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Chapter
One
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Chapter One
What is Statistics?
GOALS
When you have completed this chapter, you will be able to:
ONE
Understand why we study statistics.
TWO
Explain what is meant by descriptive statistics and inferential statistics.
THREE
Distinguish between a qualitative variable and a quantitative variable.
FOUR
Distinguish between a discrete variable and a continuous variable.
Goals
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Introduction
Decision theory in statistics is concerned with identifying the
uncertainties and other issues relevant in a given decision and
the resulting optimal decision.
Statistical analysis is a tool to describe objectively the decision
problem based on facts in a transparent and understandable
language for the decision maker. Today's good decisions are
driven by data. In all aspects of our lives, and importantly in the
business context, an amazing diversity of data is available for
inspection and analytical insight. Business managers and
professionals are increasingly required to justify decisions on the
basis of data.
The aim of statistical tools is to provide some useful insights to the
decision maker.
It is never a substitute for the human-side of the decision making
process. Therefore, it must help the decision maker who is
responsible and accountable for his/her decision.
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What is Meant by Statistics?
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Examples
A sales manager may use statistical techniques to
forecast sales for the coming year.
An auditor can use random sampling techniques to audit
the accounts receivable for clients.
A plant manager can use statistical quality control
techniques to assure the quality of his production with a
minimum of testing or inspection.
A financial analyst may use regression and correlation to
help understand the relationship of a financial ratio to a
set of other variables in business.
A market researcher may use test of significance to
accept or reject the hypotheses about a group of buyers
to which the firm wishes to sell a particular product.
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Objective of Statistics
To study the population characteristics by
using a representative sample
observations
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Types of Statistics 8
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A Population is a
Collection of all A Sample is a
possible individuals, portion, or part, of the
objects, or population of interest
measurements of
interest.
Types of Statistics 9
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Example 1
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A sample of
five 14.0,
executives
15.0,
received the
following 17.0,
bonus last 16.0,
year ($000): 15.0
Example 2
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Secondary Data
Secondary Data: The data, which has already been
collected by others.
Sources:
Journals and different reports,
Government publications (BBS for example),
Trade and professional bodies etc.
However, secondary data must be used with utmost care.
Such data may be bias, inadequate size of the sample/not
representative of the population.
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Variable
Variable: A characteristic that varies with
an individual or an object is called a
variable.
Example: age (as it varies from person to
person).
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Types of variable
Quantitative variable
Qualitative variable
Discrete variable
Continuous variable
Dependent variable
Independent variable
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Types of Variables
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Types of Variables
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Types of Variables
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Types of Variables
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The Independent
Variable provides the
basis for estimation. It
is the predictor variable.
Limitations of Statistics:
Single and isolated figures are not statistics
Statistics deals only with quantitative characteristics
Statistical analysis are true only under certain conditions
Statistics can be misused
Statistics are affected to a marked extent by multiplicity of
causes
Limitations of Statistics
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