Statistics for Business

Course Introduction

Vu Nguyen, PhD.
 In today’s world…

 Companies are increasingly using business

analytics to investigate business performance and
support decision making.
 Businesses that combine managerial judgment with
statistical analysis are usually more successful.
 What is statistics?
 What is Statistics

“Statistics is a way to get information from

data.” (Gerald Keller)

“Statistics is the art and science of collecting,

analyzing, presenting and interpreting data.”
(Anderson et. al.)

“Statistics is a tool for creating new

understanding from a set of numbers.” (Oxford
English Dictionary)
Data vs. Information

Data Information
Average = 48.67
Min = 43.33
Max = 53.33
Range = 10
…
 Plural or Singular?

• Statistics is the science of collecting, organizing,

analyzing, interpreting, and presenting data.
• A statistic is a single measure, reported as a
number, used to summarize a sample data set;
for example, the average height of students in
the class.
 Uses of Statistics in Business
 To summarize business data

 To draw conclusions from business data

 To make reliable forecasts about business

activities

 To improve business
 The Decision Making Process
Decision

Knowledge
Deriving knowledge
from information

Information
Organizing and
Begin Here: presenting data
Data
Identify the
Problem
 Two Branches of Statistics
Statistics
The branch of mathematics that transforms data into
useful information for decision makers.

Descriptive Statistics Inferential Statistics

Collecting, summarizing, Using data collected from a

presenting and analyzing small group to draw
data conclusions about a larger
group
 Descriptive Statistics

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

n
 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
65kgs

Drawing conclusions about a population based on

sample results.
Overview of Statistics
 Why study statistics?
 Many working opportunities
 Developing critical and analytical thinking
 Improving communication and problem solving
 Better understanding of data analysis reports
 Avoiding deceptive and spurious arguments
 …
 Applications of Statistics

 Auditing:
 Statistical sampling procedures
are used when conducting audits.
 Economics
 Statistical information is used in
making forecasts about the future
of the economy.
 Applications of Statistics

 Marketing
 A survey of customer preference
on a product or service.
 Production
 Statistical quality control charts
are used to monitor the output of a
production process.
 Applications of Statistics

 Finance
 Statistical information is used to guide an
investment.

 Operations Management
 Manage inventory by forecasting consumer
demand.
 Common Statistical Pitfalls
 Making Conclusions about a Large Population from a
Small Sample
 Smoking is not dangerous. My uncle smoked all his life and
lived to 100.
 Making Conclusions from Nonrandom Samples
 Rock stars die young. Look at John Lennon, Michael
Jackson, Whitney Houston
 Conclusions From Rare Events
 Tom’s SUV rolled over. SUV is dangerous
 Using Poor Survey Methods
 How many of you remember integral from your math class
 Common Statistical Pitfalls
 Assuming a Causal Link Based on Observations
 Crime rates were higher during the full moon. Full moon
caused higher crime rates.
 Generalization to Individuals from Observations about
Groups
 Men are taller than women, so Bill is taller than Mary.
 Unconscious Bias
 For many years, it was assumed that heart attacks were likely
to occur in men than women.
 Significance versus Importance
 Men stay homes less than women
 Quiz
 Because 25% of the students in my class watch 8 or
more hours of TV, I conclude that 25% of all students at
the university watch 8 or more hours of TV a week.
What is the most important logical weakness of this
conclusion?

