Data and Statistics

s s s s s

Applications in Business and Economics Data Data Sources Descriptive Statistics Statistical Inference

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 1 SUMMER 2011

Applications in Business and Economics

Accounting Public accounting firms use statistical sampling procedures when conducting audits for their clients. s Finance Financial analysts use a variety of statistical information, including price-earnings ratios and dividend yields, to guide their investment recommendations. s Marketing Electronic point-of-sale scanners at retail checkout counters are being used to collect data for a variety of marketing research IBM UET Lahore Business Statistics applications. 2003 Thomson/South-Western 2
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SUMMER 2011

Applications in Business and Economics

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Production A variety of statistical quality control charts are used to monitor the output of a production process. Economics Economists use statistical information in making forecasts about the future of the economy or some aspect of it.

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 3 SUMMER 2011

Data
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Elements, Variables, and Observations Scales of Measurement Qualitative and Quantitative Data Cross-Sectional and Time Series Data

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 4 SUMMER 2011 all 2010

Data and Data Sets

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Data are the facts and figures that are collected, summarized, analyzed, and interpreted. The data collected in a particular study are referred to as the data set.

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 5 SUMMER 2011

Elements, Variables, and Observations

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The elements are the entities on which data are collected. A variable is a characteristic of interest for the elements. The set of measurements collected for a particular element is called an observation. The total number of data values in a data set is the number of elements multiplied by the number of variables.

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 6 SUMMER 2011

Data, Data Sets, Elements, Variables, and Observations

Variable s

Observatio n

Earn/ Company

Stock Exchange

Annual Sales($M) Sh.($)

Dataram AMEX 73.10 0.86 EnergySouth OTC 74.00 1.67 Keystone NYSE 365.70 0.86 LandCare NYSE 111.40 0.33 Psychemedics AMEX 17.60 0.13
Element s IBM UET Lahore Data Set Datum Business Statistics 7 SUMMER 2011

2003 Thomson/South-Western

Scales of Measurement
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Types of Data Nominal Ordinal Scale

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2003 Thomson/South-Western

Business Statistics 8 SUMMER 2011

NOMINAL DATA
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Nominal (Data describes categories) Example: Students of a university are classified by the school in which they are enrolled using a nonnumeric label such as Business, Humanities, Education, and so on. Alternatively, a numeric code could be used for the school variable (e.g. 1 denotes Business, 2 denotes Humanities, 3 denotes Education, and so on).

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 9 SUMMER 2011

ORDINAL DATA
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Ordinal (where preference is specified) Example: Students of a university are classified by their class standing using a nonnumeric label such as Freshman, Sophomore, Junior, or Senior. Alternatively, a numeric code could be used for the class standing variable (e.g. 1 denotes Freshman, 2 denotes Sophomore, and so on).

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 10 Fall 2010

SCALE DATA
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All types of data where measurement and counts are used For example, weights of students in a class Salaries of employees in an organization Percentage attendance Age of Patients in a hospital Number of Top Class Students in each Semester

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2003 Thomson/South-Western

Business Statistics 11 SUMMER 2011

Qualitative and Quantitative Data

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Data can be further classified as being qualitative or quantitative. The statistical analysis that is appropriate depends on whether the data for the variable are qualitative or quantitative. In general, there are more alternatives for statistical analysis when the data are quantitative.

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2003 Thomson/South-Western

Business Statistics 12 SUMMER 2011

Qualitative Data
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Qualitative data are labels or names used to identify an attribute of each element. Qualitative data use either the nominal or ordinal scale of measurement. Qualitative data can be either numeric or nonnumeric. The statistical analysis for qualitative data are rather limited.

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2003 Thomson/South-Western

Business Statistics 13 SUMMER 2011

Quantitative Data
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Quantitative data indicate either how many or how much. Quantitative data that measure how many are discrete. Quantitative data that measure how much are continuous because there is no separation between the possible values for the data.. Quantitative data are always numeric. Ordinary arithmetic operations are meaningful only with quantitative data.
Business Statistics 14 Fall 2010

IBM UET Lahore

2003 Thomson/South-Western

Cross-Sectional and Time Series Data

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Cross-sectional data are collected at the same or approximately the same point in time. Example: data detailing the number of building permits issued in June 2000 in each of the counties of Texas Time series data are collected over several time periods. Example: data detailing the number of building permits issued in Travis County, Texas in each of the last 36 months

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 15 SUMMER 2011

Data Sources
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Existing Sources Data needed for a particular application might already exist within a firm. Detailed information is often kept on customers, suppliers, and employees for example. Substantial amounts of business and economic data are available from organizations that specialize in collecting and maintaining data.

