Chapter 1

Introduction to
Statistics

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Learning Objectives

Upon completion of this chapter, you will be able to:

 Understand why statistics is important for managers

 Understand the need for data
 Understand scales of measurement
 Make a comparison between the four levels of data
measurement

 Understand some of the basic concepts of statistics

 Begin working on MS Excel, Minitab, and SPSS

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Why Statistics Is Important for Managers

Now a days a manager has to develop statistical thinking.

Statistical thinking can be defined as, the ability to collect,

tabulate (present and describe), analyze and interpret
data.

Statistical thinking provides support in decision making.

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Roadmap to Learning Statistics

 To understand how to present and describe information.

 To understand how a conclusion can be drawn from a

sample of small size (taken from a large population).

 To understand the concept of process improvement.

 To understand how to obtain a reliable forecast of

statistical variables of interest.

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Why We Need Data

 When we need to provide more inputs to a given

phenomenon under study.
 When there is a need to measure performance of an on-
going service or production process.
 When more than one option is available to a decision
maker who has to make a choice
 Research is meant for finding out the unknown, and data
is the only tool that can provide a platform to find out this
unknown.
 Data is also needed to satisfy the unlimited inquisitiveness
of the human mind.

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Scales of Measurement

 Nominal scale
 Ordinal scale
 Interval scale
 Ratio scale

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Scales of Measurement

 Nominal Scale: When data are labels or names used to

identify the attribute of an element, the nominal scale is
used.
 Ordinal Scale: In addition to nominal level data
capacities, ordinal scale can be used to rank or order
objects.

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Scales of Measurement

 Interval Scale: In interval level measurement, the

difference between two consecutive numbers is meaningful.
 Ratio Scale: Ratio level measurements possess all the
properties of interval data with meaningful ratio of two
values.
 In terms of measurement capacity, nominal, ordinal,
interval, and ratio level data are placed in ascending order.

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Figure 1.2: A comparison between the four levels of data
measurement in terms of usage potential

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Basic Statistical Concepts

 Population and Sample

 Descriptive Statistics and Inferential Statistics

 Parameter and Statistic

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Population and Sample

 A population is a collection of all the elements under

statistical investigation about which we are trying to draw
some conclusions.
 A small representative portion of the population under
study is referred to as the sample.
 A valid statistical procedure of drawing a sample from a
population is termed as sampling.

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Descriptive Statistics and Inferential Statistics

 Descriptive statistics is the process of describing data

and trying to reach a conclusion based on it.

 Statistics provides a scientific procedure to make

inferences about a population based on a sample. This
scientific procedure is commonly referred to as statistical
inference.

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Parameter and Statistic

 A parameter is a descriptive measure of some

characteristics of the population.

 A descriptive measure computed from a sample is called a

statistic.

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Figure 1.3: Inferential statistics procedure to estimate a
population parameter with the help of sample statistic

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