Nature of Statistics

Importance of Statistics in Business

• Accounting — auditing and cost estimation (Accountants use statistics to
forecast consumption, earnings, cash flow, and book value. Considered
accounting for the future, forecasting involves an amount of guesswork about
the future — and when people guess, they frequently make errors)
• Economics — regional, national, and international economic performance
(Statistics plays a major role in economics. Statistics helps in the study of
market structure and understand the different economic problems. After a
better understanding of the economic problems, statistics also help in solving
those issues by formulating appropriate economic policies)
• Finance — investments and portfolio management (Actuarial science deals
with probabilities and future events with the help of statistical methods.
Statistics help define, analyse and solve financial scenarios or risks that firms
and companies need to manage or avoid. For example, with the help of
statistics, insurance companies are capable of forecasting the probabilities of
an event or anomaly occurring, thus being able to prepare the funds for paying
claims. 1-2
•Management — human resources, compensation, and quality
• management (Knowledge of statistics helps a manager to
describe the problem, identify and evaluate alternative courses of action, estimate
error, monitor processes and take appropriate corrective actions to achieve optimum
results.
•International Business — market and demographic analysis (Statistical
research in business enables managers to analyze past performance, predict future
business practices and lead organizations effectively. Statistics can describe markets,
inform advertising, set prices and respond to changes in consumer demand.

•Management Information Systems — performance of systems which

gather, summarize, and disseminate information to various managerial
levels (This is important for the management team to decide whether they have to
make changes to the existing strategies or offerings. Statistical analysis can also be used
to evaluate the performance of employees and provide training for them to improve
the performance of the team.

•Marketing — market analysis and consumer research (statistics are used to

identify market trends, measure and evaluate marketing programs, and assess their
effectiveness. In order to be successful in a campaign, it's important to identify the
target market accurately as well as use effective marketing communication channels.
Importance of statistics in
Public Administration
 The importance of statistics to a public administration helps him in
devising the correct policy focus on the most priority area. The
public administrator takes the analysis from the statistical datasets
to appropriate the budget allocation and determines the amount of
allocation too.
What is Statistics?

A branch of Mathematics that examines and

investigates ways to process and analyze
the data gathered.

It provides procedure in data collection,

organization, presentation, analysis and
interpretation to have meaningful idea that
is useful to decision-makers.
Purpose of Statistics

Task of Statistics
“to reduce large masses of data to some
meaningful values”

Descriptive Statistics
“to tell something about a particular group of
observation”

Inferential Statistics
“there is an intent of predicting what the large
population is like out of the sample size“
Division of Statistics

Descriptive
The totality of methods and treatments employed
in the collection, description, and analysis of
numerical data.
To tell something about a particular group of
observation.
Usually represented by Greek letters
Inferential
The logical process from sample analysis to a
generalization of conclusion.
Also Statistical Inference or Inductive Statistics
Usually represented by Roman letters
Population vs Sample

Population
Consist of all the members of the group about
which to draw conclusion.

Sample
Portion or part, of the population of interest
selected for analysis.
population
A EF
B L Y
Z M N
C D R V X Q K
P W
P O T G S J U
I H
sample
Parameter and Statistic

Parameter
Numerical index describing a characteristic of a
population.

Statistic
Numerical index describing a characteristic of a
sample.
Sources of Data

Primary Data
Data that come from original source.
Examples:
Interview Mail-in questionnaire
Survey Experimentation

Secondary Data
Data that are taken from previously recorded data.
Examples:
Information in research Business periodicals
Financial statements Government reports
Constant and Variable

Constant
Characteristics of objects, people, or events that
does not vary.
Example:
Boiling temperature in °C

Variable
Characteristics of objects, people, or events that
can take of different values.
Example:
Weight
Types of Variables

Variable

Qualitative Quantitative
(Categorical) (numerical)

Discrete Continuous
Classification of Variables

Experimental Classification

Mathematical Classification
Experimental Classification

Independent Variables
Controlled by experimenter/ researcher, and
expected to have

Dependent Variables
Some measures of behavior of subjects and
expected to be influenced by the independent
variable
Mathematical Classification

Continuous Variables
It can assume any of an infinite number of values
and can be associated with points on a continuous
line interval.
Example:
Height, weight, volume

