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CUMULATIVE PROBABILITIES FOR THE STANDARD NORMAL DISTRIBUTION
Entries in this table

give the area under the
curve to the left of the
Cumulative z value. For example, for
probability z = –.85, the cumulative
probability is .1977.
z 0
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
3.0 .0013 .0013 .0013 .0012 .0012 .0011 .0011 .0011 .0010 .0010
2.9 .0019 .0018 .0018 .0017 .0016 .0016 .0015 .0015 .0014 .0014
2.8 .0026 .0025 .0024 .0023 .0023 .0022 .0021 .0021 .0020 .0019
2.7 .0035 .0034 .0033 .0032 .0031 .0030 .0029 .0028 .0027 .0026
2.6 .0047 .0045 .0044 .0043 .0041 .0040 .0039 .0038 .0037 .0036
2.5 .0062 .0060 .0059 .0057 .0055 .0054 .0052 .0051 .0049 .0048
2.4 .0082 .0080 .0078 .0075 .0073 .0071 .0069 .0068 .0066 .0064
2.3 .0107 .0104 .0102 .0099 .0096 .0094 .0091 .0089 .0087 .0084
2.2 .0139 .0136 .0132 .0129 .0125 .0122 .0119 .0116 .0113 .0110
2.1 .0179 .0174 .0170 .0166 .0162 .0158 .0154 .0150 .0146 .0143
2.0 .0228 .0222 .0217 .0212 .0207 .0202 .0197 .0192 .0188 .0183
1.9 .0287 .0281 .0274 .0268 .0262 .0256 .0250 .0244 .0239 .0233
1.8 .0359 .0351 .0344 .0336 .0329 .0322 .0314 .0307 .0301 .0294
1.7 .0446 .0436 .0427 .0418 .0409 .0401 .0392 .0384 .0375 .0367
1.6 .0548 .0537 .0526 .0516 .0505 .0495 .0485 .0475 .0465 .0455
1.5 .0668 .0655 .0643 .0630 .0618 .0606 .0594 .0582 .0571 .0559
1.4 .0808 .0793 .0778 .0764 .0749 .0735 .0721 .0708 .0694 .0681
1.3 .0968 .0951 .0934 .0918 .0901 .0885 .0869 .0853 .0838 .0823
1.2 .1151 .1131 .1112 .1093 .1075 .1056 .1038 .1020 .1003 .0985
1.1 .1357 .1335 .1314 .1292 .1271 .1251 .1230 .1210 .1190 .1170
1.0 .1587 .1562 .1539 .1515 .1492 .1469 .1446 .1423 .1401 .1379
.9 .1841 .1814 .1788 .1762 .1736 .1711 .1685 .1660 .1635 .1611
.8 .2119 .2090 .2061 .2033 .2005 .1977 .1949 .1922 .1894 .1867
.7 .2420 .2389 .2358 .2327 .2296 .2266 .2236 .2206 .2177 .2148
.6 .2743 .2709 .2676 .2643 .2611 .2578 .2546 .2514 .2483 .2451
.5 .3085 .3050 .3015 .2981 .2946 .2912 .2877 .2843 .2810 .2776
.4 .3446 .3409 .3372 .3336 .3300 .3264 .3228 .3192 .3156 .3121
.3 .3821 .3783 .3745 .3707 .3669 .3632 .3594 .3557 .3520 .3483
.2 .4207 .4168 .4129 .4090 .4052 .4013 .3974 .3936 .3897 .3859
.1 .4602 .4562 .4522 .4483 .4443 .4404 .4364 .4325 .4286 .4247
.0 .5000 .4960 .4920 .4880 .4840 .4801 .4761 .4721 .4681 .4641
CUMULATIVE PROBABILITIES FOR THE STANDARD NORMAL DISTRIBUTION
Cumulative
probability Entries in the table
give the area under the
curve to the left of the
z value. For example, for
z = 1.25, the cumulative
probability is .8944.
0 z
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
.0 .5000 .5040 .5080 .5120 .5160 .5199 .5239 .5279 .5319 .5359
.1 .5398 .5438 .5478 .5517 .5557 .5596 .5636 .5675 .5714 .5753
.2 .5793 .5832 .5871 .5910 .5948 .5987 .6026 .6064 .6103 .6141
.3 .6179 .6217 .6255 .6293 .6331 .6368 .6406 .6443 .6480 .6517
.4 .6554 .6591 .6628 .6664 .6700 .6736 .6772 .6808 .6844 .6879
.5 .6915 .6950 .6985 .7019 .7054 .7088 .7123 .7157 .7190 .7224
.6 .7257 .7291 .7324 .7357 .7389 .7422 .7454 .7486 .7517 .7549
.7 .7580 .7611 .7642 .7673 .7704 .7734 .7764 .7794 .7823 .7852
.8 .7881 .7910 .7939 .7967 .7995 .8023 .8051 .8078 .8106 .8133
.9 .8159 .8186 .8212 .8238 .8264 .8289 .8315 .8340 .8365 .8389
1.0 .8413 .8438 .8461 .8485 .8508 .8531 .8554 .8577 .8599 .8621
1.1 .8643 .8665 .8686 .8708 .8729 .8749 .8770 .8790 .8810 .8830
1.2 .8849 .8869 .8888 .8907 .8925 .8944 .8962 .8980 .8997 .9015
1.3 .9032 .9049 .9066 .9082 .9099 .9115 .9131 .9147 .9162 .9177
1.4 .9192 .9207 .9222 .9236 .9251 .9265 .9279 .9292 .9306 .9319
1.5 .9332 .9345 .9357 .9370 .9382 .9394 .9406 .9418 .9429 .9441
1.6 .9452 .9463 .9474 .9484 .9495 .9505 .9515 .9525 .9535 .9545
1.7 .9554 .9564 .9573 .9582 .9591 .9599 .9608 .9616 .9625 .9633
1.8 .9641 .9649 .9656 .9664 .9671 .9678 .9686 .9693 .9699 .9706
1.9 .9713 .9719 .9726 .9732 .9738 .9744 .9750 .9756 .9761 .9767
2.0 .9772 .9778 .9783 .9788 .9793 .9798 .9803 .9808 .9812 .9817
2.1 .9821 .9826 .9830 .9834 .9838 .9842 .9846 .9850 .9854 .9857
2.2 .9861 .9864 .9868 .9871 .9875 .9878 .9881 .9884 .9887 .9890
2.3 .9893 .9896 .9898 .9901 .9904 .9906 .9909 .9911 .9913 .9916
2.4 .9918 .9920 .9922 .9925 .9927 .9929 .9931 .9932 .9934 .9936
2.5 .9938 .9940 .9941 .9943 .9945 .9946 .9948 .9949 .9951 .9952
2.6 .9953 .9955 .9956 .9957 .9959 .9960 .9961 .9962 .9963 .9964
2.7 .9965 .9966 .9967 .9968 .9969 .9970 .9971 .9972 .9973 .9974
2.8 .9974 .9975 .9976 .9977 .9977 .9978 .9979 .9979 .9980 .9981
2.9 .9981 .9982 .9982 .9983 .9984 .9984 .9985 .9985 .9986 .9986
3.0 .9987 .9987 .9987 .9988 .9988 .9989 .9989 .9989 .9990 .9990
iStock.com/alienforce; iStock.com/TommL
Essentials of Statistics for

Business and Economics
9e
James J. Cochran
Thomas A. Williams University of Alabama
David R. Anderson Rochester Institute
University of Cincinnati
of Technology Michael J. Fry
Dennis J. Sweeney Jeffrey D. Camm
Wake Forest University Jeffrey W. Ohlmann
University of Iowa
Australia Brazil Mexico Singapore United Kingdom United States

● ● ● ● ●
Essentials of Statistics for Business © 2020, 2017 Cengage Learning, Inc.
and Economics, 9e
David R. Anderson Unless otherwise noted, all content is © Cengage.
Dennis J. Sweeney
WCN: 02-300
Thomas A. Williams
ALL RIGHTS RESERVED. No part of this work covered by the copyright herein
Jeffrey D. Camm
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James J. Cochran
permitted by U.S. copyright law, without the prior written permission of the
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Brief Contents
ABOUT THE AUTHORS xix
PREFACE xxiii
Chapter 1 Data and Statistics 1

Chapter 2 Descriptive Statistics: Tabular and Graphical Displays 33
Chapter 3 Descriptive Statistics: Numerical Measures 107
Chapter 4 Introduction to Probability 177
Chapter 5 Discrete Probability Distributions 223
Chapter 6 Continuous Probability Distributions 281
Chapter 7 Sampling and Sampling Distributions 319
Chapter 8 Interval Estimation 373
Chapter 9 Hypothesis Tests 417
Chapter 10 Inference About Means and Proportions with
Two Populations 481
Chapter 11 Inferences About Population Variances 525
Chapter 12 Comparing Multiple Proportions, Test
of Independence and Goodness of Fit 553
Chapter 13 Experimental Design and Analysis of Variance 597
Chapter 14 Simple Linear Regression 653
Chapter 15 Multiple Regression 731
Appendix A References and Bibliography 800
Appendix B Tables 802
Appendix C Summation Notation 829
Appendix D Answers to Even-Numbered Exercises (MindTap Reader)
Appendix E Microsoft Excel 2016 and Tools for Statistical Analysis 831
Appendix F Computing p-Values with JMP and Excel 839
Index 843
Contents
ABOUT THE AUTHORS xix
PREFACE xxiii
Chapter 1 Data and Statistics 1

Statistics in Practice: Bloomberg Businessweek 2
1.1 Applications in Business and Economics 3
Accounting 3
Finance 3
Marketing 4
Production 4
Economics 4
Information Systems 4
1.2 Data 5
Elements, Variables, and Observations 5
Scales of Measurement 5
Categorical and Quantitative Data 7
Cross-Sectional and Time Series Data 8
1.3 Data Sources 10
Existing Sources 10
Observational Study 11
Experiment 12
Time and Cost Issues 13
Data Acquisition Errors 13
1.4 Descriptive Statistics 13
1.5 Statistical Inference 15
1.6 Analytics 16
1.7 Big Data and Data Mining 17
1.8 Computers and Statistical Analysis 19
1.9 Ethical Guidelines for Statistical Practice 19
Summary 21
Glossary 21
Supplementary Exercises 22
Appendix 1.1 Opening and Saving DATA Files and Converting to
Stacked form with JMP 30
Appendix 1.2 Getting Started with R and RStudio
(MindTap Reader)
Appendix 1.3 Basic Data Manipulation in R
(MindTap Reader)
Contents v
Chapter 2 Descriptive Statistics: Tabular and Graphical

Displays 33
Statistics in Practice: Colgate-Palmolive Company 34
2.1 Summarizing Data for a Categorical Variable 35
Frequency Distribution 35
Relative Frequency and Percent Frequency Distributions 36
Bar Charts and Pie Charts 37
2.2 Summarizing Data for a Quantitative Variable 42
Frequency Distribution 42
Relative Frequency and Percent Frequency Distributions 44
Dot Plot 45
Histogram 45
Cumulative Distributions 47
Stem-and-Leaf Display 47
2.3 Summarizing Data for Two Variables Using Tables 57
Crosstabulation 57
Simpson’s Paradox 59
2.4 Summarizing Data for Two Variables Using Graphical
Displays 65
Scatter Diagram and Trendline 65
Side-by-Side and Stacked Bar Charts 66
2.5 Data Visualization: Best Practices in Creating Effective
Graphical Displays 71
Creating Effective Graphical Displays 71
Choosing the Type of Graphical Display 72
Data Dashboards 73
Data Visualization in Practice: Cincinnati Zoo
and Botanical Garden 75
Summary 77
Glossary 78
Key Formulas 79
Case Problem 1: Pelican Stores 85
Case Problem 2: Movie Theater Releases 86
Case Problem 3: Queen City 87
Case Problem 4: Cut-Rate Machining, Inc. 88
Appendix 2.1 Creating Tabular and Graphical Presentations with
JMP 90
Appendix 2.2 Creating Tabular and Graphical Presentations
with Excel 93
Appendix 2.3 Creating Tabular and Graphical Presentations with R
(MindTap Reader)
vi Contents
Chapter 3 Descriptive Statistics: Numerical Measures 107

Statistics in Practice: Small Fry Design 108
3.1 Measures of Location 109
Mean 109
Weighted Mean 111
Median 112
Geometric Mean 113
Mode 115
Percentiles 115
Quartiles 116
3.2 Measures of Variability 122
Range 123
Interquartile Range 123
Variance 123
Standard Deviation 125
Coefficient of Variation 126
3.3 Measures of Distribution Shape, Relative Location,
and Detecting Outliers 129
Distribution Shape 129
z-Scores 130
Chebyshev’s Theorem 131
Empirical Rule 132
Detecting Outliers 134
3.4 Five-Number Summaries and Boxplots 137
Five-Number Summary 138
Boxplot 138
Comparative Analysis Using Boxplots 139
3.5 Measures of Association Between Two Variables 142
Covariance 142
Interpretation of the Covariance 144
Correlation Coefficient 146
Interpretation of the Correlation Coefficient 147
3.6 Data Dashboards: Adding Numerical Measures to
Improve Effectiveness 150
Summary 153
Glossary 154
Key Formulas 155
Case Problem 1: Pelican Stores 162
Case Problem 2: Movie Theater Releases 163
Case Problem 3: Business Schools of Asia-Pacific 164
Case Problem 4: Heavenly Chocolates Website Transactions 164
Contents vii
Case Problem 5: African Elephant Populations 166

Appendix 3.1 Descriptive Statistics with JMP 168
Appendix 3.2 Descriptive Statistics with Excel 171
Appendix 3.3 Descriptive Statistics with R (MindTap Reader)
Chapter 4 Introduction to Probability 177

Statistics in Practice: National Aeronautics and Space
Administration 178
4.1 Random Experiments, Counting Rules,
and Assigning Probabilities 179
Counting Rules, Combinations, and Permutations 180
Assigning Probabilities 184
Probabilities for the KP&L Project 185
4.2 Events and Their Probabilities 189
4.3 Some Basic Relationships of Probability 193
Complement of an Event 193
Addition Law 194
4.4 Conditional Probability 199
Independent Events 202
Multiplication Law 202
4.5 Bayes’ Theorem 207
Tabular Approach 210
Summary 212
Glossary 213
Key Formulas 214
Case Problem 1: Hamilton County Judges 219
Case Problem 2: Rob’s Market 221
Chapter 5 Discrete Probability Distributions 223

