BBS12e PPT ch01

Basic Business Statistics
12th Edition
Chapter 1
Introduction
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Chap 3-1
Learning Objectives
In this chapter, you learn:

 • How businesses use statistics
 • The basic vocabulary of statistics
 • The types of data used in business
Why Learn Statistics
 Statistics is the branch of mathematics that

transforms numbers into useful information for
decision makers.
 Statistics lets you know about the risks associated
with making a business decision and allows you to
understand and reduce the variation in the decision-
making process.
Why Learn Statistics
 Do these numbers represent useful

information? How can you decide?
 Statistical methods help you understand the
information contained in “the numbers” and
determine whether differences in “the numbers”
are meaningful or are just due to chance.
Statistics in Business
 In the business world, statistics has these

important specific uses:
• To summarize business data
• To draw conclusions from those data
• To make reliable forecasts about business
activities
• To improve business processes
Branches of Statistics
 Descriptive statistics are the methods that

help collect, summarize, present, and analyze
a set of data.
 Inferential statistics are the methods that use
the data collected from a small group to draw
conclusions about a larger group
Basic Vocabulary
 A variable is a characteristic of an item or

individual.
 Data are the different values associated with a
variable.
 A population consists of all the items or
individuals about which you want to reach
conclusions.
 A sample is the portion of a population selected
for analysis.
Basic Vocabulary
 A parameter is a measure that describes a

characteristic of a population.
 A statistic is a measure that describes a
characteristic of a sample.
Types of Variables
 Categorical variables (also known as

qualitative variables) have values that can
only be placed into categories such as yes and
no.
 “Do you currently own bonds?” (yes or no) and
the level of risk of a bond fund (below average,
average, or above average) are examples of
categorical variables
Types of Variables
 Numerical variables (also known as

quantitative variables) have values that
represent quantities.
 Numerical variables are further identified as
being either discrete or continuous
variables.
Types of Variables
 Discrete variables have numerical values that

arise from a counting process.
 “The number of premium cable channels
subscribed to” is an example of a discrete
numerical variable because the response is one
of a finite number of integers.
Types of Variables
 Continuous variables produce numerical

responses that arise from a measuring process.
 The time you wait for teller service at a bank is
an example of a continuous numerical variable
because the response takes on any value
within a continuum, or an interval, depending on
the
precision of the measuring instrument.
Types of Variables
Measurement Scale
 A nominal scale classifies data into distinct

categories in which no ranking is implied.
 Examples of a nominal scaled variable are your
favorite soft drink, your political party affiliation,
and your gender.
 Nominal scaling is the weakest form of
measurement because you cannot specify any
ranking across the various categories.
Measurement Scale
 An ordinal scale classifies values into distinct

categories in which ranking is implied.
 “How do you rate the overall service provided
by Good Tunes & More during your most recent
purchase?” to which the responses were
“excellent,” “very good,” “fair,” and “poor.”
Measurement Scale
 An interval scale is an ordered scale in which

the difference between measurements is a
meaningful quantity but does not involve a true
zero point.
 For example, a noontime temperature reading
of 67 degrees Fahrenheit is 2 degrees warmer
than a noontime reading of 65 degrees.
Measurement Scale
 A ratio scale is an ordered scale in which the

difference between the measurements involves
a true zero point, as in height, weight, age, or
salary measurements.
 If Good Tunes & More conducted a survey and
asked the amount of money that you expected
to spend on audio equipment in the next year,
the responses to such a question would be an
example of a ratio scaled variable.

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Basic Business Statistics

In this chapter, you learn:

 • The basic vocabulary of statistics

 • The types of data used in business

 Statistics is the branch of mathematics that

 Do these numbers represent useful

 In the business world, statistics has these

 Descriptive statistics are the methods that

 A variable is a characteristic of an item or

 A parameter is a measure that describes a

 Categorical variables (also known as

 Numerical variables (also known as

 Discrete variables have numerical values that

 Continuous variables produce numerical

 A nominal scale classifies data into distinct

 An ordinal scale classifies values into distinct

 An interval scale is an ordered scale in which

 A ratio scale is an ordered scale in which the

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