Statistics For Business and Economics Metric Edition 14Th Edition Cengage South Western All Chapter

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Statistics for
Business & Economics
14e Metric Version
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

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Brief Contents
ABOUT THE AUTHORS xxi
PREFACE xxv
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
Chapter 16 Regression Analysis: Model Building 799
Chapter 17 Time Series Analysis and Forecasting 859
Chapter 18 Nonparametric Methods 931
Chapter 19 Decision Analysis 981
Chapter 20 Index Numbers 1013
Chapter 21 Statistical Methods for Quality Control 1033
Chapter 22 Sample Survey (MindTap Reader)
appendix a References and Bibliography 1068
appendix B Tables 1070
appendix C Summation Notation 1097
appendix d Answers to Even-Numbered Exercises (MindTap Reader)
appendix e Microsoft Excel 2016 and Tools for Statistical Analysis 1099
appendix F Computing p-Values with JMP and Excel 1107
Index 1111
Contents
ABOUT THE AUTHORS xxi
PREFACE xxv
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)
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
Contents v
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)
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
vi Contents
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
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
Contents vii
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
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
viii Contents
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
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
Contents ix
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
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
x Contents
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
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
Contents xi
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)
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
xii Contents
Case Problem 2: Meticulous Drill & Reamer 547

Appendix 11.1 Population Variances with JMP 549
Appendix 11.2 Population Variances with Excel 551
Appendix 11.3 Population Variances with R (MindTap Reader)
Chapter 12 Comparing Multiple proportions, test of

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
13.3 Multiple Comparison Procedures 615
Fisher’s LSD 615
Type I Error Rates 617
Contents xiii
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
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
xiv Contents
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
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
Contents xv
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)
Chapter 16 regression analysis: Model Building 799

Statistics in Practice: Monsanto Company 800
16.1 General Linear Model 801
Modeling Curvilinear Relationships 801
Interaction 805
Transformations Involving the Dependent Variable 807
Nonlinear Models That Are Intrinsically Linear 812
16.2 Determining When to Add or Delete Variables 816
General Case 818
Use of p-Values 819
16.3 Analysis of a Larger Problem 822
16.4 Variable Selection Procedures 826
Stepwise Regression 826
Forward Selection 828
Backward Elimination 828
Best-Subsets Regression 828
Making the Final Choice 829
16.5 Multiple Regression Approach to Experimental Design 832
16.6 Autocorrelation and the Durbin-Watson Test 836
Summary 840
Glossary 841
Key Formulas 841
xvi Contents

Case Problem 1: Analysis of LPGA Tour Statistics 845
Case Problem 2: Rating Wines from the Piedmont Region of Italy 846
Appendix 16.1 Variable Selection Procedures with JMP 848
Appendix 16.2 Variable Selection Procedures with R (MindTap Reader)
Chapter 17 time Series analysis and Forecasting 859

Statistics in Practice: Nevada Occupational Health Clinic 860
17.1 Time Series Patterns 861
Horizontal Pattern 861
Trend Pattern 863
Seasonal Pattern 863
Trend and Seasonal Pattern 864
Cyclical Pattern 864
Selecting a Forecasting Method 866
17.2 Forecast Accuracy 867
17.3 Moving Averages and Exponential Smoothing 872
Moving Averages 872
Weighted Moving Averages 874
Exponential Smoothing 875
17.4 Trend Projection 881
Linear Trend Regression 882
Nonlinear Trend Regression 886
17.5 Seasonality and Trend 891
Seasonality Without Trend 892
Seasonality and Trend 894
Models Based on Monthly Data 897
17.6 Time Series Decomposition 900
Calculating the Seasonal Indexes 902
Deseasonalizing the Time Series 905
Using the Deseasonalized Time Series to Identify Trend 905
Seasonal Adjustments 907
Models Based on Monthly Data 908
Cyclical Component 908
Summary 910
Glossary 911
Key Formulas 912
Case Problem 1: Forecasting Food and Beverage Sales 917
Case Problem 2: Forecasting Lost Sales 918
Appendix 17.1 Forecasting with JMP 920
Appendix 17.2 Forecasting with Excel 926
Appendix 17.3 Forecasting with R (MindTap Reader)
Contents xvii
Chapter 18 nonparametric Methods 931

Statistics in Practice: West Shell Realtors 932
18.1 Sign Test 933
Hypothesis Test About a Population Median 933
Hypothesis Test with Matched Samples 938
18.2 Wilcoxon Signed-Rank Test 941
18.3 Mann-Whitney-Wilcoxon Test 947
18.4 Kruskal-Wallis Test 956
18.5 Rank Correlation 961
Summary 966
Glossary 966
Key Formulas 967
Case Problem: RainOrShine.Com 971
Appendix 18.1 Nonparametric Methods with JMP 972
Appendix 18.2 Nonparametric Methods with Excel 979
Appendix 18.3 Nonparametric Methods with R (MindTap Reader)
Chapter 19 decision analysis 981

Statistics in Practice: Ohio Edison Company 982
19.1 Problem Formulation 983
Payoff Tables 983
Decision Trees 984
19.2 Decision Making with Probabilities 985
Expected Value Approach 985
Expected Value of Perfect Information 987
19.3 Decision Analysis with Sample Information 992
Decision Tree 993
Decision Strategy 994
Expected Value of Sample Information 998
19.4 Computing Branch Probabilities Using Bayes’ Theorem 1002
Summary 1006
Glossary 1007
Key Formulas 1008
Case Problem 1: Lawsuit Defense Strategy 1010
Case Problem 2: Property Purchase Strategy 1011
Chapter 20 index numbers 1013

Statistics in Practice: U.S. Department of Labor, Bureau
of Labor Statistics 1014
20.1 Price Relatives 1014
20.2 Aggregate Price Indexes 1015
xviii Contents
20.3 Computing an Aggregate Price Index from Price Relatives 1019

20.4 Some Important Price Indexes 1021
Consumer Price Index 1021
Producer Price Index 1021
Dow Jones Averages 1022
20.5 Deflating a Series by Price Indexes 1023
20.6 Price Indexes: Other Considerations 1026
Selection of Items 1026
Selection of a Base Period 1026
Quality Changes 1027
20.7 Quantity Indexes 1027
Summary 1029
Glossary 1029
Key Formulas 1029
Chapter 21 Statistical Methods for Quality Control 1033

Statistics in Practice: Dow Chemical Company 1034
21.1 Philosophies and Frameworks 1035
Malcolm Baldrige National Quality Award 1036
ISO 9000 1036
Six Sigma 1036
Quality in the Service Sector 1038
21.2 Statistical Process Control 1039
Control Charts 1040
x Chart: Process Mean and Standard Deviation Known 1041
x Chart: Process Mean and Standard Deviation Unknown 1043
R Chart 1045
p Chart 1046
np Chart 1049
Interpretation of Control Charts 1049
21.3 Acceptance Sampling 1052
KALI, Inc.: An Example of Acceptance Sampling 1053
Computing the Probability of Accepting a Lot 1054
Selecting an Acceptance Sampling Plan 1056
Multiple Sampling Plans 1057
Summary 1059
Glossary 1060
Key Formulas 1060
Appendix 21.1 Control Charts with JMP 1064
Appendix 21.2 Control Charts with R (MindTap Reader)
Contents xix
Chapter 22 Sample Survey (Mindtap reader) 22-1

