Basic Business Statistics

Chapter 1

Introduction and Data Collection

 Learning Objectives

The study of this chapter should enable you to:

 define statistics and other related terms

 describe the types of statistics

 describe the types of data and their sources

 understand the different levels of measurement

 differentiate between census and sampling

 describe the types of sampling and various

methods of collecting data

 What is Statistics?

 Science of collecting, organizing,

presenting, analyzing, and interpreting
numerical data for the purpose of assisting
in making effective decisions.

 Use to transform data into useful

information for decision makers.
 Why Study Statistics?

Decision Makers Use Statistics To:

 Present and describe business data and information properly

 Draw conclusions about large groups of individuals or items,
using information collected from subsets of the individuals or
items.
 Make reliable forecasts about a business activity
 Improve business processes
 Types of Statistics

Descriptive Inferential
 Collecting,  Drawing conclusions
presenting, and and/or making
characterizing data decisions concerning
a population based
only on sample data

 Involve either
estimation or
hypothesis testing
 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 large group of

individuals based on a subset of the large group.
 Related Terms in Statistics
 POPULATION - All the items or individuals
about which you want to draw a
conclusion.

 SAMPLE - The portion of a population

selected for analysis.

 PARAMETER - A numerical measure that

describes a characteristic of a population.

 STATISTIC - A numerical measure that

describes a characteristic of a sample.
 Population vs. Sample

Population Sample

Measures used to describe the Measures computed from

population are called parameters sample data are called statistics
 Related Terms in Statistics

 DATA - Describes the actual values or

observations of the variable
 VARIABLE - Describes the name of the
characteristic of interest
 SOURCES OF DATA
 Primary data
 Specific information collected by the person who is
doing the research
 Secondary data
 Any material that has been collected from published
records
 Sources of Data

 Primary Sources: The data collector is the one using the data
for analysis
 Data from a political survey
 Data collected from an experiment
 Observed data
 Secondary Sources: The person performing data analysis is
not the data collector
 Analyzing census data
 Examining data from print journals or data published on the internet.
 Why Collect Data?
 A marketing research analyst needs to assess the
effectiveness of a new television advertisement.

 A pharmaceutical manufacturer needs to determine

whether a new drug is more effective than those currently
in use.

 An operations manager wants to monitor a manufacturing

process to find out whether the quality of the product
being manufactured is conforming to company standards.

 An auditor wants to review the financial transactions of a

company in order to determine whether the company is in
compliance with generally accepted accounting
principles.
 Exercise 1
A group of researchers wish to know the reason of
unemployment in Malaysia. To make this study, they
conducted a survey on 2598 unemployed workers and
asked them why they lost their job.

a. Identify the population of this study.

b. Identify the sample in this study.
c. Identify the variable of interest. Is the variable
categorical (qualitative) or numerical (quantitative)? If it
is numerical (quantitative), is it discrete or continuous?

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 1-13

Types of Data/Variables
 Types of Variables

 Categorical (qualitative) variables have values that

can only be placed into categories, such as “yes” and
“no.”

 Numerical (quantitative) variables have values that

represent quantities.
 Types of Data

Data

Categorical Numerical

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

 A nominal scale classifies data into distinct categories in

which no ranking is implied.

Categorical Variables Categories

Personal Computer Yes / No

Ownership

Type of Stocks Owned Growth Value Other

Internet Provider Microsoft Network / AOL/ Other

 Levels of Measurement

 An ordinal scale classifies data into distinct categories

in which ranking is implied

Categorical Variable Ordered Categories

Student class designation Freshman, Sophomore, Junior,

Senior
Product satisfaction Satisfied, Neutral, Unsatisfied

Faculty rank Professor, Associate Professor,

Assistant Professor, Instructor
Standard & Poor’s bond ratings AAA, AA, A, BBB, BB, B, CCC, CC,
C, DDD, DD, D
Student Grades A, B, C, D, F
 Levels of Measurement
 An interval scale is an ordered scale in which the difference
between measurements is a meaningful quantity but the
measurements do not have a true zero point.

 A ratio scale is an ordered scale in which the difference

between the measurements is a meaningful quantity and the
measurements have a true zero point.
Interval and Ratio Scales
 Exercise 2
For each of the following variables, determine whether the
variable is categorical (qualitative variable) or numerical
(quantitative variable). If it is numerical (quantitative variable),
determine whether it was the type of continuous or discrete.
Next, determine the level of measurement used nominal,
ordinal, interval or ratio.

a. Number of chicken burgers sold each day at Marrybrown.

b. Marital status of academic staffs in UPSI.
c. Level of passenger's’ satisfaction of bus service in Perak.
d. Time in system 24 hours.

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 1-22

 Related Terms in Statistics
 CENSUS
 SAMPLING
 Census & Sampling

 Census is a complete enumeration

of every item in a population.

 Sampling is a survey to collect

data on a sample.
 Why Sample?

 Selecting a sample is less time-consuming than

selecting every item in the population (census).

 Selecting a sample is less costly than selecting

every item in the population.

 An analysis of a sample is less cumbersome

and more practical than an analysis of the
entire population.
 Types of Samples:
Probability Sample

 In a probability sample, items in the sample

are chosen on the basis of known probabilities.

Probability Samples

Simple
Systematic Stratified Cluster
Random
 Probability Sample:
Simple Random Sample

 Every individual or item from the frame has an

equal chance of being selected

 Selection may be with replacement (selected

individual is returned to frame for possible
reselection) or without replacement (selected
individual isn’t returned to the frame).
 Probability Sample:
Systematic Sample
 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
First Group
N = 40
n=4
k = 10
 Stratified Samples
 Population Divided into 2 or More Groups
According to Some Common Characteristic
 Simple Random Sample Selected from Each Group
 The Two or More Samples are Combined into One
 Probability Sample
Cluster Sample
 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
 Exercise 3
Question 1:
The evening host of a dinner dance reached into a bowl,
mixed all the tickets around, and selected the ticket to award
the grand door prize.

What sampling method was used?

a) Simple random sample

b) Systematic sample
c) Stratified sample
d) Cluster sample
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 1-31
 Exercise 3 (continued)
Question 2:
A telemarketer set the company’s computerized dialing
system to contact every 25th person listed in the local
telephone directory.

What sampling method was used?

a) Simple random sample

b) Systematic sample
c) Stratified sample
d) Cluster sample
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 1-32
Getting started with SPSS
In the end of this lessons, students
should know:
How to start SPSS

The windows in SPSS

The SPSS main menus and the

commands
How to prepare Data File

 name variables
 key-in data
 How to save Data File