Why Study Business Statistics?

Chapter 1

1 ©Mohammad Jamal Hossain

 GOALS

Understand what is Business statistics.

Understand why we study Business statistics.
Explain what is meant by descriptive statistics and inferential
statistics.
Distinguish between a qualitative variable and a quantitative
variable.
Describe how a discrete variable is different from a
continuous variable.
Distinguish among the nominal, ordinal, interval, and ratio
levels of measurement.

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 What Is Meant By Business Statistics?

Statistics is a discipline of study dealing with the collection,

analysis, interpretation, and presentation of data.
Statistics is the numerical statements of facts in any
department of inquiry. ---- Bowley

Statistics is the science, which deals with the collection,

analysis, and interpretation of numerical data.
---Croxton & Cowden
Statistics is the science of collecting, organizing, presenting,
analyzing, and interpreting numerical data to assist in
making more effective business decisions.

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 Why we study Statistics?

v The first reason is numerical information is

needed every where.

v The second reason is statistical techniques are

used to make decisions that affects our daily
lives.

v A third reason is that the knowledge of

statistical methods will help us understand how
decisions are made and give us a better
understanding.

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 What Are The Types of Statistics?

Descriptive Statistics: Descriptive statistics include the

techniques that are used to organize, summarize, and present
data for the purpose of easier interpretation

EXAMPLE 1:The USA govt. reports that the population of USA was 179323000 in
1960, 203302000 in 1970. This information is descriptive statistics.

EXAMPLE 2: According to Consumer Reports, General Electric washing machine owners

reported 9 problems per 100 machines during 2001. The statistic 9 describes the number of
problems out of every 100 machines.

Inferential Statistics: Inferential statistics include those

techniques by which decisions about a statistical population are
made based only on a sample having been observed.
Example: A recent survey showed 46% of university seniors can
solve problems in Statistics.
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 Population versus Sample

A population is a collection of all possible individuals, objects, or

measurements of interest.
The population that is being studied is called the target population.

Example1: All the students of BBA program of MIU may constitute a

population.
Example2: All the cars in the Dhaka city may constitute a population.

A sample is a portion, or part, of the population of interest

Example: Some students of BBA program of MIU may constitute a sample.

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 Parameter and Statistic

Parameter: Population characteristics are

known as parameter.
Population mean, population variance, max.,
min. etc. are the examples of parameter.

Statistic: Sample characteristics are known as

statistic
Sample mean, sample variance, max., min.
etc. are the examples of statistic.

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 Constant: A constant is a value that does not
change during mathematical computation.
E.g., the number of sides of a cube
E.g., the sum of the interior angles of a triangle

A constant can be represented by a numeral or

by a symbol (say) a, b, c etc.

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 What is Variable?

A variable is a characteristic under study that

assumes different values for different elements
or persons or items.
A variable can be represented by capital letters
or symbols (say) x, y, z etc.

The value of a variable for an element or item

is called an observation or measurement.

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 Types of Variables

A. Qualitative or categorical variable: A

variable that cannot assume a numerical value but
can be classified into two or more nonnumeric
categories is called a qualitative or categorical
variable.
EXAMPLES: Gender, religion, type of automobile owned,
place of birth, eye color, hair color are examples of QV.
A variable that can be measured
B. Quantitative variable:
numerically is called a quantitative variable.
EXAMPLES: balance of an account, minutes remaining in
class, or number of children in a family etc.

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 Quantitative Variables - Classifications

Quantitative variables can be classified as either discrete or

continuous.

A. Discrete variables: A variable that can assume only certain

values and there are usually “gaps” between values is called a
discrete variable.

EXAMPLE: Family size, the number of bedrooms in a house, or the number of hammers
sold at the local market (1,2,3,…,etc).

B.Continuous variable: A variable that can assume any value

within a specified range is called a continuous variable.

EXAMPLE: The pressure in a tire, the weight of a car, or the height of students in a class.

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 Summary of Types of Variables

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Second level
● Third level

● Fourth level

● Fifth level

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 Data

Data: Data means a set of known or given things, facts.

Note that data can be numerical (e.g. age of people) or non-
numerical (e.g. gender of people).
A data set consists of the observations of a variable for the
elements of a sample.
Raw data: Information obtained by observing values of a
variable is called raw data.
Data recorded in which they are collected and before they
are processed or ranked are called raw data.
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Second level
● Third level

● Fourth level

● Fifth level

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 Four Levels of Measurement
Nominal level - data that is classified
into categories and cannot be
arranged in any particular order.
EXAMPLES: eye color, gender, religion etc.
Ordinal level – involves data arranged
in some order, but the differences
between data values cannot be
determined or are meaningless.
EXAMPLE: During a taste test of 4 soft drinks,
Mellow Yellow was ranked number 1, Sprite
number 2, Seven-up number 3, and Orange
Crush number 4.
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Interval level - similar to the ordinal level,
with the additional property that
meaningful amounts of differences
between data values can be determined.
There is no natural zero point.
EXAMPLE: Temperature on the Fahrenheit scale.
Ratio level - the interval level with an
inherent zero starting point. Differences
and ratios are meaningful for this level of
measurement.
EXAMPLES: Monthly income of surgeons, or
distance traveled by manufacturer’s
representatives per month.
 Summary of the Characteristics for
Levels of Measurement

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Second level
● Third level

● Fourth level

● Fifth level

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 End of Chapter 1

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