Statistics in Practice: Duke Energy 22-2
22.1 Terminology Used in Sample Surveys 22-2
22.2 Types of Surveys and Sampling Methods 22-3
22.3 Survey Errors 22-5
Nonsampling Error 22-5
Sampling Error 22-5
22.4 Simple Random Sampling 22-6
Population Mean 22-6
Population Total 22-7
Population Proportion 22-8
Determining the Sample Size 22-9
22.5 Stratified Simple Random Sampling 22-12
22.6 Cluster Sampling 22-21
22.7 Systematic Sampling 22-29
Summary 22-29
Glossary 22-30
Key Formulas 22-30
Supplementary Exercises 22-34
Case Problem: Medicament’s Predicament 22-36
appendix a References and Bibliography 1068
appendix B Tables 1070
appendix C Summation Notation 1097
appendix d Answers to Even-Numbered Exercises (MindTap Reader)
appendix e Microsoft Excel 2016 and Tools for Statistical Analysis 1099
appendix F Computing p-Values with JMP and Excel 1107
index 1111
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 Business 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 Science

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 science,
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
xxii 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 xxiii
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 14th edition of STATISTICS FOR BUSINESS AND ECONOMICS, Metric
Version. 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 STATISTICS
FOR BUSINESS AND ECONOMICS and the major changes that were made in developing
the 14th 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 methodo-
logical 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 ad-
vanced 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 14e and
Microsoft® Office Excel 2016 and emphasizes the role of computer software in the application
of statistical 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 package, but the
wide availability and use of Excel make it important for students to understand the statistical
capabilities of this package. JMP and Excel procedures are provided in appendices so that in-
structors have the flexibility of using as much computer emphasis as desired for the course.
MindTap Reader includes appendices for using R for statistical analysis. 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 soft-
ware is extremely powerful. To ease students’ introduction to the R language, we also use
RStudio which provides an integrated development environment for R.
This international metric version is designed for classrooms and students outside of the
United States. The units of measurement used in selected examples and exercises have been
changed from U.S. Customary units to metric units.
Changes in the 14th Edition

We appreciate the acceptance and positive response to the previous editions 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
Software. In addition to step-by-step instructions in the software appendices for
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 JMP appendices are contained within the textbook chapters, while R appen-
dices are provided in MindTap Reader. In this latest edition, we no longer provide
discussion of the use of Minitab.
xxvi Preface
Case Problems. We have added 12 new case problems in this edition; the total num-
ber 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 Chapter 16
case on regression model building has been updated. A new case utilizing nonpara-
metric procedures has been added to Chapter 18, and a new case on sample survey
has been added to Chapter 22. The 42 case problems in this book provide students
the opportunity to work on more complex problems, analyze larger data sets, and
prepare managerial reports based on the results of their analyses.
Examples and Exercises Based on Real Data. In this edition, we have added 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 information. 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 stat-
istics 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 14th
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
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 on the publisher’s website
at https://login.cengage.com.
Preface xxvii
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 Maine University of Alberta Tulane University
Kathleen Arano School of Business J. G. Pitt
Fort Hays State University Clifford B. Hawley University of Toronto
Musa Ayar West Virginia University Scott A. Redenius
Uw-baraboo/Sauk County Vance A. Hughey Brandeis University
Kathleen Burke Western Nevada College Sandra Robertson
SUNY Cortland Tony Hunnicutt Thomas Nelson
Ouachita Technical College Community College
YC Chang
University of Notre Stacey M. Jones Sunil Sapra
Dame Albers School of Business California State University,
and Economics, Seattle Los Angeles
David Chen
University Kyle Vann Scott
Rosemont College and
Saint Joseph’s University Dukpa Kim Snead State Community
University of Virginia College
Margaret E. Cochran
Northwestern State University Rajaram Krishnan Rodney E. Stanley
of Louisiana Earlham College Tennessee State University
Thomas A. Dahlstrom Robert J. Lemke Jennifer Strehler
Eastern University Lake Forest College Oakton Community College
Anne Drougas Philip J. Mizzi Ronald Stunda
Dominican University Arizona State University Valdosta State University
Fesseha Gebremikael Strayer Mehdi Mohaghegh Norwich Cindy van Es
University/Calhoun Community University Cornell University
College Mihail Motzev Jennifer VanGilder
Malcolm C. Gold Walla Walla University Ursinus College
University of Wisconsin— Somnath Mukhopadhyay Jacqueline Wroughton
Marshfield/Wood County The University of Texas Northern Kentucky
Joel Goldstein at El Paso University
Western Connecticut State Kenneth E. Murphy Dmitry Yarushkin
University Chapman University Grand View University
Jim Grant Ogbonnaya John Nwoha David Zimmer
Lewis & Clark College Grambling State University Western Kentucky University
We continue to owe debt to our many colleagues and friends for their helpful comments
and suggestions in the development of this and earlier editions of our text. Among them are:
Mohammad Ahmadi James Brannon Richard Claycombe

University of Tennessee University of Wisconsin— McDaniel College
at Chattanooga Oshkosh Robert Cochran
Lari Arjomand John Bryant University of Wyoming
Clayton College and State University of Pittsburgh Robert Collins
University Peter Bryant Marquette University
Robert Balough University of Colorado David W. Cravens
Clarion University Terri L. Byczkowski Texas Christian University
Philip Boudreaux University of Cincinnati Tom Dahlstrom
University of Louisiana Robert Carver Eastern College
Mike Bourke Stonehill College
Houston Baptist University
xxviii Preface
Gopal Dorai John S. Loucks Bill Seaver

William Patterson University St. Edward’s University University of Tennessee
Nicholas Farnum David Lucking-Reiley Alan Smith
California State Vanderbilt University Robert Morris College
University—Fullerton Bala Maniam Willbann Terpening
Donald Gren Sam Houston State University Gonzaga University
Salt Lake Community Ted Tsukahara
College Don Marx
University of Alaska, St. Mary’s College of
Paul Guy
California State Anchorage California
University—Chico Tom McCullough Hroki Tsurumi
Clifford Hawley University of California— Rutgers University
Berkeley David Tufte
West Virginia University
Ronald W. Michener University of New Orleans
Jim Hightower University of Virginia Victor Ukpolo
California State Glenn Milligan Austin Peay State University
University, Fullerton Ohio State University Ebenge Usip
Alan Humphrey Mitchell Muesham Youngstown State
University of Rhode Island Sam Houston State University University
Ann Hussein Roger Myerson Cindy Van Es
Philadelphia College of Northwestern University Cornell University
Textiles and Science
Richard O’Connell Jack Vaughn
C. Thomas Innis Miami University of Ohio University of Texas-El Paso
Alan Olinsky Andrew Welki
Ben Isselhardt Bryant College John Carroll University
Rochester Institute of
Technology Ceyhun Ozgur Ari Wijetunga
Valparaiso University Morehead State University
Jeffery Jarrett
University of Rhode Island Tom Pray J. E. Willis
Rochester Institute Louisiana State University
Ronald Klimberg
St. Joseph’s University of Technology Mustafa Yilmaz
Harold Rahmlow Northeastern University
David A. Kravitz
George Mason University St. Joseph’s University Gary Yoshimoto
St. Cloud State University
David Krueger H. V. Ramakrishna
St. Cloud State University Yan Yu
Penn State University at Great University of Cincinnati
John Leschke Valley
University of Virginia Charles Zimmerman
Tom Ryan Robert Morris College
Martin S. Levy Case Western Reserve
University of Cincinnati University
We thank our associates from business and industry who supplied the Statistics in Practice
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
SUPPLEMENTARY ExERCISES 22
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
output. Suppose, for example, that a machine fills containers with 350 milliliters of a soft
drink. Periodically, a production worker selects a sample of containers and computes the
average number of milliliters 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 liter of conventional regular
gasoline between 2012 and 2018. From January 2012 until June 2014, prices fluctuated
between $0.84 and $1.01 per liter before a long stretch of decreasing prices from July 2014
to January 2015. The lowest average price per liter occurred in January 2016 ($0.44). 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 Liter for Conventional Regular Gasoline
$1.17
$1.04
$0.91
Average Price per Liter
$0.78
$0.65
$0.52
$0.39
$0.26
$0.13
$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. An 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 Frequencies and Percent Frequencies for the Fitch Credit
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 ($)
1.5 Statistical Inference 15
Per Capita GDP for the 60 nations ranges from $0 to $80,000, with the highest concentration
between $0 and $10,000. Only one nation had a Per Capita GDP exceeding $70,000.
In addition to tabular and graphical displays, numerical descriptive statistics are used
to summarize data. The most common numerical measure is the average, or mean. Using
Chapters 2 and 3 devote atten- the data on Per Capita GDP for the 60 nations in Table 1.1, we can compute the average by
tion to the tabular, graphical, adding Per Capita GDP for all 60 nations and dividing the total by 60. Doing so provides
and numerical methods of
an average Per Capita GDP of $21,279. This average provides a measure of the central
descriptive statistics.
tendency, or central location of the data.
There is a great deal of interest in effective methods for developing and presenting
descriptive statistics.
1.5 Statistical Inference

