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OPRE 6301/SYSM 6303

Quantitative Introduction to Risk and
Uncertainty in Business
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Chapter One
What is Statistics?

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What is Statistics?
Statistics is a way to get information
from data
Data
Statistics
Information

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What is Statistics?
Descriptive Statistics
Inferential Statistics

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Descriptive Statistics
Organize and summarize data
Tabular
Graphical
Numerical

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Inferential statistics
The process of making a:
Prediction
Estimation
Decision
about a population based on sample
data
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Key Statistical Concepts

A Population
all items of interest

Populations can be very large

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Key Statistical Concepts

A Sample
subset of a population

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Key Statistical Concepts

Parameter
a descriptive measure of a population

Statistic
a descriptive measure of a sample
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Key Statistical Concepts

Population

Parameter

Sample

Statistic
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Key Statistical Concepts

Population

Parameter

Sample

Statistic
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Measures of Reliability
Conclusions and estimates may not
always be correct
Two measures built into statistical
process to address this
Confidence Level
Significance Level
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Confidence Level
Proportion of times
an estimation procedure
will produce a correct result
Typically between 90-99%
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Significance Level
How frequently a conclusion will
produce an incorrect result,
in the long run.
Typically between 1-10%
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Measures of Reliability
For any one statistical inferential result
Confidence Level
+
Significance Level
= 100%
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