1 1 slide © 2005 thomson/south-western chapter 1 data and statistics i need help! n applications in...
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Chapter 1Chapter 1 Data and Statistics Data and Statistics
I need I need help!help! Applications in Business and EconomicsApplications in Business and Economics
DataData Data SourcesData Sources Descriptive StatisticsDescriptive Statistics Statistical InferenceStatistical Inference Computers and Computers and
Statistical AnalysisStatistical Analysis
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Applications in Applications in Business and EconomicsBusiness and Economics
AccountingAccounting
EconomicsEconomics
Public accounting firms use statisticalPublic accounting firms use statistical
sampling procedures when conductingsampling procedures when conducting
audits for their clients.audits for their clients.
Economists use statistical informationEconomists use statistical information
in making forecasts about the future ofin making forecasts about the future of
the economy or some aspect of it.the economy or some aspect of it.
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Applications in Applications in Business and EconomicsBusiness and Economics
A variety of statistical quality A variety of statistical quality
control charts are used to monitorcontrol charts are used to monitor
the output of a production process.the output of a production process.
ProductionProduction
Electronic point-of-sale scanners atElectronic point-of-sale scanners at
retail checkout counters are used toretail checkout counters are used to
collect data for a variety of marketingcollect data for a variety of marketing
research applications.research applications.
MarketingMarketing
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Applications in Applications in Business and EconomicsBusiness and Economics
Financial advisors use price-earnings ratios andFinancial advisors use price-earnings ratios and
dividend yields to guide their investmentdividend yields to guide their investment
recommendations.recommendations.
FinanceFinance
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Data and Data SetsData and Data Sets
DataData are the facts and figures collected, summarized, are the facts and figures collected, summarized, analyzed, and interpreted.analyzed, and interpreted.
The data collected in a particular study are referredThe data collected in a particular study are referred to as the to as the data setdata set..
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The The elementselements are the entities on which data are are the entities on which data are collected.collected. A A variablevariable is a characteristic of interest for the elements. is a characteristic of interest for the elements.
The set of measurements collected for a particularThe set of measurements collected for a particular element is called an element is called an observationobservation..
The total number of data values in a data set is theThe total number of data values in a data set is the number of elements multiplied by the number ofnumber of elements multiplied by the number of variables.variables.
Elements, Variables, and ObservationsElements, Variables, and Observations
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Stock Annual Earn/Stock Annual Earn/Exchange Sales($M) Share($)Exchange Sales($M) Share($)
Data, Data Sets, Data, Data Sets, Elements, Variables, and ObservationsElements, Variables, and Observations
CompanyCompany
DataramDataram
EnergySouthEnergySouth
KeystoneKeystone
LandCareLandCare
PsychemedicsPsychemedics
AMEXAMEX 73.10 73.10 0.86 0.86
OTCOTC 74.00 74.00 1.67 1.67
NYSENYSE 365.70365.70 0.86 0.86
NYSENYSE 111.40111.40 0.33 0.33
AMEXAMEX 17.60 17.60 0.13 0.13
VariableVariablessElemenElemen
tt NamesNames
Data SetData Set
ObservatioObservationn
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Scales of MeasurementScales of Measurement
The scale indicates the data summarization andThe scale indicates the data summarization and statistical analyses that are most appropriate.statistical analyses that are most appropriate. The scale indicates the data summarization andThe scale indicates the data summarization and statistical analyses that are most appropriate.statistical analyses that are most appropriate.
The scale determines the amount of informationThe scale determines the amount of information contained in the data.contained in the data. The scale determines the amount of informationThe scale determines the amount of information contained in the data.contained in the data.
Scales of measurement include:Scales of measurement include: Scales of measurement include:Scales of measurement include:
NominalNominal
OrdinalOrdinal
IntervalInterval
RatioRatio
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Scales of MeasurementScales of Measurement
NominalNominal
A A nonnumeric labelnonnumeric label or or numeric codenumeric code may be used. may be used. A A nonnumeric labelnonnumeric label or or numeric codenumeric code may be used. may be used.