Many situations require information about a large group of elements (individuals, compa-
nies, voters, households, products, customers, and so on). But, because of time, cost, and
other considerations, data can be collected from only a small portion of the group. The
larger group of elements in a particular study is called the population, and the smaller
group is called the sample. Formally, we use the following definitions.
POPULATION
A population is the set of all elements of interest in a particular study.
SAMPLE
A sample is a subset of the population.
The U.S. government conducts The process of conducting a survey to collect data for the entire population is called a
a census every 10 years.
census. The process of conducting a survey to collect data for a sample is called a sample
Market research firms conduct
sample surveys every day.
survey. As one of its major contributions, statistics uses data from a sample to make
estimates and test hypotheses about the characteristics of a population through a process
referred to as statistical inference.
As an example of statistical inference, let us consider the study conducted by Rogers
Industries. Rogers manufactures lithium batteries used in rechargeable electronics such as
laptop computers and tablets. In an attempt to increase battery life for its products, Rogers
has developed a new solid-state lithium battery that should last longer and be safer to use.
In this case, the population is defined as all lithium batteries that could be produced using
the new solid-state technology. To evaluate the advantages of the new battery, a sample of
200 batteries manufactured with the new solid-state technology were tested. Data collected
from this sample showed the number of hours each battery lasted before needing to be
recharged under controlled conditions. See Table 1.5.
Suppose Rogers wants to use the sample data to make an inference about the average
hours of battery life for the population of all batteries that could be produced with the
new solid-state technology. Adding the 200 values in Table 1.5 and dividing the total by
200 provides the sample average battery life: 18.84 hours. We can use this sample result
to estimate that the average lifetime for the batteries in the population is 18.84 hours.
Figure 1.6 provides a graphical summary of the statistical inference process for Rogers
Industries.
Whenever statisticians use a sample to estimate a population characteristic of interest,
they usually provide a statement of the quality, or precision, associated with the estimate.
For the Rogers Industries example, the statistician might state that the point estimate of the
average battery life is 18.84 hours ±.68 hours. Thus, an interval estimate of the average
battery life is 18.16 to 19.52 hours. The statistician can also state how confident he or she
is that the interval from 18.16 to 19.52 hours contains the population average.
TABLE 1.5 Hours Until Recharge for a Sample of 200 Batteries for the
Rogers Industries Example
Battery Life (hours)

19.49 18.18 18.65 19.45 19.89 18.94 17.72 18.35 18.66 18.23
19.08 19.92 19.01 18.84 17.73 19.70 18.37 18.69 19.98 18.80
19.11 18.26 19.05 17.89 19.61 18.52 18.10 19.08 18.27 18.29
19.55 18.81 18.68 17.43 20.34 17.73 17.66 18.52 19.90 19.33
18.81 19.12 18.39 19.27 19.43 19.29 19.11 18.96 19.65 18.20
19.18 20.07 18.54 18.37 18.13 18.29 19.11 20.22 18.07 18.91
Rogers
18.44 19.04 18.88 19.51 18.84 20.98 18.82 19.40 19.00 17.53
18.74 19.04 18.35 19.01 17.54 18.14 19.82 19.23 19.20 20.02
20.14 17.75 18.50 19.85 18.93 19.07 18.83 18.54 17.85 18.51
18.74 18.74 19.06 19.00 18.77 19.12 19.58 18.75 18.67 20.71
18.35 19.42 19.42 19.41 19.85 18.23 18.31 18.44 17.61 19.21
17.71 18.04 19.53 18.87 19.11 19.28 18.55 18.58 17.33 18.75
18.52 19.06 18.54 18.41 19.86 17.24 18.32 19.27 18.34 18.89
18.78 18.88 18.67 18.19 19.07 20.12 17.69 17.92 19.49 19.52
19.91 18.46 18.98 19.18 19.01 18.79 17.90 18.43 18.35 19.02
18.06 19.11 19.40 18.71 18.91 18.95 18.51 19.27 20.39 19.72
17.48 17.49 19.29 18.49 17.93 19.42 19.19 19.46 18.56 18.41
18.24 17.83 18.28 19.51 18.17 18.64 18.57 18.65 18.61 17.97
18.73 19.32 19.37 18.60 19.16 19.44 18.28 19.20 17.88 18.90
19.66 19.00 18.43 19.54 19.15 18.62 19.64 18.87 18.31 19.54
FIGURE 1.6 The Process of Statistical Inference for the Norris

Electronics Example
1. Population
consists of all batteries 2. A sample of
manufactured with 200 batteries is
the new solid-state manufactured with
technology. Average the new solid-state technology.
lifetime is unknown.
4. The sample average 3. The sample data provide