Statistics in Practice: Voter Waiting Times in Elections 224
5.1 Random Variables 225
Discrete Random Variables 225
Continuous Random Variables 225
5.2 Developing Discrete Probability Distributions 228
5.3 Expected Value and Variance 233
Expected Value 233
Variance 233
5.4 Bivariate Distributions, Covariance, and Financial
Portfolios 238
A Bivariate Empirical Discrete Probability Distribution 238
Financial Applications 241
Summary 244
viii Contents
5.5 Binomial Probability Distribution 247

A Binomial Experiment 248
Martin Clothing Store Problem 249
Using Tables of Binomial Probabilities 253
Expected Value and Variance for the Binomial
Distribution 254
5.6 Poisson Probability Distribution 258
An Example Involving Time Intervals 259
An Example Involving Length or Distance Intervals 260
5.7 Hypergeometric Probability Distribution 262
Summary 265
Glossary 266
Key Formulas 266
Case Problem 1: Go Bananas! Breakfast Cereal 272
Case Problem 2: McNeil’s Auto Mall 272
Case Problem 3: Grievance Committee at Tuglar Corporation 273
Appendix 5.1 Discrete Probability Distributions with JMP 275
Appendix 5.2 Discrete Probability Distributions with Excel 278
Appendix 5.3 Discrete Probability Distributions with R
(MindTap Reader)
Chapter 6 Continuous Probability Distributions 281
Statistics in Practice: Procter & Gamble 282
6.1 Uniform Probability Distribution 283
Area as a Measure of Probability 284
6.2 Normal Probability Distribution 287
Normal Curve 287
Standard Normal Probability Distribution 289
Computing Probabilities for Any Normal Probability
Distribution 294
Grear Tire Company Problem 294
6.3 Normal Approximation of Binomial Probabilities 299
6.4 Exponential Probability Distribution 302
Computing Probabilities for the Exponential
Distribution 302
Relationship Between the Poisson and Exponential
Distributions 303
Summary 305
Glossary 305
Key Formulas 306
Contents ix
Case Problem 1: Specialty Toys 309

Case Problem 2: Gebhardt Electronics 311
Appendix 6.1 Continuous Probability Distributions
with JMP 312
Appendix 6.2 Continuous Probability Distributions
with Excel 317
Appendix 6.3 Continuous Probability Distribution with R
(MindTap Reader)
Chapter 7 Sampling and Sampling Distributions 319

Statistics in Practice: Meadwestvaco Corporation 320
7.1 The Electronics Associates Sampling Problem 321
7.2 Selecting a Sample 322
Sampling from a Finite Population 322
Sampling from an Infinite Population 324
7.3 Point Estimation 327
Practical Advice 329
7.4 Introduction to Sampling Distributions 331
7.5 Sampling Distribution of x 333
Expected Value of x 334
Standard Deviation of x 334
Form of the Sampling Distribution of x 335
Sampling Distribution of x for the EAI Problem 337
Practical Value of the Sampling Distribution of x 338
Relationship Between the Sample Size and the Sampling
Distribution of x 339
7.6 Sampling Distribution of p 343
Expected Value of p 344
Standard Deviation of p 344
Form of the Sampling Distribution of p 345
Practical Value of the Sampling Distribution of p 345
7.7 Properties of Point Estimators 349
Unbiased 349
Efficiency 350
Consistency 351
7.8 Other Sampling Methods 351
Stratified Random Sampling 352
Cluster Sampling 352
Systematic Sampling 353
Convenience Sampling 353
Judgment Sampling 354
x Contents
7.9 Big Data and Standard Errors of Sampling Distributions 354

Sampling Error 354
Nonsampling Error 355
Big Data 356
Understanding What Big Data Is 356
Implications of Big Data for Sampling Error 357
Summary 360
Glossary 361
Key Formulas 362
Case Problem: Marion Dairies 366
Appendix 7.1 The Expected Value and Standard Deviation
of x– 367
Appendix 7.2 Random Sampling with JMP 368
Appendix 7.3 Random Sampling with Excel 371
Appendix 7.4 Random Sampling with R
(MindTap Reader)
Chapter 8 Interval Estimation 373

Statistics in Practice: Food Lion 374
8.1 Population Mean: s Known 375
Margin of Error and the Interval Estimate 375
8.2 Population Mean: s Unknown 381
Margin of Error and the Interval Estimate 382
Using a Small Sample 385
Summary of Interval Estimation Procedures 386
8.3 Determining the Sample Size 390
8.4 Population Proportion 393
Determining the Sample Size 394
8.5 Big Data and Confidence Intervals 398
Big Data and the Precision of Confidence Intervals 398
Implications of Big Data for Confidence Intervals 399
Summary 401
Glossary 402
Key Formulas 402
Case Problem 1: Young Professional Magazine 406
Case Problem 2: Gulf Real Estate Properties 407
Case Problem 3: Metropolitan Research, Inc. 409
Contents xi
Appendix 8.1 Interval Estimation with JMP 410

Appendix 8.2 Interval Estimation Using Excel 413
Appendix 8.3 Interval Estimation with R (MindTap Reader)
Chapter 9 Hypothesis Tests 417

Statistics in Practice: John Morrell & Company 418
9.1 Developing Null and Alternative Hypotheses 419
The Alternative Hypothesis as a Research Hypothesis 419
The Null Hypothesis as an Assumption to Be
Challenged 420
Summary of Forms for Null and Alternative
Hypotheses 421
9.2 Type I and Type II Errors 422
9.3 Population Mean: s Known 425
One-Tailed Test 425
Two-Tailed Test 430
Summary and Practical Advice 433
Relationship Between Interval Estimation and
Hypothesis Testing 434
9.4 Population Mean: s Unknown 439
One-Tailed Test 439
Two-Tailed Test 440
Summary and Practical Advice 441
9.5 Population Proportion 445
Summary 447
9.6 Hypothesis Testing and Decision Making 450
9.7 Calculating the Probability of Type II Errors 450
9.8 Determining the Sample Size for a Hypothesis Test
About a Population Mean 455
9.9 Big Data and Hypothesis Testing 459
Big Data, Hypothesis Testing, and p Values 459
Implications of Big Data in Hypothesis Testing 460
Summary 462
Glossary 462
Key Formulas 463
Case Problem 1: Quality Associates, Inc. 467
Case Problem 2: Ethical Behavior of Business Students
at Bayview University 469
Appendix 9.1 Hypothesis Testing with JMP 471
Appendix 9.2 Hypothesis Testing with Excel 475
Appendix 9.3 Hypothesis Testing with R (MindTap Reader)
xii Contents
Chapter 10 Inference About Means and Proportions with

Two Populations 481
Statistics in Practice: U.S. Food and Drug Administration 482
10.1 Inferences About the Difference Between Two
Population Means: s1 and s2 Known 483
Interval Estimation of m1 − m2 483
Hypothesis Tests About m1 − m2 485
Population Means: s1 and s2 Unknown 489
Interval Estimation of m1 − m2 489
Hypothesis Tests About m1 − m2 491
Population Means: Matched Samples 497
10.4 Inferences About the Difference Between Two Population
Proportions 503
Interval Estimation of p1 − p2 503
Hypothesis Tests About p1 − p2 505
Summary 509
Glossary 509
Key Formulas 509
Case Problem: Par, Inc. 514
Appendix 10.1 Inferences About Two Populations with JMP 515
Appendix 10.2 Inferences About Two Populations with Excel 519
Appendix 10.3 Inferences about Two Populations with R
(MindTap Reader)
Chapter 11 Inferences About Population Variances 525

Statistics in Practice: U.S. Government Accountability Office 526
11.1 Inferences About a Population Variance 527
Interval Estimation 527
Hypothesis Testing 531
11.2 Inferences About Two Population Variances 537
Summary 544
Key Formulas 544
Case Problem 1: Air Force Training Program 546
Case Problem 2: Meticulous Drill & Reamer 547
Appendix 11.1 Population Variances with JMP 549
Contents xiii
Appendix 11.2 Population Variances with Excel 551

Appendix 11.3 Population Variances with R (MindTap Reader)
Chapter 12 omparing Multiple Proportions, Test of

C
Independence and Goodness of Fit 553
Statistics in Practice: United Way 554
12.1 Testing the Equality of Population Proportions
for Three or More Populations 555
A Multiple Comparison Procedure 560
12.2 Test of Independence 565
12.3 Goodness of Fit Test 573
Multinomial Probability Distribution 573
Normal Probability Distribution 576
Summary 582
Glossary 582
Key Formulas 583
Case Problem 1: A Bipartisan Agenda for Change 587
Case Problem 2: Fuentes Salty Snacks, Inc. 588
Case Problem 3: Fresno Board Games 588
Appendix 12.1 Chi-Square Tests with JMP 590
Appendix 12.2 Chi-Square Tests with Excel 593
Appendix 12.3 Chi-Squared Tests with R (MindTap Reader)
Chapter 13 Experimental Design and Analysis

of Variance 597
Statistics in Practice: Burke Marketing Services, Inc. 598
13.1 An Introduction to Experimental Design
and Analysis of Variance 599
Data Collection 600
Assumptions for Analysis of Variance 601
Analysis of Variance: A Conceptual Overview 601
13.2 Analysis of Variance and the Completely
Randomized Design 604
Between-Treatments Estimate of Population Variance 605
Within-Treatments Estimate of Population Variance 606
Comparing the Variance Estimates: The F Test 606
ANOVA Table 608
Computer Results for Analysis of Variance 609
Testing for the Equality of k Population Means:
An Observational Study 610
xiv Contents
13.3 Multiple Comparison Procedures 615

Fisher’s LSD 615
Type I Error Rates 617
13.4 Randomized Block Design 621
Air Traffic Controller Stress Test 621
ANOVA Procedure 623
Computations and Conclusions 623
13.5 Factorial Experiment 627
ANOVA Procedure 629
Computations and Conclusions 629
Summary 635
Glossary 635
Key Formulas 636
Case Problem 1: Wentworth Medical Center 643
Case Problem 2: Compensation for Sales
Professionals 644
Case Problem 3: Touristopia Travel 644
Appendix 13.1 Analysis of Variance with JMP 646
Appendix 13.2 Analysis of Variance with Excel 649
Appendix 13.3 Analysis Variance with R (MindTap Reader)
Chapter 14 Simple Linear Regression 653

Statistics in Practice: Alliance Data Systems 654
14.1 Simple Linear Regression Model 655
Regression Model and Regression Equation 655
Estimated Regression Equation 656
14.2 Least Squares Method 658
14.3 Coefficient of Determination 668
Correlation Coefficient 671
14.4 Model Assumptions 675
14.5 Testing for Significance 676
Estimate of s2 676
t Test 677
Confidence Interval for b1 679
F Test 679
Some Cautions About the Interpretation of Significance
Tests 681
14.6 Using the Estimated Regression Equation
for Estimation and Prediction 684
Interval Estimation 685
Confidence Interval for the Mean Value of y 685
Prediction Interval for an Individual Value of y 686
Contents xv
14.7 Computer Solution 691

14.8 Residual Analysis: Validating Model Assumptions 694
Residual Plot Against x 695
Residual Plot Against ŷ 697
Standardized Residuals 698
Normal Probability Plot 699
14.9 Residual Analysis: Outliers and Influential Observations 703
Detecting Influential Observations 704
14.10 Practical Advice: Big Data and Hypothesis Testing in Simple
Linear Regression 710
Summary 711
Glossary 711
Key Formulas 712
Case Problem 1: Measuring Stock Market Risk 721
Case Problem 2: U.S. Department of Transportation 721
Case Problem 3: Selecting a Point-and-Shoot Digital Camera 722
Case Problem 4: Finding the Best Car Value 723
Case Problem 5: Buckeye Creek Amusement Park 724
Appendix 14.1 Calculus-Based Derivation of Least Squares
Formulas 726
Appendix 14.2 A Test for Significance Using Correlation 727
Appendix 14.3 Simple Linear Regression with JMP 727
Appendix 14.4 Regression Analysis with Excel 728
Appendix 14.5 Simple Linear Regression with R
(MindTap Reader)
Chapter 15 Multiple Regression 731

Statistics in Practice: 84.51° 732
15.1 Multiple Regression Model 733
Regression Model and Regression Equation 733
Estimated Multiple Regression Equation 733
15.2 Least Squares Method 734
An Example: Butler Trucking Company 735
Note on Interpretation of Coefficients 737
15.3 Multiple Coefficient of Determination 743
15.4 Model Assumptions 746
15.5 Testing for Significance 747
F Test 747
t Test 750
Multicollinearity 750
xvi Contents
15.6 Using the Estimated Regression Equation

for Estimation and Prediction 753
15.7 Categorical Independent Variables 755
An Example: Johnson Filtration, Inc. 756
Interpreting the Parameters 758
More Complex Categorical Variables 760
15.8 Residual Analysis 764
Studentized Deleted Residuals and Outliers 766
Influential Observations 767
Using Cook’s Distance Measure to Identify
Influential Observations 767
15.9 Logistic Regression 771
Logistic Regression Equation 772
Estimating the Logistic Regression Equation 773
Testing for Significance 774
Managerial Use 775
Interpreting the Logistic Regression Equation 776
Logit Transformation 778
15.10 Practical Advice: Big Data and Hypothesis Testing
in Multiple Regression 782
Summary 783
Glossary 783
Key Formulas 784
Case Problem 1: Consumer Research, Inc. 790
Case Problem 2: Predicting Winnings for NASCAR Drivers 791
Case Problem 3: Finding the Best Car Value 792
Appendix 15.1 Multiple Linear Regression with JMP 794
Appendix 15.2 Logistic Regression with JMP 796
Appendix 15.3 Multiple Regression with Excel 797
Appendix 15.4 Multiple Linear Regression with R
(MindTap Reader)
Appendix 15.5 Logistics Regression with R
(MindTap Reader)
Appendix A References and Bibliography 800
Appendix B Tables 802
Contents xvii
Appendix C Summation Notation 829
Appendix D Answers to Even-Numbered Exercises