Data are Data are labels or nameslabels or names used to identify an used to identify an attribute of the element.attribute of the element. Data are Data are labels or nameslabels or names used to identify an used to identify an attribute of the element.attribute of the element.
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Example:Example: Students of a university are classified by theStudents of a university are classified by the school in which they are enrolled using aschool in which they are enrolled using a nonnumeric label such as Business, Humanities,nonnumeric label such as Business, Humanities, Education, and so on.Education, and so on.
Alternatively, a numeric code could be used forAlternatively, a numeric code could be used for the school variable (e.g. 1 denotes Business,the school variable (e.g. 1 denotes Business, 2 denotes Humanities, 3 denotes Education, and2 denotes Humanities, 3 denotes Education, and so on).so on).
Example:Example: Students of a university are classified by theStudents of a university are classified by the school in which they are enrolled using aschool in which they are enrolled using a nonnumeric label such as Business, Humanities,nonnumeric label such as Business, Humanities, Education, and so on.Education, and so on.
Alternatively, a numeric code could be used forAlternatively, a numeric code could be used for the school variable (e.g. 1 denotes Business,the school variable (e.g. 1 denotes Business, 2 denotes Humanities, 3 denotes Education, and2 denotes Humanities, 3 denotes Education, and so on).so on).
Scales of MeasurementScales of Measurement
NominalNominal
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Scales of MeasurementScales of Measurement
OrdinalOrdinal
A A nonnumeric labelnonnumeric label or or numeric codenumeric code may be used. may be used. A A nonnumeric labelnonnumeric label or or numeric codenumeric code may be used. may be used.
The data have the properties of nominal data andThe data have the properties of nominal data and the the order or rank of the data is meaningfulorder or rank of the data is meaningful.. The data have the properties of nominal data andThe data have the properties of nominal data and the the order or rank of the data is meaningfulorder or rank of the data is meaningful..
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Scales of MeasurementScales of Measurement
OrdinalOrdinal
Example:Example: Students of a university are classified by theirStudents of a university are classified by their class standing using a nonnumeric label such as class standing using a nonnumeric label such as Freshman, Sophomore, Junior, or Senior.Freshman, Sophomore, Junior, or Senior.
Alternatively, a numeric code could be used forAlternatively, a numeric code could be used for the class standing variable (e.g. 1 denotesthe class standing variable (e.g. 1 denotes Freshman, 2 denotes Sophomore, and so on).Freshman, 2 denotes Sophomore, and so on).
Example:Example: Students of a university are classified by theirStudents of a university are classified by their class standing using a nonnumeric label such as class standing using a nonnumeric label such as Freshman, Sophomore, Junior, or Senior.Freshman, Sophomore, Junior, or Senior.
Alternatively, a numeric code could be used forAlternatively, a numeric code could be used for the class standing variable (e.g. 1 denotesthe class standing variable (e.g. 1 denotes Freshman, 2 denotes Sophomore, and so on).Freshman, 2 denotes Sophomore, and so on).
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Scales of MeasurementScales of Measurement
IntervalInterval
Interval data are Interval data are always numericalways numeric.. Interval data are Interval data are always numericalways numeric..
The data have the properties of ordinal data, andThe data have the properties of ordinal data, and the interval between observations is expressed inthe interval between observations is expressed in terms of a fixed unit of measure.terms of a fixed unit of measure.
The data have the properties of ordinal data, andThe data have the properties of ordinal data, and the interval between observations is expressed inthe interval between observations is expressed in terms of a fixed unit of measure.terms of a fixed unit of measure.
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Scales of MeasurementScales of Measurement
IntervalInterval
Example:Example: Melissa has an SAT score of 1205, while KevinMelissa has an SAT score of 1205, while Kevin has an SAT score of 1090. Melissa scored 115has an SAT score of 1090. Melissa scored 115 points more than Kevin.points more than Kevin.
Example:Example: Melissa has an SAT score of 1205, while KevinMelissa has an SAT score of 1205, while Kevin has an SAT score of 1090. Melissa scored 115has an SAT score of 1090. Melissa scored 115 points more than Kevin.points more than Kevin.