is used to estimate the a sample average lifetime
population average. of 18.84 hours per battery.
1.6 Analytics
Because of the dramatic increase in available data, more cost-effective data storage, faster
computer processing, and recognition by managers that data can be extremely valuable for
understanding customers and business operations, there has been a dramatic increase in
data-driven decision making. The broad range of techniques that may be used to support
data-driven decisions comprise what has become known as analytics.
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had perforated with so many millions of holes, as to reduce it to a
powder, and a new one was obliged to be placed in its room. The
black ant was no less persevering in attacks upon our persons; her
bite was nearly as bad as a scorpion, and so sharp as to excite an
involuntary exclamation from the sufferer; indeed, for weeks
together, my skin had, from these insects alone, more resembled
that of a person afflicted with the measle than any thing else that I
can compare it to. Oil, unfortunately, we had none, which is both a
preventive and a cure; the only substitute I could obtain was a little
fat rubbed over the body, and this seldom failed of giving me relief.
The kafila for Mourzuk left Kouka on the 13th: several Arabs, who
had determined on remaining here some time, took their departure in
consequence of their fears of the bashaw’s visit. Nothing had
arrived, and, in the absence of authentic intelligence, all was alarm
and confusion, and reports of every kind arose: they said the kafila,
which had been expected more than two months, could not be
delayed from any other cause than the hostile intentions of the
sultan: trusty persons were accordingly stationed at the
commencement of the desert to give the earliest information of any
thing approaching, and no assurances of ours had the least effect in
calming the fears of the natives.
Mr. Clapperton’s illness increased; and one night, while all were
asleep, he made his way to the hut where the only servant slept who
was not sick, begging for water; his inside, he said, was burning; the
delirium had just then left him; he was too weak to return to his hut
without the assistance of Columbus, who supported him in his arms;
he was still dangerously ill; and four persons of our establishment,
besides Doctor Oudney, were confined to their beds at this time with
this same disorder: the symptoms of all were similar.
Sep. 25.—After a most restless night, I rose by daylight, and
taking my old negro, Barca, rode in the direction of Dowergoo. The
harvest was abundant, and they had already begun to lop off the
heads of the long gussub: the tamarind trees, which lose all their
leaves at the commencement of the rains, were budding with great
beauty, and had a bright carnation colour; the waters had already
decreased very considerably; and the season appeared highly
favourable for an expedition in some previously untrodden path:
every thing else was, however, against the attempt; for, added to our
poverty, I was the only one of our party capable of mounting a horse.
On my return I visited my patients, for Doctor Oudney could not
move from his hut; and the small-pox raged amongst the slaves of
two of our friends, added to the fever of the season. Out of twelve
slaves who were seized, two had died; and the only child of
Mohamed-el-Wordy had now taken it from his slave. They are not
ignorant of inoculation, and it is performed nearly in the same
manner as amongst ourselves, by inserting the sharp point of the
dagger, charged with the disease; they never give any medicine, but
merely roll the invalid in a barracan, and lay him in a corner of the
hut until the disorder takes a turn.
The castor tree is found in this neighbourhood, and is commonly
used as a medicine. There is also another tree, of which they either
chew the blossom or steep it in water, which has the effect of an
emetic.
The weather continued to improve upon us, though the heat
increased; and some days the thermometer was at 97° and 98°, but
we had fewer mosquitoes, and a clearer atmosphere. Doctor
Oudney had been violently attacked, first in his right, and then in his
left eye, with an inflammation, which left him no rest by day or night;
he, however, within the last two days, got out for an hour in the
evening. Mr. Clapperton also, who had been in a state of extreme
danger for many days, appeared to have passed the crisis of his
attack—cool blood flowed once more in his veins, and
consciousness was restored to his mind: he was however
emaciated, and in a dreadful state of weakness, and his eyes could
scarcely be said to have life or expression in them; he had been
supported outside his hut for the last two days, and we began to
hope he would recover.
Sep. 28.—During the confinement of Doctor Oudney, I had
occasionally seen the sheikh about every seven days; he was
always anxious in his inquiries after him, and seemed much
surprised that, having such excellent medicines for other people, he
should not be able to cure himself: and as this day the doctor
seemed to think himself a little better, we went together to the
sheikh. Dr. Oudney at once told him that he wished to go to Soudan;
and as he had not given me the slightest intimation of this being his
intention, I was really as much surprised as the sheikh himself.
“What is your object?” said he: “why, the courier has not yet brought
the bashaw’s directions.” Doctor Oudney replied, “My wish is to see
the country—I cannot live here—I shall die. While travelling, I am
always better.”
From a Sketch by Major Denham. Engraved by E. Finden.
HUT AND CARPENTER WORK SHOP.

Published Feb. 1826, by John Murray, London.
Hillman had been for a long time employed in making a gun-

