Applied Statistics

Vahe Movsisyan
 Chapter 1
Applied Statistics Course Framework

Applied Statistics

Descriptive Basic Inferential

Statistics Probability Statistics

2 weeks 4 weeks 8 weeks Final exam

First Second
Midterm Midterm
exam exam
 Chapter 1
Introduction

Learning Objectives

In this chapter, you learn:

• How businesses use statistics
• The basic vocabulary of statistics
• The types of data used in business
 Chapter 1
Transforming data to information

Statistics is the branch of mathematics that transforms numbers (data) into

useful information for decision makers.

Why learn statistics? First and foremost, statistics helps you make better
sense of the world. Second, statistics helps you make better business
decisions.
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Basic Business Statistics Concepts

In the business world, statistics has these important specific uses:

• To summarize business data

• To draw conclusions from those data
• To make reliable forecasts about business activities
• To improve business processes

The statistical methods you use for these tasks come from one of the two
branches of statistics:

descriptive statistics and inferential statistics.

 Chapter 1
Descriptive Statistics
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Inferential Statistics

Inferential statistics are the methods that use the data collected from a small
group (sample) to draw conclusions about a larger group (population).

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 about a population based on sample results

 Chapter 1
Basic Vocabulary of Statistics

Variable: A variable is a characteristic of an item or individual.

Data: Data are the different values associated with a variable.

Population: A population consists of all the items or individuals about which

you want to reach conclusions.

Sample: A sample is the portion of a population selected for analysis.

Parameter: A parameter is a measure that describes a characteristic of a

population.

Statistic: A statistic is a measure that describes a characteristic of a sample.

 Chapter 1
Identifying Types of Variables

Types of Variables or data

Quantitative Qualitative
variable variable

Discrete Nominal
variable variable

Continuous Ordinal
variable variable
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Quantitative or Numerical variables

A discrete variable is the one whose outcomes are measured in fixed numbers. Such data are
essentially count data. These are derived from a process of counting, such as the number of items
possessing or not possessing a certain characteristic (counted items).

 Number of children
 Number of cars
 Defects per hour

A continuous variable is the one that can assume any value between any two points on a line segment, thus
representing an interval of values (measured characteristics).

 Weight
 Height
 Salary
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Qualitative or categorical variables

Nominal data are the outcome of classification into two or more categories of
items or units comprising a sample or a population according to some quality
characteristic.

Qualitative (Categorical) Variable Categories

Gender 1. Male 2. Female

Eye color 1. Blue 2. Green 3. Brown

Do you have a Facebook profile? 1. Yes 2. No

Types of investment 1. Stocks 2. Bonds 3. Other

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Qualitative or categorical variables

Ordinal or Rank data, are the result of assigning ranks to specify order in
terms of the integers 1,2,3, ..., n.

Qualitative (Categorical) Variable Ordered Categories

Student class designation Freshman Sophomore Junior Senior

Product satisfaction Very unsatisfied Fairly unsatisfied Fairly satisfied Very Satisfied

Student grades A B C D F