FRISCO, AYANNA MAE C.

1ST YEAR BSA2112-A There are four important uses of statistics in

business:
TOPIC REVIEW: BUSINESS STATISTICAL
ANALYSIS WITH SOFTWARE - To visualize and summarize your data.
APPLICATION - To reach conclusions about a large group
based on data collected from a small group.
- To make reliable forecasts that are based on
STATISTICS statistical models for prediction.
- To improve business processes using
- is the branch of mathematics that Managerial approaches
transforms numbers into useful information
for decision makers.
Why learn Statistics? Variable, Observation, and Data
- helps you make better sense of the world. Variable: A variable is a characteristic of an item
- helps you make better business decisions. or individual.
Observation: Realized value of a variable.
- Statistical methods help you understand
the information contained in “the numbers” Data: Data are the different values associated with
and determine whether differences in “the a variable.
numbers” are meaningful or are just due to
chance.
Statistics in Business
- To summarize business data
- To draw conclusions from those data
- To make reliable forecasts about business
activities
- To improve business processes

Two Branches of Statistics Types of Variables

Descriptive Statistics (Used to describe and Qualitative Variable (attribute data / text data)
summarize data) - Also known as Categorical Variable
- Are the methods that help collect, organize, - Have labels or names assigned to their
present, analyze, and interpret set of data. respective categories
- Analyze sample characteristics - Assumes values that are not numerical but
can be categorized
Inferential Statistics (Drawing conclusions about - Categories may be identified either
a population, when sample data is used) nonnumerical descriptions or by numeric
codes
- Are the methods that use the data collected
from a small group to draw conclusions Examples:
about a larger group.
- Aim to go beyond immediate data, utilizing - Sexual Orientation
tools like the t-test and analysis of variance - Academic Degree
for hypothesis testing. - Blood Type
- Satisfaction Ratings
- Employment Status
- Ethnicity Age
- Group Marriage Status