carriage for a four-pounder, which the sultan of Fezzan had formerly
brought as a present to the sheikh: the scarcity of iron, the
awkwardness of the negro blacksmiths, and clumsiness of their work
when finished, were so distressing to the correct eye of an English
shipwright, that even after the carriage was completed—and
considering the means he had, it was very well done—Hillman was
far from being satisfied with his work: not so, however, the sheikh.
We took it to him this afternoon, and he was greatly pleased and
surprised at the facility with which its elevation could be increased or
decreased: both this and the wheels were subjects of great wonder.
During the work, on several occasions, the sheikh had sent Hillman
presents of honey, milk, rice, wheat, and sweet cakes, all of which he
had shared with his companions. On one occasion, after he had
finished a large chair, which pleased the sheikh excessively, he sent
him a bag of gubbuk (money of the country): this, after inquiring what
it was, he returned, with the true and honest pride of an English
seaman, saying, “No! the king of England pays me—I don’t want
that; but I am much obliged to the sheikh, nevertheless.”
The season seemed now to prove very unhealthy both to the
natives and ourselves, and from six to ten bodies were seen carried
out daily from the city gates. My poor friend Mai Meegamy was
attacked, among the rest, by this dreadfully prevalent complaint, and
he sent for me by daylight. I found him in an alarming state of fever,
with a fit of the ague on him at the time: after consulting with Doctor
Oudney, who was unable to visit him, I gave him a strong dose of
emetic tartar, and in two days had the pleasure of seeing him quite
recovered. The effect of the emetic tartar was to him a matter of the
greatest astonishment: at the first sight of the dose he was unwilling
to take it, and asked what a little white powder like that could do for
him: he was very shortly, however, convinced, that the quantity I had
prescribed was quite sufficient. “What wonderful medicine!” said he:
“why, if I had swallowed so much,” taking up a little sand in his hand,
“what would have become of me! Wonderful! wonderful! the English
know every thing: why are they not Musselmen?”
This day, a large guana and a young crocodile were brought to
me by one of the Shouaas: they had been killed on the banks of the
Shary, five days distant, and were in pretty good preservation. I
proceeded to dry them in the way mentioned by Mr. Burchell; and
although this was a matter I had never before had the least
experience in, or taste for, yet I became every day more and more
interested in the collections and preservations of our specimens of
birds and other animals.
The sheikh sent us three birds[37], which had been taken in their
nests at Loggun: they are very scarce, and much esteemed, their
flesh being used as a medicine for many disorders, placed hot to the
part affected, particularly for an enlargement of the spleen. They
feed on insects, fish, snakes, and serpents, the latter of which they
have a particular instinct of discovering. This bird discovers their
vicinity while yet many feet under ground, digs on the spot, destroys
the nest, and feeds on the venomous inhabitant and its eggs:
although larger than a turkey-cock, they were so young as to be
unable to walk; indeed, the feathers were not all perfect, and I
determined on endeavouring to rear one of them to more mature age
and beauty. I had, indeed, already a little menagerie, which, if I
would have allowed it, the sheikh would have added to daily, and I
found in them great amusement—I might almost say much comfort.
My collection consisted, besides my Loggun bird, of two monkeys,
five parrots, a civet cat, a young ichneumon, and a still younger
hyæna: they had all become sociable with each other, and with me,
and had their separate corners allotted them in the inclosure that
surrounded my hut, except the parrots and the monkeys, who were
at liberty; and while sitting in the midst of them of a morning, with my
mess of rice and milk, I have often cast my thoughts to England, and
reflected with deep interest on the singular chances of life by which I
was placed in a situation so nearly resembling the adventurous hero
of my youthful sympathies, Robinson Crusoe.
Our whole household now began to revive, and on Sunday we all
met in the evening about sun-set, before the doors of our huts, and
enjoyed the cool breeze for more than half an hour; even Doctor
Oudney, whose eyes had ceased to be so painful, joined us—we
had not enjoyed such a coterie for many months. A very hale strong
negro woman, the mother of Mr. Clapperton’s servant, had taken the
fever from her son, who had been more than a month laid on his
back, and reduced her almost to death’s door. She was a Koorie
from one of the islands to the east of the Tchad, and had sent for
several fighis, who, after writing mysterious words, decided on her
case as hopeless. At last an old Hadgi, more than seventy years of
age, was requested to come to her:—he was a miserable old wretch,
carrying nothing but an ink-bottle, made of a small gourd, and a few
reed pens; but he set about his business with great form, and with
the air of a master; and, in the evening, Zerega, my negro’s wife,
came to me, quite in raptures at the following wonderful story: he
said the woman was certainly enchanted, probably by the kaffirs,
meaning the English, but, “By the head of the prophet,” he should
drive the devil out of her, and which he called shetan (the devil). He
wrote a new gidder (wooden bowl) all over sentences from the
Koran; he washed it, and she drank the water; he said “Bismullah”
forty times, and some other words, when she screamed out, and he
directly produced two little red and white birds, which he said had
come from her. “What did you do in that poor woman? she is not
young,” said the fighi; “why perplex her? why did not you come out of
her before?” “We did not wish to hurt her much,” said the birds; “but
she has been kaffiring, old as she is, and must be punished: there
are others in her yet who will not come out so easily; but now, since
you are come, she will not die, but she had better take care for the
future: we jumped into her when she went to the market; and she
knows what she did there.” The poor woman shed an abundance of
tears, and acknowledged that she had been a little thoughtless on
the preceding market-day. The fighi was rewarded with her best
Soudan shift, and they were all made happy at the news of her
recovery.
October 7.—About three thousand of the sheikh’s spaheia
(horsemen) had lately come in from the Tchad, Shary, and the
different towns south and west of Angornou, in order that they might
undergo a general inspection: their horses were in good condition.
An extremely careful inspection took place by the sheikh himself,
and punishment was instantly inflicted on any one who had a young
horse, if it appeared to have been neglected: but those whose
horses were old were excused, and the animal changed.
October 8.—A circumstance happened yesterday, which I
acknowledge a good deal irritated my feelings. A Tripoli merchant
had intrusted to one of the Mesurata a parcel of coral, to take for him
to Angornou: it was, however, never forthcoming, and he declared
that he had lost it on the road. The Koran law would not, in that case,
oblige the loser to make good the loss—a thing lost is God’s will, and
nobody’s fault. A servant of the owner, however, unluckily saw the
coral afterwards in the Mesurata’s house; the merchant, therefore,
appealed to the kadi, as, if he succeeded in proving this, the value
would be recoverable. This servant had been for some time out of
employ, and had assisted at our huts during the time that we had so
many of our party sick. The kadi took this man’s oath, and was about
to decide, when some one said, “Why, he eats bread and salt with
the Christians.” “How!” said the kadi; “is that true?” “Yes,” replied he,
“I have eaten their bread, but it was because no one else would feed
me; but I don’t hate them the less for that.” “Turn him out,” said the
kadi: “Staffur allah! God forbid that any one who has eaten with
Christians should give justice by the laws of Mahommed!” His
evidence was accordingly refused, and the merchant lost his cause.
A Bornouese, a friend of mine, who was present, asked the kadi,
with much simplicity, whether really these Christians were such bad
people: “they seem kind,” said he; “and if they are so very bad, why
does God suffer them to be so rich, and to know things so much
better than we do?” “Don’t talk about them,” said the kadi, “don’t talk
about them—please God, those who are here will die Mislem: as to
their riches, let them enjoy them. God allows them the good things of
this world, but to Mislem he has given paradise and eternity.” “Geree!
geree!” (true! true!) was re-echoed from each; and the fatah was
immediately recited aloud.
We had now received intelligence that the kafila which had left
this place from Mourzuk, nearly a month since, was detained at
Woodie, in consequence of the Tibboos having filled the wells
between that place and Billma. Such of the Arabs as remained of our
escort, after their return from Munga, left Kouka with the first kafila
for Tripoli: they were all my professed friends; but, notwithstanding
the miserable state in which they were, I had not the means of
assisting them; the few dollars each man had received from the
bashaw on quitting Tripoli, and all they possessed besides, being
lost at Mandara, and they knew I was precisely in the same situation.
One man in three or four sold his gun, an Arab’s greatest treasure, to
provide them with water, skins, and corn, for their journey. Added to
this, they were all weakened by sickness and wounds: the fancied
riches they were to be masters of, by Boo-Khaloom’s victories over
the Kerdies, had vanished into air, and they were about to return to
their families after a year’s absence, even poorer than they left them.
That the desperation natural to an Arab should be excited by such
circumstances was not to me a matter of surprise. I cautioned them,
however, against returning to Tripoli with unclean hands: they
promised fair enough, and even shuddered when I reminded them of
the bashaw’s summary mode of punishing; all was, however, without
effect; for, on arriving at the Tibboo country, they proceeded to the
well Daggesheinga, a retreat which had been shown to Boo-
Khaloom in confidence, on his last journey, by Mina Tahr, the road to
which they too well remembered, and surprising the flocks of the
Tibboos, and killing three of their people, marched off four hundred
and upwards of their best maherhies: this had exasperated the
Tibboos almost to madness; and they filled up all the wells, swearing
they would be repaid, or that no kafilas should pass through their
country. This news made us tremble for our supplies; but evils
seemed to be crowding thick upon us, from all quarters. We
discovered too, or thought we discovered, that the people now
treated us with less respect, and were more lavish of the
contemptuous appellations of kaffir, kelb, insara, unbeliever, dog,
Christian, both to me and to our servants than formerly; and as the
opinion of the oi polloi in all these countries is usually governed by
authority, I concluded we had also lost ground in the estimation of
the chief. A Bornou boy whom I had taken some notice of, and who
used to come to me almost every day to talk Bornouese, was hooted
in the streets, and called insara; and when we turned him from the
huts for stealing nearly two dollars in strips of cloth, the money of the
country, the people all exclaimed against such an act, as, by kaffiring
with Christians, they said that the misfortune of being supposed a
thief had come upon him.
October 10.—We had to-day a fresh breeze from the north-west,
which was delightfully invigorating, and the natives promised us
some few days of cold dry weather, which was to carry off all the
fever and agues. This strongly reminded me of the Spanish villagers
in Old Castile, who, during the sickly months of July and August,
were, upon an average, three out of four confined to their beds with
a very similar complaint: like these people, they took no medicines,
but always said, “When the cold winds come we shall be better.” The
winds in Bornou are regular and periodical: previous to our going to
Munga, east and south-east winds were nearly constant; when the
rainy season commenced, we had them from the south-west, with a
thick atmosphere, a sultry, damp, and oppressive air. Previous to a
