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Statistics For Business and Economics: 7 Edition
Statistics For Business and Economics: 7 Edition
Chapter 1
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-1
Introduction
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-3
Dealing with Uncertainty
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Reasons for Drawing a Sample
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Random Sampling
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A parameter is a specific characteristic of a
population
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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Descriptive Statistics
Collect data
e.g., Survey
Present data
e.g., Tables and graphs
Summarize data
e.g., Sample mean = X i
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Inferential Statistics
Estimation
e.g., Estimate the population
Variable
specific characteristics of an individual or
object…
Categorical / numerical
(type and amount of information contained in
the data)
Measurement levels
(qualitative and quantitative)
Types of Data
Examples:
Marital Status
Are you registered to vote?
Eye Color
(Defined as categories or groups) Examples: Examples:
Number of Children Weight
Defects per hour Voltage
(Counted items) (Measured characteristics)
(counting process) (measurement process)
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-17
Types of Data
There is no measurable
meaning to the
“difference” in numbers.
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-19
Obtained from ordered categories.
Obtained from categorical questions Examples:
Examples: Product quality ratings
1: male 2: female 1: poor 2: average 3:good
1: yes 2: no
Graph
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-22
Graphical
Presentation of Data
(continued)
Techniques reviewed in this chapter:
Categorical Numerical
Variables Variables
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Tables and Graphs for
Categorical Variables
Categorical
Data
Frequency
Distribution Bar Pie Pareto
Table Chart Chart Diagram
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The Frequency
Distribution Table
- Classes or groups..
- All possible responses on a
variable being studied…
The Frequency
Distribution Table
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Bar and Pie Charts
Bar charts and Pie charts are often used for
qualitative (categorical) data
Number of
Maternity 552 3000
2245
Surgery 4,630
2000
1052
1000 552
340
Cardiac
Emergency
Maternity
Surgery
Intensive
Care
Care
Height of bar shows
the frequency of
each category
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-28
Example: Health conscious level by gender
Males Females
Very health conscious 16 13
Moderately health 26 29
conscious
Slightly health 12 8
conscious
Not very health 7 2
conscious
Component or Stacked Bar Chart
Males Females
Very health 16 13
conscious
Moderately health 26 29
conscious
Slightly health 12 8
conscious
Not very health 7 2
conscious 60
50
40 29
female
30
male
13
20
8
26
10 16 2
12
7
0
very health moderately slightly health not very
conscious health conscious health
conscious conscious
Cluster Bar Chart
35
30 29
26
very health conscious
25
20 moderately health
16 conscious
15 slightly health
12 13
conscious
10 8 not very healt
7 conscious
5
2
0
male female
Pie Chart Example
Hospital Number % of
Unit of Patients Total
Hospital Patients by Unit
Cardiac Care 1,052 11.93
Emergency 2,245 25.46 Cardiac Care
12%
Intensive Care 340 3.86
Maternity 552 6.26
Surgery 4,630 52.50
Emergency
Surgery 25%
53%
category
Maternity
6%
90%
50%
80%
70%
40%
60%
30% 50%
40%
20%
30%
20%
10%
10%
0% 0%
Poor Alignment Paint Flaw Bad Weld Missing Part Cracked case Electrical Short
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Pareto Diagram Example
(continued)
Source of
Manufacturing Error Number of defects % of Total Defects
Poor Alignment 223 55.75
Paint Flaw 78 19.50
Bad Weld 34 8.50
Missing Part 25 6.25
Cracked case 21 5.25
Electrical Short 19 4.75
Total 400 100%
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Pareto Diagram Example
(continued)
Step 3: Show results graphically
Pareto Diagram: Cause of Manufacturing Defect
60% 100%
90%
% of defects in each category
50%
80%
30% 50%
40%
20%
30%
20%
10%
10%
0% 0%
Poor Alignment Paint Flaw Bad Weld Missing Part Cracked case Electrical Short
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-38
Example: A company has determined that there are
seven possible defects for one of its product line.
Construct a Pareto diagram for the following defect
frequencies:
Defect
Code Frequency
A 10
B 70
C 15
D 90
E 8
F 4
G 3
Example: Construct a Pareto diagram to help the
company determine the most significant factors
contributing to processing errors.
Categorical Numerical
Variables Variables
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-41
Graphs for Time-Series Data
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-43
Examples of time series data;
350
300
Thousands of subscribers
250
200
150
100
50
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-45
Example
Construct a time-series plot for the following
numbers of customers shopping at a new mall during
a given week. (from your book, pp.40)
Numerical Data
Histogram Ogive
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Frequency Distributions
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Example: Frequency distribution for employee
completion times
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The classes or intervals of a frequency
distribution for numerical data are not easily
identifiable…
Frequency
2
1.5
Can give a poor indication of how 1
4
8
12
16
20
24
28
32
36
40
44
48
56
60
52
More
Temperature
Frequency
and yield a blocky distribution 6
variation. 0
0 30 60 More
Temperature
(X axis labels are upper class endpoints)
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Class Intervals
and Class Boundaries
STEP 2:
Determine the interval width.
