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Etextbook 978 0078020520 Statistical Techniques in Business and Economics 16th Edition
Etextbook 978 0078020520 Statistical Techniques in Business and Economics 16th Edition
vii
H O W A R E C H A P T E R S O R G A N I Z E D T O E N G AG E
S T U D E N T S A N D P R O M O T E L E A R N I N G?
Example/Solution E X A M P L E
The service departments at Tionesta Ford Lincoln Mercury and Sheffield Motors
After important concepts are intro- Inc., two of the four Applewood Auto Group dealerships, were both open 24 days
duced, a solved example is given. This last month. Listed below is the number of vehicles serviced last month at the two
example provides a how-to illustration dealerships. Construct dot plots and report summary statistics to compare the two
dealerships.
and shows a relevant business appli-
cation that helps students answer the
Tionesta Ford Lincoln Mercury
question, “What will I use this for?”
Monday Tuesday Wednesday Thursday Friday Saturday
23 33 27 28 39 26
30 32 28 33 35 32
29 25 36 31 32 27
35 32 35 37 36 30
Self-Reviews
Self-Reviews are interspersed
The Quality Control department of Plainsville Peanut Company is responsible for checking the
throughout each chapter and weight of the 8-ounce jar of peanut butter. The weights of a sample of nine jars produced last
closely patterned after the hour are:
help students monitor their 4–2 7.69 7.72 7.8 7.86 7.90 7.94 7.97 8.06 8.09
viii
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Statistics in Action
Statistics in Action articles are scattered through- STATISTICS IN ACTION
out the text, usually about two per chapter. They If you wish to get some
provide unique and interesting applications and attention at the next gath-
historical insights in the field of statistics. Page 63 12/10/13 ering you attend, announce
Lin20522_ch03_050-092.indd 11:37 AM user-f-w-198 /201/MH02018/Lin20522_disk1of1/0078020522/Lin20522_pagefiles
that you believe that at
least two people present
were born on the same
date—that is, the same day
of the year but not neces-
sarily the same year. If there
are 30 people in the room,
Definitions
Definitions of new terms or terms unique to
JOINT PROBABILITY A probability that measures the likelihood two or more
the study of statistics are set apart from the events will happen concurrently.
text and highlighted for easy reference and
review. They also appear in the Glossary at
the end of the book.
Formulas
Formulas that are used for the first time are
boxed and numbered for reference. In addi- SPECIAL RULE OF MULTIPLICATION P(A and B) 5 P(A)P(B) [5–5]
Exercises E X E R C I S E S 33. P(A1 ) 5 .60, P(A2 ) 5 .40, P(B1 ƒ A1 ) 5 .05, and P(B1 ƒ A2 ) 5 .10. Use Bayes’ theorem to de-
termine P(A1 ƒ B1 ).
34. P(A1 ) 5 .20, P(A2 ) 5 .40, P(A3 ) 5 .40, P(B1 ƒ A1 ) 5 .25, P(B1 ƒ A2 ) 5 .05, and P(B1 ƒ A3 ) 5 .10.
Exercises are included after Use Bayes’ theorem to determine P(A3 ƒ B1 ).
35. The Ludlow Wildcats baseball team, a minor league team in the Cleveland Indians organi-
sections within the chapter zation, plays 70% of their games at night and 30% during the day. The team wins 50% of
and at the end of the chap- their night games and 90% of their day games. According to today’s newspaper, they won
yesterday. What is the probability the game was played at night?
ter. Section exercises cover 36. Dr. Stallter has been teaching basic statistics for many years. She knows that 80% of the
the material studied in the students will complete the assigned problems. She has also determined that among those
who do their assignments, 90% will pass the course. Among those students who do not do
section.
Computer Output
The text includes many software examples, using
Excel, MegaStat®, and Minitab.
ix
HOW DOES THIS TEXT RE INFORCE
S T U D E N T L E A R N I N G?
BY C H A P T E R C H A P T E R S U M M A R Y
I. A random variable is a numerical value determined by the outcome of an experiment.
II. A probability distribution is a listing of all possible outcomes of an experiment and the prob-
ability associated with each outcome.
Chapter Summary A. A discrete probability distribution can assume only certain values. The main features are:
1. The sum of the probabilities is 1.00.
2. The probability of a particular outcome is between 0.00 and 1.00.
Each chapter contains a brief sum- 3. The outcomes are mutually exclusive.
B. A continuous distribution can assume an infinite number of values within a specific range.
mary of the chapter material, includ- III. The mean and variance of a probability distribution are computed as follows.
A. The mean is equal to:
ing the vocabulary and the critical m 5 © [xP(x) ] [6–1]
formulas. B. The variance is equal to:
s2 5 © [ (x 2 m) 2P(x) ] [6–2]
Pronunciation Key P R O N U N C I A T I O N
SYMBOL MEANING
K E Y
PRONUNCIATION
This tool lists the mathematical symbol, itsPage 241 10/18/13 8:39 AM f-494
Lin20522_ch07_206-246.indd
P(A)
P(,A)
Probability of A P of A
/201-1/MH02018/Lin20522_disk1of1/0078020522/Lin20522_pagefiles
Probability of not A P of not A
meaning, and how to pronounce it. We believe P(A and B) Probability of A and B P of A and B
this will help the student retain the meaning of P(A or B) Probability of A or B P of A or B
P(A ƒ B) Probability of A given B has happened P of A given B
the symbol and generally enhance course P
n r
Permutation of n items selected r at a time Pnr
communications. n
Cr Combination of n items selected r at a time Cnr
Chapter Exercises C H A P T E R E X E R C I S E S
41. The amount of cola in a 12-ounce can is uniformly distributed between 11.96 ounces and
12.05 ounces.
