Debre Brehan University

College of Business & Economics

Department of Management

Statistics for Management-I

By Yilma E. (MBA)
CHAPTER-ONE
Introduction to
Statistics
 Agendas
1. Definition or Meaning of Statistics
2. Basic Terminologies in Statistics
3. Major Classification of Statistics
4. Populations Vs Samples
5. Classifications of Variables
6. Business Application of Statistics
 1.1 MEANING OF STATISTICS
 The word statistics has two meanings.

1. Statistics refers to quantitative or numerical facts or data.

2. Statistics refers to the field or discipline of study (principles and

methods which have been developed for handling numerical data).

 Statistics is defined as a branch of mathematics or science that

deals with the collection, analysis and interpretation of numerical
information.
 The first meaning of statistics refers to numerical facts such as
averages, medians, mode, percent, and range that help us
understand a variety of business and economic situations.

 Example of numerical facts includes:

 Income of a family.
 Age of a student.
 Starting salary of a college graduate .
 The second meaning of statistics refers to the field or discipline
of study. In this sense of the word, statistics is defined as follows:

 Statistics is a group of methods used to collect, analyze, present,

and interpret data and to make decisions.

 Statistics is the science of conducting studies to collect,

organizes, summarize, analyze, and draw conclusions from data.
Furthermore, in a broader sense, statistics is defined as the
art and science of collecting, organizing, analyzing,
presenting, and interpreting data.

Hence, Statistics is the art and science of deciding:

 What are the appropriate data to collect

 How to collect the required data efficiently

 Finally, using the information answer questions and

make the decisions.
Like almost all fields of study, statistics has two aspects: (1)
Theoretical and (2) Applied.

 The Theoretical Statistics: It deals with the development,

derivation, and proof of statistical theorems, formulas, rules, and
laws.

 The Applied Statistics: It involves the applications of those

theorems, formulas, rules, and laws to solve the real-world problems.
 1.2 Basic Terminologies in Statistics
 Data: A plural noun (the singular form is datum)
which means a set of known or given things, facts.

 Note that data can be numerical (e.g. age of

people) or non-numerical (e.g. gender of people).
 statistics: Without a capital letter, means the set of
numerical data or figures that have been collected
systematically.

 Statistics: With a capital letter, means the set of methods

and theories that can be used to arrange, analyze and
interpret the data.
 Variable: A quantity that varies the opposite of a constant.

 Example: The number of mobile phones sold per day in a shop is

a variable, whereas the number of hours in a day is a constant.

 A capital letter, usually X or Y, will be used to represent a variable.

 Income, height, weight, sex, age, etc are some examples of

variables.
 Value: A specific amount that is possible for a variable
to be.

 Example: The number of mobile phones sold per day

could be 25 or 43 or 51.

 These are all possible values of the variable ‘number of

phones sold’.
 Observation: A value of a variable that has actually occurred,
i.e. been counted or measured.
 Example: If 38 phones are sold on a particular day that is an
observation of the variable ‘number of phones sold’.
 It is represented by the small letter used to represent the
variable; for instance ‘x’ represents a single observed value of
the variable ‘X’.
 In a set; x1 would represent the first observed value, x2 the
second and so on.
 Random: This refers to something that occurs in an unplanned
way. A random variable is a variable whose observed values arise
by a matter of chance.

 Example: The number of new accounts a bank opens during a

month is a variable that is random, whereas the number of days in
a month is a constant that is not random.

 Distribution: The observed values of a variable when they are

arranged in order of magnitude.
 Population: Generally this means the total number of persons
residing in a defined geographical area at a given time. In Statistics
a population is the complete set of things we want to investigate.

Population can be Finite (limited in its size) or Infinite

(unrestricted).

 Sample: A subset of the population, that is, a smaller number of

items picked from the population.
Statistical Design: It is a process that involves a
decision problem and choosing an approach to
solving the problem.

Frame: It is the list of all the population under

study. Strictly speaking, one cannot present frame
for infinite population.
 1.3 Classifications of Statistics

Applied statistics can be divided into

two areas:
A. Descriptive Statistics

B. Inferential Statistics
 A. Descriptive Statistics
It consists of the collection, organization,
summarization, and presentation of data.

It also consists of different methods such as tables,

graphs, and summary measures.
Suppose we have information on the test scores of
students enrolled in a statistics class:

Data Set: The whole set of numbers that represents the

scores of students.

Element: The name of each student.


 B. Inferential Statistics
It consists of methods that use sample results to help make
decisions or predictions about a population.

It also consists of generalizing from samples to populations,

performing estimations and hypothesis tests, determining
relationships among variables, and making predictions.

 In statistics, the collection of all elements of interest is called a

population, whereas the selection of a few elements from this
population is called a sample.
 Population vs Sample
 Population: It consists of all elements individuals, items, or objects
whose characteristics are being studied.
 The population that is being studied is also called the target
population.
 Example:
 Number of students in Dire Dawa University.

 Gross sales of all companies in Dire Dawa City.

 Sample: The portion of the population selected for study is referred

to as a sample.
Population VS Sample
 Representative Sample:
A sample that represents
the characteristics of the
population as closely as
possible is called a
representative sample.
 Random VS Nonrandom Sample
Random Sample Nonrandom Sample
Each element of the Each element of the
population has a chance population has no a
of being included in the chance of being
sample. included in the sample.
One way to select a
random sample is by
lottery or draw.
 With Replacement VS Without Replacement
With Replacement Without Replacement
Each time we select an element It occurs when the selected
from the population, we put it element is not replaced in the
back in the population before we population.
select the next element.
In this case, each time we select
The population contains the an item, the size of the
same number of items each time population is reduced by one
a selection is made. element.

As a result, we may select the Thus, we cannot select the same
same item more than once in item more than once in this type
such a sample. of sampling.
 Census, Survey and Sample Survey
A survey that includes every member of the population is
called a census.

The collection of information from the elements of a

population or a sample is called a survey.

The technique of collecting information from a portion of

the population is called a sample survey.
Example:
If we collect information on the 2013 incomes of
all families in Dire Dawa, it will be referred to as a
census.

If we collect information on the 2013 incomes of

only 50 families, it will be called a sample survey.
 1.4 Classifications of Variables
Variable: Characteristic being studied. Examples; ages of
people; heights of children, educational level, etc.
Variables can be classified as qualitative or quantitative.

A. Qualitative Variable: Identifiable simply by noting its

presence. For example; the color of an object; sex of an
individual; etc.

B. Quantitative Variable: It consists numerical values. For

example; weight of coffee, height of individuals, volume
of sales, age, body temperature, etc.
NBB
Quantitative Variables are numerical and can be ordered or

ranked. Quantitative Variables can be further classified into two

groups: (1) Discrete Variables and (2) Continuous Variables.

Discrete Variables can be assigned values such as 0, 1, 2, 3

and are said to be countable.

Examples of discrete variables are the number of children in a

family, the number of students in a classroom, and the number of

calls received by the bank operator each day for a month.
Continuous Variables can assume an infinite number
of values between any two specific values.

They are obtained by measuring. They often include

fractions and decimals.

Example: Height/Length, Weight/Volume, Age,

Temperature, etc.
Accounting Business Application of Statistics

Finance e s s
s i n s
Marketing b u ly a
t h e n t
i l d e
Production
e t a pe n
i n d d e t
Economics
a d s i n e n
re s ti c n m
n t s a t i s i g
d e f st a s
s t u o n g
a r i o n ad i
De licat a re
a p p
End of the Chapter

Thank You for Your

Attention