Statistics for Managers

Using Microsoft Excel

4th Edition
Chapter 1
Introduction and Data Collection

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-1

Chapter Goals
After completing this chapter, you should be
able to:

Explain key definitions:

Population vs. Sample

Primary vs. Secondary Data

Parameter vs. Statistic

Descriptive vs. Inferential Statistics

Describe key data collection methods

Describe different sampling methods

Probability Samples vs. Nonprobability Samples

Select a random sample using a random numbers table

Identify types of data and levels of measurement

Describe the different types of survey error

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-2

Why a Manager Needs to

Know about Statistics
To know how to:

properly present information

draw conclusions about populations based

on sample information

improve processes

obtain reliable forecasts

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-3

Key Definitions

A population (universe) is the collection of all

items or things under consideration

A sample is a portion of the population

selected for analysis

A parameter is a summary measure that

describes a characteristic of the population

A statistic is a summary measure computed

from a sample to describe a characteristic of
the population

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-4

Population vs. Sample

Population
a b

Sample

cd

ef gh i jk l m n
o p q rs t u v w
x y

Measures used to describe

the population are called
parameters
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

gi
o

n
r

y
Measures computed from
sample data are called
statistics
Chap 1-5

Two Branches of Statistics

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, 4e 2004 Prentice-Hall, Inc.

Chap 1-6

Descriptive Statistics

Collect data

Present data

e.g., Survey

e.g., Tables and graphs

Characterize data

e.g., Sample mean =

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-7

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 and/or making decisions

concerning a population based on sample results.
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-8

Why We Need Data

To provide input to survey

To provide input to study

To measure performance of service or

production process

To evaluate conformance to standards

To assist in formulating alternative courses of

action

To satisfy curiosity

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-9

Data Sources
Primary

Secondary

Data Collection

Data Compilation
Print or Electronic

Observation

Survey

Experimentation

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-10

Reasons for Drawing a Sample

Less time consuming than a census

Less costly to administer than a census

Less cumbersome and more practical to

administer than a census of the targeted
population

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-11

Types of Samples Used

Nonprobability Sample

Items included are chosen without regard to

their probability of occurrence

Probability Sample

Items in the sample are chosen on the basis

of known probabilities

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-12

Types of Samples Used

(continued)

Samples

Non-Probability
Samples

Judgement
Quota

Chunk
Convenience

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Probability Samples

Simple
Random

Stratified

Systematic

Cluster

Chap 1-13

Probability Sampling

Items in the sample are chosen based on

known probabilities
Probability Samples

Simple
Random

Systematic

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Stratified

Cluster

Chap 1-14

Simple Random Samples

Every individual or item from the frame has an

equal chance of being selected

Selection may be with replacement or without

replacement

Samples obtained from table of random

numbers or computer random number
generators

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-15

Systematic Samples

Decide on sample size: n

Divide frame of N individuals into groups of k

individuals: k=N/n

Randomly select one individual from the 1st

group

Select every kth individual thereafter

N = 64
n=8

First Group

k=8
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-16

Stratified Samples

Divide population into two or more subgroups (called

strata) according to some common characteristic

A simple random sample is selected from each subgroup,

with sample sizes proportional to strata sizes

Samples from subgroups are combined into one

Population
Divided
into 4
strata

Sample
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-17

Cluster Samples

Population is divided into several clusters,

each representative of the population

A simple random sample of clusters is selected

All items in the selected clusters can be used, or items can be

chosen from a cluster using another probability sampling
technique

Population
divided into
16 clusters.

Randomly selected
clusters for sample

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-18

Advantages and Disadvantages

Simple random sample and systematic sample

Stratified sample

Simple to use
May not be a good representation of the populations
underlying characteristics
Ensures representation of individuals across the
entire population

Cluster sample

More cost effective

Less efficient (need larger sample to acquire the
same level of precision)

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-19

Types of Data
Data

Categorical

Numerical

Examples:

Marital Status
Political Party
Eye Color
(Defined categories)

Discrete
Examples:

Number of Children
Defects per hour
(Counted items)

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Continuous
Examples:

Weight
Voltage
(Measured characteristics)
Chap 1-20

Levels of Measurement
and Measurement Scales
Differences between
measurements, true
zero exists

Ratio Data

Differences between
measurements but no
true zero

Interval Data

Ordered Categories
(rankings, order, or
scaling)

Ordinal Data

Categories (no
ordering or direction)

Nominal Data

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Highest Level
Strongest forms of
measurement

Higher Level

Lowest Level
Weakest form of
measurement

Evaluating Survey Worthiness

What is the purpose of the survey?

Is the survey based on a probability sample?
Coverage error appropriate frame?
Nonresponse error follow up
Measurement error good questions elicit good
responses
Sampling error always exists

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-22

Types of Survey Errors

Coverage error or selection bias

Non response error or bias

People who do not respond may be different from those

who do respond

Sampling error

Exists if some groups are excluded from the frame and

have no chance of being selected

Variation from sample to sample will always exist

Measurement error

Due to weaknesses in question design, respondent

error, and interviewers effects on the respondent

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-23

Types of Survey Errors

(continued)

Coverage error

Non response error

Sampling error

Measurement error

Excluded from
frame
Follow up on
nonresponses
Random
differences from
sample to sample
Bad or leading
question

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-24

Chapter Summary

Reviewed why a manager needs to know statistics

Introduced key definitions:

Population vs. Sample

Primary vs. Secondary data types

Qualitative vs. Qualitative data

Time Series vs. Cross-Sectional data

Examined descriptive vs. inferential statistics

Described different types of samples

Reviewed data types and measurement levels

Examined survey worthiness and types of survey
errors

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 1-25