Chapter 1

An Introduction to Business
Statistics
McGraw-Hill/I rwin Copyright 2011 by The McGraw-Hill Companies, I nc. All rights reserved.
An Introduction to Business
Statistics
1.1 Data
1.2 Data Sources
1.3 Populations and Samples
1.4 Three Case Studies that Illustrate
Sampling and Statistical Inference
1.5 Ratio, Interval, Ordinal, and Nominative
Scales of Measurement (Optional)
1-2
1.1 Data
Data: facts and figures from which
conclusions can be drawn
Data set: the data that are collected for a
particular study
Elements: may be people, objects, events, or
other entries
Variable: any characteristic of an element
LO 1: Explain what a
variable is.
1-3
Data Continued
Measurement: A way to assign a value of a
variable to the element
Quantitative: the possible measurements of
the values of a variable are numbers that
represent quantities
Qualitative: the possible measurements fall
into several categories
LO 2: Describe the
difference between a
quantitative variable and
a qualitative variable.
1-4
Cross-Sectional Data
Cross-sectional data: Data collected at the
same or approximately the same point in time
Time series data: data collected over
different time periods
LO 3: Describe the
difference between
cross-sectional data
and time series data.
1-5
Time Series Data
LO 4: Construct and
interpret a time series
(runs) plot.
1-6
1.2 Data Sources
Existing sources: data already gathered by public or
private sources
Internet
Library
US Government
Data collection agency
Experimental and observational studies: data we
collect ourselves for a specific purpose
Response variable: variable of interest
Factors: other variables related to response variable
LO 5: Describe the
different types of data
sources.
1-7
1.3 Populations and
Samples
Population The set of all elements about which we
wish to draw conclusions (people,
objects or events)
Census An examination of the entire population
of measurements
Sample A selected subset of the units of a
population
LO 6: Describe the
difference between a
population and a
sample.
1-8
Descriptive Statistics
and Statistical Inference
Descriptive statistics: the science of
describing the important aspects of a set of
measurements
Statistical inference: the science of using a
sample of measurements to make
generalizations about the important aspects
of a population of measurements
LO 7: Distinguish
between descriptive
statistics and statistical
inference.
1-9
1.4 Three Case Studies That
Illustrate Sampling and Statistical
Inference
1. The Cell Phone Case: Estimating Cell
Phone Costs
2. The Marketing Research Case: Rating a
New Bottle Design
3. The Car Mileage Case: Estimating Mileage
LO 8: Explain the
importance of random
sampling.
1-10
The Cell Phone Case:
Estimating Cell Phone Costs
Considering using a company to manage
their cellular resources
Random sample of 100 employees on 500-
minute plan
Many overages and underage
LO8
1-11
The Cell Phone Case: The Data
LO8
1-12
The Marketing Research Case:
Rating a New Bottle Design
Studying to see if changes should be made in
the bottle design for a popular soft drink
Using mall intercept method
Sample size of 60
LO8
1-13
The Marketing Research
Case: The Form and the Data
LO8
1-14
Terms
Process: a sequence of operations that
takes inputs and turns them into outputs
Finite population: a population of limited
size
Infinite population: a population of unlimited
size
LO8
1-15
The Care Mileage Case:
Estimating Mileage
Study of tax credit offered by the federal
government for improving fuel economy
Automaker has introduced a new model and
wishes to demonstrate it qualifies for the tax
credit
Sample of 50 cars

LO8
1-16
The Care Mileage Case: The
Data
LO8
1-17
1.5 Ratio, Interval, Ordinal, and
Nominative Scales of
Measurement (Optional)
Quantitative variables
Ratio variable: a quantitative variable measured on a
scale such that ratios of its value are meaningful and there
is an inherently defined zero value
Interval variable: a quantitative variable where ratios are
not meaningful and there is no defined zero
Qualitative variables (categorical)
Ordinal variable: a qualitative variable for which there is a
meaningful ranking of the categories
Nominative variable: a qualitative variable for which there
is no meaningful ranking of the categories
LO 9: Identify scales of
measurement (optional).
1-18