1 1 Slide © 2001 South-Western /Thomson Learning Anderson Sweeney Williams Anderson Sweeney Williams Slides Prepared by JOHN LOUCKS CONTEMPORARYBUSINESSSTATISTICS

1 1 Slide Slide© 2001 © 2001 South-Western /Thomson LearningSouth-Western /Thomson Learning

Anderson Anderson Sweeney Sweeney WilliamsWilliams

Anderson Anderson Sweeney Sweeney WilliamsWilliams

Slides Prepared by JOHN LOUCKS Slides Prepared by JOHN LOUCKS

CONTEMPORARCONTEMPORARYY

BUSINESSBUSINESSSTATISTICSSTATISTICS

WITH MICROSOFTWITH MICROSOFT EXCEL EXCEL

CONTEMPORARCONTEMPORARYY

BUSINESSBUSINESSSTATISTICSSTATISTICS

WITH MICROSOFTWITH MICROSOFT EXCEL EXCEL

2 2 Slide Slide

Chapter 1Chapter 1 Data and Statistics Data and Statistics

Applications in Business Applications in Business and Economicsand Economics

DataData Data SourcesData Sources Descriptive StatisticsDescriptive Statistics Statistical InferenceStatistical Inference Statistical Analysis Statistical Analysis

using Microsoftusing Microsoft Excel Excel

3 3 Slide Slide

Applications in Applications in Business and EconomicsBusiness and Economics

AccountingAccounting

Public accounting firms use statistical sampling Public accounting firms use statistical sampling procedures when conducting audits for their procedures when conducting audits for their clients.clients.

FinanceFinance

Financial advisors use a variety of statistical Financial advisors use a variety of statistical information, including price-earnings ratios and information, including price-earnings ratios and dividend yields, to guide their investment dividend yields, to guide their investment recommendations.recommendations.

MarketingMarketing

Electronic point-of-sale scanners at retail checkout Electronic point-of-sale scanners at retail checkout counters are being used to collect data for a counters are being used to collect data for a variety of marketing research applications.variety of marketing research applications.

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ProductionProduction

A variety of statistical quality control charts A variety of statistical quality control charts are used to monitor the output of a production are used to monitor the output of a production process.process.

EconomicsEconomics

Economists use statistical information in Economists use statistical information in making forecasts about the future of the making forecasts about the future of the economy or some aspect of it.economy or some aspect of it.

Applications Applications in Business and Economicsin Business and Economics

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DataData

Elements, Variables, and ObservationsElements, Variables, and Observations Qualitative and Quantitative DataQualitative and Quantitative Data Cross-Sectional and Time Series DataCross-Sectional and Time Series Data

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Data and Data SetsData and Data Sets

DataData are the facts and figures that are are the facts and figures that are collected, summarized, analyzed, and collected, summarized, analyzed, and interpreted.interpreted.

The data collected in a particular study are The data collected in a particular study are referred to as the referred to as the data setdata set..

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Elements, Variables, and ObservationsElements, Variables, and Observations

The The elementselements are the entities on which data are the entities on which data are collected.are collected.

A A variablevariable is a characteristic of interest for the is a characteristic of interest for the elements.elements.

The set of measurements collected for a The set of measurements collected for a particular element is called an particular element is called an observationobservation..

The total number of data values in a data set The total number of data values in a data set is the number of elements multiplied by the is the number of elements multiplied by the number of variables.number of variables.

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Data, Data Sets, Data, Data Sets, Elements, Variables, and ObservationsElements, Variables, and Observations

ElementElementss

StockStock Annual Earn/ Annual Earn/

CompanyCompany Exchange Sales($M) Sh.($) Exchange Sales($M) Sh.($)

DataramDataram AMEXAMEX 73.1073.10 0.86 0.86

EnergySouthEnergySouth OTC OTC 74.0074.00 1.67 1.67

KeystoneKeystone NYSE NYSE 365.70 365.70 0.86 0.86

LandCareLandCare NYSE NYSE 111.40 111.40 0.33 0.33

PsychemedicsPsychemedics AMEXAMEX 17.6017.60 0.13 0.13

VariableVariabless

Data SetData Set DatumDatum

ObservatioObservationn

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Qualitative and Quantitative DataQualitative and Quantitative Data

The statistical analysis that is appropriate The statistical analysis that is appropriate depends on whether the data for the variable depends on whether the data for the variable are qualitative or quantitative.are qualitative or quantitative.

Qualitative dataQualitative data are labels or names used to are labels or names used to identify an attribute of each element.identify an attribute of each element.

Quantitative dataQuantitative data indicate either how much or indicate either how much or how many.how many.

Quantitative data are always Quantitative data are always numericnumeric.. Qualitative data can be either numeric or Qualitative data can be either numeric or

nonnumericnonnumeric. . Ordinary arithmetic operations are meaningful Ordinary arithmetic operations are meaningful

only with quantitative data.only with quantitative data.