Generally, the end-of-chapter exer- a. What is the mean amount per can?
b. What is the standard deviation amount per can?
cises are the most challenging and c. What is the probability of selecting a can of cola and finding it has less than 12 ounces?
integrate the chapter concepts. The d. What is the probability of selecting a can of cola and finding it has more than 11.98
ounces?
answers and worked-out solutions for e. What is the probability of selecting a can of cola and finding it has more than 11.00
ounces?
all odd-numbered exercises are in Ap- 42. A tube of Listerine Tartar Control toothpaste contains 4.2 ounces. As people use the tooth-
paste, the amount remaining in any tube is random. Assume the amount of toothpaste re-
pendix D at the end of the text. Many maining in the tube follows a uniform distribution. From this information, we can determine
the following information about the amount remaining in a toothpaste tube without invading
exercises are noted with a data file anyone’s privacy.
a. How much toothpaste would you expect to be remaining in the tube?
icon in the margin. For these exercises, b. What is the standard deviation of the amount remaining in the tube?
there are data files in Excel format lo- c. What is the likelihood there is less than 3.0 ounces remaining in the tube?
d. What is the probability there is more than 1.5 ounces remaining in the tube?
cated on the text’s website, www 43. Many retail stores offer their own credit cards. At the time of the credit application, the
customer is given a 10% discount on the purchase. The time required for the credit appli-
.mhhe.com/lind16e. These files help cation process follows a uniform distribution with the times ranging from 4 minutes to
10 minutes.
students use statistical software to a. What is the mean time for the application process?
b. What is the standard deviation of the process time?
solve the exercises. c. What is the likelihood a particular application will take less than 6 minutes?
The last several exercises at the end of 74. Refer to the Real Estate data, which report information on homes sold in the Goodyear,
Arizona, area during the last year.
each chapter are based on three large a. The mean selling price (in $ thousands) of the homes was computed earlier to be
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$221.10, with a standard deviation of $47.11. Use the normal distribution to estimate
data sets. These data sets are printed the percentage of homes selling for more than $280.0. Compare this to the actual re-
sults. Does the normal distribution yield a good approximation of the actual results?
in Appendix A in the text and are also b. The mean distance from the center of the city is 14.629 miles, with a standard deviation
of 4.874 miles. Use the normal distribution to estimate the number of homes 18 or more
on the text’s website. These data sets miles but less than 22 miles from the center of the city. Compare this to the actual re-
present the students with real-world sults. Does the normal distribution yield a good approximation of the actual results?
x
Answers to Self-Review 16–7 a.
Rank
The worked-out solutions to the Self-Reviews are provided x y x y d d2
at the end of the text in Appendix E. 805 23 5.5 1 4.5 20.25
777 62 3.0 9 26.0 36.00
820 60 8.5 8 0.5 0.25
682 40 1.0 4 23.0 9.00
777 70 3.0 10 27.0 49.00
810 28 7.0 2 5.0 25.00
805 30 5.5 3 2.5 6.25
840 42 10.0 5 5.0 25.00
777 55 3.0 7 24.0 16.00
820 51 8.5 6 2.5 6.25
0 193.00
BY S E C T I O N
Section Reviews A REVIEW OF CHAPTERS 1–4
After selected groups of chapters This section is a review of the major concepts and terms introduced in Chapters 1–4. Chapter 1 began by describing the
meaning and purpose of statistics. Next we described the different types of variables and the four levels of measurement.
(1–4, 5–7, 8 and 9, 10–12, 13 and Chapter 2 was concerned with describing a set of observations by organizing it into a frequency distribution and then portray-
14, 15 and 16, and 17 and 18), a ing the frequency distribution as a histogram or a frequency polygon. Chapter 3 began by describing measures of location,
such as the mean, weighted mean, median, geometric mean, and mode. This chapter also included measures of dispersion,
Section Review is included. Much or spread. Discussed in this section were the range, variance, and standard deviation. Chapter 4 included several graphing
techniques such as dot plots, box plots, and scatter diagrams. We also discussed the coefficient of skewness, which reports
like a review before an exam, these the lack of symmetry in a set of data.
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include a brief overview of the
chapters and problems for review.
Cases C A S E S
A. Century National Bank balances for the four branches. Is there a difference
among the branches? Be sure to explain the difference
The review also includes continuing The following case will appear in subsequent review sec-
tions. Assume that you work in the Planning Department of between the mean and the median in your report.
3. Determine the range and the standard deviation of the
cases and several small cases that the Century National Bank and report to Ms. Lamberg. You
will need to do some data analysis and prepare a short writ- checking account balances. What do the first and third
let students make decisions using ten report. Remember, Mr. Selig is the president of the bank, quartiles show? Determine the coefficient of skewness
and indicate what it shows. Because Mr. Selig does not
so you will want to ensure that your report is complete and
tools and techniques from a variety accurate. A copy of the data appears in Appendix A.6. deal with statistics daily, include a brief description and
interpretation of the standard deviation and other
Century National Bank has offices in several cities in
of chapters. the Midwest and the southeastern part of the United States. measures.
