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Chapter 1
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-1
Chapter Goals
After completing this chapter, you should be
able to:
Explain key definitions:
Population vs. Sample Primary vs. Secondary Data
Parameter vs. Statistic Descriptive vs. Inferential Statistics
Describe key data collection methods
Describe different sampling methods
Probability Samples vs. Nonprobability Samples
Select a random sample by computer generation
Identify types of data and levels of measurement
Describe the different types of survey error
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-2
Why a Manager Needs to
Know about Statistics
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-3
Key Definitions
A population is the collection of all items or
things under consideration people or objects
A sample is a portion of the population
selected for analysis
A parameter is a summary measure that
describes a characteristic of the population
A statistic is a summary measure computed
from a sample
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-4
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
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-6
Two Branches of Statistics
Descriptive statistics
Collecting, summarizing, and describing data
Inferential statistics
Drawing conclusions and/or making decisions
concerning a population based only on sample
data
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-7
Descriptive Statistics
Collect data
e.g. Survey
Present data
e.g. Tables and graphs
Characterize data
e.g. Sample mean =
X i
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-8
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 over
120 pounds
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-9
Why We Need Data
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-10
Data Sources
Primary Secondary
Data Collection Data Compilation
Print or Electronic
Observation Survey
Experimentation
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-11
Types of Data
Data
Categorical Numerical
(Qualitative) (Quantitative)
Examples:
Marital Status
Political Party Discrete Continuous
Eye Color
(Defined categories) Examples: Examples:
Number of Children Weight
Defects per hour Voltage
(Counted items) (Measured characteristics)
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-12
Levels of Measurement
and Measurement Scales
Differences between
Highest Level
measurements, true
zero exists
Ratio Data
Strongest forms of
measurement
Differences between The interval between the
measurements but no
true zero
Interval Data start of years 1981 and
1982 is 365 days.
Height of the tide
Ordered Categories
(rankings, order, or Ordinal Data Higher Level
scaling) Likert Scale Data
Lowest Level
Categories (no
ordering or direction) Nominal Data Male 0, Female 1
Weakest form of
measurement
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.
Example Data
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-14
Data in Frequency Distributions
Height Income
Category Frequency Category Frequency
>54 to 60 1 20K 4
>60 to 66 2 >20K to 50K 5
>66 to 72 5 > 50K 1
>72 to 78 2
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-15
Statistical Data
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-16
Reasons for Drawing a Sample
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-17
Types of Samples Used
(continued)
Samples
Simple Stratified
Judgement Chunk Random
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-18
Probability Sampling
Probability Samples
Simple
Systematic Stratified Cluster
Random
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-19
Simple Random Samples
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-20
Systematic Samples
Decide on sample size: n
Divide frame of N individuals into groups of k
individuals: k=N/n
Randomly select one individual from the 1st
group
Select every kth individual thereafter
N = 64
n=8 First Group
k=8
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-21
Stratified Samples
Population divided into two or more subgroups
(called strata) according to some common
characteristic
Simple random sample selected from each
subgroup
Samples from subgroups are combined into one
Population
Divided
into 4
strata
Sample
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-22
Cluster Samples
Population is divided into clusters, each
representative of the population
A simple random sample of clusters is selected
All items in the selected clusters can be used, or items can be
chosen from a cluster using another probability sampling
technique
Population
divided into
16 clusters. Randomly selected
clusters for sample
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-23
Advantages and Disadvantages
Simple random sample and systematic sample
Simple to use
May not be a good representation of the populations
underlying characteristics that have small probabilities
Stratified sample
Ensures representation of individuals across the entire
population
Cluster sample
More cost effective
Less efficient (need larger sample to acquire the same
level of precision)
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-24
Types of Survey Errors
Coverage error or selection bias
Exists if some groups are excluded from the frame and
have no chance of being selected
Sampling error
Variation from sample to sample will always exist
Measurement error
Due to weaknesses in question design, respondent
error, and interviewers effects on the respondent
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-25
Evaluating Survey Worthiness
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-26
Chapter Summary
Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc. Chap 1-27