Business Statistics:

A Decision-Making Approach
8th Edition

Chapter 1
The Where, Why, and How of
Data Collection

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 Chapter Goals

After completing this chapter, you should be

able to:
 Describe key data collection methods
 Know key definitions:
Population vs. Sample Primary vs. Secondary data types
Qualitative vs. Quantitative data Time Series vs. Cross-Sectional data

 Explain the difference between descriptive and

inferential Statistics
 Describe different sampling methods
 Construct and interpret graphs

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 Procedures of Statistics

 Descriptive procedures
 Collecting, presenting, and describing data

 Inferential procedures
 Drawing conclusions and/or making decisions
concerning a population based only on
sample data
Goal: Convert data into meaningful information!

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 Descriptive Procedures
 Collect data
 e.g., Survey, Observation,
Experiments
 Present data
 e.g., Charts and graphs
 Describe data

e.g., Sample mean = x i

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 Inferential Procedures
 Making statements about a population by
examining sample results
Sample statistics Population parameters
(known) Inference
unknown, but can
be estimated from
sample evidence

S a m p le P opulation

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 Techniques for Inferential Procedures
Drawing conclusions and/or making decisions
concerning a population based on sample results.
 Estimation
 e.g., Estimate the population mean
weight using the sample mean
weight
 Hypothesis Testing
 e.g., Use sample evidence to test
the claim that the population mean
weight is 120 pounds

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 Procedures for Collecting Data
(MKTG 300 course and Video Clip #14: Samples and Surveys)

Data Collection Procedures

Experiments Written
questionnaires

Telephone Direct observation and

surveys personal interview

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 Population vs. Sample

Population Sample

a b cd b c
ef gh i jk l m n gi n
o p q rs t u v w o r u
x y z y

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 Populations and Samples

 A population is the entire collection of things under

consideration and referred to as the frame
 The sampling unit is each object or individual in the frame
 A parameter is a summary measure computed to describe a
characteristic of the population

 A sample is a subset of the population selected for

analysis
 A statistic is a summary measure computed to describe a
characteristic of the sample drawn from the population

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 Why Sample?

 Less time consuming than a census

 Less costly to administer than a census
 It is possible to obtain statistical results of a
sufficiently high precision based on samples

Strive for representative samples to reflect the population

of interest accurately!

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 Sampling Techniques

Sampling Techniques

Nonstatistical Sampling Statistical Sampling

Convenience Simple Systematic

Random
Judgment Cluster
Stratified

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 Nonstatistical Sampling

 Convenience
 Collected in the most convenient manner for the
researcher

 Judgment
 Based on judgments about who in the population
would be most likely to provide the needed
information

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 Statistical Sampling
 Items of the sample are chosen based on
known or calculable probabilities

Statistical Sampling
(Probability Sampling)

Simple Random Stratified Systematic Cluster

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 Simple Random Sampling

 Every possible sample of a given size has an

equal chance of being selected
 Selection may be with replacement or without
replacement
 The sample can be obtained using a table of
random numbers or computer random number
generator

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 Stratified Random Sampling
(Please Watch Video Clip #14: Samples and Surveys) 

 Divide population into subgroups (called strata) according

to some common characteristic
 e.g., gender, income level
 Select a simple random sample from each subgroup
 Combine samples from subgroups into one

Population
Divided
into 4
strata

Sample
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 Systematic Random Sampling
 Decide on sample size: n
 Divide ordered (e.g., alphabetical) frame of N
individuals into groups of k individuals: k=N/n
 Randomly select one individual from the 1st
group
 Select every kth individual thereafter
N = 64
n=8 First Group
k=8
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 Cluster Sampling
 Divide population into several “clusters,” each
representative of the population (e.g., county)
 Select a simple random sample of clusters
 All items in the selected clusters can be used, or items can be
chosen from a cluster using another probability sampling
technique

Population
divided into
16 clusters. Randomly selected
clusters for sample

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 Cluster vs. Stratified Sampling
Cluster Sampling Stratified Sampling

Elements of a population are randomly The entire population is divided into even
selected to be a part of groups (clusters). segments (strata).

Individual components of the strata are

Members from randomly selected clusters are
randomly considered to be a part of sampling
a part of this sample.
units.

Homogeneity is maintained between clusters Homogeneity is maintained within the strata.

Heterogeneity is maintained with the

Heterogeneity is maintained between strata.
clusters.
The strata division is primarily decided by
The clusters are divided naturally.
the researchers or statisticians.

The key objective is to conduct accurate

The key objective is to minimize the cost
sampling along with properly represented
involved and enhance competence.
population.

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 Data Types
(Please see the Video Clip Introduction to Variables)

Data

Qualitative Quantitative
(Categorical) (Numerical)
Examples:
 Marital Status
 Political Party Discrete Continuous
 Eye Color
Examples: Examples:
(Defined categories)
 Number of Children  Weight
 Defects per hour  Voltage
(Counted items) (Measured
characteristics)

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 Data Types

 Time Series Data

 Ordered data values observed over time

 Cross Sectional Data

 Data values observed at a single point in time

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 Data Types

Sales (in $1000’s)

2003 2004 2005 2006 Time
Atlanta 435 460 475 490 Series
Boston 320 345 375 395 Data

Cleveland 405 390 410 395

Denver 260 270 285 280

Cross Sectional
Data

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 Data Measurement Levels
(Please see the Video Clip: Scales of Measurement)

Highest Level
Measurements
e.g., temperature
Ratio/Interval Data Complete Analysis

Rankings Higher Level

Ordered Categories Ordinal Data Mid-level Analysis
e.g., age range 25-34

Categorical Codes Lowest Level

e.g., ID Numbers, gender Nominal Data Basic Analysis

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 Steps to Categorizing Data

1. Identify each factor in the data set

2. Determine if the data are time-series or
cross-sectional
3. Determine which factors are quantitative and
which are qualitative
4. Determine the level of data measurement
 e.g., nominal, ordinal

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 Chapter Summary

 Reviewed key data collection methods

 Introduced key definitions:
Population vs. Sample Primary vs. Secondary data types
Qualitative vs. Quantitative data Time Series vs. Cross-Sectional data

 Examined descriptive vs. inferential procedures

 Described different sampling techniques
 Reviewed data types and measurement levels

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