IBU Introduction to the Course

International Burch University

Fundamentals of Statistics
Literature
• „Applied Statistics with SPSS“ Zafer Konakli
• „Statistics for Business and Economics” Paul Newbold, William L. Carlson,
Betty M. Thorne
• „Probability and Stochastic Processes“ Roy D. Yates, David J. Goodman
• „Probability and Statistics for Engineers and Scientists“ Ronald E.
Walpole, Raymond H. Myers, Sharon L. Myers, Keying Ye
• „Understanding Basic Statistics“ Charles H. Brrase, Corrinne P. Brase
Grading Scale
• Final Exam 40% (week 16)
• Midterm Exam 30% (week 8)
• Quiz 1 15% (week 7)
• Quiz 2 15% (week 15)

 Minor grades (Quiz 1 and Quiz 2 cannot be re-taken)

 Follow LMS (Probability and Statistics) for the exact dates of the quizzes
and exams
Topics
• Describing data (Graphical)
• Describing data (Numerical)
• Probability
• Hypothesis testing (Type I, Type II errors)
• Regression (Interpretation)
Course Content
 Chapter 1

Why Study Statistics?

Chapter Goals
After completing this chapter, you should be able to:

Explain how decisions are often based on incomplete information

Explain key definitions:

 Population vs. Sample
 Parameter vs. Statistic
¨ Descriptive vs. Inferential Statistics

Understand sampling techniques

Explain the difference between Descriptive and Inferential statistics

Why do We Need to Study Statistics?
1. Data Analysis & Decision Making
• Engineers often deal with large datasets (e.g., sensor data, network traffic, or
power usage logs).
• Statistical methods help in identifying patterns, trends, and anomalies in the data
2. Quality Control & Reliability Engineering
• Electrical engineers design circuits, components, and systems that must be reliable
and efficient.
• Statistical quality control (SQC) and probability models ensure components meet
performance standards.
3. Signal Processing & Communications
• Statistical methods are used in image processing, audio processing, and digital
communications.
• Noise reduction, filtering, and signal detection rely on statistical techniques like
Fourier analysis and stochastic processes.
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4. Machine Learning & Artificial Intelligence
• IT and Electrical engineers working on AI, machine learning, and deep learning use statistics for:
• Model training and evaluation.
• Feature selection and data preprocessing.
• Understanding uncertainty in predictions.
5. Optimization of Systems
• Power systems, network performance, and embedded systems require probability and statistical models for
optimization.
• Example: Predictive maintenance in electrical grids uses statistical failure models.
6. Simulation & Modeling
• Engineers use Monte Carlo simulations for designing robust systems under uncertainty.
• Statistical models help in predicting system behavior before actual implementation.
7. Cybersecurity & Network Analysis
• IT engineers use statistics for intrusion detection, cryptography, and risk analysis.
• Probability helps in detecting anomalies and threats in network traffic.
8. Big Data & IoT Applications
• Electrical and IT engineers working on smart grids, IoT, and cloud computing analyze vast amounts of data.
• Statistical techniques help in predictive analytics, fault detection, and efficiency improvements.
9. Control Systems & Robotics
• Modern control systems use Kalman filters, Bayesian estimation, and stochastic control to handle uncertainty.
• Robotics applications include sensor fusion and path planning using probabilistic models.
10. Financial & Risk Analysis in Engineering Projects
• Engineers in both fields often manage cost estimations, project risks, and performance evaluations.
• Statistics is used to perform risk analysis and cost-benefit studies.
The Creative Process

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Statistics Supports The Creative Process

The field of statistics deals with the collection, presentation,

analysis, and use of data to:
• Make decisions
• Solve problems
• Design products and processes
It is the science of data.

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Why Do We Study Probability and Statistics?
The Five Words of Statistics
A population is the collection of all items of interest or under
investigation
N represents the population size
A sample is an observed subset of the population
n represents the sample size
A variable is characteristic of an item or an individual that will be
analyzed using statistics.
A parameter is a specific characteristic of a population
A statistic is numerical measure that describes a variable
(characteristic) of a sample (part of a population).
 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

Values calculated using population Values computed from sample data

data are called parameters are called statistics

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc.

Examples of Population
• Names of all registered voters in the BiH
• Incomes of all families living in Sarajevo
• Annual returns of all stocks traded on the SASE
• Grade point averages of all the students at IBU
Variable
Measurement

Measurement scales:

- nominal
- ordinal
- interval
- ratio
The branches of statistics

Descriptive statistics
• Collecting, summarizing, and processing data to transform
data into information

Inferential statistics
• Provide the bases for predictions, forecasts, and estimates
that are used to transform information into knowledge

Data comprises raw, unprocessed facts that need context to become useful,
while information is data that has been processed, organized, and
interpreted to add meaning and value.
Descriptive Statistics
• The daily average temperature range of Mostar was 25 last
week
• The average age of athletes who participated in the Berlin
Marathon was 25 years
• 50% of teachers at IBU are female
• The score of 200 students in Calculus 1 are found to range
from 0 to 80
 Descriptive

Collect data
e.g., Survey
Present data
e.g., Tables and graphs
Summarize data
e.g., Sample mean = X i

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc.

