Business Management, 13e CHAPTER 14 Data Analysis and Decision Making 14.1 14.2 14.3 14.4 Mathematics and Management Basic Math and Measurement Systems Understanding and Using Basic Statistics Using Data in Decision Making ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 2 14.1 Mathematics and Management GOALS ● Describe ways that mathematics is used by managers to improve decision making. ● Identify several common and specialized mathematical applications used by business managers. CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 3 Mathematics Skills for Managers ● Math for decision making ● Data-based decisions – use information facts, and measures, usually in numerical form, as the primary basis for choosing among alternatives ● Inductive and deductive reasoning ● Statistics ● Communicating findings ● Raw data ● Processed data (Information) CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 4 Checkpoint ● Why should managers use data to aid them in decision making? CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 5 Checkpoint ● Why should managers use data to aid them in decision making? ● Managers gather and analyze information to keep decisions objective and as free from bias as possible. CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 6 Business Applications of Mathematics ● Developing Math Skills ● Electronic database programs and spreadsheets have become the primary tools for analyzing data ● Math Applications in Business ● Accounting and Finance ● Production and Operations ● Marketing ● Human Resources CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Common Business Activities that Require Math Skills ACTIVITY DESCRIPTION Calculate Determine the quantity or value of something Compare Determine how two or more values vary from each other Plan Use data to set numerical goals or standards Analyze Review data to identify relationships, patterns, and explanations Project Use past and current information to estimate future performance ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 8 Checkpoint ● What are five common activities managers complete that require mathematics skills? CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 9 Checkpoint ● What are five common activities managers complete that require mathematics skills? ● Calculate ● Compare ● Plan ● Analyze ● Project CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 10 14.2 Basic Math and Measurement Systems GOALS ● Demonstrate understanding of basic mathematical operations. ● Recognize common units of U.S. and metric measurement. CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 11 Basic Mathematic Operations ● Adding and subtracting ● Multiplying and dividing ● Fractions, ratios, decimals, and percentages CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 12 Checkpoint ● What are the equations for addition, subtraction, multiplication, and division? CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 13 Checkpoint ● What are the equations for addition, subtraction, multiplication, and division? ● Addend + Addend = Sum ● Minuend – Subtrahend = Difference ● Multiplicand x Multiplier = Product ● Dividend / Divisor = Quotiuent CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 14 Measurement Systems in Business ● Traditional U.S. measures ● Different from most other countries ● Developed from the traditional English system ● Metric measures ● Based on the decimal system, meaning that all measures are in common units of ten CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 15 Checkpoint ● What is the preferred system of weights and measures for United States trade and commerce? CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 16 Checkpoint ● What is the preferred system of weights and measures for United States trade and commerce? ● The metric system CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 17 14.3 Understanding and Using Basic Statistics GOALS ● Explain why statistics is important to managers and identify two types of statistics. ● Recognize important types of statistical information. CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 18 Understanding Numerical Information ● The importance of statistics ● Managers frequently use statistics to help them understand, interpret, communicate, and apply numerical information. ● By using statistics, managers can make decisions more quickly, with greater confidence, and with a higher probability that the best choice has been made. CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 19 Statistics Terms and Concepts ● Descriptive statistics ● Provide managerial summaries of data to help managers understand the current situation ● Inferential statistics ● Use the analysis of information to help managers make predictions about similar circumstances or about the future. CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 20 Checkpoint ● How are descriptive statistics different from inferential statistics? CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 21 Checkpoint ● How are descriptive statistics different from inferential statistics? ● Descriptive help explain the current situation ● Inferential help make predictions for similar circumstances CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 22 Common Descriptive Statistics ● Range ● Frequency distribution ● Central tendency ● Mean ● Median ● Mode CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 23 Common Inferential Statistics ● Population ● All people or objects ● Sample ● Probability ● Correlation ● A connection or relationship between two things being studied CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 24 Checkpoint ● Explain the relationship between a sample and a population? CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 25 Checkpoint ● Explain the relationship between a sample and a population? ● A sample is a smaller but representative part of the larger population being studied. CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 26 14.4 Using Data in Decision Making GOALS ● Describe how to identify and communicate the results of data analysis. ● Discuss how data should be used in effective decision making. CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 27 Communicating Results of Data Analysis ● Completing data analysis ● Focus on the problem or question ● Recognize the purpose of data analysis ● Summarize the information accurately ● Look for changes, differences, and unexpected results ● Search for patterns or relationships ● Summarizing results ● Written summaries ● Tables, charts, and graphs CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 28 © Cengage Learning 2013. Example of a Table CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 29 © Cengage Learning 2013. Example of a Chart CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 30 © Cengage Learning 2013. Example of a Graph CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 31 Checkpoint ● What should tables, charts, graphs be used when analyzing and communicating information? CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 32 Checkpoint ● What should tables, charts, graphs be used when analyzing and communicating information? ● Many people can more easily study and understand information when it is summarized and presented visually. CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 33 Making Data-Based Decisions ● Reading and interpreting information 1. Read the title carefully 2. Determine what is represented in the data set 3. Review the row and column headings of a table ● Answering questions and solving problems ● Data ● Representative ● Significant CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 34 Checkpoint ● What are the two important characteristics of data? CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved. Business Management, 13e 35 Checkpoint ● What are the two important characteristics of data? ● Representative – consistent with other similar data that could be collected ● Significant – meaningful and not happen due to chance CHAPTER 14 ©2013 Cengage Learning. All Rights Reserved.