(MindTap Reader)
Appendix E Microsoft Excel 2016 and Tools for Statistical

Analysis 831
Appendix F Computing p-Values with JMP and Excel 839
Index 843
About the Authors
David R. Anderson. David R. Anderson is Professor Emeritus of Quantitative Analysis
in the College of Business Administration at the University of Cincinnati. Born in Grand
Forks, North Dakota, he earned his B.S., M.S., and Ph.D. degrees from Purdue University.
Professor Anderson has served as Head of the Department of Quantitative Analysis and
Operations Management and as Associate Dean of the College of Business Administration
at the University of Cincinnati. In addition, he was the coordinator of the College’s first
Executive Program.
At the University of Cincinnati, Professor Anderson has taught introductory statistics
for business students as well as graduate-level courses in regression analysis, multivari-
ate analysis, and management science. He has also taught statistical courses at the Depart-
ment of Labor in Washington, D.C. He has been honored with nominations and awards for
excellence in teaching and excellence in service to student organizations.
Professor Anderson has coauthored 10 textbooks in the areas of statistics, management
science, linear programming, and production and operations management. He is an active
consultant in the field of sampling and statistical methods.
Dennis J. Sweeney. Dennis J. Sweeney is Professor Emeritus of Quantitative Analysis and

Founder of the Center for Productivity Improvement at the University of Cincinnati. Born in
Des Moines, Iowa, he earned a B.S.B.A. degree from Drake University and his M.B.A. and
D.B.A. degrees from Indiana University, where he was an NDEA Fellow. Professor Sweeney
has worked in the management science group at Procter & Gamble and spent a year as a
visiting professor at Duke University. Professor Sweeney served as Head of the Department
of Quantitative Analysis and as Associate Dean of the College of B
usiness Administration at
the University of Cincinnati.
Professor Sweeney has published more than 30 articles and monographs in the area of
management science and statistics. The National Science Foundation, IBM, Procter & Gam-
ble, Federated Department Stores, Kroger, and Cincinnati Gas & Electric have funded his
research, which has been published in Management Science, Operations Research, Mathe-
matical Programming, Decision Sciences, and other journals.
Professor Sweeney has coauthored 10 textbooks in the areas of statistics, management
science, linear programming, and production and operations management.
Thomas A. Williams. Thomas A. Williams is Professor Emeritus of Management S cience

in the College of Business at Rochester Institute of Technology. Born in Elmira, New York,
he earned his B.S. degree at Clarkson University. He did his graduate work at Rensselaer
Polytechnic Institute, where he received his M.S. and Ph.D. degrees.
Before joining the College of Business at RIT, Professor Williams served for seven years
as a faculty member in the College of Business Administration at the University of Cincin-
nati, where he developed the undergraduate program in Information Systems and then served
as its coordinator. At RIT he was the first chairman of the Decision Sciences Department. He
teaches courses in management science and statistics, as well as graduate courses in regres-
sion and decision analysis.
Professor Williams is the coauthor of 11 textbooks in the areas of management s cience,
statistics, production and operations management, and mathematics. He has been a consul-
tant for numerous Fortune 500 companies and has worked on projects ranging from the use
of data analysis to the development of large-scale regression models.
Jeffrey D. Camm. Jeffrey D. Camm is the Inmar Presidential Chair and Associate Dean of
Analytics in the School of Business at Wake Forest University. Born in Cincinnati, Ohio, he
holds a B.S. from Xavier University (Ohio) and a Ph.D. from Clemson University. Prior to
xx About the Authors
joining the faculty at Wake Forest, he was on the faculty of the University of Cincinnati. He
has also been a visiting scholar at Stanford University and a visiting professor of business
administration at the Tuck School of Business at Dartmouth College.
Dr. Camm has published over 40 papers in the general area of optimization applied to
problems in operations management and marketing. He has published his research in Science,
Management Science, Operations Research, Interfaces, and other professional journals. Dr.
Camm was named the Dornoff Fellow of Teaching Excellence at the University of Cincin-
nati and he was the 2006 recipient of the INFORMS Prize for the Teaching of Operations
Research Practice. A firm believer in practicing what he preaches, he has served as an oper-
ations research consultant to numerous companies and government agencies. From 2005 to
2010 he served as editor-in-chief of Interfaces. In 2017, he was named an INFORMS Fellow.
James J. Cochran. James J. Cochran is Professor of Applied Statistics and the Rogers-
Spivey Faculty Fellow at the University of Alabama. Born in Dayton, Ohio, he earned his
B.S., M.S., and M.B.A. degrees from Wright State University and a Ph.D. from the University
of Cincinnati. He has been at the University of Alabama since 2014 and has been a visiting
scholar at Stanford University, Universidad de Talca, the University of South Africa, and
Pole Universitaire Leonard de Vinci.
Professor Cochran has published over 40 papers in the development and application of
operations research and statistical methods. He has published his research in Management
Science, The American Statistician, Communications in Statistics—Theory and Methods,
Annals of operations Research, European Journal of Operational Research, Journal of Com-
binatorial Optimization. Interfaces, Statistics and Probability Letters, and other professional
journals. He was the 2008 recipient of the INFORMS Prize for the Teaching of Operations
Research Practice and the 2010 recipient of the Mu Sigma Rho Statistical Education Award.
Professor Cochran was elected to the International Statistics Institute in 2005 and named a
Fellow of the American Statistical Association in 2011. He received the Founders Award
in 2014 and the Karl E. Peace Award in 2015 from the American Statistical Association. In
2017 he received the American Statistical Association’s Waller Distinguished Teaching Ca-
reer Award and was named a Fellow of INFORMS, and in 2018 he received the INFORMS
President’s Award.
A strong advocate for effective statistics and operations research education as a means
of improving the quality of applications to real problems, Professor Cochran has organized
and chaired teaching effectiveness workshops in Montevideo, Uruguay; Cape Town, South
Africa; Cartagena, Colombia; Jaipur, India; Buenos Aires, Argentina; Nairobi, Kenya; Buea,
Cameroon; Kathmandu, Nepal; Osijek, Croatia; Havana, Cuba; Ulaanbaatar, Mongolia; and
Chis̹inău, Moldova. He has served as an operations research consultant to numerous compa-
nies and not-for-profit organizations. He served as editor-in-chief of INFORMS Transactions
on Education from 2006 to 2012 and is on the editorial board of Interfaces, International
Transactions in Operational Research, and Significance.
Michael J. Fry. Michael J. Fry is Professor of Operations, Business Analytics, and In-
formation Systems and Academic Director of the Center for Business Analytics in the Carl
H. Lindner College of Business at the University of Cincinnati. Born in Killeen, Texas, he
earned a BS from Texas A&M University and M.S.E. and Ph.D. degrees from the University
of Michigan. He has been at the University of Cincinnati since 2002, where he was previ-
ously Department Head and has been named a Lindner Research Fellow. He has also been a
visiting professor at the Samuel Curtis Johnson Graduate School of Management at Cornell
University and the Sauder School of Business at the University of British Columbia.
Professor Fry has published more than 25 research papers in journals such as Operations
Research, M&SOM, Transportation Science, Naval Research Logistics, IIE Transactions,
Critical Care Medicine and Interfaces. His research interests are in applying quantitative
About the Authors xxi
management methods to the areas of supply chain analytics, sports analytics, and public-
policy operations. He has worked with many different organizations for his research, includ-
ing Dell, Inc., Starbucks Coffee Company, Great American Insurance Group, the Cincinnati
Fire Department, the State of Ohio Election Commission, the Cincinnati Bengals, and the
Cincinnati Zoo & Botanical Garden. He was named a finalist for the Daniel H. Wagner Prize
for Excellence in Operations Research Practice, and he has been recognized for both his
research and teaching excellence at the University of Cincinnati.
Jeffrey W. Ohlmann. Jeffrey W. Ohlmann is Associate Professor of Management Sci-

ences and Huneke Research Fellow in the Tippie College of Business at the University of
Iowa. Born in Valentine, Nebraska, he earned a B.S. from the University of Nebraska, and
MS and Ph.D. degrees from the University of Michigan. He has been at the University of
Iowa since 2003.
Professor Ohlmann’s research on the modeling and solution of decision-making problems
has produced more than 20 research papers in journals such as Operations Research, Math-
ematics of Operations Research, INFORMS Journal on Computing, Transportation Science,
the European Journal of Operational Research, and Interfaces. He has collaborated with
companies such as Transfreight, LeanCor, Cargill, the Hamilton County Board of Elections,
and three National Football League franchises. Because of the relevance of his work to in-
dustry, he was bestowed the George B. Dantzig Dissertation Award and was recognized as
a finalist for the Daniel H. Wagner Prize for Excellence in Operations Research Practice.
Preface
T his text is the 9th edition of ESSENTIALS OF STATISTICS FOR BUSINESS AND
ECONOMICS. In this edition, we include procedures for statistical analysis using Excel
2016 and JMP Student Edition 14. In MindTap Reader, we also include instructions for using
the exceptionally popular open-source language R to perform statistical analysis. We are excited
to introduce two new coauthors, Michael J. Fry of the University of Cincinnati and Jeffrey W.
Ohlmann of the University of Iowa. Both are accomplished teachers and researchers. More
details on their backgrounds may be found in the About the Authors section.
The remainder of this preface describes the authors’ objectives in writing ESSENTIALS
OF STATISTICS FOR BUSINESS AND ECONOMICS and the major changes that were
made in developing the 9th edition. The purpose of the text is to give students, primarily
those in the fields of business administration and economics, a conceptual introduction
to the field of statistics and its many applications. The text is applications-oriented and
written with the needs of the nonmathematician in mind; the mathematical prerequisite
is understanding of algebra.
Applications of data analysis and statistical methodology are an integral part of the or-
ganization and presentation of the text material. The discussion and development of each
technique is presented in an application setting, with the statistical results providing insights
to decisions and solutions to problems.
Although the book is applications oriented, we have taken care to provide sound meth-
odological development and to use notation that is generally accepted for the topic being
covered. Hence, students will find that this text provides good preparation for the study of
more advanced statistical material. A bibliography to guide further study is included as an
appendix.
The text introduces the student to the software packages of JMP Student Edition 14 and
Microsoft® Office Excel 2016 and emphasizes the role of computer software in the applica-
tion of s tatistical analysis. JMP is illustrated as it is one of the leading statistical software
packages for both education and statistical practice. Excel is not a statistical software pack-
age, but the wide availability and use of Excel make it important for students to under-
stand the statistical c apabilities of this package. JMP and Excel procedures are provided in
appendices so that instructors have the flexibility of using as much computer emphasis as
desired for the course. MindTap Reader includes appendices for using R for statistical anal-
ysis. R is an open-source programming language that is widely used in practice to perform
statistical analysis. The use of R typically requires more training than the use of software
such as JMP or Excel, but the software is extremely powerful. To ease students’ introduction
to the R language, we also use RStudio which provides an integrated development environ-
ment for R.
Changes in the 9th Edition

We appreciate the acceptance and positive response to the previous editions of Essentials of
Statistics for Business and Economics. Accordingly, in making modifications for this new
edition, we have maintained the presentation style and readability of those editions. There
have been many changes made throughout the text to enhance its educational effectiveness.
The most substantial changes in the new edition are summarized here.
Content Revisions
oftware. In addition to step-by-step instructions in the software appendices for
S
Excel 2016, we also provide instructions for JMP Student Edition 14 and R. This
provides students exposure to and experience with the current versions of several of
the most commonly used software for statistical analysis in business. Excel 2016 and
xxiv Preface
JMP appendices are contained within the textbook chapters, while R appendices are
provided in MindTap Reader. In this latest edition, we no longer provide discussion of
the use of Minitab.
ase Problems. We have added 12 new case problems in this edition; the total
C
number of cases is now 42. One new case on graphical display has been added to
Chapter 2. Two new cases using discrete probability distributions have been added
to Chapter 5, and one new case using continuous probability distributions has been
added to Chapter 6. A new case on hypothesis testing has been added to Chapter 11,
and two new cases on testing proportions have been added to Chapter 12. The 42
case problems in this book provide students the opportunity to work on more com-
plex problems, analyze larger data sets, and prepare managerial reports based on the
results of their analyses.
xamples and Exercises Based on Real Data. In this edition, we have added
E
headers to all Applications exercises to make the application of each problem more
obvious. We continue to make a substantial effort to update our text examples and
exercises with the most current real data and referenced sources of statistical in-
formation. We have added more than 160 new examples and exercises based on
real data and referenced sources. Using data from sources also used by The Wall
Street Journal, USA Today, The Financial Times, and others, we have drawn from
actual studies and applications to develop explanations and create exercises that
demonstrate the many uses of statistics in business and economics. We believe that
the use of real data from interesting and relevant problems helps generate more
student interest in the material and enables the student to learn about both statistical
methodology and its application. The 9th edition contains more than 350 examples
and exercises based on real data.
Features and Pedagogy

Authors Anderson, Sweeney, Williams, Camm, Cochran, Fry, and Ohlmann have continued many
of the features that appeared in previous editions. Important ones for students are noted here.
Methods Exercises and Applications Exercises

The end-of-section exercises are split into two parts, Methods and Applications. The Meth-
ods exercises require students to use the formulas and make the necessary computations. The
Applications exercises require students to use the chapter material in real-world situations.
Thus, students first focus on the computational “nuts and bolts” and then move on to the
subtleties of statistical application and interpretation.
Margin Annotations and Notes and Comments

Margin annotations that highlight key points and provide additional insights for the student
are a key feature of this text. These annotations, which appear in the margins, are designed
to provide emphasis and enhance understanding of the terms and concepts being presented
in the text.
At the end of many sections, we provide Notes and Comments designed to give the
student additional insights about the statistical methodology and its application. Notes and
Comments include warnings about or limitations of the methodology, recommendations for
application, brief descriptions of additional technical considerations, and other matters.
Data Files Accompany the Text

Over 200 data files accompany this text. Data files are provided in Excel format and step-
by-step instructions on how to open Excel files in JMP are provided in Appendix 1.1. Files
Preface xxv
for use with R are provided in comma-separated-value (CSV) format for easy loading into
the R environment. Step-by-step instructions for importing CSV files into R are provided in
MindTap Reader Appendix R 1.2.
The data files can be accessed from WebAssign within the resources section, directly
within the MindTap Reader by clicking on the DATAfile icon, or online directly at
www.cengage.com/decisionsciences/anderson/sbe/14e.
Acknowledgments
We would like to acknowledge the work of our reviewers, who provided comments and sug-
gestions of ways to continue to improve our text. Thanks to
AbouEl-Makarim Aboueissa, Reidar Hagtvedt Claudiney Pereira

