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Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-1
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2. © 2002 Prentice-Hall, Inc. Chap 1-2
Basic Business Statistics
(8th
Edition)
Chapter 1
Introduction and Data Collection
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3. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-3
Chapter Topics
 Why a manager needs to know about
statistics
 The growth and development of modern
statistics
 Key definitions
 Descriptive versus inferential statistics
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4. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-4
Chapter Topics
 Why data are needed
 Types of data and their sources
 Design of survey research
 Types of sampling methods
 Types of survey errors
(continued)
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5. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-5
Why a Manager Needs to
Know about Statistics
 To know how to properly present
information
 To know how to draw conclusions
about populations based on sample
information
 To know how to improve processes
 To know how to obtain reliable
forecasts
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6. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-6
The Growth and Development
of Modern Statistics
Needs of government to
collect data on its citizens
The development of the
mathematics of probability
theory
The advent of the computer
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7. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-7
Key Definitions
 A population (universe) is the collection of
things under consideration
 A sample is a portion of the population
selected for analysis
 A parameter is a summary measure
computed to describe a characteristic of the
population
 A statistic is a summary measure computed
to describe a characteristic of the sample
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8. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-8
Population and Sample
Population Sample
Use parameters to
summarize features
Use statistics to
summarize features
Inference on the population from the samplehttp://caindwarka

9. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-9
Statistical Methods
 Descriptive statistics
 Collecting and describing data
 Inferential statistics
 Drawing conclusions and/or making
decisions concerning a population based
only on sample data
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10. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-10
Descriptive Statistics
 Collect data
 e.g. Survey
 Present data
 e.g. Tables and graphs
 Characterize data
 e.g. Sample mean =
iX
n
∑
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11. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-11
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 and/or making decisions
concerning a population based on sample results.
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12. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-12
Why We Need Data
 To provide input to survey
 To provide input to study
 To measure performance of service or
production process
 To evaluate conformance to standards
 To assist in formulating alternative courses
of action
 To satisfy curiosity
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13. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-13
Data Sources
Primary
Data Collection
Secondary
Data Compilation
Observation
Experimentation
Survey
Print or Electronic
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14. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-14
Types of Data
C a t e g o r i c a l
( Q u a l it a t iv e )
D i s c r e t e C o n t i n u o u s
N u m e r i c a l
( Q u a n t i t a t i v e )
D a t a
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15. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-15
Design of Survey Research
 Choose an appropriate mode of response
 Reliable primary modes

Personal interview

Telephone interview

Mail survey
 Less reliable self-selection modes (not appropriate
for making inferences about the population)

Television survey

Internet survey

Printed survey on newspapers and magazines

Product or service questionnaires
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16. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-16
Design of Survey Research
 Identify broad categories
 List complete and non-overlapping categories
that reflect the theme
 Formulate accurate questions
 Make questions clear and unambiguous. Use
universally-accepted definitions
 Test the survey
 Pilot test the survey on a small group of
participants to assess clarity and length
(continued)
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17. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-17
Design of Survey Research
 Write a cover letter
 State the goal and purpose of the survey
 Explain the importance of a response
 Provide assurance of respondent’s anonymity
 Offer incentive gift for respondent participation
(continued)
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18. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-18
Reasons for Drawing a Sample
 Less time consuming than a census
 Less costly to administer than a census
 Less cumbersome and more practical to
administer than a census of the targeted
population
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19. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-19
Types of Sampling Methods
Quota
Samples
Non-Probability
Samples
Judgement Chunk
Probability Samples
Simple
Random
Systematic
Stratified
Cluster
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20. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-20
Probability Sampling
 Subjects of the sample are chosen based on
known probabilities
Probability Samples
Simple
Random Systematic Stratified Cluster
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21. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-21
Simple Random Samples
 Every individual or item from the frame has an
equal chance of being selected
 Selection may be with replacement or without
replacement
 Samples obtained from table of random
numbers or computer random number
generators
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22. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-22
 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 k-th individual thereafter
Systematic Samples
N = 64
n = 8
k = 8
First Group
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23. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-23
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
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24. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-24
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

25. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-25
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

26. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-26
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

27. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-27
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

28. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-28
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

29. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-29
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

30. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-30
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

31. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-31
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

32. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-32
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

33. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-33
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

34. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-34
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

35. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-35
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

36. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-36
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

37. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-37
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

38. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-38
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

39. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-39
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

40. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-40
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

41. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-41
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

42. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-42
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

43. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-43
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

44. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-44
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

45. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-45
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

46. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-46
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

47. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-47
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

48. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-48
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

49. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-49
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

50. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-50
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

51. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-51
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

52. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-52
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

53. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-53
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

54. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-54
Stratified Samples
 Population divided into two or more groups
according to some common characteristic
 Simple random sample selected from each
group
 The two or more samples are combined into
one
http://caindwarka

55. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-55
Cluster Samples
 Population divided into several “clusters,”
each representative of the population
 Simple random sample selected from each
 The samples are combined into one
Population
divided
into 4
clusters.
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56. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-56
Advantages and Disadvantages
 Simple random sample and systematic
sample
 Simple to use
 May not be a good representation of the
population’s underlying characteristics
 Stratified sample
 Ensures representation of individuals across the
entire population
 Cluster sample
 More cost effective
 Less efficient (need larger sample to acquire the
same level of precision) http://caindwarka

57. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-57
Evaluating Survey Worthiness
 What is the purpose of the survey?
 Is the survey based on a probability sample?
 Coverage error – appropriate frame
 Nonresponse error – follow up
 Measurement error – good questions elicit
good responses
 Sampling error – always exists
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58. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-58
Types of Survey Errors
 Coverage error
 Non response error
 Sampling error
 Measurement error
Excluded from
frame.
Follow up on
non responses.
Chance
differences from
sample to sample.
Bad Question!
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59. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-59
Chapter Summary
 Addressed why a manager needs to know
about statistics
 Discussed the growth and development of
modern statistics
 Addressed the notion of descriptive versus
inferential statistics
 Discussed the importance of data
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60. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc.
Chap 1-60
Chapter Summary
 Defined and described the different types of
data and sources
 Discussed the design of survey
 Discussed types of sampling methods
 Described different types of survey errors
(continued)
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