STEP 3:
Intervals never overlap
Each observation must belong to one and only
one interval.
Example:
age 20 to age 30 age 20 but less than age 30 20-29
age 30 to age 40 age 30 but less than age 40 30-39
wrong
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Questions for Grouping Data
into Intervals
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Frequency Distribution Example
Example:
A manufacturer of insulation randomly
selects 20 winter days and records the
daily high temperature
24, 35, 17, 21, 24, 37, 26, 46, 58, 30,
32, 13, 12, 38, 41, 43, 44, 27, 53, 27
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-57
Frequency Distribution Example
(continued)
Relative Percentage
Interval Frequency Frequency (%)
10 but less than 20 3 .15 15
20 but less than 30 6 .30 30
30 but less than 40 5 .25 25
Total 20
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
1.00 100 Ch. 1-59
The Cumulative
Frequency Distribution
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
Cumulative Cumulative
Class Frequency Percentage
Frequency Percentage
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Example (from your book, pp. 47):
17 62 15 65
28 51 24 65 Please construct a
frequency distribution
39 41 35 15 by considering the
39 32 36 37 following data
40 21 44 37
59 13 44 56
12 54 64 59
Example (from your book, pp. 47):
Interval Frequency
His togram : Daily High Te m pe rature
10 but less than 20 3
20 but less than 30 6 7 6
30 but less than 40 5
40 but less than 50 4
6 5
50 but less than 60 2 5 4
Frequency
4 3
3 2
2
1 0 0
(No gaps between 0
bars)
0 0 10 10 2020 30 30 40 40 50 50 60 60
70 Temperature in Degrees
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Ogive
Relative Cumulative
Interval frequency frequency relative
frequency (%)
10 but less than 20 5 0.178 17.8
METHOD:
Separate the sorted data series
into leading digits (the stem) and
the trailing digits (the leaves)
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-69
Example
Data in ordered array:
21, 24, 24, 26, 27, 27, 30, 32, 38, 41
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-70
Example
(continued)
Data in ordered array:
21, 24, 24, 26, 27, 27, 30, 32, 38, 41
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-71
Using other stem units
Using the 100’s digit as the stem:
Round off the 10’s digit to form the leaves
Stem Leaf
613 would become 6 1
776 would become 7 8
...
1224 becomes 12 2
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-72
Using other stem units
(continued)
Using the 100’s digit as the stem:
The completed stem-and-leaf display:
Data:
Stem Leaves
613, 632, 658, 717, 6 136
722, 750, 776, 827, 7 2258
841, 859, 863, 891, 8 346699
894, 906, 928, 933, 9 13368
955, 982, 1034,
1047,1056, 1140, 10 356
1169, 1224 11 47
12 2
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Example (from your book, pp. 46):
88 51 63 85 79
65 79 70 73 77
3.5 2.8 4.5 6.2 4.8 2.3 2.6 3.9 4.4 5.5
5.2 6.7 3.0 2.4 5.0 3.6 2.9 1.0 2.8 3.6
Categorical Numerical
(Qualitative) (Quantitative)
Variables Variables
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Scatter Diagrams
(dağılma diyagramı)
horizontal axis
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The scatter diagram provides a picture of
the data, include the following:
33 160 150
38 167 100
42 170
50
50 188
55 195 0
60 200 0 10 20 30 40 50 60 70
Volume per Day
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Cross Tables
(çapraz tablolar)
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Cross Table Example
4 x 3 Cross Table for Investment Choices by
Investor (values in $1000’s)
Investment Investor A Investor B Investor C Total
Category
Stocks 46.5 55 27.5 129
Bonds 32.0 44 19.0 95
CD 15.5 20 13.5 49
Savings 16.0 28 7.0 51
Total 110.0 147 67.0 324
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 1-81
1.7
Data Presentation Errors
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Data Presentation Errors
(continued)
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Example: Grocery Receipts (from your
book, pp. 56)
Forecast Number of
analyst a) Draw the histogram.
($ per share)
9.95 < 10.45 2 b) Find the relative frequencies.
10.45 < 10.95 8 c) Find the cumulative
frequencies.
10.95 < 11.45 6
d) Find the relative cumulative
11.45 < 11.95 3 frequencies.
11.95 < 12.45 1
Example (from your book, pp. 62):