Business Statistics

Introduction
 Contents
What is Statistics?
Overview of Statistics
Main branches of Statistics
Why study Statistics?
Uses of Statistics
Statistical Challenges
 What is Statistics?
• Statistics is the science of collecting, organizing,
analyzing, interpreting, and presenting data.

• A statistic is a single measure (number) used to

summarize a sample data set. For example, the
average height of students in this class.
• The word statistics also refers to numerical facts and
figures relating to some specific phenomenon. For
example, sports statistics, crime statistics, trade
statistics, etc.

McGraw-Hill/Irwin © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

 Overview of Statistics

Statistics

Describing Making Inferences

Data from Samples

Visual Numerical Estimating Testing

Displays Summaries Parameters Hypotheses
 Main Branches of Statistics
 Two main branches of statistics:
• Descriptive statistics – the collection, organization,
presentation and summary of data.

• Inferential statistics – generalizing from a sample

to a population, estimating unknown parameters,
drawing conclusions, making decisions.
 Why Study Statistics?
 Career Advancement
• Statistical literacy can enhance your career mobility.

 Quality Improvement
• Statistics helps firms oversee their suppliers,
monitor their internal operations and identify
problems.
 Why Study Statistics? (con’t.)
 Communication
Understanding the language of statistics facilitates
communication and improves problem solving.
 Information Management
Statistics help summarize large amounts of data
and reveal underlying relationships.
 Uses of Statistics
 Auditing
• Sample from over 12,000 invoices to estimate the
proportion of incorrectly paid invoices.

 Marketing
• Identify likely repeat customers for Amazon.com
and suggests co-marketing opportunities based
on a database of 5 million Internet purchases.
 Uses of Statistics (con’t.)
 Health Care
• Evaluate 100 incoming patients using a 42-item
physical and mental assessment questionnaire.

 Purchasing
• Determine the defect rate of a shipment and
whether that rate has changed significantly over
time.
 Uses of Statistics (con’t.)
 Medicine
• Determine whether a new drug is really better
than the placebo or if the difference is due to
chance.

 Forecasting
• Manage inventory by forecasting consumer
demand.
 Statistical Challenges
 Working with Imperfect Data
• State any assumptions and limitations and use
generally accepted statistical tests to detect
unusual data points or to deal with missing data.

 Dealing with Practical Constraints

• You will face constraints on the type and quantity
of data you can collect.
 Statistical Challenges (con’t.)
 Upholding Ethical Standards
• Know and follow accepted procedures, maintain
data integrity, carry out accurate calculations,
report procedures, protect confidentiality, cite
sources and financial support.
 Using Consultants
• Hire consultants at the beginning of the project,
when your team lacks certain skills or when an
unbiased or informed view is needed.
Skills Needed for Success in Business
For initial For long-range Most common
job success job success weaknesses
Report-writing Managerial accounting Communication skills

Accounting principles Managerial economics Writing skills

Mathematics Managerial finance Immaturity

Statistics Report writing Unrealistic expectations

Oral communication