Introduction To Stati

stics
„There are three kinds of lies: lies, damned lies, a
nd statistics.“ (B.Disraeli)
 Why study statistics?
1. Data are everywhere
2. Statistical techniques are used to make many decisions that
affect our lives
3. No matter what your career, you will make professional de
cisions that involve data. An understanding of statistical me
thods will help you make these decisions efectively
Applications of statistical concepts in the
business world

• Finance – correlation and regression, index numbers, time

series analysis
• Marketing – hypothesis testing, chi-square tests, nonparametri
c statistics
• Personel – hypothesis testing, chi-square tests, nonparametric
tests
• Operating management – hypothesis testing, estimation, anal
ysis of variance, time series analysis
 Statistics

• The science of collectiong, organizing, presenting, an

alyzing, and interpreting data to assist in making mor
e effective decisions
• Statistical analysis – used to manipulate summarize, a
nd investigate data, so that useful decision-making inf
ormation results.
 Types of statistics

• Descriptive statistics – Methods of organizing, summari

zing, and presenting data in an informative way
• Inferential statistics – The methods used to determine s
omething about a population on the basis of a sample
• Population –The entire set of individuals or objects of interest
or the measurements obtained from all individuals or objects o
f interest
• Sample – A portion, or part, of the population of interest
 Inferential Statistics
• Estimation
• e.g., Estimate the population mean
weight using the sample mean weig
ht
• Hypothesis testing
• e.g., Test the claim that the populati
on mean weight is 70 kg

Inference is the process of drawing conclusions or making decisions about a po

pulation based on sample results
 Sampling

a sample should have the same characteristics

as the population it is representing.
Sampling can be:
• with replacement: a member of the population may
be chosen more than once (picking the candy from t
he bowl)
• without replacement: a member of the population
may be chosen only once (lottery ticket)
 Sampling methods
Sampling methods can be:
• random (each member of the population has an equal chance of bein
g selected)
• nonrandom

The actual process of sampling causes sampling

errors. For example, the sample may not be large
enough or representative of the population. Factors not
related to the sampling process cause non sampling
errors. A defective counting device can cause a
Non sampling error.
 Random sampling methods
• simple random sample (each sample of the same size ha
s an equal chance of being selected)
• stratified sample (divide the population into groups calle
d strata and then take a sample from each stratum)
• cluster sample (divide the population into strata and the
n randomly select some of the strata. All the members fro
m these strata are in the cluster sample.)
• systematic sample (randomly select a starting point and
take every n-th piece of data from a listing of the populati
on)
 Descriptive Statistics

• Collect data
• e.g., Survey
• Present data
• e.g., Tables and graphs
• Summarize data X i

• e.g., Sample mean = n

 Statistical data
 The collection of data that are relevant to the problem bei
ng studied is commonly the most difficult, expensive, and
time-consuming part of the entire research project.
 Statistical data are usually obtained by counting or measuri
ng items.
 Primary data are collected specifically for the analysis desired
 Secondary data have already been compiled and are available fo
r statistical analysis
 A variable is an item of interest that can take on many dif
ferent numerical values.
 A constant has a fixed numerical value.
 Data

Statistical data are usually obtained by counting or meas

uring items. Most data can be put into the following c
ategories:
• Qualitative - data are measurements that each fail int
o one of several categories. (hair color, ethnic groups
and other attributes of the population)
• quantitative - data are observations that are measure
d on a numerical scale (distance traveled to college, n
umber of children in a family, etc.)
 Qualitative data
Qualitative data are generally described by words or
letters. They are not as widely used as quantitative data
because many numerical techniques do not apply to the
qualitative data. For example, it does not make sense to
find an average hair color or blood type.
Qualitative data can be separated into two subgroups:
 dichotomic (if it takes the form of a word with two options (g
ender - male or female)
 polynomic (if it takes the form of a word with more than two
options (education - primary school, secondary school and univ
ersity).
 Quantitative data
Quantitative data are always numbers and are the
result of counting or measuring attributes of a population.
Quantitative data can be separated into two
subgroups:
• discrete (if it is the result of counting (the number of students o
f a given ethnic group in a class, the number of books on a shel
f, ...)
• continuous (if it is the result of measuring (distance traveled, we
ight of luggage, …)
 Types of variables
Variables