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Scales of MeasurementScales of Measurement
RatioRatio
The data have all the properties of interval dataThe data have all the properties of interval data and the and the ratio of two values is meaningfulratio of two values is meaningful.. The data have all the properties of interval dataThe data have all the properties of interval data and the and the ratio of two values is meaningfulratio of two values is meaningful..
Variables such as distance, height, weight, and timeVariables such as distance, height, weight, and time use the ratio scale.use the ratio scale. Variables such as distance, height, weight, and timeVariables such as distance, height, weight, and time use the ratio scale.use the ratio scale.
This This scale must contain a zero valuescale must contain a zero value that indicates that indicates that nothing exists for the variable at the zero point.that nothing exists for the variable at the zero point. This This scale must contain a zero valuescale must contain a zero value that indicates that indicates that nothing exists for the variable at the zero point.that nothing exists for the variable at the zero point.
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Scales of MeasurementScales of Measurement
RatioRatio
Example:Example: Melissa’s college record shows 36 credit hoursMelissa’s college record shows 36 credit hours earned, while Kevin’s record shows 72 credit earned, while Kevin’s record shows 72 credit hours earned. Kevin has twice as many credithours earned. Kevin has twice as many credit hours earned as Melissa.hours earned as Melissa.
Example:Example: Melissa’s college record shows 36 credit hoursMelissa’s college record shows 36 credit hours earned, while Kevin’s record shows 72 credit earned, while Kevin’s record shows 72 credit hours earned. Kevin has twice as many credithours earned. Kevin has twice as many credit hours earned as Melissa.hours earned as Melissa.
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Data can be further classified as being qualitativeData can be further classified as being qualitative or quantitative.or quantitative. Data can be further classified as being qualitativeData can be further classified as being qualitative or quantitative.or quantitative.
The statistical analysis that is appropriate dependsThe statistical analysis that is appropriate depends on whether the data for the variable are qualitativeon whether the data for the variable are qualitative or quantitative.or quantitative.
The statistical analysis that is appropriate dependsThe statistical analysis that is appropriate depends on whether the data for the variable are qualitativeon whether the data for the variable are qualitative or quantitative.or quantitative.
In general, there are more alternatives for statisticalIn general, there are more alternatives for statistical analysis when the data are quantitative.analysis when the data are quantitative. In general, there are more alternatives for statisticalIn general, there are more alternatives for statistical analysis when the data are quantitative.analysis when the data are quantitative.
Qualitative and Quantitative DataQualitative and Quantitative Data
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Qualitative DataQualitative Data
Labels or namesLabels or names used to identify an attribute of each used to identify an attribute of each elementelement Labels or namesLabels or names used to identify an attribute of each used to identify an attribute of each elementelement
Often referred to as Often referred to as categorical datacategorical data Often referred to as Often referred to as categorical datacategorical data
Use either the nominal or ordinal scale ofUse either the nominal or ordinal scale of measurementmeasurement Use either the nominal or ordinal scale ofUse either the nominal or ordinal scale of measurementmeasurement
Can be either numeric or nonnumericCan be either numeric or nonnumeric Can be either numeric or nonnumericCan be either numeric or nonnumeric
Appropriate statistical analyses are rather limitedAppropriate statistical analyses are rather limited Appropriate statistical analyses are rather limitedAppropriate statistical analyses are rather limited
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Quantitative DataQuantitative Data
Quantitative data indicate Quantitative data indicate how many or how much:how many or how much: Quantitative data indicate Quantitative data indicate how many or how much:how many or how much:
discretediscrete, if measuring how many, if measuring how many discretediscrete, if measuring how many, if measuring how many
continuouscontinuous, if measuring how much, if measuring how much continuouscontinuous, if measuring how much, if measuring how much
Quantitative data are Quantitative data are always numericalways numeric.. Quantitative data are Quantitative data are always numericalways numeric..
Ordinary arithmetic operations are meaningful forOrdinary arithmetic operations are meaningful for quantitative data.quantitative data. Ordinary arithmetic operations are meaningful forOrdinary arithmetic operations are meaningful for quantitative data.quantitative data.
