# Ch01 - Statistics, Data & Statistical Thinking

Statistics & Data

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Applications in Business and Economics

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Descriptive Statistics

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Inferential Statistics

Statistics

Data overload!

I need help!

Slide 1

Applications in

Business and Economics

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Accounting

Public accounting firms use statistical

sampling procedures when conducting

audits for their clients.

Economics

Economists use statistical information

in making forecasts about the future of

the economy or some aspect of it.

Statistics

Slide 2

Applications in

Business and Economics

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Marketing

Electronic point-of-sale scanners at

retail checkout counters are used to

collect data for a variety of marketing

research applications.

Production

A variety of statistical quality

control charts are used to monitor

the output of a production process.

Statistics

Slide 3

Applications in

Business and Economics

Finance

Financial advisors use price-earnings ratios and

dividend yields to guide their investment

recommendations.

Statistics

Slide 4

Statistical Methods

St i i

at st cal

M et

hods

D escri i

pt ve

St i i

at st cs

Statistics

Inf

erent al

i

St i i

at st cs

Slide 5

What Is Statistics?

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Statistics is the science of data. It involves collecting,

classifying, summarizing, organizing, analyzing, and

interpreting numerical information.

• Descriptive Statistics utilizes numerical and

graphical methods to look for patterns in the data

set, to summarize the information revealed in the

data set, and to present the information in the

convenient form

• Inferential Statistics utilizes sample data to make

estimates, decisions, predictions, or other

generalizations about the population that the

sample has come from

Let’s see an example

Statistics

Slide 6

Example: Hudson Auto Repair

The manager of Hudson Auto

would like to have a better

understanding of the cost

of parts used in the engine

tune-ups performed in the

shop. She examines 50

customer invoices for tune-ups. The costs of parts,

rounded to the nearest dollar, are listed on the next

slide.

Statistics

Slide 7

Example: Hudson Auto Repair

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Sample of Total Parts Cost ($) for 50 Tune-ups

91

71

104

85

62

Statistics

78

69

74

97

82

93

72

62

88

98

57

89

68

68

101

75

66

97

83

79

52

75

105

68

105

99

79

77

71

79

80

75

65

69

69

97

72

80

67

62

62

76

109

74

73

Slide 8

Tabular Summary:

Frequency and Percent Frequency

Total Parts

Cost ($) Frequency

2

50-59

13

60-69

16

70-79

7

80-89

7

90-99

5

100-109

50

Statistics

Percent

Frequency

4

26

(2/50)100

32

14

14

10

100

Slide 9

Graphical Summary: Histogram

Tune-up Total Parts Cost

18

16

Frequency

14

12

10

8

6

4

2

Statistics

Total Parts

5059 6069 7079 8089 9099 100-110 Cost ($)

Slide 10

Numerical Descriptive Statistics

The most common numerical (i.e., frequently used)

descriptive statistic is the average (or mean).

Hudson’s average total cost of parts, based on the 50

tune-ups studied, is $79 (found by summing the

50 cost values and then dividing by 50).

Statistics

Slide 11

Inferential Statistics

1.

2.

Involves

• Estimation

• Hypothesis

Testing

Popul i

at on?

Purpose

• Make decisions about

population characteristics

Statistics

Slide 12

Statistical Inference

Population

the set of all elements of interest in a

particular study

Sample a subset of the population

Statistical inference the process of using data obtained from a sample to make estimates

and test hypotheses about the

characteristics of a population

Census collecting data for a population

Sample survey collecting data for a sample

Statistics

Slide 13

Process of Statistical Inference

1. Population

consists of all

tune-ups. Average

cost of parts is

unknown.

2. A sample of 50...

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