University of Southern University of Alberta Tulane University
Maine School of Business J. G. Pitt
Kathleen Arano Clifford B. Hawley University of Toronto
Fort Hays State University West Virginia University Scott A. Redenius
Musa Ayar Vance A. Hughey Brandeis University
Uw-baraboo/Sauk County Western Nevada College Sandra Robertson
Kathleen Burke Tony Hunnicutt Thomas Nelson
SUNY Cortland Ouachita Technical College Community College
YC Chang Stacey M. Jones Sunil Sapra
University of Notre Albers School of Business California State University,
Dame and Economics, Seattle Los Angeles
David Chen University Kyle Vann Scott
Rosemont College and Dukpa Kim Snead State Community
Saint Joseph’s University University of Virginia College
Margaret E. Cochran Rajaram Krishnan Rodney E. Stanley
Northwestern State Earlham College Tennessee State University
University of Louisiana Robert J. Lemke Jennifer Strehler
Thomas A. Dahlstrom Lake Forest College Oakton Community College
Eastern University Philip J. Mizzi Ronald Stunda
Anne Drougas Arizona State University Valdosta State University
Dominican University Mehdi Mohaghegh Norwich Cindy van Es
Fesseha Gebremikael Strayer University Cornell University
University/Calhoun Commu- Mihail Motzev Jennifer VanGilder
nity College Walla Walla University Ursinus College
Malcolm C. Gold Somnath Mukhopadhyay Jacqueline Wroughton
University of Wisconsin— The University of Texas Northern Kentucky
Marshfield/Wood County at El Paso University
Joel Goldstein Kenneth E. Murphy Dmitry Yarushkin
Western Connecticut State Chapman University Grand View University
University Ogbonnaya John Nwoha David Zimmer
Jim Grant Grambling State University Western Kentucky University
Lewis & Clark College
xxvi Preface
We continue to owe debt to our many colleagues and friends for their helpful c omments
and suggestions in the development of this and earlier editions of our text. Among them are:
Mohammad Ahmadi West Virginia University Roger Myerson

University of Tennessee Jim Hightower Northwestern University
at Chattanooga Richard O’Connell
California State
Lari Arjomand University, Fullerton Miami University of Ohio
Clayton College and State Alan Olinsky
University Alan Humphrey
University of Rhode Island Bryant College
Robert Balough Ceyhun Ozgur
Clarion University Ann Hussein
Philadelphia College of Valparaiso University
Philip Boudreaux Textiles and Science Tom Pray
University of Louisiana
C. Thomas Innis Rochester Institute
Mike Bourke University of Cincinnati of Technology
Houston Baptist University
Ben Isselhardt Harold Rahmlow
James Brannon Rochester Institute of St. Joseph’s University
University of Wisconsin— Technology
Oshkosh H. V. Ramakrishna
Jeffery Jarrett
John Bryant Penn State University at
University of Rhode Island
University of Pittsburgh Great Valley
Ronald Klimberg
Peter Bryant Tom Ryan
St. Joseph’s University
University of Colorado Case Western Reserve
David A. Kravitz University
Terri L. Byczkowski George Mason University
University of Cincinnati Bill Seaver
David Krueger University of Tennessee
Robert Carver St. Cloud State University
Stonehill College Alan Smith
John Leschke Robert Morris College
Richard Claycombe University of Virginia
McDaniel College Willbann Terpening
Martin S. Levy Gonzaga University
Robert Cochran University of Cincinnati
University of Wyoming Ted Tsukahara
John S. Loucks
Robert Collins St. Mary’s College of
St. Edward’s University
Marquette University California
David Lucking-Reiley
David W. Cravens Vanderbilt University Hroki Tsurumi
Texas Christian University Rutgers University
Bala Maniam
Tom Dahlstrom David Tufte
Eastern College Sam Houston State
University University of New Orleans
Gopal Dorai Victor Ukpolo
Don Marx
William Patterson University Austin Peay State University
University of Alaska,
Nicholas Farnum Ebenge Usip
Anchorage
California State Youngstown State
University—Fullerton Tom McCullough University
University of California—
Donald Gren Cindy Van Es
Berkeley
Salt Lake Community Cornell University
College Ronald W. Michener
Jack Vaughn
University of Virginia
Paul Guy University of Texas-El Paso
California State Glenn Milligan
Andrew Welki
University—Chico Ohio State University
John Carroll University
Clifford Hawley Mitchell Muesham
Sam Houston State University
Preface xxvii
Ari Wijetunga Mustafa Yilmaz Yan Yu

Morehead State University Northeastern University University of Cincinnati
J. E. Willis Gary Yoshimoto Charles Zimmerman
Louisiana State University St. Cloud State University Robert Morris College
We thank our associates from business and industry who supplied the Statistics in P
ractice
features. We recognize them individually by a credit line in each of the articles. We are also
indebted to our senior product manager, Aaron Arnsparger; our learning designer, Brandon
Foltz; our content manager, Conor Allen; our project manager at MPS Limited, Manoj
Kumar; and others at Cengage for their editorial counsel and support during the prepartion
of this text.
David R. Anderson
Dennis J. Sweeney
Thomas A. Williams
Jeffrey D. Camm
James J. Cochran
Michael J. Fry
Jeffrey W. Ohlmann
Chapter 1
Data and Statistics
CONTENTS
STATISTICS IN PRACTICE:
Bloomberg bUSINESSWEEK
1.1 APPLICATIONS IN BUSINESS AND ECONOMICS

Accounting
Finance
Marketing
Production
Economics
Information Systems
1.2 DATA
Elements, Variables, and Observations
Scales of Measurement
Categorical and Quantitative Data
Cross-Sectional and Time Series Data
1.3 DATA SOURCES
Existing Sources
Observational Study
Experiment
Time and Cost Issues
Data Acquisition Errors
1.4 DESCRIPTIVE STATISTICS
1.5 STATISTICAL INFERENCE
1.6 ANALYTICS
1.7 BIG DATA AND DATA MINING
1.8 COMPUTERS AND STATISTICAL ANALYSIS
1.9 ETHICAL GUIDELINES FOR STATISTICAL PRACTICE
Summary 21
Glossary 21
Appendix 1.1 Opening and Saving DATA Files and
Converting to Stacked Form with JMP
2 Chapter 1 Data and Statistics
S TAT I S T I C S I N P R A C T I C E
Bloomberg Businessweek*
NEW YORK, NEW YORK
Bloomberg Businessweek is one of the most widely read
business magazines in the world. Along with feature
articles on current topics, the magazine contains articles
on international business, economic analysis, information
processing, and science and technology. Information in
the feature articles and the regular sections helps readers
stay abreast of current developments and assess the im-
pact of those developments on business and economic
conditions.
Most issues of Bloomberg Businessweek provide an
in-depth report on a topic of current interest. Often, the
in-depth reports contain statistical facts and summaries
that help the reader understand the business and eco-
nomic information. Examples of articles and reports in-
clude the impact of businesses moving important work
to cloud computing, the crisis facing the U.S. Postal
Service, and why the debt crisis is even worse than we Bloomberg Businessweek uses statistical facts and summaries
think. In addition, Bloomberg Businessweek provides a in many of its articles. AP Images/Weng lei-Imaginechina
variety of statistics about the state of the economy, in-
cluding production indexes, stock prices, mutual funds,
Businessweek managers to subscriber interest in articles
and interest rates.
about new developments in computers. The results
Bloomberg Businessweek also uses statistics and
of the subscriber survey are also made available to
statistical information in managing its own business.
potential advertisers. The high percentage of subscrib-
For example, an annual survey of subscribers helps
ers involved with computer purchases at work would be
the company learn about subscriber demographics,
an incentive for a computer manufacturer to consider
reading habits, likely purchases, lifestyles, and so on.
advertising in Bloomberg Businessweek.
Bloomberg Businessweek managers use statistical
In this chapter, we discuss the types of data available
summaries from the survey to provide better services
for statistical analysis and describe how the data are ob-
to subscribers and advertisers. One North American
tained. We introduce descriptive statistics and statistical
subscriber survey indicated that 64% of Bloomberg
inference as ways of converting data into meaningful
Businessweek subscribers are involved with computer
and easily interpreted statistical information.
purchases at work. Such statistics alert Bloomberg
*The authors are indebted to Charlene Trentham, Research Manager,

for providing the context for this Statistics in Practice.
Frequently, we see the following types of statements in newspapers and magazines:

●● Unemployment dropped to an 18-year low of 3.8% in May 2018 from 3.9% in
April and after holding at 4.1% for the prior six months (Wall Street Journal,
June 1, 2018).
●● Tesla ended 2017 with around $5.4 billion of liquidity. Analysts forecast it
will burn through $2.8 billion of cash this year (Bloomberg Businessweek,
April 19, 2018).
●● The biggest banks in America reported a good set of earnings for the first three
months of 2018. Bank of America and Morgan Stanley made quarterly net profits of
$6.9 billion and $2.7 billion, respectively (The Economist, April 21, 2018).
●● According to a study from the Pew Research Center, 15% of U.S. adults say they
have used online dating sites or mobile apps (Wall Street Journal, May 2, 2018).
1.1 Applications in Business and Economics 3
●● According to the U.S. Centers for Disease Control and Prevention, in the United
States alone, at least 2 million illnesses and 23,000 deaths can be attributed each year
to antibiotic-resistant bacteria (Wall Street Journal, February 13, 2018).
The numerical facts in the preceding statements—3.8%, 3.9%, 4.1%, $5.4 billion, $2.8
billion $6.9 billion, $2.7 billion, 15%, 2 million, 23,000—are called statistics. In this
usage, the term statistics refers to numerical facts such as averages, medians, percentages,
and maximums that help us understand a variety of business and economic situations.
However, as you will see, the subject of statistics involves much more than numerical facts.
In a broader sense, statistics is the art and science of collecting, analyzing, presenting,
and interpreting data. Particularly in business and economics, the information provided by
collecting, analyzing, presenting, and interpreting data gives managers and decision makers
a better understanding of the business and economic environment and thus enables them to
make more informed and better decisions. In this text, we emphasize the use of statistics
for business and economic decision making.
Chapter 1 begins with some illustrations of the applications of statistics in business
and economics. In Section 1.2 we define the term data and introduce the concept of a data
set. This section also introduces key terms such as variables and observations, discusses
the difference between quantitative and categorical data, and illustrates the uses of cross-
sectional and time series data. Section 1.3 discusses how data can be obtained from
existing sources or through survey and experimental studies designed to obtain new data.
The uses of data in developing descriptive statistics and in making statistical inferences are
described in Sections 1.4 and 1.5. The last four sections of Chapter 1 provide an introduc-
tion to business analytics and the role statistics plays in it, an introduction to big data and
data mining, the role of the computer in statistical analysis, and a discussion of ethical
guidelines for statistical practice.
1.1 Applications in Business and Economics

In today’s global business and economic environment, anyone can access vast amounts of
statistical information. The most successful managers and decision makers understand the
information and know how to use it effectively. In this section, we provide examples that
illustrate some of the uses of statistics in business and economics.
Accounting
Public accounting firms use statistical sampling procedures when conducting audits for
their clients. For instance, suppose an accounting firm wants to determine whether the
amount of accounts receivable shown on a client’s balance sheet fairly represents the
actual amount of accounts receivable. Usually the large number of individual accounts
receivable makes reviewing and validating every account too time-consuming and expen-
sive. As common practice in such situations, the audit staff selects a subset of the accounts
called a sample. After reviewing the accuracy of the sampled accounts, the auditors draw
a conclusion as to whether the accounts receivable amount shown on the client’s balance
sheet is acceptable.
Finance
Financial analysts use a variety of statistical information to guide their investment
recommendations. In the case of stocks, analysts review financial data such as price/
earnings ratios and dividend yields. By comparing the information for an individual
stock with information about the stock market averages, an analyst can begin to draw
a conclusion as to whether the stock is a good investment. For example, the average
dividend yield for the S&P 500 companies for 2017 was 1.88%. Over the same period,
the average dividend yield for Microsoft was 1.72% (Yahoo Finance). In this case, the
statistical information on dividend yield indicates a lower dividend yield for Microsoft
than the average dividend yield for the S&P 500 companies. This and other information
about Microsoft would help the analyst make an informed buy, sell, or hold recommen-
dation for Microsoft stock.
Marketing
Electronic scanners at retail checkout counters collect data for a variety of marketing
research applications. For example, data suppliers such as The Nielsen Company and
IRI purchase point-of-sale scanner data from grocery stores, process the data, and then
sell statistical summaries of the data to manufacturers. Manufacturers spend hundreds of
thousands of dollars per product category to obtain this type of scanner data. Manufactur-
ers also purchase data and statistical summaries on promotional activities such as special
pricing and the use of in-store displays. Brand managers can review the scanner statistics
and the promotional activity statistics to gain a better understanding of the relationship
between promotional activities and sales. Such analyses often prove helpful in establishing
future marketing strategies for the various products.
Production
Today’s emphasis on quality makes quality control an important application of statistics in
production. A variety of statistical quality control charts are used to monitor the output of
a production process. In particular, an x-bar chart can be used to monitor the average out-
put. Suppose, for example, that a machine fills containers with 12 ounces of a soft drink.
Periodically, a production worker selects a sample of containers and computes the average
number of ounces in the sample. This average, or x-bar value, is plotted on an x-bar chart.
A plotted value above the chart’s upper control limit indicates overfilling, and a plotted
value below the chart’s lower control limit indicates underfilling. The process is termed “in
control” and allowed to continue as long as the plotted x-bar values fall between the chart’s
upper and lower control limits. Properly interpreted, an x-bar chart can help determine
when adjustments are necessary to correct a production process.
Economics
Economists frequently provide forecasts about the future of the economy or some aspect
of it. They use a variety of statistical information in making such forecasts. For instance,
in forecasting inflation rates, economists use statistical information on such indicators as
the Producer Price Index, the unemployment rate, and manufacturing capacity utilization.
Often these statistical indicators are entered into computerized forecasting models that
predict inflation rates.
Information Systems
Information systems administrators are responsible for the day-to-day operation of an
organization’s computer networks. A variety of statistical information helps administra-
tors assess the performance of computer networks, including local area networks (LANs),
wide area networks (WANs), network segments, intranets, and other data communication
systems. Statistics such as the mean number of users on the system, the proportion of time
any component of the system is down, and the proportion of bandwidth utilized at various
times of the day are examples of statistical information that help the system administrator
better understand and manage the computer network.
Applications of statistics such as those described in this section are an integral part of
this text. Such examples provide an overview of the breadth of statistical applications. To
supplement these examples, practitioners in the fields of business and economics provided
chapter-opening Statistics in Practice articles that introduce the material covered in each
chapter. The Statistics in Practice applications show the importance of statistics in a wide
variety of business and economic situations.
1.2 Data 5
1.2 Data
Data are the facts and figures collected, analyzed, and summarized for presentation and
interpretation. All the data collected in a particular study are referred to as the data set for
the study. Table 1.1 shows a data set containing information for 60 nations that participate
in the World Trade Organization. The World Trade Organization encourages the free flow
of international trade and provides a forum for resolving trade disputes.
Elements, Variables, and Observations

