
Chap 1-21