Discrete Variables
Some measures of behavior of subjects and
expected to be influenced by the independent
variable
Example:
Gender, courses, Olympic games
Levels of Measurement

Scale Legitimate Statistics

Nominal •Indicates a difference
Ordinal •Indicates a difference
•Indicates a direction of the difference
(e.g., more than or less than)
Interval •Indicates a difference
•Indicates a direction of the difference
•Indicates the amount of difference
(in equal intervals)
Ratio •Indicates a difference
•Indicates a direction of the difference
•Indicates the amount of difference
•Indicates an absolute zero
Nominal Level Data
• Numbers are used to classify or categorize
Example: Employment Classification

– 1 for Educator
– 2 for Construction Worker
– 3 for Manufacturing Worker
Example: Ethnicity

– 1 for African-American
– 2 for Anglo-American
– 3 for Hispanic-American
– 4 for Oriental-American

1-17
Ordinal Level Data
• Numbers are used to indicate rank or order
– Relative magnitude of numbers is meaningful
– Differences between numbers are not comparable

Example: Ranking productivity of employees

Example: Taste test ranking of three brands of soft drink
Example: Position within an organization
– 1 for President
– 2 for Vice President
– 3 for Plant Manager
– 4 for Department Supervisor
– 5 for Employee
1-18
Interval Level Data
• Distances between consecutive integers
are equal
– Relative magnitude of numbers is meaningful
– Differences between numbers are comparable
– Location of origin, zero, is arbitrary
– Vertical intercept of unit of measure transform function is not zero

Example: Fahrenheit Temperature

Example: Calendar Time
Example: Monetary Units

1-19
Ratio Level Data
• Highest level of measurement
– Relative magnitude of numbers is meaningful
– Differences between numbers are comparable
– Location of origin, zero, is absolute (natural)
– Vertical intercept of unit of measure transform function is zero

Examples: Height, Weight, and Volume

Example: Monetary Variables, such as Profit
and Loss, Revenues, and Expenses
Example: Financial ratios, such as P/E Ratio,
Inventory Turnover, and Quick Ratio.
1-20
Data Level, Operations, and
Statistical Methods
Statistical
Data Level Meaningful Operations
Methods

Nominal Classifying and Counting Nonparametric

Ordinal All of the above plus Ranking Nonparametric

Interval All of the above plus Addition, Parametric

Subtraction, Multiplication, and
Division

Ratio All of the above Parametric

1-21
Nominal Level

Mutually Exclusive
Property of a set of categories such that an
individual or object is included in only one category.

Exhaustive
Property of a set of categories such that each
individual or object must appear in only one
category.

Example
Qualitative Variable Categories
Gender Male, Female
Automobile Ownership Yes, No
Type of Life Insurance Owned Term, Endowment, Straight-Life, Others, None
Ordinal Level

Example
Qualitative Variable Categories
Student class designation Freshman, Sophomore, Junior, Senior
Product satisfaction Unsatisfied, Neutral, Satisfied, Very Satisfied
Movie classification G, PG, PG-13, R-18, X
Faculty Rank Professor, Associate Prof., Assistant Prof, Instructor
Hotel Ratings , , , , 
Student Grades 1.0, 1.25, 1.50, 1.75, 2.00, …
Interval Level

Example

Qualitative Variable
Temperature (in degree oC or oF)
Calendar Time (Gregorian, Hebrew, or Islamic)
Ratio Level

Example

Qualitative Variable
Weight ( in pounds or kilograms)
Age (in years or days)
Salary (in Philippine peso)
Classification of Numerical Data

Numerical
Data

Qualitative Quantitative

Nominal Ordinal Interval Ratio

Sampling Techniques

Random Sampling
Simple Random Cluster
Systematic Multiple Stage
Stratified

Non-Random Sampling

Convenience Quota
Purposive Snowball
Simple Random Sampling/Lottery
- is the process of selecting n sample size in the population via random
numbers or through lottery

W
H A B T
Z L R D
Y J G
D Q G O X
S J
X U E F N B
K
I O M
C V Sample
P

Population
Table of Random Numbers
13345 93645 03853 84695 48729 25370 35563 62842 75422 87973