Quantitative variable (Variable data)
- Also known as Numerical Variable
- Any characteristic that can be measured or
counted in numbers
- Indicates the quantity or amount of a
characteristic
- Data are always numeric
(a) discrete (with finite or countable number of
possible values)
(b) continuous (assumes any value in each
interval)
Examples:
- Credit card transactions
- Sales data or data from financial reports
- Macroeconomic indicators
- Number of employees
- Number of job postings
Levels of Measurement
1. Nominal (frequencies/percentages)
2. Ordinal (frequencies/percentages)
3. Interval (only difference or sum can be
used)
4. Ratio (all algebraic operations can be used)
Measurement the process of determining the value
or label of a particular variable for a particular
element based on what has been observed
1. Nominal (Cannot be ordered; no
arithmetic can be performed) / (qualitative)
- The numbers in the measurement system
are used to classify an element into distinct,
nonoverlapping, and exhaustive categories
Example: sex (I- male and 2 – female) occupation
(farming, laborer, employee)
2. Ordinal (Can be ordered; differences
between values meaningless) / (qualitative)
Example:
- satisfaction rating (1-10; 1 being the lowest
and 10 being the highest)
- extent of damage (minimal, moderate,
serious) living condition (poor, good,
excellent)
3. Interval (Can be ordered; differences
between values meaningful (not ratios)) /
(quantitative)
- Variables in the interval level have no
absolute zero point.
- Meaning, a zero value in a variable does not
mean the absence of the characteristic being
measured, instead, it has an arbitrary
interpretation.
Example: temperature (°C), IQ
Example: temperature (°C) – 40°C is hotter than
20°C but we cannot say that 40°C is twice as hot as
20°C.
4. Ratio (Can be ordered; ratios meaningful;
zero indicates an absence) / (quantitative)
- variables in the ratio level have an absolute
zero point.
- Meaning, a zero value in a variable means
the absence of the characteristic being
measured
Example: number of siblings – a zero value for this
variable means such individual has no sibling
weight (kg), height (cm), number of household
members
Example: weight (kg) – we can say that an object
with a weight of 40kg is twice as heavy as 20kg
object (cm)
Population and Sample
Population: A population consists of all the items
or individuals about which you want to reach
conclusions.
Sample: A sample is the portion of a population
selected for analysis.
Population
 - A population consists of all the items or
individuals about which you want to reach
conclusions.
Example:
- All the iTunes sales transactions for a
specific year
- All the customers who shopped at iTunes
this weekend
- All the full-time students enrolled in FEUC
- All the registered voters in Silang, Cavite
Sample
- A sample is the portion of a population
selected for analysis.
Example:
- A sample of 200 iTunes sales transactions,
randomly selected by an auditor for study.
- A sample of 30 iTunes customers asked to
complete a customer satisfaction survey.
- A sample of 50 full-time students selected
for a marketing study.
- A sample of 500 registered voters in Silang,
Cavite contacted by telephone for a
political poll.
Parameter and Statistics
Parameter: a summary measure describing a
specific characteristic of the population
Statistics: a summary measure describing a
specific characteristic of the sample
Parameter
- A summary measure describing a specific
characteristic of the population.
Example:
The average amount spent by all customers who
shopped at iTunes this weekend is an example of a
parameter because this amount refers to the amount
spent in the entire population.
Statistics
- A summary measure describing a specific
characteristic of the sample.
Example:
The average amount spent by the 30 customers
completing the customer satisfaction survey is an
example of a statistic because it refers only to the
amount spent by the sample of 30 customers
DESCRIPTIVE STATISTICS
- Organization and Graphic Presentation of
Data
- Measures of Central Tendency (Mean,
Median, Mode)
- Measures of Dispersion (Range, Variance,
Standard Deviation)
- Skewness and Kurtosis
- Exploratory Data Analysis (EDA)
Numerical Summary Measures (single numeric
figure )
- Describes a particular feature of the
collection of observations
- If summary measure is computed using..
(a) Population data – parameter
(b) Sample data – statistics
Include:
1. Measures of Central Tendency
2. Measures of Location
3. Measures of Dispersion
4. Measure of Skewness
5. Measure of Kurtosis
6. Proportions, Rates, Ratios, and Percent Change
Measures of Central Tendency (MCT)
- Used to represent all the other values in the
collection
- Describes where the center of the
distribution lies
- ‘A.K.A ‘average’’
- Includes: Mean, Median and Mode
 - Facilitate the comparison of two or more
data sets
MCT: Arithmetic Mean
- Sum of all observed values divided by the
total number of observations
- Mean as the center of the mass
Population equation:
Sample equation:
Example:
Effect of an Outlier on the Mean
(Outlier – observations that are markedly different
from the rest of the data items)
- An outlier will pull the value of the mean in
its direction and away from the location of
majority of the observations
✓ The Mean is affected by the extremes
MCT: Arithmetic Mean
Characteristics of the Mean
- It uses all the observed values in the
calculation
- Its value is gravely affected by outliers
- The mean of a finite collection always
exists and is unique
- It may or may not be an actual observed
value in the data set
- Data values should be measured using at
least an interval scale for it to be
interpretable
MCT: MEDIAN
• it divides the sorted observations into two equal
parts.
Steps to get median:
1. Sort the observations from lowest to
highest
2. Formula in computing median:
Effect of an Outlier on the Median
✓ The median is not affected by extremes
Characteristics of the Median
- Outliers do not affect the median
- It is also a measure of location
- If the observation is smaller than the
median then it belongs in the lower half of
the distribution; otherwise, it belongs in the
upper half of the distribution
- It is interpretable even if the level of
measurement is as low as ordinal
MCT: MODE
- The most common observation in a data set
- It is determined by the frequency of each
value and finding the value with the highest
frequency of occurrence.
- It does not always exist; and if it does, it
may not be unique
- It is not recommended if there are only a
few observations
- It is not affected by outliers
- The mode can be used even if the level of
measurement is as low as nominal