Elements are the entities on which data are collected. Each nation listed in Table 1.1 is an
element with the nation or element name shown in the first column. With 60 nations, the
data set contains 60 elements.
A variable is a characteristic of interest for the elements. The data set in Table 1.1
includes the following five variables:
●● WTO Status: The nation’s membership status in the World Trade Organization; this
can be either as a member or an observer.
●● Per Capita Gross Domestic Product (GDP) ($): The total market value ($) of all
goods and services produced by the nation divided by the number of people in the
nation; this is commonly used to compare economic productivity of the nations.
●● Fitch Rating: The nation’s sovereign credit rating as appraised by the Fitch Group1;
the credit ratings range from a high of AAA to a low of F and can be modified by
+ or −.
●● Fitch Outlook: An indication of the direction the credit rating is likely to move over
the upcoming two years; the outlook can be negative, stable, or positive.
Measurements collected on each variable for every element in a study provide the data.
The set of measurements obtained for a particular element is called an observation. Refer-
ring to Table 1.1, we see that the first observation (Armenia) contains the following mea-
surements: Member, 3615, BB-, and Stable. The second observation (Australia) contains
the following measurements: Member, 49755, AAA, and Stable and so on. A data set with
60 elements contains 60 observations.
Scales of Measurement
Data collection requires one of the following scales of measurement: nominal, ordinal,
interval, or ratio. The scale of measurement determines the amount of information con-
tained in the data and indicates the most appropriate data summarization and statistical
analyses.
When the data for a variable consist of labels or names used to identify an attribute
of the element, the scale of measurement is considered a nominal scale. For example,
referring to the data in Table 1.1, the scale of measurement for the WTO Status variable is
nominal because the data “member” and “observer” are labels used to identify the status
category for the nation. In cases where the scale of measurement is nominal, a numerical
code as well as a nonnumerical label may be used. For example, to facilitate data collec-
tion and to prepare the data for entry into a computer database, we might use a numerical
code for the WTO Status variable by letting 1 denote a member nation in the World Trade
Organization and 2 denote an observer nation. The scale of measurement is nominal even
though the data appear as numerical values.
The scale of measurement for a variable is considered an ordinal scale if the data
exhibit the properties of nominal data and in addition, the order or rank of the data is
meaningful. For example, referring to the data in Table 1.1, the scale of measurement for
1
The Fitch Group is one of three nationally recognized statistical rating organizations designated by the U.S. Securities
and Exchange Commission. The other two are Standard & Poor’s and Moody’s.
TABLE 1.1 Data Set for 60 Nations in the World Trade Organization
Nation WTO Per Capita Fitch Fitch
Status GDP ($) Rating Outlook
Armenia Member 3,615 BB2 Stable
Australia Member 49,755 AAA Stable
Austria Member 44,758 AAA Stable
Azerbaijan Observer 3,879 BBB2 Stable
Bahrain Member 22,579 BBB Stable
Belgium Member 41,271 AA Stable
Brazil Member 8,650 BBB Stable
Bulgaria Member 7,469 BBB2 Stable
Canada Member 42,349 AAA Stable
Cape Verde Member 2,998 B1 Stable
Chile Member 13,793 A1 Stable
China Member 8,123 A1 Stable
Colombia Member 5,806 BBB2 Stable
Costa Rica Member 11,825 BB+ Stable
Croatia Member 12,149 BBB2 Negative
Cyprus Member 23,541 B Negative
Nations Czech Republic Member 18,484 A1 Stable
Denmark Member 53,579 AAA Stable
Ecuador Member 6,019 B2 Positive
Egypt Member 3,478 B Negative
El Salvador Member 4,224 BB Negative
Estonia Member 17,737 A1 Stable
France Member 36,857 AAA Negative
Georgia Member 3,866 BB2 Stable
Germany Member 42,161 AAA Stable
Hungary Member 12,820 BB1 Stable
Iceland Member 60,530 BBB Stable
Ireland Member 64,175 BBB1 Stable
Israel Member 37,181 A Stable
Italy Member 30,669 A2 Negative
Japan Member 38,972 A1 Negative
Kazakhstan Observer 7,715 BBB1 Stable
Kenya Member 1,455 B1 Stable
Latvia Member 14,071 BBB Positive
Lebanon Observer 8,257 B Stable
Lithuania Member 14,913 BBB Stable
Malaysia Member 9,508 A2 Stable
Mexico Member 8,209 BBB Stable
Peru Member 6,049 BBB Stable
Philippines Member 2,951 BB1 Stable
Poland Member 12,414 A2 Positive
Portugal Member 19,872 BB1 Negative
South Korea Member 27,539 AA2 Stable
Romania Member 9,523 BBB2 Stable
Russia Member 8,748 BBB Stable
Rwanda Member 703 B Stable
Serbia Observer 5,426 BB2 Negative
Singapore Member 52,962 AAA Stable
Slovakia Member 16,530 A1 Stable
1.2 Data 7
Slovenia Member 21,650 A2 Negative

South Africa Member 5,275 BBB Stable
Spain Member 26,617 A2 Stable
Sweden Member 51,845 AAA Stable
Switzerland Member 79,888 AAA Stable
Thailand Member 5,911 BBB Stable
Turkey Member 10,863 BBB2 Stable
United Kingdom Member 40,412 AAA Negative
Uruguay Member 15,221 BB1 Positive
United States Member 57,638 AAA Stable
Zambia Member 1,270 B1 Negative
the Fitch Rating is ordinal because the rating labels, which range from AAA to F, can be
rank ordered from best credit rating (AAA) to poorest credit rating (F). The rating letters
provide the labels similar to nominal data, but in addition, the data can also be ranked or
ordered based on the credit rating, which makes the measurement scale ordinal. Ordinal
data can also be recorded by a numerical code, for example, your class rank in school.
The scale of measurement for a variable is an interval scale if the data have all the
properties of ordinal data and the interval between values is expressed in terms of a fixed
unit of measure. Interval data are always numerical. College admission SAT scores are
an example of interval-scaled data. For example, three students with SAT math scores
of 620, 550, and 470 can be ranked or ordered in terms of best performance to poorest
performance in math. In addition, the differences between the scores are meaningful. For
instance, student 1 scored 620 − 550 = 70 points more than student 2, while student 2
scored 550 − 470 = 80 points more than student 3.
The scale of measurement for a variable is a ratio scale if the data have all the properties
of interval data and the ratio of two values is meaningful. Variables such as distance, height,
weight, and time use the ratio scale of measurement. This scale requires that a zero value be
included to indicate that nothing exists for the variable at the zero point. For example, con-
sider the cost of an automobile. A zero value for the cost would indicate that the automobile
has no cost and is free. In addition, if we compare the cost of $30,000 for one automobile to
the cost of $15,000 for a second automobile, the ratio property shows that the first automo-
bile is $30,000/$15,000 = 2 times, or twice, the cost of the second automobile.
Categorical and Quantitative Data

Data can be classified as either categorical or quantitative. Data that can be grouped by spe-
cific categories are referred to as categorical data. Categorical data use either the nominal
or ordinal scale of measurement. Data that use numeric values to indicate how much or
how many are referred to as quantitative data. Quantitative data are obtained using either
the interval or ratio scale of measurement.
The statistical method A categorical variable is a variable with categorical data, and a quantitative variable is
appropriate for summarizing a variable with quantitative data. The statistical analysis appropriate for a particular variable
data depends upon whether
depends upon whether the variable is categorical or quantitative. If the variable is categorical,
the data are categorical or
quantitative.
the statistical analysis is limited. We can summarize categorical data by counting the num-
ber of observations in each category or by computing the proportion of the observations in
each category. However, even when the categorical data are identified by a numerical code,
arithmetic operations such as addition, subtraction, multiplication, and division do not provide
meaningful results. Section 2.1 discusses ways of summarizing categorical data.
Arithmetic operations provide meaningful results for quantitative variables. For
example, quantitative data may be added and then divided by the number of observations
to compute the average value. This average is usually meaningful and easily interpreted. In
general, more alternatives for statistical analysis are possible when data are quantitative.
Section 2.2 and Chapter 3 provide ways of summarizing quantitative data.
Cross-Sectional and Time Series Data

For purposes of statistical analysis, distinguishing between cross-sectional data and time
series data is important. Cross-sectional data are data collected at the same or approx-
imately the same point in time. The data in Table 1.1 are cross-sectional because they
describe the five variables for the 60 World Trade Organization nations at the same point
in time. Time series data are data collected over several time periods. For example, the
time series in Figure 1.1 shows the U.S. average price per gallon of conventional regular
gasoline between 2012 and 2018. From January 2012 until June 2014, prices fluctuated be-
tween $3.19 and $3.84 per gallon before a long stretch of decreasing prices from July 2014
to January 2015. The lowest average price per gallon occurred in January 2016 ($1.68).
Since then, the average price appears to be on a gradual increasing trend.
Graphs of time series data are frequently found in business and economic publications.
Such graphs help analysts understand what happened in the past, identify any trends over
time, and project future values for the time series. The graphs of time series data can take
on a variety of forms, as shown in Figure 1.2. With a little study, these graphs are usually
easy to understand and interpret. For example, Panel (A) in Figure 1.2 is a graph that shows
the Dow Jones Industrial Average Index from 2008 to 2018. Poor economic conditions
caused a serious drop in the index during 2008 with the low point occurring in February
2009 (7062). After that, the index has been on a remarkable nine-year increase, reaching its
peak (26,149) in January 2018.
The graph in Panel (B) shows the net income of McDonald’s Inc. from 2008 to 2017. The
declining economic conditions in 2008 and 2009 were actually beneficial to McDonald’s as
the company’s net income rose to all-time highs. The growth in McDonald’s net income
showed that the company was thriving during the economic downturn as people were
cutting back on the more expensive sit-down restaurants and seeking less-expensive
alternatives offered by McDonald’s. McDonald’s net income continued to new all-time
highs in 2010 and 2011, decreased slightly in 2012, and peaked in 2013. After three years of
relatively lower net income, their net income increased to $5.19 billion in 2017.
Panel (C) shows the time series for the occupancy rate of hotels in South Florida over
a one-year period. The highest occupancy rates, 95% and 98%, occur during the months
FIGURE 1.1 U.S. Average Price per Gallon for Conventional Regular Gasoline
$4.50
$4.00
Average Price per Gallon
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18
Date
Source: Energy Information Administration, U.S. Department of Energy.
1.2 Data 9
Figure 1.2 A Variety of Graphs of Time Series Data
Dow Jones Industrial Average Index

30000
25000
20000
15000
10000
5000
08
09
10
11
12
13
14
15
16
17
18
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Date
(A) Dow Jones Industrial Average Index
5
Net Income ($ billions)
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
(B) Net Income for McDonald’s Inc.
100
80
Percentage Occupied
60
40
20
0
n
p
n
ec
ug
ar
pr
ay
ct
ov
l
Ju
Se
Ja
Fe
Ju
M
D
A
M
Month
(C) Occupancy Rate of South Florida Hotels
of February and March when the climate of South Florida is attractive to tourists. In fact,
January to April of each year is typically the high-occupancy season for South Florida hotels.
On the other hand, note the low occupancy rates during the months of August to October,
with the lowest occupancy rate of 50% occurring in September. High temperatures and the
hurricane season are the primary reasons for the drop in hotel occupancy during this period.
N O T E S + C O M M E N T S
1. A
n observation is the set of measurements obtained for 2. Quantitative data may be discrete or continuous. Quanti-
each element in a data set. Hence, the number of obser- tative data that measure how many (e.g., number of calls
vations is always the same as the number of elements. received in 5 minutes) are discrete. Quantitative data that
The number of measurements obtained for each element measure how much (e.g., weight or time) are continuous
equals the number of variables. Hence, the total number because no separation occurs between the possible data
of data items can be determined by multiplying the num- values.
ber of observations by the number of variables.
1.3 Data Sources

Data can be obtained from existing sources, by conducting an observational study, or by
conducting an experiment.
Existing Sources
In some cases, data needed for a particular application already exist. Companies maintain a va-
riety of databases about their employees, customers, and business operations. Data on employee
salaries, ages, and years of experience can usually be obtained from internal personnel records.
Other internal records contain data on sales, advertising expenditures, distribution costs, inventory
levels, and production quantities. Most companies also maintain detailed data about their custom-
ers. Table 1.2 shows some of the data commonly available from internal company records.
Organizations that specialize in collecting and maintaining data make available sub-
stantial amounts of business and economic data. Companies access these external data
sources through leasing arrangements or by purchase. Dun & Bradstreet, Bloomberg, and
Dow Jones & Company are three firms that provide extensive business database services to
clients. The Nielsen Company and IRI built successful businesses collecting and process-
ing data that they sell to advertisers and product manufacturers.
Data are also available from a variety of industry associations and special interest organiza-
tions. The U.S. Travel Association maintains travel-related information such as the number of
TABLE 1.2 Examples of Data Available from Internal Company Records

Source Some of the Data Typically Available
Employee records Name, address, social security number, salary, number of vacation
days, number of sick days, and bonus
Production records Part or product number, quantity produced, direct labor cost, and
materials cost
Inventory records Part or product number, number of units on hand, reorder level,
economic order quantity, and discount schedule
Sales records Product number, sales volume, sales volume by region, and sales
volume by customer type
Credit records Customer name, address, phone number, credit limit, and accounts
receivable balance
Customer profile Age, gender, income level, household size, address, and preferences
1.3 Data Sources 11
TABLE 1.3 Examples of Data Available from Selected Government Agencies