storm, gusts of wind would accompany the black clouds which
encompassed us, and blow with great force from the north-east;
these winds, however, were not accompanied by such violent or
lasting rains; but when the clouds formed themselves to the south-
east, they were tremendous, accumulating, as it were, all their force,
and gradually darkening into a deeper and more terrific black, with
frequent and vivid forked lightning, accompanied by such deafening
and repeated claps of thunder, as shook the ground beneath our feet
like an earthquake. The rain always at these times burst upon us in
torrents, continuing sometimes for several hours; while blasts of
wind, from the same quarter, drove with a violence against our
unsheltered huts, that made us expect, every instant, low as they
were, to see the roofs fly from over our heads, and deprive us of the
trifling protection they afforded. After these storms, the inclosures
round our huts were often knee deep in water, and channels were
formed, with all possible speed, in order to prevent the huts
themselves from being inundated. At the full and change of the moon
these storms were always most violent.
Oct. 16.—“How use doth breed a habit in a man.” Miserably
solitary as were all my pursuits, disheartening as were my prospects,
and demi-savage as was my life altogether, I was incapable of
accounting, even to myself, for the tranquillity in which my days
glided away. The appetite with which I generally devoured the rice or
paste, which formed my lone repasts, for no one could endure the
smell of food but myself, so heavy was sickness upon them; the
satisfaction felt in my morning and evening visits to Barca Gana, and
the plans, full of hope of further progress, which floated in my
imagination, when at night I laid my head upon my pillow, frequently
excited in my mind the most proud and grateful sensations.
I had been fully employed (convinced that I was best consulting
the interests of the mission, the primary object of all my thoughts, by
cultivating the favour and good will of the sheikh), during the two last
days in superintending the manufacture of cartridges, for the two
field-pieces, which were now both mounted, as we had plenty of very
good paper for the purpose with us. In this I succeeded to my
wishes; but the providing of balls was a great difficulty; and after
trying a number of musket-balls in a small linen bag, which would not
answer, I succeeded in getting from the negro blacksmith, by means
of a paper model, a small tin canister, the size of the mouth of the
piece, and holding sixteen musket balls. The sheikh’s delight was
extreme at this acquisition to his own implements of war, and he
became impatient to see the guns exercised. I offered, if he would
appoint six of his best slaves, three to each gun, that I would instruct
them as well as I was able—as firing them quick was a very material
augmentation of their utility; and I at the same time strongly
recommended his holding forth to his people the promise of reward,
in the event of their being brought safe out of battle; and that the
punishment would be most severe in case they were deserted, and
fell into the hands of an enemy. The sheikh’s preparation for war had
been carried on for the last two months with great vigour; his whole
armoury had been renovated; and he told me, exultingly, that he had
two hundred guns, pistols, and carbines—although from the locks of
full fifty it would have been in vain to attempt producing fire.
The sheikh had, in the beginning of his conquests, seen the
advantage of encouraging the discontented of other countries to
settle in his new towns; and, besides the Kanemboo who
accompanied him, he had Tuaricks, Tibboos, Arabs, and Begharmis,
—and on those he appeared to rest his chief reliance. To check this
warlike spirit was far from his wish or interest; for by indulging it, he
not only enriched himself, and his people, and strengthened his
power, but might also hope to render it eventually a source of
strength, prosperity, and permanency to his kingdom.
Notwithstanding the business of war appeared so fully to occupy
the sheikh’s thoughts, yet his anxiety for a reformation, as despotic
as it was impracticable, amongst the frail of his woman-kind, was still
uppermost in his mind; an instance of which occurred when two of
these unfortunates fell into his hands, whose sinnings were placed
beyond all doubt by the activity of the spies he employed to watch
over this department; and although his decisions on ordinary
occasions were ever on the side of mercy, these poor girls were
sentenced to be hanged by the neck until they were dead[38]. The
agitation and sorrow which the threatened execution of these two
girls, who were both of them under seventeen, excited in the minds
of all the people, were most creditable to their feelings; and although
on other occasions their submission to the decrees of their chief was
abject in the extreme, yet on this (to say the least of it) rigorous
sentence being made public, loud murmurs were uttered by the men,
and railings by the women. The lover of one of the girls swore that
he would stab any man who attempted to place the rope. He had
offered to read the fatah with her[39], which offer had been refused.
The general feeling was pity, and the severity of the punishment
caused the sin to be almost forgotten, which would not have been
the case had the penalty been of a more lenient nature: indeed, it
was natural that pity should be felt—notwithstanding all one’s
morality, it was impossible to feel otherwise. The day after (for
punishments are summary in eastern countries) was fixed for the
expiation of their crime, but a fighi, nearly equal to the sheikh in skill,
took upon himself to remonstrate, and declared such punishments
were themselves haram (sins), for in no part of the Koran could an
authority be found for such a sentence. To disgrace or set a mark on
such culprits was the law of the Prophet, not death;—and that should
these poor offenders suffer, God would avenge their death on the
country, and sickness, with bad crops, would come upon them. The
sheikh for a long time continued inexorable, and observed that
riches, plenty, and prosperity, without virtue, were not worth
possessing—the punishment of the two girls, however, was
eventually commuted to that of head-shaving, a heavy disgrace, and
which was performed in the public street.
The ceremony of the trial of the brass guns, for which, after
consulting Mr. Clapperton, who was too ill to undertake it himself, I
had succeeded in making charge and wadding, took place this
afternoon, before the sheikh and a thousand spectators. The
distance to which they threw the balls, and the loudness of the
report, created the greatest astonishment: but I could not persuade
the sheikh to suffer a second canister to be shot: “No, no!” said he,
“they are too valuable; they must not be thrown away: curses on
their race! how these will make the Begharmis jump!” I had cut them
out a harness in paper as a pattern, which had been tolerably made
in leather: this was attached to each gun, with a man mounted on the
mule that drew it; and altogether the guns had a far better
appearance and effect than I expected. The carriages answered
extremely well—were very steady; and I much regretted that poor
Hillman, to whom all the credit of mounting them belonged, was
confined to his mattress, and unable to see how well they answered:
but the sheikh’s anxiety would not brook delay.
Nov. 9.—The cool winds which had prevailed for the last fifteen
days had so purified the air, that disease appeared to be taking its
departure, and a season of health about to succeed in its turn. These
long-wished-for breezes generally came on about ten in the
forenoon, and continued until two hours after mid-day. They had a
great effect on the natives, and appeared considerably to invigorate
ourselves. Both Mr. Clapperton and Hillman were now able to walk
about with the assistance of a stick: they were both, however, sadly
pulled down, and enfeebled.
The two expeditions, one for Kanem and the other to Begharmi,
were now said to be in readiness for departing after the feast, or Aid-
of-Milaud, which was to be kept on the 16th and two following days. I
had determined on accompanying one of them, whether a supply of
money arrived or not, as the season of the year was too valuable to
be wasted. This was the first opportunity that had offered of a
movement to the eastward in any direction, and it was not to be lost.
I had one camel and one horse, and, as before, I was determined on
taking my chance with the ghrazzie, and faring as well as
circumstances would allow me. The feast was ushered in with all the
customary rejoicings, and gifts were distributed by all the great
people; nor were we forgotten by the sheikh, who sent us two
bullocks[40] and three sheep, and two jars of honey, which in our
situation was no mean present; for as sickness began to subside
amongst us, our appetite increased.
Nov. 21.—The feast, Aid-of-Milaud (the birth-day of Mohammed)
is attended with nearly similar rejoicings to the other feast days; but
instead of wrestlings amongst the men, the ladies, on this occasion,
dance according to the fashion of their country. The motions of the
Kouka women, though the least graceful, are certainly the most
entertaining; all, however, form a striking contrast to the lascivious
movements of the Arab and Barbary dancers—every thing here is
modest, and free from any indelicacy. To commence with those of
the capital, who also first appear in the circle, the Koukowy advance
by twos and threes, and after advancing, retiring, and throwing
themselves into various attitudes, accompanied by the music from
several drums, they suddenly turn their backs to each other, and
suffer those parts which are doomed to endure the punishment for all
the offences of our youth to come together with all the force they can
muster, and she who keeps her equilibrium and destroys that of her
opponent, is greeted by cheers and shouts, and is led out of the ring
by two matrons, covering her face with her hands. They sometimes
come together with such violence as to burst the belt of beads which
all the women of rank wear round their bodies just above the hips,
and showers of beads would fly in every direction: some of these
belts are twelve or sixteen inches wide, and cost fifteen or twenty
dollars. Address is, however, often attended, in these contests, with
better success than strength; and a well managed feint exercised at
the moment of the expected concussion, even when the weight of
metal would be very unequal, oftentimes brings the more weighty
tumbling to the ground, while the other is seen quietly seated on the
spot where she had with great art and agility dropt herself. The
Shouaas were particularly happy in these feints, which were
practised in different ways, either by suddenly slipping on one side,
sitting or lying down. I had not seen so many pretty women together
since leaving England, for, as compared with the negresses, the
Shouaas are almost white, and their features particularly handsome;
such an assembly was to us novel and gratifying. I was, however,
sometimes surprised to find how much I became accustomed to the
sight of these swarthy beauties, even so as to be able to look at
them with pleasure. The women of Bornou and Begharmi danced
with a much slower motion, and accompanied themselves by
singing: the former wear simply a blue wrapper or scarf over the
shoulders, and holding each end of the wrapper with the arms
extended, frequently threw themselves into very pleasing and
graceful, if not elegant, attitudes; while the latter, with their hands
before them, sometimes clasped together, sometimes crossed on
the breast, and sometimes with only just the tips of the fingers
meeting à la Madonna, appeared to sing a tale of extreme interest to
the bystanders; this was accompanied by sinkings of the body, and
bendings of the head, from side to side—all finished by sitting down
and covering their faces, when they were led out of the circle by the
elder women.
The Arabs and chiefs from Angornou and the neighbouring towns
came into Kouka in the evening, and the sheikh, accompanied by full
one thousand horsemen, rode round the walls, preceded by seven
flags, and after praying at some distance, returned to the palace: his
new-trained footmen with guns were present, who skirmished with
the horse: and on asking me how they fired, he said, “I have full two
hundred guns—where are the Begharmis now?—the dogs!” This