Mr. Dan Selig, president and CEO, would like to know the
characteristics of his checking account customers. What is
the balance of a typical customer? B. Wildcat Plumbing Supply Inc.: Do We
How many other bank services do the checking ac- Have Gender Differences?
count customers use? Do the customers use the ATM ser- Wildcat Plumbing Supply has served the plumbing needs of
vice and, if so, how often? What about debit cards? Who Southwest Arizona for more than 40 years. The company
uses them, and how often are they used? was founded by Mr. Terrence St. Julian and is run today by
Practice Test
P R A C T I C E T E S T
The Practice Test is intended to
There is a practice test at the end of each review section. The tests are in two parts. The first part contains several objective
give students an idea of content questions, usually in a fill-in-the-blank format. The second part is problems. In most cases, it should take 30 to 45 minutes to
complete the test. The problems require a calculator. Check the answers in the Answer Section in the back of the book.
that might appear on a test and
Part 1—Objective
how the test might be structured. 1. The science of collecting, organizing, presenting, analyzing, and interpreting data to assist in
The Practice Test includes both making effective decisions is called .
2. Methods of organizing, summarizing, and presenting data in an informative way are
1.
covering the material studied in individuals or objects of interest are called the . 3.
4. List the two types of variables. 4.
the section.
xi
W H AT T E C H N O L O G Y C O N N E C T S S T U D E N T S
T O B U S I N E S S S TAT I S T I C S?
MCGRAW-HILL CONNECT®
BUSINESS STATISTICS
Less Managing. More Teaching. Greater Learning.
McGraw-Hill Connect® Business Statistics is an online assignment and assessment solution that connects stu-
dents with the tools and resources they’ll need to achieve success. McGraw-Hill Connect® Business Statistics
helps prepare students for their future by enabling faster learning, more efficient studying, and higher retention of
knowledge.
Smart Grading
When it comes to studying, time is precious. Connect® Business Statistics helps students learn more efficiently
by providing feedback and practice material when they need it, where they need it. When it comes to teaching,
your time is also precious. The grading function enables you to
• Have assignments scored automatically, giving students immediate feedback on their work and side-by-side
comparisons with correct answers.
• Access and review each response; manually change grades or leave comments for students to review.
• Reinforce classroom concepts with practice tests and instant quizzes.
Instructor Library
The Connect® Business Statistics Instructor Library is your repository for additional resources to improve student
engagement in and out of class. You can select and use any asset that enhances your lecture.
xii
LearnSmart
Students want to make the best use of their study time. The LearnSmart adaptive self-study technology within
Connect® Business Statistics provides students with a seamless combination of practice, assessment, and reme-
diation for every concept in the textbook. LearnSmart’s intelligent software adapts to every student response and
automatically delivers concepts that advance the student’s understanding while reducing time devoted to the
concepts already mastered. The result for every student is the fastest path to mastery of the chapter concepts.
LearnSmart
• Applies an intelligent concept engine to identify the relationships between concepts and to serve new
concepts to each student only when he or she is ready.
• Adapts automatically to each student, so students spend less time on the topics they understand and prac-
tice more those they have yet to master.
• Provides continual reinforcement and remediation, but gives only as much guidance as students need.
• Integrates diagnostics as part of the learning experience.
• Enables you to assess which concepts students have efficiently learned on their own, thus freeing class time
for more applications and discussion.
LearnSmart Achieve
LearnSmart Achieve is a revolutionary new learning system that combines a continually adaptive learning experi-
ence with necessary course resources to focus students on mastering concepts they don’t already know. The
program adjusts to each student individually as he or she progresses, creating just-in-time learning experiences
by presenting interactive content that is tailored to each student’s needs. A convenient time-management feature
and reports for instructors also ensure students stay on track.
xiii
For more information about Connect, go to www.mcgrawhillconnect.com, or contact your local McGraw-Hill
sales representative.
COURSESMART
CourseSmart is a new way to find and buy eTextbooks. At CourseSmart you can save up
to 50% of the cost of your print textbook, reduce your impact on the environment, and
gain access to powerful web tools for learning. Try a free chapter to see if it’s right for you.
Visit www.CourseSmart.com and search by title, author, or ISBN.
xiv
W H AT S O F T WA R E I S AVA I L A B L E W I T H
THIS TEXT?
MINITAB®/SPSS®/JMP®
Minitab® Student Version 14, SPSS® Student Version 18.0, and JMP® Student Edition Version 8 are software
tools that are available to help students solve the business statistics exercises in the text. Each can be packaged
with any McGraw-Hill business statistics text.
xv
WHAT R E SO U RC E S AR E AVAI L AB LE FO R I N STR UC TO R S?
All test bank questions are available in an EZ Test electronic format. Included are a number of multiple-choice,
true/false, and short-answer questions and problems. The answers to all questions are given, along with a rating
of the level of difficulty, chapter goal the question tests, Bloom’s taxonomy question type, and the AACSB knowl-
edge category.
WebCT/Blackboard/eCollege
All of the material in the Online Learning Center is also
available in portable WebCT, Blackboard, or eCollege
content “cartridges” provided free to adopters of this
text.
xvi
W H AT R E S O U R C E S A R E AVA I L A B L E F O R S T U D E N T S?