78214 03852 20947 34574 84959 25468 34297 82538 33456 32355

23456 73855 83654 23463 27385 64875 09643 18465 33433 94398

09862 83653 63952 98743 05857 82482 07833 16382 97833 87654

23643 14648 64759 64859 35464 83954 84693 24533 93643 45689

23754 08265 73654 83553 84794 33543 93749 74549 83956 09853

23476 82409 83053 56392 83547 56754 93743 76262 03837 23654

09562 28395 72543 73953 73905 55667 03467 16383 83649 45683

67292 33718 45679 92742 92743 35533 94575 09893 72839 92747

93275 13253 64836 32733 64792 87494 43267 35473 22434 42633

09663 21526 42345 92749 98927 74653 63456 32123 34532 83643

86473 98353 43629 82094 64525 55432 62822 34324 22453 63840

76328 02864 74584 34663 35683 21346 74345 32134 33456 83043

02348 64859 73645 67328 34535 12347 45754 56543 94567 93754

82964 04768 73952 76683 63855 13235 23424 34542 23457 23422
Systematic Sampling

- Is a process of selecting a kth element in the population until the desired

number of subjects or respondents is attained.

A B C D E

F G H I J
C
K L M N O H M

P Q R S T R W

U V W X Y

Z Sample

Population
Stratified Sampling

- Is a process of subdividing the population into subgroups or strata and

drawing members at random from each subgroup or stratum.

A B C D E
(25%)
B D
F G H I J (25%)
F I M O
K L M N O
(50%)
(50%)
P S
(25%)
P Q R S T
(25%) Sample

Population
Cluster Sampling

- Is a process of selecting clusters from a population which is very large

or widely spread out over a wide geographical area

A D
E
C B F
I A
T C B O
U H G
P Q M N
R S T U
S
J
O N L K
M Sample

Population
Multi-Stage Sampling

D
A E
C B F A
B
I C O
T M N

P Q U H G Sample of T U
S Cluster
R S

J
O N L K
M A
N
Population S
Sample
 Purposive Sampling

- Is process of selecting based from judgement to select a sample which the

researcher believed.

W
H A B T
Z L R A
Y J N
D Q G Especially
C O
S Qualified J
X U E F N Y
K T
I O M
C V Sample
P

Population
Convenience Sampling

-is a process of selecting a group of individuals who (conveniently) are

available for study.

W
H A B T
Z L R R
J G
Y D Q G F E
Easily
S Accessible J
X U E F N S
K Q
I O M
C V Sample
P

Population
 Quota Sampling
- Is applied when an investigator survey collects information from an assigned
number, or quota of individuals from one several sample units fulfilling certain
prescribed criteria or belonging to one stratum.

A B C D E
(25%)
A BD
F G H I J (37.5%)

K L M N O I M
(25%)
(50%)
P S T
(37.5%)
P Q R S T
(25%) Sample

Population = 20
 Snowball Sampling

- Is technique in which one or more members of a population are located and

used to lead the researchers to other members of the population.

W
H A B T
Z L R R
Y J G
D Q G With F E
S Information J
X U E F N S
K Q
I O M
C V Sample
P

Population
Methods in Collecting Data

Direct or Interview Method

Indirect or Questionnaire Method
Registration Method
Observation Method
Experiment Method
Methods in Presenting Data

Textual Method
data is presented in paragraph form.

Tabular Method
data is presented in rows and columns.

Graphical Method
data is presented in visual form.
Textual Form

Table 1 presents the frequency and

percentage distribution of the respondents
according to gender. The table shows that
majority of the respondents are female with
3,625 or 72.5%, while 1,375 or 27.5% are male.
Most of the Nursing students are female, it
only shows that Nursing is a course more
favorable for female.
Example: Tabular Form

Table 1
Frequency and Percentage Distribution of the
Nursing Students According to Gender

Gender Frequency Percentage

Male 1,375 27.5
Female 3,625 72.5
Total 5000 100
Example: Graphical Form

150 120
100
100 80
60
50 40
20
0 0
A M S C K y T A M A S C K y T A M
BS BSB BSC BSM BSM SPs BS FM HR M
BS BSB BSC BSM BSM SPs BS FM HR
B B

BSA
120
HRM
BSBM 100
80
60
BSCS 40
FMA 20
BSMC
0

BST
0 2 4 6 8 10
BSMK
BSPsy
Thank you!!!