Government Agency Some of the Data Available
Census Bureau Population data, number of households, and household income
Federal Reserve Board Data on the money supply, installment credit, exchange rates,
and discount rates
Office of Management Data on revenue, expenditures, and debt of the federal
and Budget government
Department of Commerce Data on business activity, value of shipments by industry, level of
profits by industry, and growing and declining industries
Bureau of Labor Statistics Consumer spending, hourly earnings, unemployment rate,
safety records, and international statistics
DATA.GOV More than150,000 data sets including agriculture, consumer,
education, health and manufacturing data
tourists and travel expenditures by states. Such data would be of interest to firms and individ-
uals in the travel industry. The Graduate Management Admission Council maintains data on
test scores, student characteristics, and graduate management education programs. Most of the
data from these types of sources are available to qualified users at a modest cost.
The Internet is an important source of data and statistical information. Almost all com-
panies maintain websites that provide general information about the company as well as
data on sales, number of employees, number of products, product prices, and product spec-
ifications. In addition, a number of companies, including Google, Yahoo, and others, now
specialize in making information available over the Internet. As a result, one can obtain
access to stock quotes, meal prices at restaurants, salary data, and an almost infinite variety
of information. Some social media companies such as Twitter provide application program-
ming interfaces (APIs) that allow developers to access large amounts of data generated by
users. These data can be extremely valuable to companies who want to know more about
how existing and potential customers feel about their products.
Government agencies are another important source of existing data. For instance, the web-
site DATA.GOV was launched by the U.S. government in 2009 to make it easier for the public
to access data collected by the U.S. federal government. The DATA.GOV website includes
more than 150,000 data sets from a variety of U.S. federal departments and agencies, but there
are many other federal agencies who maintain their own websites and data repositories. Table
1.3 lists selected governmental agencies and some of the data they provide. Figure 1.3 shows
the home page for the DATA.GOV website. Many state and local governments are also now
providing data sets online. As examples, the states of California and Texas maintain open data
portals at data.ca.gov and data.texas.gov, respectively. New York City’s open data website is
opendata.cityofnewyork.us, and the city of Cincinnati, Ohio, is at data.cincinnati-oh.gov.
Observational Study
In an observational study we simply observe what is happening in a particular situation,
record data on one or more variables of interest, and conduct a statistical analysis of the
resulting data. For example, researchers might observe a randomly selected group of cus-
tomers that enter a Walmart supercenter to collect data on variables such as the length of
time the customer spends shopping, the gender of the customer, the amount spent, and so
on. Statistical analysis of the data may help management determine how factors such as the
length of time shopping and the gender of the customer affect the amount spent.
As another example of an observational study, suppose that researchers were interested
in investigating the relationship between the gender of the CEO for a Fortune 500 company
and the performance of the company as measured by the return on equity (ROE). To obtain
data, the researchers selected a sample of companies and recorded the gender of the CEO
FIGURE 1.3 DATA.GOV Homepage
U.S. BUREAU OF LABOR STATISTICS HOMEPAGE

and the ROE for each company. Statistical analysis of the data can help determine the
relationship between performance of the company and the gender of the CEO. This exam-
ple is an observational study because the researchers had no control over the gender of the
CEO or the ROE at each of the companies that were sampled.
Surveys and public opinion polls are two other examples of commonly used observa-
tional studies. The data provided by these types of studies simply enable us to observe
opinions of the respondents. For example, the New York State legislature commissioned
a telephone survey in which residents were asked if they would support or oppose an in-
crease in the state gasoline tax in order to provide funding for bridge and highway repairs.
Statistical analysis of the survey results will assist the state legislature in determining if it
should introduce a bill to increase gasoline taxes.
The largest experimental stat- Experiment

istical study ever conducted is
believed to be the 1954 Public The key difference between an observational study and an experiment is that an experiment
Health Service experiment for is conducted under controlled conditions. As a result, the data obtained from a well-designed
the Salk polio vaccine. Nearly experiment can often provide more information as compared to the data obtained from exist-
2 million children in grades 1,
ing sources or by conducting an observational study. For example, suppose a pharmaceutical
2, and 3 were selected from
throughout the United States. company would like to learn about how a new drug it has developed affects blood pressure.
To obtain data about how the new drug affects blood pressure, researchers selected a sample
In Chapter 13, we discuss
statistical methods appropriate of individuals. Different groups of individuals are given different dosage levels of the new
for analyzing the data from an drug, and before and after data on blood pressure are collected for each group. Statistical
experiment. analysis of the data can help determine how the new drug affects blood pressure.
The types of experiments we deal with in statistics often begin with the identification of a
particular variable of interest. Then one or more other variables are identified and controlled so
that data can be obtained about how the other variables influence the primary variable of interest.
1.4 Descriptive Statistics 13
Time and Cost Issues

Anyone wanting to use data and statistical analysis as aids to decision making must be
aware of the time and cost required to obtain the data. The use of existing data sources is
desirable when data must be obtained in a relatively short period of time. If important data
are not readily available from an existing source, the additional time and cost involved
in obtaining the data must be taken into account. In all cases, the decision maker should
consider the contribution of the statistical analysis to the decision-making process. The cost
of data acquisition and the subsequent statistical analysis should not exceed the savings
generated by using the information to make a better decision.
Data Acquisition Errors

Managers should always be aware of the possibility of data errors in statistical studies. Us-
ing erroneous data can be worse than not using any data at all. An error in data acquisition
occurs whenever the data value obtained is not equal to the true or actual value that would
be obtained with a correct procedure. Such errors can occur in a number of ways. For
example, an interviewer might make a recording error, such as a transposition in writing
the age of a 24-year-old person as 42, or the person answering an interview question might
misinterpret the question and provide an incorrect response.
Experienced data analysts take great care in collecting and recording data to ensure that
errors are not made. Special procedures can be used to check for internal consistency of the
data. For instance, such procedures would indicate that the analyst should review the ac-
curacy of data for a respondent shown to be 22 years of age but reporting 20 years of work
experience. Data analysts also review data with unusually large and small values, called
outliers, which are candidates for possible data errors. In Chapter 3 we present some of the
methods statisticians use to identify outliers.
Errors often occur during data acquisition. Blindly using any data that happen to be
available or using data that were acquired with little care can result in misleading informa-
tion and bad decisions. Thus, taking steps to acquire accurate data can help ensure reliable
and valuable decision-making information.
1.4 Descriptive Statistics

Most of the statistical information in the media, company reports, and other publications
consists of data that are summarized and presented in a form that is easy for the reader to
understand. Such summaries of data, which may be tabular, graphical, or numerical, are
referred to as descriptive statistics.
Refer to the data set in Table 1.1 showing data for 60 nations that participate in the World
Trade Organization. Methods of descriptive statistics can be used to summarize these data.
For example, consider the variable Fitch Outlook, which indicates the direction the nation’s
credit rating is likely to move over the next two years. The Fitch Outlook is recorded as being
negative, stable, or positive. A tabular summary of the data showing the number of nations
with each of the Fitch Outlook ratings is shown in Table 1.4. A graphical summary of the
same data, called a bar chart, is shown in Figure 1.4. These types of summaries make the data
TABLE 1.4 requencies and Percent Frequencies for the Fitch Credit
F
Rating Outlook of 60 Nations
Fitch Outlook Frequency Percent Frequency (%)

Positive 4 6.7
Stable 44 73.2
Negative 12 20.0
FIGURE 1.4 Bar Chart for the Fitch Credit Rating Outlook for 60 Nations
80
70
Percentage Frequency
60
50
40
30
20
10
0
Negative Stable Positive
Fitch Outlook
easier to interpret. Referring to Table 1.4 and Figure 1.4, we can see that the majority of Fitch
Outlook credit ratings are stable, with 73.3% of the nations having this rating. More nations
have a negative outlook (20%) than a positive outlook (6.7%).
A graphical summary of the data for the quantitative variable Per Capita GDP in Table 1.1,
called a histogram, is provided in Figure 1.5. Using the histogram, it is easy to see that
FIGURE 1.5 Histogram of Per Capita Gdp for 60 Nations
30
25
20
Frequency
15
10
0
0–9,999 10,000– 20,000– 30,000– 40,000– 50,000– 60,000– 70,000–
19,999 29,999 39,999 49,999 59,999 69,999 79,999
Per Capita GDP ($)
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etteikä voinut otaksua muuta kuin että onnellinen isä heti olisi valmis
anteliaasti ottamaan Blazing Starin suojelukseensa. Jolleikaan
sulhasella ollut täällä mitään sukulaisia, käsitettiin hyvin, että
sellainen paikka, josta löytyi kihlasormuksia ja, kuten Jim Fanquies
lisäsi, "oli miehiä, jotka osasivat käyttäytyä", olisi paras, mihin saattoi
sijottaa pääomiaan. Ja sama tuntehikas virginialainen vei myös
Cassin syrjään kuiskatakseen hänelle seuraavat jalomieliset sanat:
"Jos niin kävisi, ettet sinä sujuisi tytön kera yhteen, kuten tietenkään
et voi ihmisen kera, jolla on punainen tukka ja joka on nilkku" (leiri oli
ilman mitään aihetta koristanut ilmotuksen salaperäisen kirjottajan
näillä vähemmän viettelevillä ominaisuuksilla), "niin voit luottaa
minuun. Sinunhan tarvitsee vain tuoda esiin, että minä tunsin
sormusta kohtaan samaa kunnioitusta kuin sinäkin ja että minä
tahdoin aina lainata sen sunnuntaisin. Jos siitä sitte tulee jotakin, no,
niin jaamme tasan keskenämme."
Sangen tärkeä kysymys oli, kuinka Cass pukeutuisi, ja tämä

kysymys käsiteltiin yhdessä, sillä häntä pidettiin yleensä leirin
edustajana. Puku, joka hänellä oli tällä kertaa, ei tietysti sopinut
lainkaan, sitä mieltä olivat kaikki muut paitsi Fanquies, joka ehdotti,
että "hänen piti mennä tytön luo aivan sellaisena kuin oli ja siten
osottaa, että hän sulasta rakkaudesta oli unhottanut kaiken muun."
Mutta Cass väitti mitä innokkaimmin tätä vastaan ja häntä
kannattivat toiset toverit. Ilmottamalla lehdessä saatiin takausta
vastaan lainaksi valkoiset housut purjekankaasta, punainen paita,
musta silkkinen kaulaliina ja panamahattu. Drummond, joka oli
naimaton, lainasi hänelle paksun vihkisormuksen, hieno viittaus,
arveli hän, ja viime hetkessä koristi Fanquies vielä kaulaliinan
jättiläissuurella kultakvartsisella rintaneulalla. "Se tulee viittaamaan
kullanrunsauteen meidän seudullamme, eikähän vanhuksen
(vanhimman toiminimessä Bookhamin pojat) tarvitse tietää, että olen
sen voittanut pelissä San Fransiskossa", sanoi Fanquies. "Jos
luovutat tytön minulle, niin voit antaa neulan minulle takaisin, jotta
minäkin voin sillä koettaa onneani." Cass sai neljäkymmentä dollaria
matkarahaksi ja koko joukkokunta saattoi häntä poikkitielle, jossa
hän pääsi postivaunuun, samalla kuin satoja onnentoivotuksia
lähetettiin hänen jälkeensä huiskovien hattujen ja revolverin
laukausten muodossa.
Tarvitsee tuskin sanoa, ettei Cass ottanut osaa toveriensa yli

ääriensä kuohuviin toivomuksiin ja että hän kokonaan torjui heidän
naimasuunnitelmansa. Samalla kuin hän leikillään oli suostuvinaan
kaikkeen, piti hän kuitenkin hiljaisuudessa oman päänsä. Mutta
asiassa piili kuitenkin jotakin puoleensa vetävää, houkuttelevaa, ja
vaikkakin hänellä oli selvä tunne siitä, että oli ainaiseksi luopunut
unelmistaan, oli hänestä kuitenkin suloista tietää, että ne sentään
kerran voisivat toteentua. Ei hän ollut millänsäkään siitäkään, että
neiti Porter joka tapauksessa saisi tästä kuulla ja silloin tyttö katuisi
sitä, ettei ollut kunnioittanut hänen tunteitaan kuten ne ansaitsivat.
Jos joku upporikas tyttö tosiaankin oli kiintynyt häneen, niin hän
tahtoi näyttää neiti Porterille, että hänen tähtensä oli valmis
luopumaan loistavimmistakin mahdollisuuksista.
Istuessaan aivan yksin matkavaunun katolla, harjotti hän yhtä

niistä tyynnyttävistä puheista, joita mielikuvitusrikkaat ihmiset aina
laittavat, mutta joita sentään ei todellisuudessa pidetä siten kuin ne
on ajateltu. "Rakas neiti Porter", puhutteli hän ajurin selkää, "voitteko
te luulla, että minä myisin elämäni ainoan rakkauden inhan voiton
hinnasta, kun minä kuitenkin uskollisesti säilytin nuoruuteni unelman,
joka tuskin oli muuta kuin hourekuva?" Tämän pienen, sievän
puheen sepittäminen ja laususkeleminen vei häneltä kokonaisen
tunnin työn. Ja vaihtelun vuoksi muutti hän muutamia sanoja ja
laususkeli yhtä runollisesti ja yhtä suureksi tyydytyksekseen: "Rakas
neiti Porter! Voitteko te luulla, että minä pysyisin uskollisena ainoalle
rakkaudelleni, kun minä kuitenkin luovun nuoruuteni unelmista" j.n.e.
Mutta silloin johtui myös hänen mieleensä, että koko asia saattoi
tulla sekavammaksi, jos tuntematon, kun kaikki kävi ympäri, olikin
köyhä — sillä neiti Porterin sanottiin olevan varoissaan.
Pankkihuoneen "Bookhamin pojat" näkeminen ei tehnyt mitään