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Scales of MeasurementScales of Measurement
QualitativeQualitativeQualitativeQualitative QuantitativQuantitativee
QuantitativQuantitativee
NumericalNumericalNumericalNumerical NumericalNumericalNumericalNumericalNonnumericalNonnumericalNonnumericalNonnumerical
DataDataDataData
NominaNominallNominaNominall
OrdinaOrdinallOrdinaOrdinall
NominalNominalNominalNominal OrdinalOrdinalOrdinalOrdinal IntervalIntervalIntervalInterval RatioRatioRatioRatio
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Cross-Sectional DataCross-Sectional Data
Cross-sectional dataCross-sectional data are collected at the same or are collected at the same or approximately the same point in time.approximately the same point in time. Cross-sectional dataCross-sectional data are collected at the same or are collected at the same or approximately the same point in time.approximately the same point in time.
ExampleExample: data detailing the number of building: data detailing the number of building permits issued in June 2003 in each of the countiespermits issued in June 2003 in each of the counties of Ohioof Ohio
ExampleExample: data detailing the number of building: data detailing the number of building permits issued in June 2003 in each of the countiespermits issued in June 2003 in each of the counties of Ohioof Ohio
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Time Series DataTime Series Data
Time series dataTime series data are collected over several time are collected over several time periods.periods. Time series dataTime series data are collected over several time are collected over several time periods.periods.
ExampleExample: data detailing the number of building: data detailing the number of building permits issued in Lucas County, Ohio in each ofpermits issued in Lucas County, Ohio in each of the last 36 monthsthe last 36 months
ExampleExample: data detailing the number of building: data detailing the number of building permits issued in Lucas County, Ohio in each ofpermits issued in Lucas County, Ohio in each of the last 36 monthsthe last 36 months
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Data SourcesData Sources
Existing SourcesExisting Sources
Within a firmWithin a firm – almost any department – almost any department
Business database servicesBusiness database services – Dow Jones & Co. – Dow Jones & Co.
Government agenciesGovernment agencies - U.S. Department of Labor - U.S. Department of Labor
Industry associationsIndustry associations – Travel Industry Association – Travel Industry Association of Americaof America
Special-interest organizationsSpecial-interest organizations – Graduate Management – Graduate Management Admission CouncilAdmission Council
InternetInternet – more and more firms – more and more firms
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Statistical StudiesStatistical Studies
Data SourcesData Sources
In In experimental studiesexperimental studies the variables of interest the variables of interestare first identified. Then one or more factors areare first identified. Then one or more factors arecontrolled so that data can be obtained about howcontrolled so that data can be obtained about howthe factors influence the variables.the factors influence the variables.
In In experimental studiesexperimental studies the variables of interest the variables of interestare first identified. Then one or more factors areare first identified. Then one or more factors arecontrolled so that data can be obtained about howcontrolled so that data can be obtained about howthe factors influence the variables.the factors influence the variables.
In In observationalobservational (nonexperimental) (nonexperimental) studiesstudies no no attempt is made to control or influence theattempt is made to control or influence the variables of interest.variables of interest.
In In observationalobservational (nonexperimental) (nonexperimental) studiesstudies no no attempt is made to control or influence theattempt is made to control or influence the variables of interest.variables of interest.
a survey is aa survey is agood good
exampleexample
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Data Acquisition ConsiderationsData Acquisition Considerations
Time RequirementTime Requirement
Cost of AcquisitionCost of Acquisition
Data ErrorsData Errors
• Searching for information can be time consuming.Searching for information can be time consuming.• Information may no longer be useful by the time itInformation may no longer be useful by the time it
is available.is available.
• Organizations often charge for information evenOrganizations often charge for information even when it is not their primary business activity.when it is not their primary business activity.
• Using any data that happens to be available orUsing any data that happens to be available or that were acquired with little care can lead to poorthat were acquired with little care can lead to poor and misleading information.and misleading information.
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Descriptive StatisticsDescriptive Statistics
Descriptive statisticsDescriptive statistics are the tabular, are the tabular, graphical, and numerical methods used to graphical, and numerical methods used to summarizesummarize data. data.