ALEKS also includes a new instructor module with powerful, assignment-driven fea-
tures and extensive content flexibility. ALEKS simplifies course management and al-
lows instructors to spend less time with administrative tasks and more time directing
student learning. To learn more about ALEKS, visit www.aleks.com.
xvii
AC K N O W L E D G M E N T S
This edition of Statistical Techniques in Business and Economics is the product of many people: students, colleagues, reviewers,
and the staff at McGraw-Hill/Irwin. We thank them all. We wish to express our sincere gratitude to the survey and focus group par-
ticipants, and the reviewers:
xviii
Stanley D. Stephenson Philip Boudreaux Shaomin Huang
Texas State University–San Marcos University of Louisiana at Lafayette Lewis-Clark State College
Debra Stiver Nancy Brooks J. Morgan Jones
University of Nevada–Reno University of Vermont University of North Carolina at
Bedassa Tadesse Qidong Cao Chapel Hill
University of Minnesota–Duluth Winthrop University Michael Kazlow
Stephen Trouard Margaret M. Capen Pace University
Mississippi College East Carolina University John Lawrence
Elzbieta Trybus California State University–Fullerton
Robert Carver
California State University– Stonehill College Sheila M. Lawrence
Northridge Rutgers, The State University of
Jan E. Christopher
Daniel Tschopp New Jersey
Delaware State University
Daemen College Jae Lee
James Cochran State University of New York at
Sue Umashankar
Louisiana Tech University New Paltz
University of Arizona
Farideh Dehkordi-Vakil Rosa Lemel
Bulent Uyar
Western Illinois University Kean University
University of Northern Iowa
Jesus M. Valencia Brant Deppa Robert Lemke
Slippery Rock University Winona State University Lake Forest College
Joseph Van Matre Bernard Dickman Francis P. Mathur
University of Alabama at Hofstra University California State Polytechnic
Birmingham Casey DiRienzo University, Pomona
Raja Vatti Elon University Ralph D. May
St. John’s University Erick M. Elder Southwestern Oklahoma State
Holly Verhasselt University of Arkansas at Little University
University of Houston–Victoria Rock Richard N. McGrath
Angie Waits Nicholas R. Farnum Bowling Green State University
Gadsden State Community College California State University–Fullerton Larry T. McRae
Bin Wang K. Renee Fister Appalachian State University
St. Edwards University Murray State University Dragan Miljkovic
Kathleen Whitcomb Gary Franko Southwest Missouri State
University of South Carolina Siena College University
Blake Whitten John M. Miller
Maurice Gilbert
University of Iowa Sam Houston State University
Troy State University
Oliver Yu Cameron Montgomery
Deborah J. Gougeon
San Jose State University Delta State University
University of Scranton
Zhiwei Zhu Broderick Oluyede
Christine Guenther Georgia Southern University
University of Louisiana Pacific University
Andrew Paizis
Charles F. Harrington Queens College
University of Southern Indiana
Survey and Focus Group Andrew L. H. Parkes
Participants Craig Heinicke University of Northern Iowa
Baldwin-Wallace College
Paul Paschke
Nawar Al-Shara George Hilton Oregon State University
American University Pacific Union College Srikant Raghavan
Charles H. Apigian Cindy L. Hinz Lawrence Technological
Middle Tennessee State University St. Bonaventure University University
Nagraj Balakrishnan Johnny C. Ho Surekha K. B. Rao
Clemson University Columbus State University Indiana University Northwest
xix
Timothy J. Schibik William Stein Lee J. Van Scyoc
University of Southern Indiana Texas A&M University University of Wisconsin–Oshkosh
Carlton Scott Robert E. Stevens Stuart H. Warnock
University of California, Irvine University of Louisiana at Monroe Tarleton State University
Samuel L. Seaman Debra Stiver Mark H. Witkowski
Baylor University University of Nevada–Reno University of Texas at San
Scott J. Seipel Ron Stunda Antonio
Middle Tennessee State University Birmingham-Southern College William F. Younkin
Sankara N. Sethuraman Edward Sullivan University of Miami
Augusta State University Lebanon Valley College Shuo Zhang
Daniel G. Shimshak Dharma Thiruvaiyaru State University of New York,
University of Massachusetts, Augusta State University Fredonia
Boston Daniel Tschopp Zhiwei Zhu
Robert K. Smidt Daemen College University of Louisiana at
California Polytechnic State Bulent Uyar Lafayette
University University of Northern Iowa
Their suggestions and thorough reviews of the previous edition and the manuscript of this edi-
tion make this a better text.
Special thanks go to a number of people. Professor Malcolm Gold, Avila University, reviewed
the page proofs and the solutions manual, checking text and exercises for accuracy. Professor
Jose Lopez–Calleja, Miami Dade College–Kendall, prepared the test bank. Professor Vickie Fry,
Westmoreland County Community College, accuracy checked the Connect exercises.
We also wish to thank the staff at McGraw-Hill. This includes Thomas Hayward, Senior Brand
Manager; Kaylee Putbrese, Development Editor; Diane Nowaczyk, Content Project Manager; and
others we do not know personally, but who have made valuable contributions.
xx
E N H A N C E M E N T S T O S TAT I S T I C A L T E C H N I Q U E S
I N B U S I N E S S & E C O N O M I C S , 16 E
MAJOR CHANGES MADE TO INDIVIDUAL • Revised Self-Review 6–4 applying the binomial distribution.
CHAPTERS: • New exercise 10 using the number of “underwater” loans.
• New exercise using a raffle at a local golf club to demon-
CHAPTER 1 What Is Statistics? strate probability and expected returns.