salaperäistä vaikutusta. Se näytti perin käytännöllisesti liiketarpeita
silmälläpitäen rakennetulta, lasiovineen, joista lisäksi muutamat
olivat seposen selällään. Kenenkään mieleen ei luulisi johtuvan
uskoa täällä jollekin salaisuuksia, jotka epäilemättä leviäisivät koko
huoneustoon. Cassin valtasi epämääräinen tunne, ettei hän eikä
hänen kertomuksensa ja löytämänsä aarre kuulunut tänne, tähän
realismin temppeliin. Suurimmasti hämillään piti hän käsissään
kääröä, joka sisälsi sormuksen ja sanomalehden uutisineen,
ikäänkuin täten tahtoisi todistaa tarkotustensa rehellisyyden. Lähinnä
seisova kirjanpitäjä otti käärön hänen kädestään, avasi sen, käänteli
sormusta ja pani uudestaan takaisin sanoen: "Seuraava liike, nuori
mies; viereinen ovi!" Sen jälkeen kääntyi hän toisen kundin puoleen.
Cass meni ovelle, näki ainoalla silmäyksellä, että "seuraava liike" oli
panttilainakonttori, ja palasi takaisin salamoivin silmin ja punakoin
kasvoin. "Olen täällä erään sanomalehdessä olleen ilmotuksen
tähden", alotti hän uudestaan.
Kirjanpitäjä heitti katseen hänen kaulaliinaansa ja

kultakvartsineulaansa ja sanoi lyhyesti: "Paikka täytettiin
toissapäivänä — emme tarvitse enää ketään."
Cass punastui vihasta. Mutta Blazing Starissa ei ollut tapana jättää

vastaamatta hävyttömyyksiin. Hän sanoi: "Jos tarkotatte omaa
paikkaanne, niin en epäile, että yhdessä käden käänteessä voisi
saada paikan tusinalle teidänIaisianne. Mutta minä tulen tänne
tämän ilmotuksen johdosta. Jollei vanha Bookham itse ole
saapuvilla, niin lähettäkää tänne joku hänen täysikasvuisista
pojistaan. Sanomalehti ilmotuksineen ja ympärillä seisovain nauru ei
jättänyt tekemättä vaikutustaan. Nuori, nokkaviisas kirjanpitäjä
poistui, ja palattuaan kehotti hän Cassia seuraamaan itseään
sisempään huoneeseen. Cass tunsi jälleen rohkeutensa vaipuvan,
kun hän näki edessään harmaan miehen, jonka koko ulkonäkö,
jonka kasvonpiirteet, puhe ja ryhti oli jyrkin vastakohta Cassille,
sormukselle ja sille romantilliselle kertomukselle, joka sormukseen
siirtyi. Nuori mies kertoi lyhyesti juttunsa ja näytti aarteensa. Pankkiiri
heitti siihen tuskin katsettakaan ja kysyi kärsimättömästi:
"Missä ovat paperinne?"
"Paperini!"
"Niin! Todistus, että olette sama henkilö. Sanotte nimenne olevan

Cass. Millä voitte näyttää sen toteen? Kuinka muuten voin tietää,
kuka te olette?" Tunteelliseen ihmiseen ei minkäänlainen
halveksuminen tee niin musertavaa ja hämmentävää vaikutusta kuin
se, että hänen epäillään esiintyvän väärällä nimellä. Cass tunsi
olevansa kaksin kerroin loukattu siitä, ettei hänen sanojaan uskottu,
koskei hänellä tällä hetkellä ollut mitään, jolla olisi voinut näyttää ne
toteen. Pankkiiri katseli häntä terävästi, mutta ei epäystävällisesti.
"No hyvä", sanoi hän vihdoin. "Asia ei oikeastaan koske minua; jos
teidän tiedonantonne tyydyttävät rouvashenkilöä, jonka asiamies
oikeastaan olen, niin onhan kaikki kuten pitää ollakin. Uskon kyllä,
että niin on laita, mutta kaikessa tapauksessa varotan teitä, jollei niin
olisi asianlaita. Olen tehnyt teille muutamia kysymyksiä, koska
tahdon säästää rouvashenkilöä joutumasta petturien kanssa
tekemisiin — mutta te ette näytä olevan sellainen. Tässä on kortti.
Hyvästi!"
"Neiti Martimer." Ei siis pankkiirin oma tytär. Blazing Starin

ensimäinen toive haihtui kuin tuhka tuuleen. Mutta rikas täytyi hänen
sentään olla, muuten ei kai pankkiiri olisi niin huolellisesti koettanut
suojella häntä petkuttajilta. Hänen nuoruuttaan ja kauneuttaan oli
Cass aikoja sitte lakannut ajattelemasta.
Kortilla mainittu osote ei ollut kaukana. Pamppailevin sydämin

painoi Cass kellonnappia ulkonäöltään kunnioitusta herättävässä
talossa ja vietiin salonkiin. Hän aavisti, että tämä huone usein muutti
asujaa; sillä oli vivahdus, joka on omituinen huoneustoille, jotka ovat
muhkeimmasti kalustetut vuokrattavaksi, ja kun ovi aukeni ja pitkä
nainen tummassa surupuvussa näyttäytyi kynnyksellä, näki Cass
heti, ettei hän soveltunut nykyiseen ympäristöönsä. Hymyillen
hymyä, joka väikkyi maailmaan tottuneen luonnollisuuden ja
surullisen umpimielisyyden välillä, viittasi hän Cassin istumaan.
Miss Martimer oli vielä nuori, vielä kaunis, edelleen puettu

viimeisen muodin mukaan ja edelleen sangen puoleensa vetävä.
Ensi tervehdyksestä siihen saakka, jolloin he sanoivat hyvästit,
ymmärsi Cass, että neiti oli hänestä hankkinut perinpohjaiset tiedot.
Siten hän tosin vapautui näyttämästä toteen että oli sama henkilö,
mutta hän tunsi sentään alemmuutensa neidin rinnalla. Hän tunsi
kiusallisesti oman nuoruutensa ja kokemattomuutensa tämän naisen
läsnäollessa.
"Toivon teidän uskovan minua", alotti neiti, "kun sanon, että syy,
miksi teen teille kysymyksiäni, on ainoastaan se, että etsin
sydämelleni tyynnytystä." Hän jatkoi surumielisesti hymyillen: "Jos
asiat olisivat toisin, olisin jättänyt jutun oikeudellisesti tutkittavaksi ja
keskustelun teidän kanssanne jollekin kylmäverisemmälle henkilölle,
joka olisi ollut vähemmän kiintynyt asiaan. Mutta minä luulen, ei,
minä tiedän, että voin luottaa teihin. Me naiset olemme tosin
hupakoita, kun puhumme vaistostamme, ja heti kuultuanne
kertomukseni on teillä syytä luulla, ettei pidäkään luottaa siihen —
mutta eikö totta, en pety, kun edellytän teissä myötätuntoa, joka
antaa tällaiset heikkoudet anteeksi?" Hän säesti kysymystään ylen
surumielisellä hymyllä, painoi huulensa lujasti yhteen ja puristi
suonenvedontapaisesti toisella kädellään toista. "Sanotte, että
löysitte sormuksen kadulta noin kolme kuukautta sitte, ennen —
ennen kuin — tiedätte kyllä, mitä aion sanoa — ennen kuin ruumis
löydettiin."
"Niin."
"Ajattelitte silloin, että joku ohikulkija on pudottanut sen?"
"Niin, sillä kukaan leirissä ei sitä vaatinut."
"Löysittekö sen asuntonne edestä vai maantieltä?"
"Asuntoni edestä!"
"Oletteko aivan varma siitä?" Neidin hymy oli edelleen

surumielinen, mutta samalla niin surullinen, että Cassin täytyi
punastua.
"Kyllä, mutta asuntoni on aivan maantien varressa."
"Ah, ymmärrän. Ja muuta ette löytänyt mitään? Ei mitään paperia?

Ei mitään käärettä?"
"Ei mitään."
"Ja te kätkitte sormuksen, koska siinä oli sama nimi kuin teilläkin?"
"Niin!"
"Ei mistään muusta syystä?"
"Ei, ei muusta mistään." Mutta samalla Cass tunsi punastuvansa

koko kasvoiltaan.
"Saatte antaa anteeksi, vaikka vielä kerran teen kysymyksen,

jonka jo olemme jättäneet. Mutta panen suurta painoa siihen.
Oikeudellisessa tutkinnossa näyttää tulleen näytetyksi toteen, että
sormus löydettiin — tuon… onnettoman miehen ruumiilta. Sanotteko,
ettei ollut niin?"
"Voin vannoa sen."
"Vanhurskas Jumala! Mikä petturi!" Hän nousi nopeasti, meni

ikkunaan ja palasi sitte Cassin luo sanoakseen aivan murtuneella
äänellä: "Lupasin luottaa teihin. Sormus kuului kerran minulle!"
Hän vaikeni tuokioksi, jatkaakseen sitte nopeammin: "Muutamia

vuosia sitte annoin sen eräälle miehelle, joka on syvästi loukannut ja
pettänyt minua — miehelle, jonka elämä siitä pitäen on ollut
häpeäpilkku kaikille, jotka hänet ovat milloinkaan tunteneet; miehelle,
joka kerran oli ansainnut herrasmiehen nimen, mutta joka vaipui niin
syvälle, että hän tuli tappelupukarien ja varkaiden toveriksi, että hän
petti yksin heidätkin ja jouduttuaan heidän uhrikseen, laskettiin
nimettömään hautaan. Sellainen oli mies, jonka ruumiin olette
löytänyt."
Cass lyyhistyi kokoon. "Hänen nimensä?" kysyi hän.

"Osaksi sama kuin teidän — Cass — Henry Cass."
Lyhyen väliajan jälkeen jatkoi nainen: "Näette nyt, miksi kaitselmus

saattoi sormuksen juuri teidän käsiinne. Mutta jos kysytte minulta,
miksi panen niin suurta painoa siihen, löysittekö sormuksen tieltä tai
oliko se ruumiin mukana, niin kuulkaa! Kaikista enimmän suututtaa
minua se, että tämän miehen sanotaan näytelleen minun
sormustani, kerskailleen sillä, panneen sen peliin ja hävinneen sen
muutamalle kurjista veikkosistaan."
"Ranaka Joelle", sanoi Cass, muistaen hevosvarkaan iloisuuden,

kun sormus näytettiin hänelle oikeuden edessä.
"Niin, juuri hänelle!" puuttui neiti äkkiä puheeseen. "Jos sormus

olisi löydetty hänen ruumiinsa muasta, niin olisin sentään vielä voinut
uskoa, että jossakin hänen sydämensä piilotetussa sopessa vielä
paloi tunteen kipinä sille naiselle, jonka hän oli pettänyt. Olen nainen
— hupakko nainen — mutta te olette ainaiseksi tehneet viimeisen
toiveeni tyhjäksi."
"Mutta mitä varten oikeastaan olette kutsunut minut tänne?" kysyi

Cass, syvästi liikutettuna siitä surusta, jota oli joutunut todistamaan.
"Siksi, että tahdon päästä varmuuteen!" sanoi nainen hurjasti.

"Ettekö voi ymmärtää ettei nainen, kuten minä, voi elää
epävarmuudessa. Mutta sitäpaitsi voitte olla minulle avuksi. En ole
kutsunut teitä tänne ainoastaan rasittaakseni teitä surullani: Teidän
on otettava minut mukaanne sinne, mistä löysitte sormuksen, mistä
löysitte ruumiin, paikkaan, jossa — jossa hän lepää haudattuna.
Mutta teidän täytyy osata asettaa niin, ettei kukaan näe, ei kukaan
tunne minua."
Cass epäröi. Hän ajatteli tovereitaan ja kuinka heidän
saippuakuplansa särkyivät. Kuinka voisi hän suojella heiltä
salaisuuden?
"Jos tarvitsette rahaa siihen, niin sanokaa. En tahdo kuluttaa

aikaannekaan sitä vastaavalla tavalla korvaamatta. Bookhamilla on
tuhat dollaria maksettavaksi, jos sormus löytyy. Kohotan summan
kaksinkertaiseksi, jos autatte minua tässäkin asiassa."
Cass luuli sentään, että se oli mahdollista. Hän voi ottaa neidin
mukaansa kenenkään siitä tietämättä; voi sitte sanoa tovereille, että
tarvittiin vielä muutamia todistuksia ennenkuin palkinnon saisi
nostaa, ja jos hän sitte jakaisi saaliin toisten kera, ei kukaan virkkaisi
mitään. Hän vastasi päättävästi: "Minä vien teidät sinne."
Neiti otti hänen molemmat kätensä omiinsa, kosketti niitä

huulillaan ja hymyili kiitollisesti. Hänen kasvojensa surullinen ja
umpimielinen ilme oli kadonnut yhtäkkiä ja kiemaileva ynnä samalla
veitikkamainen katse hänen tummista silmistään teki kaikille
vaikutuksille herkkään Cassiin niin suuren vaikutuksen, että hän läksi
talosta jokseenkin sekavassa mielentilassa. Samalla johtui hänen
mieleensä, että mitähän neiti Porter ajattelisikaan, jos hän saisi
kaiken selville. Mutta hänhän palaisi tämän luo onnellisempana ja
tuhatta dollaria rikkaampana. Miksi hän nuhtelisi itseään siitä, että
kaunis nainen ja surullinen juttu olivat häneen vaikuttaneet? Hän
tunsi, kuinka miellyttävä naisen läheisyys oli, kun hän illalla auttoi
tämän postivaunuun, ja erään toisen matkan muisto ei estänyt häntä
lohduttamasta tätä naista, jota hän katsoi olevansa velvollinen
lohduttamaan. He olivat sopineet siitä, että Cass antaisi neidin
laskeutua vaunuista hotellin edustalla poikkitien risteyksessä, mutta
itse jatkaisi matkaansa Blazing Stariin; puolenyön ajoissa tulisi hän
sitte neitiä noutamaan, jos hän näki mahdolliseksi tämän
huomaamatta viedä mainitulle paikalle. Päivä jo valkeni, kun
postivaunu pysähtyi tienristeyksessä, missä ravintolan ruoka- ja
tarjoiluhuoneen valo loisteli itäisen aamuruskon kera. Cass laskeutui
vaunuista, jätti neiti Martimerin emännän huostaan ja palasi
vaunuun, jonka ilman monet vielä makaavat matkustajat olivat
turmelleet. Cass huomasi vapaan paikan vaunujen katolla ja kiipesi
heti sinne ja istuutui hyvinkäärityn olennon viereen. Tämä liikahti
samassa hieman ja kuiva ääni sanoi: "Hyvää huomenta!" Se oli neiti
Porter.
"Oletteko istunut täällä kauvan?" sammalsi Cass.
"Koko yön!"
Mieluummin olisi Cass hypännyt alas vaunuista, jotka juuri lähtivät

liikkeelle, päästäkseen selityksistä joiden nyt välttämättä täytyi
seurata. Hän tunsi, että hän näytti hämmentyneeltä, vaikkei hänellä
ollut mitään syytä siihen. Siitä huolimatta heittäytyi hän, kuten kaikki
kokemattomat tunteelliset luonteet, heti ansaan. Hän kertoi tytölle
kaiken, paljasti yksin salaisuutensakin ja istui sitte onnetonna,
omantunnonvaivojen ahdistamana ja selvästi tietoisena siitä, ettei
ollut saanut mitään aikaan suoruudellaan.
"Ja hän on siis" — sanoi tyttö olkapäitään kohauttaen — "teidän

Maynne?"
Cass tahtoi heti alottaa kertomuksensa uudelleen. "Ei, ei, jättäkää

se!
Juttu ei ole hauska eikä muuten merkillinen. Uskotteko te siihen?"
"Minäkö! Kyllä!" sanoi Cass tuohtuneena.