was repeated the two following days: blessings were asked on the
expedition about to depart, and the disposition made. Two days out
of three I accompanied them, and rode for a short time by his side,
and very much pleased he appeared to be by the attention. We had
no news, however, of the courier, and our spirits were greatly
depressed by the report of his being lost on the road.
Nov. 25.—The season of the year had arrived when the
sovereigns of these countries go out to battle, and the dread of the
bashaw’s expedition had prevented the sheikh from making an
inroad into the Begharmi country; they, in consequence, took the
opportunity of attacking him, notwithstanding their discomfiture in five
different former expeditions, when at least twenty thousand poor
creatures were slaughtered, and three-fourths of that number at least
driven into slavery. The Begharmis had once more come down to the
south side of the Shary, and induced the people of Loggun to declare
for them. The boats of Loggun were to bring the Begharmis over the
river, and then all were to pour into the sheikh’s dominions. We were
in sad confusion at Kouka on hearing the news, and the sheikh
prepared to muster his forces with all despatch.
Nov. 29.—At our audience this morning we were detained for
some time, while a case was decided in which several Kanemboo
chiefs were charged with not having, on some former occasions,
treated the sheikh’s people with kindness. The disaffected sheikhs
were buffeted even in the presence, by the Bornouese, taken out,
and three of the worst of them strangled in the court-yard[41].
Dec. 3.—Although, by the arrival of a messenger from Munga, the
immediate alarm of the Felatah attack from the south-west was
considerably abated, yet they continued increasing in force, and at
not more than five days distance. The Begharmis were also still on
the south bank of the Shary, close to the river, and unless alarmed
by the sheikh’s preparations, were confidently reported to have the
intention of attacking him when the waters had sufficiently subsided
to render it practicable, which was expected in less than a month.
The expedition for Kanem accordingly left this day, under the charge
of Ali Gana, the sheikh’s kaganawha[42], and next in command after
Barca Gana, and another was said to be intended to the south-west.
The news of the last month, both from the Begharmi side and the
Kanem, from the south-east and the east, had been of the worst
description: a direful war of extermination had been for years carried
on between Bornou and Begharmi, the fury of which had not in the
least abated. No males were spared on either side, except on terms
worse perhaps than death. The sultan of Bornou had more than two
hundred youths under twenty, from Begharmi, in his harem, as
eunuchs; while the sultan of Begharmi (who was said to have nearly
one thousand wives) had treble that number of unfortunate
Bornouese and Kanemboo eunuchs, chosen out of the most healthy
young men who had fallen into his hands as prisoners, and spared
from the general massacre for the purpose of serving him in that
capacity. Even the moral, and in many respects the amiable, sheikh
had more than thirty Begharmi lads thus qualified to enter the
apartments of his wives and princesses.
As I was one day taking shelter, in the portico of the sheikh’s
garden, from the violence of a sudden storm of rain, the chief of
those privileged persons brought me to see about a dozen of this
corps, who were just recovering from the ordeal of initiation, which
they had gone through: thin and emaciated, though fed and taken
the greatest care of (for they become extremely valuable, and will
sell to any Turkish merchant for two hundred and fifty or three
hundred dollars), these poor remnants of promising healthy young
men passed before me. I could not contain my emotion, or disguise
the distress which was apparent in my countenance, so that the old
hardened chief of the seraglio, who seemed happy that so many of
his fellow-creatures were reduced to the same standard as himself,
exclaimed, “Why, Christian, what signifies all this? they are only
Begharmis! dogs! kaffirs! enemies!—they ought to have been cut in
four quarters alive, and now they will drink coffee, eat sugar, and live
in a palace all their lives.”
The late intelligence from Waday side, by which route I had
always indulged hopes of advancing, some distance at least, very
much tended to weaken those hopes. The contention between
Waday and the sheikh, for the possession and government of
Kanem, had, for the last year or two, been violent; and now open
hostilities had commenced between him and the sultan. It was true,
that no kafila had passed between Bornou and Waday for five years,
and the only person that had left the former place, since our arrival,
for Waday, had been the young Fighi from Timbuctoo, on his way to
Musser (Cairo), who had accompanied a Fakeer[43] on his return to
Waday. A party of Shouaas had once, indeed, since our residence at
Kouka, come from the borders of the Waday country, beyond
Kanem, to sell a few camels; but it was generally supposed here,
they came merely as spies: they were the most lawless set
themselves; and the account they gave of the road was merely to
induce some of the Arab merchants to take their advice, when they
would have been the first to plunder them[44]. Since the death of the
good sultan Sabon, as he was called, no intercourse had been
attempted either from hence, or even from Fezzan. The only man
who escaped from the last kafila, five years ago, was now here, and
gave the following account of the treatment he received: he was
named Abde Nibbe, the confidential servant of the kaghia[45] of the
bashaw; and had gone from Tripoli to Waday, by the way of
Mourzuk, having been intrusted with a very considerable sum of the
kaghia’s, with which he was to trade: they arrived at Waday in safety,
and at Wara the capital; and after residing there more than twenty
days, during which time he had purchased thirty-seven slaves, and
was apparently upon friendly terms with the natives, one morning
they entered his hut, seized all his property, stripped and bound him,
and, when naked, he was carried before the chief who acted as
regent, Sabon’s son the sultan being but an infant. Abde Nibbe there
found forty persons, consisting of his fellow-travellers and their
followers, bound in the same manner as himself: after being insulted
in every possible way, they were taken outside the town, in order to
have their throats cut. Abde Nibbe, who was a powerful fellow from
Towergha[46], after seeing many of his companions suffer
themselves patiently to be massacred, feeling the cord with which
his hands were tied but loosely fastened, determined on making an
attempt, at least, to save his life: he burst the cord asunder, and ran
towards the hills; twice they caught him, and twice he escaped from
their keeping, carrying with him three wounds from spears, and one
from a knife, which very nearly severed his right hand from his body:
night, however, came on, and creeping into a hole, which had been,
and still might be, the habitation of a brood of hyænas; there he
remained three nights and three days, until raging hunger forced him
to quit his retreat—where, however, to go was the question—who
could he trust amongst so barbarous a people? One person alone
came to his mind as likely to assist him in this extremity—in whose
hands alone he conceived his life would be safe. Was it his brother,
or his sworn bosom friend? No: it was man’s never failing, last, and
best consolation, woman: one to whom he had been kind in his
prosperity, whom he had been intimate with; and he felt assured that
she would not be ungrateful, and never betray his confidence. Was
he mistaken? No: she received him, fed him, washed his wounds,
and for seven days concealed him; when, at last, he was discovered,
and carried again before the chief. After asking how he escaped, the
governor said, “I will keep you in my service, give you a horse, and
see whether you will fight as well for me as you did for yourself.”
Abde Nibbe remained more than two months in this situation,
drawing water, carrying wood, &c. when he heard that a kafila was
about to leave Waday, consisting of a few merchants only, the
remains of his own, and former ones, who had bought their lives at a
very high price: taking advantage, therefore, of a dark night, he once
more escaped and joined them. They lent him a gun and some
ammunition to protect him from the wild beasts, which were very
numerous, and advised his quitting the kafila before day for the
woods: he moved nearly parallel with the kafila, and at night again
joined them. In this way he moved for five days, when the Waday
horsemen gave up the pursuit, and returned without him.
December 14.—Doctor Oudney and Mr. Clapperton left Kouka
this day, for Kano, with a kafila of nearly twenty merchants, beside
servants: this was the eighth kafila that had gone to Soudan, since
our arrival here; and as no other was expected to go for many
months in consequence of the non-arrivals from Mourzuk, and the
other parts of Fezzan, Doctor Oudney, notwithstanding the extremely
debilitated state to which he was reduced, determined on
accompanying this, if the sheikh would allow him. El Kanemy not
only gave his instant permission, but did his utmost to forward his
views, and to secure his safety: he charged Mohammed-el-Wordee,
the principal person of the kafila, to assist them in every way, and
gave them letters to the sultan of Kattagum, to the sultan of Kano,
and also to a Moor, residing at Kano, named Hat-Salah, with whom
he had great influence, and to whose care he confided them as
friends of his own, and the best of Christians.
December 16.—Yesterday Barca Gana, with an expedition nearly
twelve hundred strong, marched to the south-west, to a place called
Kaka; from whence he was to proceed against a Felatah town, called
Monana, which was said to be the rendezvous for the sheikh’s
enemies: his orders, however, were more to ascertain in what
strength the Felatah really were, and what were their intentions, than
to attack them.
December 21.—To my inexpressible delight, Karouash came with
intelligence that a small kafila had arrived at Woodie from Mourzuk,
that an Englishman accompanied them, and that this was followed
by another, a more numerous one, which they had quitted at Zow.
The following was a day of great anxiety; and on the 23d instant,
very soon after daylight, I was overjoyed at seeing, instead of Mr.
Tyrwhit, whose bodily infirmities made me always consider his
joining me doubtful, a robust, healthy-looking young man, with a
double-barrelled gun slung at his back. When he presented himself
at the door of my hut, his very countenance was an irresistible letter
of introduction, and I opened the packages which were to account for
his appearance with considerable eagerness. Mr. Tyrwhit, I found,
had been prevented by sickness from profiting by the consul’s
recommendation; and that on application being made to the
governor of Malta for a substitute, Mr. Toole, an ensign in the 80th
regiment, had volunteered to join me, and left Malta at twenty hours’
notice. He had made the long, dangerous, and difficult journey from
Tripoli to Bornou, in the short space of three months and fourteen
days, having left that place on the 6th of September; and overcoming
all obstacles by perseverance and resolution, both at Mourzuk and in
the Tibboo country, had arrived here with only the loss of five
camels.
The arrival of this kafila with Mr. Toole, and the supplies which he
brought, gave a most favourable turn to my situation at Kouka. I had
now money, health, and a desirable companion: even an attack
might lead to our pursuing an enemy, and by that means getting out
of the sheikh’s dominions; and “God send the fair goddess, deep in
love with us,” was our constant prayer, as, on the least favourable
opportunity offering, I had determined to make a start in one
direction or another. At one time, indeed, Pandora’s sealed casket
seemed literally to have burst over our heads,—strife, war, famine,
falsehood, and a thousand other evils, surrounded us. Still, however,
hope remained in the box; so did we attach ourselves to this never-
failing sheet-anchor, and despondency took wing as we abandoned
ourselves without reserve to the sympathies she inspired.
Jan. 3, 1824.—My friend Tirab, the Shouaa generalissimo, had
long promised to kill me an elephant, as he expressed himself; and
this day, about noon, a messenger came to our huts, saying, that,