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2003 Thomson/South-Western

Business Statistics 16 SUMMER 2011

Data Sources
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Existing Sources Government agencies are another important source of data. Data are also available from a variety of industry associations and special-interest organizations.

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2003 Thomson/South-Western

Business Statistics 17 SUMMER 2011

Data Sources
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Internet The Internet has become an important source of data. Most government agencies, like the Bureau of the Census (www.census.gov), make their data available through a web site. More and more companies are creating web sites and providing public access to them. A number of companies now specialize in making information available over the Internet.
Business Statistics 18 SUMMER 2011

IBM UET Lahore

2003 Thomson/South-Western

Data Sources
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Statistical Studies Statistical studies can be classified as either experimental or observational. In experimental studies the variables of interest are first identified. Then one or more factors are controlled so that data can be obtained about how the factors influence the variables. In observational (nonexperimental) studies no attempt is made to control or influence the variables of interest; an example is a survey.
Business Statistics 19 SUMMER 2011

IBM UET Lahore

2003 Thomson/South-Western

Data Acquisition Considerations

Time Requirement Searching for information can be time consuming. Information might no longer be useful by the time it is available. s Cost of Acquisition Organizations often charge for information even when it is not their primary business activity. s Data Errors Using any data that happens to be available or that were acquired with little care can lead to poor and misleading information. IBM UET Lahore Business Statistics
s 2003 Thomson/South-Western

SUMMER 2011

20

Descriptive Statistics
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Descriptive statistics are the tabular, graphical, and numerical methods used to summarize data.

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2003 Thomson/South-Western

Business Statistics 21 SUMMER 2011

Example: Hudson Auto Repair

The manager of Hudson Auto would like to have a better understanding of the cost of parts used in the engine tune-ups performed in the shop. She examines 91 78 invoices 75 52 99 The costs of 50 customer 93 57 for tune-ups. 80 97 62 71 parts, 69 72 89 66 75 79 75 72 76 104 to 62 68 97 105 77 65 below. rounded74 the nearest dollar, are listed 80 109 85 97 88 68 83 68 71 69 67 74 62 82 98 101 79 105 79 69 62 73
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2003 Thomson/South-Western

Example: Hudson Auto Repair

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Tabular Summary (Frequencies and Percent Frequencies) Parts Percent Cost ($) Frequency Frequency 50-59 2 4 60-69 13 26 70-79 16 32 80-89 7 14 90-99 7 14 100-109 5 10 Total 50 100

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2003 Thomson/South-Western

Business Statistics 23 SUMMER 2011

Example: Hudson Auto Repair

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Graphical Summary (Histogram)

18 16 Frequency 14 12 10 8 6 4 2 50 60 70 80 90 100

Parts Cost ($) 110

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 24 SUMMER 2011

Example: Hudson Auto Repair

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Numerical Descriptive Statistics The most common numerical descriptive statistic is the average (or mean). Hudsons average cost of parts, based on the 50 tune-ups studied, is $79 (found by summing the 50 cost values and then dividing by 50).

IBM UET Lahore

2003 Thomson/South-Western

Business Statistics 25 SUMMER 2011

Statistical Inference
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Statistical inference is the process of using data obtained from a small group of elements (the sample) to make estimates and test hypotheses about the characteristics of a larger group of elements (the population).

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2003 Thomson/South-Western

Business Statistics 26 SUMMER 2011

Example: Hudson Auto Repair

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Process of Statistical Inference

1. Population consists of all tune-ups. Average cost of parts is unknown. unknown

2. A sample of 50 engine tune-ups is examined.

4. The value of the sample average is used to make an estimate of the population average. IBM UET Lahore
2003 Thomson/South-Western

3. The sample data provide a sample average cost of $79 per tune-up. Business Statistics 27 SUMMER 2011