I.

Chapter 1: Introduction
A. What is Statistics?
1.

Statistics is the branch of mathematics

that uncovers patterns in data and
transforms that into useful information
for decision making.

2.

Provides a means of using numbers to

analyze the world we live in.
(Ex: The manager of a company notices
that potential buyers on their website
drop off during checkout. After
consulting with the web master, the site
is redesigned so that the Checkout
process is reduced to one, manageable
web page. Q: Has the change been
effective and how? Note: this process
uses data to monitor the web traffic,
then uses data to assess any changes)

3.

With the wealth of information

available today, businesspersons
needs to know how to use
information efficiently and
effectively for better decision making.

B. Future Statistical Involvement

1.
2.

Practitioner of statistics Competing on

Analytics
Consumer of statistical claims

C. Statistics in Business
1.

Statistics has 4 applications:

a. summarize business data
b. draw conclusions from the data
c. make reliable forecasts about
business activities
d. improve business processes (****)

2.

Many are Recognizing the Importance

of Statistics (Newsweek, January 2006)

http://www.math.uiuc.edu/MSS/2006Spring/MathWillRockYourWorld.pdf

3.

TWO branches of Statistics

a.

Descriptive Statistics those

methods involved in the collection,
summarizing (numerically or
graphically), presenting, and
analyzing a set of data in order to
describe the various features of that
data set.
(Example: Creating pie charts,
histograms; calculating mean,
median, mode)

b. Inferential Statistics - those

methods that use data from a
smaller group (sample) to make
conclusions/decisions about the
characteristic of a larger group
(population).
(Example: projecting the results of
an election from a sample of likely
voters)

D. Basic Vocabulary
The understanding of the following terms is
fundamental to the practice of statistics:
1.

Variable the characteristic of an

observation or individual

2.

Data the values associated with a

variable

Example: Taken from an Excel spreadsheet

containing data collected from the Fall 2006
ISDS 2000 Course Survey
GENDER

CLASSIF

CREDIT
HOURS*

INTERNET
USAGE

SKIP CLASS

HRS
WORK*

BUY
ONLINE

19

JR

67

VERY OFTEN

VERY RARELY

20

YES

3.23

20

19

JR

61

SO

36

VERY OFTEN

VERY RARELY

17

YES

3.41

SOMEWHAT OFTEN

NEVER

YES

19

SO

2.85

30

VERY OFTEN

VERY RARELY

20

YES

19

3.98

SO

42

VERY OFTEN

NEVER

15

YES

20

3.67

SO

56

VERY OFTEN

NEVER

20

YES

3.29

19

SO

34

VERY OFTEN

OCCASIONALLY

12

YES

3.36

19

SR

115

VERY OFTEN

VERY RARELY

14

YES

2.92

AGE*

GPA*

Note : Columns represent variables (questions asked on the survey); Rows

represent the observations (students); Entries are the data. *= Numeric

Data

3.

Population - the entire set of

observations for which conclusions are
to be made.

4.

Sample - a subset of the population

selected for analysis.

5.

Parameter - a summary measure that

describes a characteristic of an entire
population.

6.

Statistic - a summary measure that

describes a characteristic of a sample.

E. Using MS Excel for Statistical Analysis

Large amounts of data require computer
usage; therefore some Excel may be used.
You will be required to read Excel Output.
G. Effective Decision-Making
In order to be effective decision-makers, you
must be able to assess the credibility of
statistical results. In short, you should ask
the following questions:

1.

Who carried out the study and

provided the results?

2.

Do they have a vested interest in the

outcome of the study?