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Statistics for Business and Economics :

Metric Edition, 14th Edition Cengage

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Chapter 1 Data and Statistics 1

Chapter 1 data and Statistics 1

Chapter 2 descriptive Statistics: tabular and Graphical

2.2 Summarizing Data for a Quantitative Variable 42

Chapter 3 descriptive Statistics: numerical Measures 107

3.2 Measures of Variability 122

Chapter 4 introduction to probability 177

4.3 Some Basic Relationships of Probability 193

Chapter 5 discrete probability distributions 223

Appendix 5.2 Discrete Probability Distributions with Excel 278

7.6 Sampling Distribution of p 343

Chapter 8 interval estimation 373

8.5 Big Data and Confidence Intervals 398

Chapter 9 hypothesis tests 417

Case Problem 2: Ethical Behavior of Business Students

Chapter 10 inference about Means and proportions with

Chapter 11 inferences about population Variances 525

Case Problem 2: Meticulous Drill & Reamer 547

Chapter 12 Comparing Multiple proportions, test of

Chapter 13 experimental design and analysis

13.4 Randomized Block Design 621

Chapter 14 Simple Linear regression 653

14.9 Residual Analysis: Outliers and Influential Observations 703

Chapter 15 Multiple regression 731

15.9 Logistic Regression 771

Chapter 16 regression analysis: Model Building 799

Supplementary Exercises 841

Chapter 17 time Series analysis and Forecasting 859

Chapter 18 nonparametric Methods 931

Chapter 19 decision analysis 981

Chapter 20 index numbers 1013

20.3 Computing an Aggregate Price Index from Price Relatives 1019

Chapter 21 Statistical Methods for Quality Control 1033

Chapter 22 Sample Survey (Mindtap reader) 22-1

appendix a References and Bibliography 1068

appendix B Tables 1070

appendix C Summation Notation 1097

appendix d Answers to Even-Numbered Exercises (MindTap Reader)

appendix F Computing p-Values with JMP and Excel 1107

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

Thomas A. Williams. Thomas A. Williams is Professor Emeritus of Management Science

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

Changes in the 14th Edition

Features and Pedagogy

Methods Exercises and Applications Exercises

Margin Annotations and Notes and Comments

Data Files Accompany the Text

Mohammad Ahmadi James Brannon Richard Claycombe

Gopal Dorai John S. Loucks Bill Seaver

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