• New photo and chapter opening exercise on the Nook Color
sold by Barnes & Noble. CHAPTER 7 Continuous Probability Distributions
• New introduction with new graphic showing the increasing • Updated Statistics in Action.
amount of information collected and processed with new • Revised Self-Review 7–2 based on daily personal water
technologies. consumption.
• New ordinal scale example based on rankings of states • Revised explanation of the Empirical Rule as it relates to the
based on business climate. normal distribution.
• The chapter includes several new examples.
• Chapter is more focused on the revised learning objectives CHAPTER 8 Sampling Methods and the Central
and improving the chapter’s flow. Limit Theorem
• Revised exercise 17 is based on economic data. • New example of simple random sampling and the applica-
tion of the table of random numbers.
CHAPTER 2 Describing Data: Frequency • The discussions of systematic random, stratified random,
Tables, Frequency Distributions, and Graphic and cluster sampling have been revised.
Presentation • Revised exercise 44 based on the price of a gallon of milk.
• Revised Self-Review 2–3 to include data.
• Updated the company list in revised exercise 38.
CHAPTER 9 Estimation and Confidence Intervals
• New or revised exercises 45, 47, and 48. • New Statistics in Action describing EPA fuel economy.
• New separate section on point estimates.
CHAPTER 3 Describing Data: Numerical • Integration and application of the central limit theorem.
Measures • A revised simulation demonstrating the interpretation of
• Reorganized chapter based on revised learning objectives. confidence level.
• Replaced the mean deviation with more emphasis on the • New presentation on using the t table to find z values.
variance and standard deviation. • A revised discussion of determining the confidence interval
• Updated statistics in action. for the population mean.
• Expanded section on calculating sample size.
CHAPTER 4 Describing Data: Displaying and • New exercise 12 (milk consumption).
Exploring Data
• Updated exercise 22 with 2012 New York Yankee player CHAPTER 10 One-Sample Tests of Hypothesis
salaries. • New example/solution involving airport parking.
• Revised software solution and explanation of p-values.
CHAPTER 5 A Survey of Probability Concepts
• New exercises 17 (daily water consumption) and 19 (number
• New explanation of odds compared to probabilities. of text messages by teenagers).
• New exercise 21. • Conducting a test of hypothesis about a population propor-
• New example/solution for demonstrating contingency tables tion is moved to Chapter 15.
and tree diagrams. • New example introducing the concept of hypothesis
• New contingency table exercise 31. testing.
• Revised example/solution demonstrating the combination • Sixth step added to the hypothesis testing procedure em-
formula. phasizing the interpretation of the hypothesis test results.
xxi
• Changed subscripts in example/solution for easier CHAPTER 15 Nonparametric Methods: Nominal
understanding. Level Hypothesis Tests
• Updated exercise with 2012 New York Yankee player • Moved and renamed chapter.
salaries.
• Moved one-sample and two-sample tests of proportions
CHAPTER 12 Analysis of Variance from Chapters 10 and 11 to Chapter 15.
• New example introducing goodness-of-fit tests.
• New introduction to the chapter.
• Removed the graphical methods to evaluate normality.
• New exercise 24 using the speed of browsers to search the
Internet. • Revised section on contingency table analysis with a new
example/solution.
• Revised exercise 33 comparing learning in traditional versus
online courses. • Revised Data Set exercises.
• New section on Comparing Two Population Variances. CHAPTER 16 Nonparametric Methods: Analysis
• New example illustrating the comparison of variances. of Ordinal Data
• Revised section on two-way ANOVA with interaction with • Moved and renamed chapter.
new examples and revised example/solution.
• New example/solution and self-review demonstrating a
• Revised the names of the airlines in the one-way ANOVA hypothesis test about the median.
example.
• New example/solution demonstrating the rank-order
• Changed the subscripts in example/solution for easier correlation.
understanding.
• New exercise 30 (flight times between Los Angeles and CHAPTER 17 Index Numbers
San Francisco). • Moved chapter to follow nonparametric statistics.
• Updated dates, illustrations, and examples.
CHAPTER 13 Correlation and Linear Regression
• Revised example/solution demonstrating the use of the Pro-
• Rewrote the introduction section to the chapter. duction Price Index to deflate sales dollars.
• The data used as the basis for the North American Copier • Revised example/solution demonstrating the comparison of
Sales example/solution used throughout the chapter has the Dow Jones Industrial Average and the Nasdaq using
been changed and expanded to 15 observations to more indexing.
clearly demonstrate the chapter’s learning objectives.
• New self-review about using indexes to compare two differ-
• Revised section on transforming data using the economic ent measures over time.
relationship between price and sales.
• Revised Data Set Exercise.
• New exercises 35 (transforming data), 36 (Masters prizes
and scores), 43 (2012 NFL points scored versus points CHAPTER 18 Time Series and Forecasting
allowed), 44 (store size and sales), and 61 (airline distance • Moved chapter to follow nonparametric statistics and index
and fare). numbers.
• Updated dates, illustrations, and examples.
CHAPTER 14 Multiple Regression Analysis
• Revised section on the components of a time series.
• Rewrote the section on evaluating the multiple regression
• Revised graphics for better illustration.
equation.
