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Chapter One

An Introduction to Business Statistics

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

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An Introduction to Business Statistics

1.1 Populations and Samples

1.2 Sampling a Population of Existing Units

1.3 Sampling a Process

1.4 Ratio, Interval, Ordinal, and Nominative Scales of Measurement

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Populations and Samples

Population

A set of existing units (people, objects, or events)

Variable

A measurable characteristic of the population

Quantitative (real-valued)/Quantitative (real-valued)/Qualitative (categorical)Qualitative (categorical)

Census

An examination of the entire population of measurements

Sample

A selected subset of the units of a population

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Populations and Samples

Population

Sample

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Descriptive Statistics and Statistical Inference

Descriptive Statistics

The science of describing important aspects of a set of measurements

Statistical Inference

The science of using a sample of measurements to make generalizations about important aspects of a population

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Sampling a Population of Existing Units

Random Sampling

A procedure for selecting a subset of the population units in such a way that every unit in the population has an equal chance of selection

Sampling with replacement

When a unit is selected as part of the sample, its value is recorded and placed back into the population for possible reselection

Sampling without replacement

Units are not placed back into the population after selection

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Approximate Random Samples

Frame

A list of all population units. Required for random sampling, but not for approximate random sampling methods like systematic and voluntary response sampling.

Systematic Sample

Every k-th element of the population is selected for the sample

Voluntary Response Sample

Sample units are self-selected (as in radio/TV surveys)

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Process

A sequence of operations that takes inputs (labor, raw materials, methods, machines, and so on) and turns them into outputs (products, services, and the like.)

ProcessInputs Outputs

Sampling a Process

A process is in statistical control if it displays constant level and constant variation.

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Runs Plot

A runs plot is a graph of individual process measurements over time.

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Runs Plot – Payment Time Example

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Scales of Measurement

RatioQuantitative scale, ratios are meaningful, inherently defined zero. (e.g. salary, height, distance.)

IntervalQuantitative scale, but ratios not meaningful nor is there an inherently defined zero. (e.g. temperature)

OrdinalQualitative or categorical scale with meaningful ordering or ranking of categories. (e.g. income classification)

NominativeQualitative scale without meaningful ordering among categories (e.g. gender, ethnic classification)

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An Introduction to Business Statistics

1.1 Populations and Samples

1.2 Sampling a Population of Existing Units

1.3 Sampling a Process

1.4 Ratio, Interval, Ordinal, and Nominative Scales of Measurement

Summary: