Inferential Statistics

INTRODUCTION AND  The branch of statistics that uses sample

DATA COLLECTION data to draw conclusions about an entire

population.

Statistics BASIC VOCABULARY OF STATISTICS

 The branch of mathematics that transforms Variables
data into useful information for decision
 Are characteristics of items or individuals
makers
and are what you analyze when you use a
 These transformations often require
statistical method.
complex calculations that are practical only
 Suggests that something changes or varies
if done by computer.
 Can differ for reasons other than time
o Especially true when dealing with
the large volumes of data that a Values are meaningless unless their variables have
typical business collects. operational definition.

STATISTICS FOR MANAGERS Operation Definition

Business managers/decision makers use statistics  Universally accepted meanings that are
to: clear to all associated with an analysis.

 Present and describe business data and Population

information properly  Consists of all the items or individuals about
 Draw conclusions about large populations, which you want to draw a conclusion
using information collected from samples
 Make reliable forecasts about a business Sample
entity  Is the portion of a population selected for
 Improve business processes analysis
“Statistics for managers” means knowing more Parameter
than just how to perform these tasks.
 A numerical measure that describes a
 They need a conceptual understanding of characteristic of a population
the principles behind each statistical
analysis they undertake in order to have Statistic
confidence that the information produced is  A numerical measure that describes a
correct and appropriate for a decision- characteristic of a sample
making situation.
DATA COLLECTION
Descriptive Statistics
 Collecting the values for those variables
 The branch of statistics that collects,
summarizes, and presents data. Collecting data from every item or individual in the
population would be too difficult or too time-
consuming.
Data sources are classified as being either primary
sources or secondary sources.
Primary sources Organization and individuals that collect and
publish data typically use that data as a primary
 If the data collector is the one using the
source and then let others use it as a secondary
data for analysis
source.
Secondary sources
TYPES OF VARIABLES
 If the person performing the statistical
analysis is not the data collector Statisticians classify variables as either being
categorical or numerical and further classify
Sources of data fall into one of four categories: numerical variables as having either discrete or
 Data distributed by an organization or an continuous values.
individual
o Market research firms and trade
associations also distribute data
pertaining to specific industries or
markets.
 A designed experiment
o Outcomes of a designed experiment Categorical Variables (qualitative variables)
are another data source
 A survey  Have values that can only be placed into
o People being surveyed are asked categories, such as “yes” or “no”
questions about their beliefs,  Can result in more than two possible
attitudes, behaviors, and other responses
characteristics. Numerical Variables (quantitative variables)
o This could lead to a result different
from a designed experiment seeking  Have values that represent quantities
the same answer. o Discrete Variables
 An observational study  Have numerical values that
o A researcher collects data by directly arise from a counting
observing a behavior, usually in a process.
natural or neutral setting.  Ex: counting the number of
o Common tool for data collection in days; number of magazines
business subscribed to
o Market researchers use focus groups o Continuous Variables
to elicit unstructured responses to  Produce numerical responses
open-ended questions posed by a that arise from a measuring
moderator to a target audience. process
o More structured types of studies  Ex: the time you wait for
involve group dynamics and teller service at a bank
consensus building  Theoretically, no two
o Observational study techniques are continuous values will be
identical
also used in situations in which
enhancing teamwork or improving
the quality of products and service is
a management tool.
 Levels of Measurement and weight, age, or salary
measurements.
Measurement Scales
Nominal and Ordinal Scales
 Data from a categorical variable are
measured on these scales
o Nominal Scale
 Classifies data into distinct
categories in which no
ranking is implied
 Ex: your favorite soft drink;
your political party affiliation;
your gender
 Weakest form of
measurement because you
cannot specify any ranking
across the various categories
o Ordinal Scale
 Classifies data into distinct
categories in which ranking is
implied
 Stronger than nominal
scaling but still a relatively
weak form of measurement
because the scale does not
account for the amount of
differences between the
categories
Interval and Ratio Scales
 Data from a numerical variable are
measured on an interval or a ratio scale
o Interval Scale
 An ordered scale in which the
difference between
measurements is a
meaningful quantity but does
not involve a true zero point.
o Ratio Scale
 An ordered scale in which the
difference between the
measurements involves a
true zero point, as in height,