"Ah, kuinka onnellista! Mutta antakaa minun sitte nukkua!"
Cass, joka edelleen oli tuohtunut, mutta samalla tunsi olevansa

sangen kiusallisella tuulella, ei sanonut enää tytölle sanaakaan. Kun
vaunut pysähtyivät Blazing Stariin, kysäsi tyttö ohimennen: "Milloin
alkaa tuo tunteellinen pyhiinvaellus?"
"Minun on noudettava hänet yhden aikaan", sanoi Cass

eräänlaisella teennäisellä arvokkuudella.
Hän piti sanansa. Toverinsa tyynnytti hän lupaamalla heille kultaa

ja kaikkea hyvää ja näytti samalla sen palkinnon, jonka oli jo saanut.
Hän kuletti neiti Martimerin erästä polkua myöten, jonka ainoastaan
hän itse tunsi, tielle majansa edustalle. Jännitys punasi nyt neidin
muuten hieman kalpeat posket aivan veripunaisiksi.
"Täällä siis?" kysyi hän kiihkeästi.
"Täältä löysin sormuksen!"
"Ja ruumiin?"
"Sen löysin paljoa myöhemmin. Kauvempana tuolla päin, metsän

toisella puolen, lähellä poikkitien risteystä."
"Ja jokainen, joka kulki sinne, täytyi aina kulkea ohitse?" kysyi neiti
hymyillen samalla omituisesti ja pannen lisäksi kylmän,
hermostuneesti vapisevan kätensä Cassin kädelle. "Eikö ole laita
niin?"
"On, juuri niin."
"Menkäämme sitte sinne."

Cass riensi nopeasti edellä päästäkseen metsään niin pian kuin
mahdollista ja välttääkseen kaikkia väijyviä katseita. "Tätä tietä on
kulettu ennenkin — se näyttää tallatulta polulta."
"Kentiesi sen olen minä polkenut, tästä on lyhin tie metsään."
"Ettekö ole koskaan löytänyt mitään tältä polulta?"
"Olen jo sanonut, että sormus oli ainoa, mitä olen milloinkaan

löytänyt."
"Niin, niin, sehän on totta! Siksi juuri kummastuittekin. Unhotin sen

tuokioksi."
Puolessa tunnissa saapuivat he metsään. Kulkiessaan pitivät he

tarkkaavaisesti silmällä tien kaikkia omituisuuksia. Kun he kulkivat
maantien poikki ja Cass näytti murhapaikan, katsoi nainen hätäisesti
ympärilleen ja kysyi: "Oletteko varma siitä, ettei kukaan meitä
huomaa?"
"Aivan varma."
"Älkää pitäkö minua liian hassuna, vaikka pyydän teitä jäämään

tänne, kun minä menen sinne yksin!" Hän viittasi onnettomaan
näreikköön heidän edessään. Hän oli tullut kalmankalpeaksi.
Cass, jonka sydän oli kylmennyt kaunista tuntematonta kohtaan

hänen viimeisen kohtauksensa jälkeen neiti Porterin kanssa,
pehmeni uudelleen.
"Menkää — minä jään." Hän odotti viisi minuuttia, mutta nainen ei

palannut. Ajatteles, jos ihmisparka päätti päivänsä samalla paikalla,
jossa hänen uskoton rakastajansa joutui murhaajan uhriksi! Mutta
kohta tyyntyi Cass jälleen, kun hän kuuli naispuvun kahisevan
pensaiden välissä. "Minä aloin juuri tulla pelkoihini", sanoi Cass.
"Teillä on syytäkin siihen", vastasi ystävällinen ääni. Cass sävähti,

sillä neiti Porter eikä kukaan muu astui esiin pensastosta.
"Katsokaas", sanoi hän, "näettekö tuon miehen tiellä? Hän on
hiipinyt teidän molempain jälestä, aina teidän lähdettyänne
majaltanne. Tiedättekö kuka hän on?"
"En!"
"Kuulkaa sitte! Hän on kolmisormi Dick, kauttaaltaan ruoskittu

maantieritari. Minä tunnen hänet."
"Menkäämme heti varottamaan neitiä", sanoi Cass innokkaasti.

Neiti Porter pani kätensä hänen olalleen. "En luule, että hän kiittäisi
teitä siitä. Kentiesi olisi parempi, jos katsoisitte mitä hän oikeastaan
tekee?"
Cass seurasi häntä aivan hämmentyneenä, jättäytyen hänen

johdettavakseen. Notkeana kuin kissa hiipi tyttö vesaikon lävitse.
Äkkiä pysähtyi hän: "Mutta katsokaas", sanoi hän ilkeästi, "sitä
hellyyttä, millä sureva May muistelee vainajaa!" Cass näki naisen,
joka vähää ennen oli hänestä eronnut, olevan polvillaan nurmella ja
kaapivan maata kuin minkäkin maamyyrän. Cass ennätti nipinnapin
nähdä, kuinka nainen silloin tällöin heitti pelokkaan, väijyvän katseen
sille taholle, jolla luuli hänen olevan, kun pensaikko kahisi ja joku
mies — sama, joka äsken oli seissyt tiellä — yhdellä hyppäyksellä
harppasi tämän rinnalle. "Rientäkää täältä", sanoi hän, "rientäkää
minkä ehditte — teidät huomataan."
"Ah! Tuo mies — Cass?" kysyi nainen halveksivasti.

"Ei! Toinen! Rientäkää — tuhma ihminen! Nyt olette selvillä
paikasta ja voitte palata toisella kertaa! Pois!" Samalla hän veti
naisen mukanaan vesakkoon. He olivat tuskin kadonneet näkyvistä,
ennenkuin neiti Porter oli samalla paikalla, jossa vieras nainen oli
ennen ryöminyt. "Näettekös täällä!" huusi hän riemuiten. "Mitä
sanotte nyt?" Cass polvistui hänen rinnalleen. "Ja tämä oli tuhannen
dollarin arvoinen, eikö totta?" kysyi tyttö ilkeästi.
"Eikö totta. Mutta te jätätte ne hänelle takaisin. Oikein todella, sen

teette."
Cass sai tuskin sanaa suustaan. "Mutta kuinka olette saanut

selvän siitä?" kysyi hän vihdoin.
"Oh, minulla olivat omat epäilykseni — nainen oli pelissä mukana

— ja sitte olette te sellainen hanhi!"
Cass nousi maasta ja ojentautui niin suoraksi kuin voi.
"Älkää nyt vain antako uutta todistusta siitä, että olen oikeassa,
vaan noutakaa hevonen ja vaunut vuoritieltä. Mutta älkää sanoko
kuskille mitään."
"Ette ole siis tullut tänne yksin?"
"En — sehän olisi ollut sopimatonta ja julkeaa."
"Anteeksi!"
"Ja ajattelepa vain, että sormus on lopuksi tuonut tämän kaiken

mukanaan!"
"Niin, sormus, jonka sain teiltä takaisin."

"Mitä sanotte?"
"Ah, en mitään."
"Jättäkää nyt tuo — vaunut tulevat."
Seuraavana aamuna oli paikkakunnan lehdessä "Chronicle"

luettavana seuraava uutinen:
"Merkillinen löytö.
Yli 300,000 dollaria löydetty toiminimen Veli, Fargo & Comp.

varastetuista aarteista.
Lukijaimme tuoreessa muistossa on luultavasti vielä se kuuluisa

ryöväys, joka tehtiin yöllä syyskuun 1 päivää vastaan, jolloin
toiminimen Veli, Fargo & Comp. suuri rahalähetys ryövättiin.
Vaikkakin melkein kaikki rosvoliiton jäsenet saatiin kiinni, onnistui
kuitenkin kaksi rosvoa päästä karkuun ja viedä mukanaan aarteen,
jonka he luulon mukaan olivat haudanneet maahan ja joka,
yhteensä kullassa, vekseleissä ja jalokivissä, nousi lähes 500,000
dollarin suuruiseen summaan. Eilen onnistui korkeasti kunnioitettu
kansalaisemme, herra Cass, joka kauvan aikaa on nauttinut
seudun jakamatonta arvonantoa, keksimään aarteen eräässä
pähkinäpensastossa, aivan lähellä sitä paikkaa, josta jonkun aikaa
takaperin löydettiin tuntemattoman miehen ruumis. Täydellä syyllä
luullaan nyt, että tämä tuntematon henkilö eläessään on ollut eräs
Henry Cass, jonka kaikki tunsivat sangen huonoksi henkilöksi, ja
josta sittemmin on saatu tietää, että hän on ollut yksi pakoon
päässeistä rosvoista. Asia on nyt oikeudellisesti tutkittavana.
Onnellinen löytö on ainoa laatuaan, ja on siitä yksistään kiittäminen
erästä nerokkaan herra Cassin järjestelmällisesti laatimaa
suunnitelmaa, jonka toteuttamiseen hän väsymättömällä innolla on
omistanut kokonaisen vuoden uuraan työn. Aihe siihen oli erään
sormuksen löytö, joka tunnettiin kuuluneen varastettuihin aarteihin
ja jonka rosvot luultavasti pudottivat paetessaan aarteiden kera
Blazing Starin lävitse."
Sama lehti sisälsi vielä mieltäkiinnittävän uutisen, joka täydentää

ja selittää tämän tosikertomuksen:
"Huhu kertoo, että aarteenlöytäjä-sankari ja eräs paikkakunnan

nuori naishenkilö, jonka uhraavaisen ja omaa voittoaan
pyytämättömän toiminnan tässä asiassa tunnustaa koko
yhteiskunta, aikovat pian mennä avioliittoon."
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Essentials of Statistics for

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Printed in the United States of America

Chapter 1 Data and Statistics 1

Chapter 1 Data and Statistics 1

Chapter 2 Descriptive Statistics: Tabular and Graphical

Chapter 3 Descriptive Statistics: Numerical Measures 107

Case Problem 5: African Elephant Populations 166

Chapter 4 Introduction to Probability 177

Chapter 5 Discrete Probability Distributions 223

5.5 Binomial Probability Distribution 247

Case Problem 1: Specialty Toys 309

Chapter 7 Sampling and Sampling Distributions 319

7.9 Big Data and Standard Errors of Sampling Distributions 354

Chapter 8 Interval Estimation 373

Appendix 8.1 Interval Estimation with JMP 410

Chapter 9 Hypothesis Tests 417

Chapter 10 Inference About Means and Proportions with

Chapter 11 Inferences About Population Variances 525

Appendix 11.2 Population Variances with Excel 551

Chapter 12  omparing Multiple Proportions, Test of

Chapter 13 Experimental Design and Analysis

13.3 Multiple Comparison Procedures 615

Chapter 14 Simple Linear Regression 653

14.7 Computer Solution 691

Chapter 15 Multiple Regression 731

15.6 Using the Estimated Regression Equation

Appendix A References and Bibliography 800

Appendix C Summation Notation 829

Appendix D Answers to Even-Numbered Exercises

Appendix E Microsoft Excel 2016 and Tools for Statistical

Appendix F Computing p-Values with JMP and Excel 839

Dennis J. Sweeney. Dennis J. Sweeney is Professor Emeritus of Quantitative Analysis and

Thomas A. Williams. Thomas A. Williams is Professor Emeritus of Management S ­ cience

Jeffrey W. Ohlmann. Jeffrey W. Ohlmann is Associate Professor of Management Sci-

Changes in the 9th Edition

Features and Pedagogy

Methods Exercises and Applications Exercises

Margin Annotations and Notes and Comments

Data Files Accompany the Text

AbouEl-Makarim Aboueissa, Reidar Hagtvedt Claudiney Pereira

Mohammad Ahmadi West Virginia University Roger Myerson

Ari Wijetunga Mustafa Yilmaz Yan Yu

1.1 APPLICATIONS IN BUSINESS AND ECONOMICS

*The authors are indebted to Charlene Trentham, Research Manager,

Frequently, we see the following types of statements in newspapers and magazines:

1.1 Applications in Business and Economics

Elements, Variables, and Observations

Slovenia Member 21,650 A2 Negative

Categorical and Quantitative Data

Cross-Sectional and Time Series Data

Source: Energy Information Administration, U.S. Department of Energy.

Figure 1.2 A Variety of Graphs of Time Series Data

Chapter 2 Descriptive Statistics: Tabular and Graphical

5.5 Binomial Probability Distribution 247

Case Problem 1: Specialty Toys 309

Appendix 8.1 Interval Estimation with JMP 410

Chapter 10 Inference About Means and Proportions with

Appendix 11.2 Population Variances with Excel 551

Chapter 12 omparing Multiple Proportions, Test of

Chapter 13 Experimental Design and Analysis

13.3 Multiple Comparison Procedures 615

14.7 Computer Solution 691

15.6 Using the Estimated Regression Equation

Appendix D Answers to Even-Numbered Exercises

Appendix E Microsoft Excel 2016 and Tools for Statistical

Appendix F Computing p-Values with JMP and Excel 839

Thomas A. Williams. Thomas A. Williams is Professor Emeritus of Management S cience

1.1 Applications in Business and Economics

1.3 Data Sources

TABLE 1.2 Examples of Data Available from Internal Company Records

TABLE 1.3 Examples of Data Available from Selected Government Agencies

1.4 Descriptive Statistics