Dr.

Mahmoud Abouagwa
Assistant professor
[email protected];
[email protected]
 Basic Business Statistics

Chapter 1

Introduction to Statistics and Data

Collection
- Berenson, M.L., Levine, D.M., Szabat, K.A. and Stephan,
D.F. (2019). Basic Business Statistics, 14th ed. Boston.
Pearson. ISBN-13:9781292265032

- Douglas, L. A., Marchal, W. and Wathen, S.A. (2012). Basic

Statistics for Business and Economics, 18th ed. Pearson.
 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
 Statistics

 The science of collectiong, organizing, presenting,

analyzing, and interpreting data to assist in making
more effective decisions

 Statistical analysis – used to manipulate summarize,

and investigate data, so that useful decision-making
information results.

Basic Business Statistics, 10e © 2006 Prentice-Hall, Inc.. Chap 1-5

 Why study statistics?

1. Data are everywhere

2. Statistical techniques are used to make
many decisions that affect our lives
3. No matter what your career, you will make
professional decisions that involve data. An
understanding of statistical methods will help
you make these decisions efectively
 Basic Concepts of Statistics

Statistics is concerned with:

 Processing and analyzing data

 Collecting, presenting, and transforming
data to assist decision makers
 Applications of statistical
concepts in the business world
 Finance – correlation and regression, index
numbers, time series analysis
 Marketing – hypothesis testing, chi-square
tests, nonparametric statistics
 Personel – hypothesis testing, chi-square
tests, nonparametric tests
 Operating management – hypothesis testing,
estimation, analysis of variance, time series
analysis
 Key Definitions
 A population (universe) is the collection of all
members of a group
 A sample is a portion of the population
selected for analysis
 A parameter is a numerical measure that
describes a characteristic of a population
 A statistic is a numerical measure that
describes a characteristic of a sample
 Population vs. Sample

Population Sample

a b cd b c
ef gh i jk l m n gi n
o p q rs t u v w o r u
x y z y

Measures used to describe a Measures computed from

population are called sample data are called
parameters statistics
Population vs. Sample
 Sampling methods

Sampling methods can be:

 random (each member of the population has an equal

chance of being selected)

 Nonrandom: The actual process of sampling causes

sampling errors. For example, the sample may not be large
enough or representative of the population. Factors not
related to the sampling process cause non-sampling errors.
A defective counting device can cause a non-sampling error.
 Random sampling methods
 simple random sample (each sample of the same
size has an equal chance of being selected)

 stratified sample (divide the population into groups

called strata and then take a sample from each
stratum)

 cluster sample (divide the population into strata and

then randomly select some of the strata. All the
members from these strata are in the cluster sample.)

 systematic sample (randomly select a starting point

and take every n-th piece of data from a listing of the
population)
 Statistical data

 The collection of data that are relevant to the

problem being studied is commonly the most
difficult, expensive, and time-consuming part of
the entire research project.

 Statistical data are usually obtained by counting

or measuring items.

 A variable is an item of interest that can take on

many different numerical values.

 A constant has a fixed numerical value.

 Two Branches of Statistics
 Descriptive statistics
 Methods of organizing, summarizing, and presenting
data in an informative way.

 Inferential statistics
 The methods used to determine something about a
population on the basis of a sample data.
 Descriptive Statistics

 Collect data
 e.g., Survey
 Present data
 e.g., Tables and graphs
 Characterize data
X i

e.g., Sample mean = n
 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 population based on

sample results.
 Collecting Data
Primary Secondary
Data Collection Data Compilation

Print or Electronic

Observation Survey

Experimentation
 Data

Statistical data are usually obtained by counting

or measuring items. Most data can be put into
the following categories:
 Qualitative - data are measurements that

each fall into one of several categories. (hair

color, ethnic groups and other attributes of the
population)
 quantitative - data are observations that are

measured on a numerical scale (distance

traveled to college, number of children in a
family, etc.)
 Qualitative data

Qualitative data are generally described by words or

letters. They are not as widely used as quantitative data
because many numerical techniques do not apply to the
qualitative data. For example, it does not make sense to
find an average hair color or blood type.
Qualitative data can be separated into two subgroups:
 dichotomic (if it takes the form of a word with two

options (gender - male or female)

 polynomic (if it takes the form of a word with more

than two options (education - primary school,

secondary school and university).
 Quantitative data

Quantitative data are always numbers and are the

result of counting or measuring attributes of a
population.
Quantitative data can be separated into two
subgroups:
 discrete (if it is the result of counting (the number of

students of a given ethnic group in a class, the

number of books on a shelf, ...)
 continuous (if it is the result of measuring (distance

traveled, weight of luggage, …)

 Types of Data

Data

Categorical Numerical

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

 Nominal – consist of categories in each of which the number of

respective observations is recorded. The categories are in no logical
order and have no particular relationship. The categories are said to
be mutually exclusive since an individual, object, or measurement
can be included in only one of them.
 Ordinal – contain more information. Consists of distinct categories
in which order is implied. Values in one category are larger or
smaller than values in other categories (e.g. rating-excelent, good,
fair, poor)
 Interval – is a set of numerical measurements in which the distance
between numbers is of a known, constant size.
 Ratio – consists of numerical measurements where the distance
between numbers is of a known, constant size, in addition, there is a
nonarbitrary zero point.
 Levels of Measurement
and Measurement Scales
Differences between Highest Level
measurements, true Ratio Data
zero exists (Strongest forms of
measurement)

Differences between
measurements but no Interval Data
true zero
Higher Levels
Ordered Categories
(rankings, order, or Ordinal Data
scaling)

Categories (no Lowest Level

ordering or direction) Nominal Data (Weakest form of
measurement)
 Levels of Measurement
and Measurement Scales
EXAMPLES:
Differences between Height, Age, Weekly
Ratio Data measurements, true
Food Spending
zero exists

Differences between Temperature in

Interval Data measurements but no Fahrenheit, Standardized
true zero exam score

Service quality rating,

Ordered Categories
Ordinal Data (rankings, order, or scaling) Standard & Poor’s bond
rating, Student letter
grades

Categories (no ordering Marital status, Type of car

Nominal Data or direction) owned
 Types of variables

Variables

Qualitative Quantitative

Nominal Ordinal Discrete Continuous

Children in Amount of
Gender, Students
family, income tax
marital status grade (A, B,
Strokes on a paid, weight
C)
 Chapter 1 Summary

 Reviewed basic concepts of statistics:

 Population vs. Sample
 Parameter vs. Statistic
 Primary vs. Secondary data sources

 Defined descriptive vs. inferential statistics

 Reviewed types of data and measurement scales
 Categorical vs. Numerical data
 Discrete vs. Continuous data
 Nominal and Ordinal scales
 Interval and Ratio scales