Inferential Statitics
• It is a second phase of Statistics which deals with techniques
of making generalization that lie outside the scope of
Descriptive Statistics
• It is concerned with the process of drawing conclusions
(inference) about specific characteristics of a population
based on information obtained from samples
• It is a process of performing hypothesis testing, determining
relationship among variables, and making predictions
• The area of inferential statistics entirely needs the whole
aims to give reasonable estimates of unknown population
parameters
 Inferential Statistics
Estimation
 e.g., Estimate the population
mean weight using the sample
mean weight
Hypothesis testing
 e.g., Test the claim that the
population mean weight is 120
pounds

Inference is the process of drawing conclusions or making

decisions about a population based on sample results

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc.

Examples of Inferential Statistics
• The result obtained from the analysis of the income of 1000 randomly
selected citizens in BiH suggests that the average monthly income of a
citizen is estimated to be 1159 KM.
• Here in the above example we are trying to represent the income of about
entire population of BiH by a sample of 1000 citizens, hence we are making
inference or generalization.
• Based on the trend analysis of the past observations/data, the average
exchange rate for a dollar is expected to be 1.8308 BAM in the coming
month.
• The National Statistical Bureau of BiH declares the outcome of its survey as
"The population of BiH in the year 2023 will likely to be 3,210,847.
WORKED-OUT EXAMPLE 1
A large paint retailer had numerous complaints from customers about under-filled paint cans. As a result, the
retailer has begun inspecting incoming shipments of paint from suppliers. Shipments with under-fill problems
will be returned to the supplier. A recent shipment contained 2,440 gallon-size cans. The retailer sampled 50
cans and weighed each on a scale capable of measuring weight to four decimal places. Properly filled cans
weigh 10 pounds.
a. Describe the population.
b. Describe the variable of interest.
c. Describe the sample.
d. Describe the inference.
WORKED-OUT EXAMPLE 2
A particular fast-food restaurant chain has 6,289 outlets with drive-through windows. To attract more
customers to its drive through services, the company is considering offering a 50% discount to customers
who wait more than a specified number of minutes to receive their order. To help determine what the time
limit should be, the company decided to estimate the average waiting time at a particular drive-through
window in Dallas, Texas. For seven consecutive days, the worker taking customers' orders recorded the
time that every order was placed. The worker who handed the order to the customer recorded the time of
delivery.
In both cases, workers used synchronized digital clocks that reported the time to the nearest second. At the
end of the 7-day period, 2,109 orders had been timed.

a. Describe the process of interest at the Dallas restaurant.

b. Describe the variable of interest.
c. Describe the sample.
d. Describe the inference of interest.
Sources of Data
Published Sources
Data available in print or in electronic form, including data found on Internet websites. Primary data sources
are those published by the individual or group that collected the data. Secondary data sources are those
compiled from primary sources.

Surveys
A process that uses questionnaires or similar means to gather values for the responses from a set of
participants.

Experiments
A study that examines the effect on a variable of varying the value(s) of another variable or variables, while
keeping all other things equal. A typical experiment contains both a treatment group and a control group. The
treatment group consists of those individuals or things that receive the treatment(s) being studied. The control
group consists of those individuals or things that do not receive the treatment(s) being studied.

Observations
Individuals are conducted in a way that doesn't change the response or the variable being measured.
Data collection
Sampling Concepts
• Frame The list of all items in the population from which the sample will be selected.

• Sampling The process by which members of a population are selected for a sample.

• Probability Sampling A sampling process that considers the chance of selection of each
item. Probability sampling increases your chance that the sample will be representative
of the population.

• Simple Random Sampling Every possible sample of a certain size has the same chance of
being selected as every other sample of that size.
Probability
sampling
 Non-
probability
sampling
Sampling Concepts
• Stratified sampling: Divide the entire population into distinct subgroups called strata.
The strata are based on a specific characteristic such as age, income, education level,
and so on. All members of the stratum share the specific characteristic. Draw random
samples from each stratum.

• Systematic sampling: Number of all members of the population sequentially. Then, from
a starting point selected at random, include every kth member of the population in the
sample.

• Cluster sampling: Divide the entire population into pre-existing segments or clusters.
The clusters are often geographic. Make a random selection of clusters. Include every
member of each selected cluster in the sample.

• Convenience sampling: Create a sample by using data from population members that
are readily available.
Random Sampling
Simple random sampling is a procedure in which:

• each member of the population is chosen strictly by chance,

• each member of the population is equally likely to be chosen,
• and
• every possible sample of n objects is equally likely to be
chosen

The resulting sample is called a random sample.

Nonrandom Sample Errors
Selection bias results when a subset of the experimental units in the population is
excluded so that these units have no chance of being selected for the sample.
Nonresponse bias results when the researchers conducting a survey or study are
unable to obtain data on all experimental units selected for the sample.
Measurement error refers to inaccuracies in the values of the data recorded. In
surveys, the error may be due to ambiguous or leading questions and the
interviewer’s effect on the respondent.
Sample Selection Methods
Proper sampling can be done either with or without replacement of the items being
selected.

Sampling with Replacement

A sampling method in which each selected item is returned to the frame from
which it was selected so that it has the same probability of being selected again.

Sampling without Replacement

A sampling method in which each selected item is not returned to the frame from
which it was selected. Using this technique, an item can be selected no more than
one time.
Computer Packages
Typical Software in analyzing the data
• SPSS
• MINITAB
• Excel
The Decision-Making Process
Decision

Knowledge
Experience, Theory,
Literature, Inferential
Statistics, Computers
Information
Descriptive Statistics,
Begin Here: Probability, Computers

Identify the Data

Problem
Questions?
Thank you!