Business Statistics, 4th

by Ken Black
Chapter 1
Discrete Distributions

Introduction
to Statistics

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Learning Objectives
Define statistics
Become aware of a wide range of
applications of statistics in business
Differentiate between descriptive and
inferential statistics
Classify numbers by level of data and
understand why doing so is important
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Statistics in Business
Accounting auditing and cost
estimation
Economics regional, national, and
international economic performance
Finance investments and portfolio
management
Marketing market analysis and
consumer research
International Business market and
demographic analysis
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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What is Statistics?
Science of gathering, analyzing,
interpreting, and presenting data
Branch of mathematics
Course of study
Facts and figures
A death
Measurement taken on a sample
Type of distribution being used to analyze
data
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Population Versus Sample

Population the whole
a collection of persons, objects, or items under
study

Census gathering data from the entire

population
Sample a portion of the whole
a subset of the population

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Population

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Population and Census Data

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

Identifier

Color

MPG

RD1
RD2
RD3
RD4
RD5
BL1
BL2
GR1
GR2
GY1
GY2
GY3

Red
Red
Red
Red
Red
Blue
Blue
Green
Green
Gray
Gray
Gray

12
10
13
10
13
27
24
35
35
15
18
17

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Sample and Sample Data

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

Identifier

Color

MPG

RD2

Red

10

RD5

Red

13

GR1

Green

35

GY2

Gray

18

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Descriptive vs. Inferential Statistics

Descriptive Statistics using data gathered
on a group to describe or reach conclusions
about that same group only
Inferential Statistics using sample data to
reach conclusions about the population
from which the sample was taken

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Parameter vs. Statistic

Parameter descriptive measure of the
population
Usually represented by Greek letters

Statistic descriptive measure of a sample

Usually represented by Roman letters

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Symbols for Population Parameters

denotespopulationparameter

denotes population variance

denotespopulationstandarddeviation

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Symbols for Sample Statistics

xdenotessamplemean

denotessamplevariance

Sdenotessamplestandarddeviation

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Process of Inferential Statistics

Calculatex
Population

toestimate

Sample
x
(statistic)

(parameter)

Selecta
randomsample
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Levels of Data Measurement

Nominal Lowest level of measurement

Ordinal
Interval
Ratio Highest level of measurement

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Nominal Level Data

Numbers are used to classify or categorize
Example: Employment Classification
1 for Educator
2 for Construction Worker
3 for Manufacturing Worker

Example: Ethnicity
1 for African-American
2 for Anglo-American
3 for Hispanic-American

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Ordinal Level Data

Numbers are used to indicate rank or order
Relative magnitude of numbers is meaningful
Differences between numbers are not comparable
Example: Ranking productivity of employees
Example: Taste test ranking of three brands of soft drink
Example: Position within an organization
1 for President
2 for Vice President
3 for Plant Manager
4 for Department Supervisor
5 for Employee
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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 For example, you might ask patients to

express the amount of pain they are feeling
on a scale of 1 to 10.
A score of 7 means more pain that a score
of 5, and that is more than a score of 3. But
the difference between the 7 and the 5 may
not be the same as that between 5 and 3.
The values simply express an order.
Another example would be movie ratings,
from * to *****.

Ordinal Data
Faculty and staff should receive preferential
treatment for parking space.
Strongly
Agree

Agree

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

Neutral

Disagree

Strongly
Disagree

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Interval Level Data

Distances between consecutive integers are
equal & data are always in numerical.
Relative magnitude of numbers is meaningful
Differences between numbers are comparable
Absolute zero is not fixed it does not mean
zero phenomenon
Example: Fahrenheit Temperature
Percentage change in employment
Percentage change in the stock price
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Ratio Level Data

Highest level of measurement
Relative magnitude of numbers is
meaningful
Differences between numbers are
comparable
Absolute zero is fixed means absence of
characteristics being studied.
Examples: Height, Weight, and Volume
.
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Usage Potential of Various

Levels of Data
Ratio
Interval
Ordinal
Nominal

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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Data Level, Operations,

and Statistical Methods
Data Level

Meaningful Operations

Statistical
Methods

Nominal

Classifying and Counting

Nonparametric

Ordinal

All of the above plus Ranking

Nonparametric

Interval

All of the above plus Addition,

Subtraction, Multiplication, and
Division

Parametric

Ratio

All of the above

Parametric

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

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