• More emphasis on the regression ANOVA table. CHAPTER 19 Statistical Process Control and
• Enhanced the discussion of the p-value in decision making. Quality Management
• More emphasis on calculating the variance inflation factor to • Updated 2012 Malcolm Baldrige National Quality Award
evaluate multicollinearity. winners.
xxii
BRIEF CONTENTS
1 What Is Statistics? 1
2 Describing Data: Frequency Tables, Frequency Distributions, and
Graphic Presentation 17
3 Describing Data: Numerical Measures 50
4 Describing Data: Displaying and Exploring Data 93 Review Section
Glossary 816
Photo Credits 822
Index 823
xxiii
CONTENTS
EXERCISES 40
1 What Is Statistics? 1
Chapter Summary 41
Introduction 2
Chapter Exercises 42
Why Study Statistics? 2
Data Set Exercises 49
What Is Meant by Statistics? 3
Types of Statistics 4
Descriptive Statistics 4
Inferential Statistics 5 3 Describing Data:
Types of Variables 6 Numerical Measures 50
Levels of Measurement 7 Introduction 51
Nominal-Level Data 7 Measures of Location 51
Ordinal-Level Data 8 The Population Mean 52
Interval-Level Data 9 The Sample Mean 53
Ratio-Level Data 10 Properties of the Arithmetic Mean 54
EXERCISES 11 EXERCISES 55
Ethics and Statistics 12 The Median 56
Computer Software Applications 12 The Mode 58
Chapter Summary 13 EXERCISES 60
Chapter Exercises 14 The Relative Positions of the Mean,
Median, and Mode 61
Data Set Exercises 16
EXERCISES 62
Software Solution 63
2 Describing Data: The Weighted Mean 64
Frequency Tables, EXERCISES 65
Frequency Distributions, The Geometric Mean 65
and Graphic EXERCISES 67
Presentation 17 Why Study Dispersion? 68
Introduction 18 Range 69
Constructing Frequency Tables 19 Variance 70
xxiv
CONTENTS xxv
EXERCISES
A REVIEW OF CHAPTERS 17–18 679
Opportunity Loss
PROBLEMS 680
EXERCISES
PRACTICE TEST 680
Expected Opportunity Loss
EXERCISES
19 Statistical Process Maximin, Maximax, and Minimax Regret
Control and Quality Strategies
Management 682 Value of Perfect Information
Introduction 683 Sensitivity Analysis
A Brief History of Quality Control 683 EXERCISES
Six Sigma 686 Decision Trees
Sources of Variation 686 Chapter Summary
Diagnostic Charts 687 Chapter Exercises
Pareto Charts 687
Fishbone Diagrams 689
APPENDIXES 715
EXERCISES 690
Purpose and Types of Quality Control Charts 691
Appendix A: Data Sets 716
called the Nook Color. With this de- LO1-1 Explain why knowledge of statistics is important.
vice, you can download from a selec- LO1-2 Define statistics and provide an example of how
statistics is applied.
tion of over two million e-books,
LO1-3 Differentiate between descriptive and inferential
newspapers, and magazines. It dis-
statistics.
plays downloaded materials in full
LO1-4 Classify variables as qualitative or quantitative, and
color. Assume you know the number discrete or continuous.
of Nook Color units sold each day for LO1-5 Distinguish between nominal, ordinal, interval, and
the last month at the Barnes & Noble ratio levels of measurement.
store at the Market Commons Mall in LO1-6 List the values associated with the practice of statistics.
Riverside, California. Describe a con-
dition in which this information could
be considered a sample. Illustrate a
second situation in which the same
data would be regarded as a popula-
tion. (See Exercise 11 and LO1-3.)
2 CHAPTER 1
INTRODUCTION
Suppose you work for a large company and your supervisor asks you to decide if a
new version of a smartphone should be produced and sold. You start by thinking about
the product’s innovations and new features. Then, you stop and realize the weight of
the decision. The product will need to make a profit so the pricing and the costs of
production and distribution are all very important. The decision to introduce the
product is based on many alternatives. So how will you know? Where do you start?
Without a long experience in the industry, beginning to develop an intelligence that
will make you an expert is essential. You select three other people to work with and meet
with them. The conversation focuses on what you need to know and what information
and data you need. In your meeting, many questions are asked. How many competitors
are already in the market? How are smartphones priced? What design features do com-
petitors’ products have? What features does the market require? What do customers
want in a smartphone? What do customers like about the existing products? The an-
swers will be based on business intelligence consisting of data and information collected
through customer surveys, engineering analysis, and market research. In the end, your
presentation to support your decision regarding the introduction of a new smartphone is
based on the statistics that you use to summarize and organize your data, the statistics
that you use to compare the new product to existing products, and the statistics to esti-
mate future sales, costs, and revenues. The statistics will be the focus of the conversa-
tion that you will have with your supervisor about this very important decision.
As a decision maker, you will need to acquire and analyze data to support your
decisions. The purpose of this text is to develop your knowledge of basic statistical
techniques and methods and how to apply them to develop the business and per-
sonal intelligence that will help you make decisions.
make the information useful, (2) statistical techniques are used to make professional
and personal decisions, and (3) no matter what your career, you will need a knowl-
edge of statistics to understand the world and to be conversant in your career. An
understanding of statistics and statistical method will help you make more effective
personal and professional decisions.
Pretzels 26%
In this book, you will learn the basic techniques and applications of statistics that
you can use to support your decisions, both personal and professional. To start, we
will differentiate between descriptive and inferential statistics.
Descriptive Statistics
Masses of unorganized data—such as the census of population, the weekly earnings
of thousands of computer programmers, and the individual responses of 2,000 regis-
tered voters regarding their choice for president of the United States—are of little
value as is. However, descriptive statistics can be used to organize data into a mean-
ingful form. We define descriptive statistics as:
The following are examples that apply descriptive statistics to summarize a large
amount of data and provide information that is easy to understand.