 Bob must be rich. He's a lawyer, and lawyers make lots

of money." This statement best illustrates which
fallacy?  
 Course Content

 Introduce statistics concepts and techniques

for analyzing business problems.
 Solve statistical problems using both manual
computation and statistical software.
 Develop quantitative reasoning skills.
 Focus on practical business applications rather
than statistical theory and methods.
 Course objectives
After this course you would be able to:
 Visualize and describe data statistically
 Understand common probability distributions
 Understand sampling distributions
 Calculate and interpret confidence intervals
 Conduct hypothesis testing
 Use regression analysis
 Perform statistical analysis using Microsoft
Excel, MegaStat and Minitab
 Pedagogy
 This course is conducted in a combination of
lectures, group presentations, quizzes and
home assignments.
 Microsoft Excel, MegaStat and Minitab are used
in the course.
 Students are also encouraged to explore other
statistical software like SPSS, Eviews, etc.
 Schedule
Session Topics
1 Introduction and Data collection
2 Describing data visually
3 Descriptive statistics
4 Probability
5 Discrete probability distributions
6 Continuous probability distributions
7 Review and tutorials
8 Mid-term exam
9 Sampling distributions and estimation
10 One-sample hyphothesis tests
11 Two-sample hyphothesis tests
12 Review and tutorials
13 Analysis of variance
14 Regression
15 Review and tutorials
 Grading

 Attendance and Participation: 5%

 Homework and Quiz: 5%
 Group Presentation: 15%
 Mid-term Exam: 25%
 Final Exam: 50%
 Evaluation

 Attendance and Participation:

 Each student is given 10pts in advance.

 Taking back 1.5pts for each absence (no more

than 3 times)
 Homework and Quiz:

 Homework: randomly pickup or volunteer

 Quiz: 15’ quiz at the begining of each session

 Evaluation
 Group presentation: Each presenter will be
evaluated by the lecturer (50%) as well as the
rest of the class (50%)
 Content

 Preparation

 Presentation and Communication

 Addressing questions

 Interest and Creativity

 Evaluation

 Mid-term exam: open-book, 90 minutes

 The mid-term exam will contains 50 multiple

choice questions
 Mid-term score = (number of correct answers –

12.5)*10/ 37.5
 Evaluation
 Final exam: open book, 120 minutes
 The final exam will contain 30 multiple choice

questions and 20 short-answer questions.

 The multiple choice questions: 50%; short

answer questions: 50%.

 Final score = [(number of correct multiple

choice answers – 7.5) / 22.5] * 50% + (number

of correct short answers / 20) * 50%
 Reference

 Required:
 Doane, P. D. & Seward, E. L. (2011), Applied
Statistics in Business and Economics, Third
edition, McGraw Hill.
 Recommended:
 Berenson, Mark L., David M. Levine and Timothy C.
Krehbiel (2004), Basic Business Statistics, 9th
edition, Prentice-Hall
 Online quiz:
 http://wps.prenhall.com/bp_berenson_bbs_11/85/219
59/5621551.cw/-/t/index.html
 Statistical Software Resources

 Minitab resources:
 http://www.minitab.com/en-us/academic/
 Megastat resources:
 http://highered.mheducation.com/sites/0071339604/s
tudent_view0/megastat_tutorials.html
 Group Presentation Topics

1. Describe data visually

2. Descriptive statistics
3. Probability & conditional probability
4. Random variables and discrete probability distributions
5. Continuous probability distributions
6. Sampling distribution and confidence intervals
7. One-sample hypothesis testing
8. Two-sample hypothesis testing
9. Analysis of Variance (ANOVA)
10.Simple regression
 Presentation Scores

 Each group: 3-4 students

 Vote A, B, C or D for each presenter

 Converting rule: D=1, C=2, B=3, A=4

Presenters:
 1st highest vote: 10 pts

 2nd highest vote: 8 pts

 3rd highest vote: 6 pts

 4th highest vote: 4 pts

Audience
 Bonus points for doing assignments, asking good questions,

answering a question correctly or participating in discussion

 Evaluation Criteria

 Presenters will be evaluated by the audience (50%)

and the lecturer (50%)
 Content:
 Is the presentation clear and focused?
 Does it cover all important content of the assigned
topic?
 Preparation:
 How well prepared is this presentation?
 How good are the slides and supporting materials?
 How well does this presenter know her materials?
 Evaluation Criteria

 Presentation and Communication:

 How effectively does this presenter interact and
involve the rest of the class?
 Does this presenter use time effectively?
 Addressing questions:
 How effective does this presenter deal with questions
and comments?
 Interest and Creativity:
 How interesting and creative is this presentation?