Qualitative Quantitative

Dichotomic Polynomic Discrete Continuous

Amount of income t
Gender, marital statu Brand of Pc, hair col Children in family, St
ax paid, weight of a s
s or rokes on a golf hole
tudent
 Numerical scale of measurement:

• Nominal – consist of categories in each of which the number of respective o

bservations is recorded. The categories are in no logical order and have no pa
rticular relationship. The categories are said to be mutually exclusive since an
individual, object, or measurement can be included in only one of them.
• Ordinal – contain more information. Consists of distinct categories in which
order is implied. Values in one category are larger or smaller than values in oth
er categories (e.g. rating-excelent, good, fair, poor)
• Interval – is a set of numerical measurements in which the distance between
numbers is of a known, sonstant size.
• Ratio – consists of numerical measurements where the distance between num
bers is of a known, constant size, in addition, there is a nonarbitrary zero poin
t.
 Data presentation
„ The question is“ said Alice, „whether you can make
words mean so many different things.“
„The question is,“ said Humpty Dumpty, „which is to
be master-that´s all.“ (Lewis Carroll)
Numerical presentation of qualitativ
e data
• pivot table (qualitative dichotomic statistical attribute
s)
• contingency table (qualitative statistical attributes fr
om which at least one of them is polynomic)

You should know how to convert absolute

values to relative ones (%).
 Frequency distributions – numerical
presentation of quantitative data
• Frequency distribution – shows the frequency, or nu
mber of occurences, in each of several categories. Fr
equency distributions are used to summarize large vol
umes of data values.
• When the raw data are measured on a qunatitative sca
le, either interval or ration, categories or classes must
be designed for the data values before a frequency dis
tribution can be formulated.
Steps for constructing a frequency di
m n
stribution max in
m
h
m
1. Determine the number of classes
2. Determine the size of each class
3. Determine the starting point for the first class
4. Tally the number of values that occur in each class
5. Prepare a table of the distribution using actual cou
nts and/ or percentages (relative frequencies)
 Frequency table

• absolute frequency “ni” (Data TabData Analysis

Histogram)
• relative frequency “fi”
Cumulative frequency distribution shows the total n
umber of occurrences that lie above or below certain
key values.
• cumulative frequency “Ni”
• cumulative relative frequency “Fi”
 Charts and graphs

• Frequency distributions are good ways to present the

essential aspects of data collections in concise and un
derstable terms
• Pictures are always more effective in displaying large
data collections
 Histogram

• Frequently used to graphically present interval and ra

tio data
• Is often used for interval and ratio data
• The adjacent bars indicate that a numerical range is b
eing summarized by indicating the frequencies in arbi
trarily chosen classes
•
 Frequency polygon

• Another common method for graphically presenting

interval and ratio data
• To construct a frequency polygon mark the frequenci
es on the vertical axis and the values of the variable b
eing measured on the horizontal axis, as with the hist
ogram.
• If the purpose of presenting is comparation with oth
er distributions, the frequency polygon provides a go
od summary of the data
 Ogive

• A graph of a cumulative frequency distribution

• Ogive is used when one wants to determine how many ob
servations lie above or below a certain value in a distributi
on.
• First cumulative frequency distribution is constructed
• Cumulative frequencies are plotted at the upper class limit
of each category
• Ogive can also be constructed for a relative frequency dis
tribution.
 Pie Chart

• The pie chart is an effective way of displaying the per

centage breakdown of data by category.
• Useful if the relative sizes of the data components ar
e to be emphasized
• Pie charts also provide an effective way of presenting
ratio- or interval-scaled data after they have been org
anized into categories
Pie Chart
 Bar chart
• Another common method for graphically presenting nomi
nal and ordinal scaled data
• One bar is used to represent the frequency for each categ
ory
• The bars are usually positioned vertically with their bases l
ocated on the horizontal axis of the graph
• The bars are separated, and this is why such a graph is fre
quently used for nominal and ordinal data – the separatio
n emphasize the plotting of frequencies for distinct categ
ories
 Time Series Graph

• The time series graph is a graph of data t

hat have been measured over time.
• The horizontal axis of this graph represe
nts time periods and the vertical axis sho
ws the numerical values corresponding to
these time periods