• There are a total of 46,837 miles of interstate highways in the United States. The
interstate system represents only 1% of the nation’s total roads but carries more
than 20% of the traffic. The longest is I-90, which stretches from Boston to Se-
attle, a distance of 3,099 miles. The shortest is I-878 in New York City, which is
0.70 mile in length. Alaska does not have any interstate highways, Texas has the
most interstate miles at 3,232, and New York has the most interstate routes with 28.
• The average person spent $103.00 on traditional Valentine’s Day merchandise in
2013. This is an increase of $0.50 from 2012. As in previous years, men spent
nearly twice the amount women spent on the holiday. The average man spent
$135.35 to impress the people in his life while women only spent $72.28. Family
pets also feel the love; the average person spent $3.27 on his or her furry friends,
up from $2.17 last year.
Statistical methods and techniques to generate descriptive statistics are pre-
sented in Chapters 2 and 4. These include organizing and summarizing data with
frequency distributions and presenting frequency distributions with charts and graphs.
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DANCE ON STILTS AT THE GIRLS’ UNYAGO, NIUCHI
I see increasing reason to believe that the view formed some time
back as to the origin of the Makonde bush is the correct one. I have
no doubt that it is not a natural product, but the result of human
occupation. Those parts of the high country where man—as a very
slight amount of practice enables the eye to perceive at once—has not
yet penetrated with axe and hoe, are still occupied by a splendid
timber forest quite able to sustain a comparison with our mixed
forests in Germany. But wherever man has once built his hut or tilled
his field, this horrible bush springs up. Every phase of this process
may be seen in the course of a couple of hours’ walk along the main
road. From the bush to right or left, one hears the sound of the axe—
not from one spot only, but from several directions at once. A few
steps further on, we can see what is taking place. The brush has been
cut down and piled up in heaps to the height of a yard or more,
between which the trunks of the large trees stand up like the last
pillars of a magnificent ruined building. These, too, present a
melancholy spectacle: the destructive Makonde have ringed them—
cut a broad strip of bark all round to ensure their dying off—and also
piled up pyramids of brush round them. Father and son, mother and
son-in-law, are chopping away perseveringly in the background—too
busy, almost, to look round at the white stranger, who usually excites
so much interest. If you pass by the same place a week later, the piles
of brushwood have disappeared and a thick layer of ashes has taken
the place of the green forest. The large trees stretch their
smouldering trunks and branches in dumb accusation to heaven—if
they have not already fallen and been more or less reduced to ashes,
perhaps only showing as a white stripe on the dark ground.
This work of destruction is carried out by the Makonde alike on the
virgin forest and on the bush which has sprung up on sites already
cultivated and deserted. In the second case they are saved the trouble
of burning the large trees, these being entirely absent in the
secondary bush.
After burning this piece of forest ground and loosening it with the
hoe, the native sows his corn and plants his vegetables. All over the
country, he goes in for bed-culture, which requires, and, in fact,
receives, the most careful attention. Weeds are nowhere tolerated in
the south of German East Africa. The crops may fail on the plains,
where droughts are frequent, but never on the plateau with its
abundant rains and heavy dews. Its fortunate inhabitants even have
the satisfaction of seeing the proud Wayao and Wamakua working
for them as labourers, driven by hunger to serve where they were
accustomed to rule.
But the light, sandy soil is soon exhausted, and would yield no
harvest the second year if cultivated twice running. This fact has
been familiar to the native for ages; consequently he provides in
time, and, while his crop is growing, prepares the next plot with axe
and firebrand. Next year he plants this with his various crops and
lets the first piece lie fallow. For a short time it remains waste and
desolate; then nature steps in to repair the destruction wrought by
man; a thousand new growths spring out of the exhausted soil, and
even the old stumps put forth fresh shoots. Next year the new growth
is up to one’s knees, and in a few years more it is that terrible,
impenetrable bush, which maintains its position till the black
occupier of the land has made the round of all the available sites and
come back to his starting point.
The Makonde are, body and soul, so to speak, one with this bush.
According to my Yao informants, indeed, their name means nothing
else but “bush people.” Their own tradition says that they have been
settled up here for a very long time, but to my surprise they laid great
stress on an original immigration. Their old homes were in the
south-east, near Mikindani and the mouth of the Rovuma, whence
their peaceful forefathers were driven by the continual raids of the
Sakalavas from Madagascar and the warlike Shirazis[47] of the coast,
to take refuge on the almost inaccessible plateau. I have studied
African ethnology for twenty years, but the fact that changes of
population in this apparently quiet and peaceable corner of the earth
could have been occasioned by outside enterprises taking place on
the high seas, was completely new to me. It is, no doubt, however,
correct.
The charming tribal legend of the Makonde—besides informing us
of other interesting matters—explains why they have to live in the
thickest of the bush and a long way from the edge of the plateau,
instead of making their permanent homes beside the purling brooks
and springs of the low country.
“The place where the tribe originated is Mahuta, on the southern
side of the plateau towards the Rovuma, where of old time there was
nothing but thick bush. Out of this bush came a man who never
washed himself or shaved his head, and who ate and drank but little.