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Example: Hudson Auto RepairExample: Hudson Auto Repair
The manager of Hudson AutoThe manager of Hudson Auto
would like to have a betterwould like to have a better
understanding of the costunderstanding of the cost
of parts used in the engineof parts used in the engine
tune-ups performed in thetune-ups performed in the
shop. She examines 50shop. She examines 50
customer invoices for tune-ups. The costs of customer invoices for tune-ups. The costs of parts,parts,
rounded to the nearest dollar, are listed on the rounded to the nearest dollar, are listed on the nextnext
slide.slide.
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91 78 93 57 75 52 99 80 97 6271 69 72 89 66 75 79 75 72 76104 74 62 68 97 105 77 65 80 10985 97 88 68 83 68 71 69 67 7462 82 98 101 79 105 79 69 62 73
91 78 93 57 75 52 99 80 97 6271 69 72 89 66 75 79 75 72 76104 74 62 68 97 105 77 65 80 10985 97 88 68 83 68 71 69 67 7462 82 98 101 79 105 79 69 62 73
Example: Hudson Auto RepairExample: Hudson Auto Repair
Sample of Parts Cost for 50 Tune-upsSample of Parts Cost for 50 Tune-ups
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Tabular Summary:Tabular Summary: Frequency and Percent Frequency Frequency and Percent Frequency
50-5950-59
60-6960-69
70-7970-79
80-8980-89
90-9990-99
100-109100-109
22
1313
1616
77
77
55
5050
44
2626
3232
1414
1414
1010
100100
(2/50)10(2/50)1000
PartsParts Cost ($)Cost ($)
PartsParts FrequencyFrequency
PercentPercentFrequencyFrequency
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Graphical Summary: HistogramGraphical Summary: Histogram
22
44
66
88
1010
1212
1414
1616
1818
PartsCost ($) PartsCost ($)
Fre
qu
en
cy
Fre
qu
en
cy
5059 6069 7079 8089 9099 100-1105059 6069 7079 8089 9099 100-110
Tune-up Parts CostTune-up Parts Cost
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Numerical Descriptive StatisticsNumerical Descriptive Statistics
Hudson’s average cost of parts, based on the 50Hudson’s average cost of parts, based on the 50 tune-ups studied, is $79 (found by summing thetune-ups studied, is $79 (found by summing the 50 cost values and then dividing by 50).50 cost values and then dividing by 50).
The most common numerical descriptive statisticThe most common numerical descriptive statistic is the is the averageaverage (or (or meanmean).).
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Statistical InferenceStatistical Inference
PopulationPopulation
SampleSample
Statistical inferenceStatistical inference
CensusCensus
Sample surveySample survey
the set of all elements of interest in athe set of all elements of interest in a particular studyparticular study
a subset of the populationa subset of the population
the process of using data obtainedthe process of using data obtained from a sample to make estimatesfrom a sample to make estimates and test hypotheses about theand test hypotheses about the characteristics of a populationcharacteristics of a population
collecting data for a populationcollecting data for a population
collecting data for a samplecollecting data for a sample
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Process of Statistical InferenceProcess of Statistical Inference
11. Population . Population consists of allconsists of all
tune-ups. Averagetune-ups. Averagecost of parts iscost of parts is
unknownunknown.
22. A sample of 50. A sample of 50engine tune-ups engine tune-ups
is examined.is examined.
33. The sample data . The sample data provide a sampleprovide a sample
average parts costaverage parts costof $79 per tune-up.of $79 per tune-up.
44. The sample average. The sample averageis used to estimate theis used to estimate the population average.population average.
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Computers and Statistical AnalysisComputers and Statistical Analysis
Statistical analysis often involves working withStatistical analysis often involves working with large amounts of datalarge amounts of data.. Computer softwareComputer software is typically used to conduct the is typically used to conduct the analysis.analysis. Statistical software packages such as Statistical software packages such as Microsoft ExcelMicrosoft Excel and and MinitabMinitab are capable of data management, analysis, are capable of data management, analysis, and presentation.and presentation.
Instructions for using Excel and Minitab are providedInstructions for using Excel and Minitab are provided in chapter appendices.in chapter appendices.