He went out and made a human figure from the wood of a tree
growing in the open country, which he took home to his abode in the
bush and there set it upright. In the night this image came to life and
was a woman. The man and woman went down together to the
Rovuma to wash themselves. Here the woman gave birth to a still-
born child. They left that place and passed over the high land into the
valley of the Mbemkuru, where the woman had another child, which
was also born dead. Then they returned to the high bush country of
Mahuta, where the third child was born, which lived and grew up. In
course of time, the couple had many more children, and called
themselves Wamatanda. These were the ancestral stock of the
Makonde, also called Wamakonde,[48] i.e., aborigines. Their
forefather, the man from the bush, gave his children the command to
bury their dead upright, in memory of the mother of their race who
was cut out of wood and awoke to life when standing upright. He also
warned them against settling in the valleys and near large streams,
for sickness and death dwelt there. They were to make it a rule to
have their huts at least an hour’s walk from the nearest watering-
place; then their children would thrive and escape illness.”
The explanation of the name Makonde given by my informants is
somewhat different from that contained in the above legend, which I
extract from a little book (small, but packed with information), by
Pater Adams, entitled Lindi und sein Hinterland. Otherwise, my
results agree exactly with the statements of the legend. Washing?
Hapana—there is no such thing. Why should they do so? As it is, the
supply of water scarcely suffices for cooking and drinking; other
people do not wash, so why should the Makonde distinguish himself
by such needless eccentricity? As for shaving the head, the short,
woolly crop scarcely needs it,[49] so the second ancestral precept is
likewise easy enough to follow. Beyond this, however, there is
nothing ridiculous in the ancestor’s advice. I have obtained from
various local artists a fairly large number of figures carved in wood,
ranging from fifteen to twenty-three inches in height, and
representing women belonging to the great group of the Mavia,
Makonde, and Matambwe tribes. The carving is remarkably well
done and renders the female type with great accuracy, especially the
keloid ornamentation, to be described later on. As to the object and
meaning of their works the sculptors either could or (more probably)
would tell me nothing, and I was forced to content myself with the
scanty information vouchsafed by one man, who said that the figures
were merely intended to represent the nembo—the artificial
deformations of pelele, ear-discs, and keloids. The legend recorded
by Pater Adams places these figures in a new light. They must surely
be more than mere dolls; and we may even venture to assume that
they are—though the majority of present-day Makonde are probably
unaware of the fact—representations of the tribal ancestress.
The references in the legend to the descent from Mahuta to the
Rovuma, and to a journey across the highlands into the Mbekuru
valley, undoubtedly indicate the previous history of the tribe, the
travels of the ancestral pair typifying the migrations of their
descendants. The descent to the neighbouring Rovuma valley, with
its extraordinary fertility and great abundance of game, is intelligible
at a glance—but the crossing of the Lukuledi depression, the ascent
to the Rondo Plateau and the descent to the Mbemkuru, also lie
within the bounds of probability, for all these districts have exactly
the same character as the extreme south. Now, however, comes a
point of especial interest for our bacteriological age. The primitive
Makonde did not enjoy their lives in the marshy river-valleys.
Disease raged among them, and many died. It was only after they
had returned to their original home near Mahuta, that the health
conditions of these people improved. We are very apt to think of the
African as a stupid person whose ignorance of nature is only equalled
by his fear of it, and who looks on all mishaps as caused by evil
spirits and malignant natural powers. It is much more correct to
assume in this case that the people very early learnt to distinguish
districts infested with malaria from those where it is absent.
This knowledge is crystallized in the
ancestral warning against settling in the
valleys and near the great waters, the
dwelling-places of disease and death. At the
same time, for security against the hostile
Mavia south of the Rovuma, it was enacted
that every settlement must be not less than a
certain distance from the southern edge of the
plateau. Such in fact is their mode of life at the
present day. It is not such a bad one, and
certainly they are both safer and more
comfortable than the Makua, the recent
intruders from the south, who have made USUAL METHOD OF
good their footing on the western edge of the CLOSING HUT-DOOR
plateau, extending over a fairly wide belt of
country. Neither Makua nor Makonde show in their dwellings
anything of the size and comeliness of the Yao houses in the plain,
especially at Masasi, Chingulungulu and Zuza’s. Jumbe Chauro, a
Makonde hamlet not far from Newala, on the road to Mahuta, is the
most important settlement of the tribe I have yet seen, and has fairly
spacious huts. But how slovenly is their construction compared with
the palatial residences of the elephant-hunters living in the plain.
The roofs are still more untidy than in the general run of huts during
the dry season, the walls show here and there the scanty beginnings
or the lamentable remains of the mud plastering, and the interior is a
veritable dog-kennel; dirt, dust and disorder everywhere. A few huts
only show any attempt at division into rooms, and this consists
merely of very roughly-made bamboo partitions. In one point alone
have I noticed any indication of progress—in the method of fastening
the door. Houses all over the south are secured in a simple but
ingenious manner. The door consists of a set of stout pieces of wood
or bamboo, tied with bark-string to two cross-pieces, and moving in
two grooves round one of the door-posts, so as to open inwards. If
the owner wishes to leave home, he takes two logs as thick as a man’s
upper arm and about a yard long. One of these is placed obliquely
against the middle of the door from the inside, so as to form an angle
of from 60° to 75° with the ground. He then places the second piece
horizontally across the first, pressing it downward with all his might.
It is kept in place by two strong posts planted in the ground a few
inches inside the door. This fastening is absolutely safe, but of course
cannot be applied to both doors at once, otherwise how could the
owner leave or enter his house? I have not yet succeeded in finding
out how the back door is fastened.