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Cross-Sectional and Time Series DataCross-Sectional and Time Series Data

Cross-sectional dataCross-sectional data are collected at the same are collected at the same or approximately the same point in time.or approximately the same point in time.• Example: data detailing the number of Example: data detailing the number of

building permits issued in June 2000 in each building permits issued in June 2000 in each of the counties of Texasof the counties of Texas

Time series dataTime series data are collected over several are collected over several time periods.time periods.• Example: data detailing the number of Example: data detailing the number of

building permits issued in Travis County, building permits issued in Travis County, Texas in each of the last 36 monthsTexas in each of the last 36 months

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Data SourcesData Sources

Existing SourcesExisting Sources• Data needed for a particular application might Data needed for a particular application might

already exist already exist within a firmwithin a firm. Detailed . Detailed information is often kept on customers, information is often kept on customers, suppliers, and employees for example.suppliers, and employees for example.

• Substantial amounts of business and economic Substantial amounts of business and economic data are available from data are available from organizations that organizations that specialize in collecting and maintaining dataspecialize in collecting and maintaining data..

• Government agenciesGovernment agencies are another important are another important source of data.source of data.

• Data are also available from a variety of Data are also available from a variety of industry associations and special-interest industry associations and special-interest organizationsorganizations..

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InternetInternet• The The InternetInternet has become an important has become an important

source of data.source of data.• Most government agencies, like the Bureau Most government agencies, like the Bureau

of the Census (www.census.gov), make their of the Census (www.census.gov), make their data available through a web site.data available through a web site.

• More and more companies are creating web More and more companies are creating web sites and providing public access to them.sites and providing public access to them.

• A number of companies now specialize in A number of companies now specialize in making information available over the making information available over the Internet.Internet.

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Statistical StudiesStatistical Studies• Statistical studies can be classified as either Statistical studies can be classified as either

experimental or observational.experimental or observational.• In In experimental studiesexperimental studies the variables of the variables of

interest are first identified. Then one or more interest are first identified. Then one or more factors are controlled so that data can be factors are controlled so that data can be obtained about how the factors influence the obtained about how the factors influence the variables.variables.

• In In observationalobservational (nonexperimental) (nonexperimental) studiesstudies no no attempt is made to control or influence the attempt is made to control or influence the variables of interest.variables of interest.

• A A surveysurvey is perhaps the most common type of is perhaps the most common type of observational study.observational study.


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Data Acquisition ConsiderationsData Acquisition Considerations

Time RequirementTime Requirement• Searching for information can be time Searching for information can be time

consuming.consuming.• Information might no longer be useful by the Information might no longer be useful by the

time it is available.time it is available. Cost of AcquisitionCost of Acquisition

• Organizations often charge for information even Organizations often charge for information even when it is not their primary business activity.when it is not their primary business activity.

Data ErrorsData Errors• Using any data that happens to be available or Using any data that happens to be available or

that were acquired with little care can lead to that were acquired with little care can lead to poor and misleading information.poor and misleading information.

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Descriptive StatisticsDescriptive Statistics

Descriptive statisticsDescriptive statistics are the tabular, are the tabular, graphical, and numerical methods used to graphical, and numerical methods used to summarizesummarize data. data.

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91 78 93 57 75 52 99 80 97 6271 69 72 89 66 75 79 75 72 76104 74 62 68 97 105 77 65 80 10985 97 88 68 83 68 71 69 67 7462 82 98 101 79 105 79 69 62 73

91 78 93 57 75 52 99 80 97 6271 69 72 89 66 75 79 75 72 76104 74 62 68 97 105 77 65 80 10985 97 88 68 83 68 71 69 67 7462 82 98 101 79 105 79 69 62 73

Example: Hudson Auto RepairExample: Hudson Auto Repair

The manager of Hudson Auto would like The manager of Hudson Auto would like to haveto have

a better understanding of the cost of parts used a better understanding of the cost of parts used in thein the

engine tune-ups performed in the shop. She engine tune-ups performed in the shop. She examinesexamines

50 customer invoices for tune-ups. The costs of 50 customer invoices for tune-ups. The costs of parts,parts,

rounded to the nearest dollar, are listed below.rounded to the nearest dollar, are listed below.

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Tabular Summary (Frequencies and Percent Tabular Summary (Frequencies and Percent FrequenciesFrequencies

PartsParts Percent Percent Cost ($)Cost ($) FrequencyFrequency

FrequencyFrequency 50-5950-59 2 2 4 4 60-6960-69 1313 2626 70-7970-79 1616 3232 80-8980-89 7 7 1414 90-9990-99 7 7 1414 100-109100-109 5 5 1010

Total 50Total 50 100 100

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Graphical Summary (Histogram)Graphical Summary (Histogram)

PartsCost ($)PartsCost ($)

22446688

10101212141416161818

Fre

qu

en

cy

Fre

qu

en

cy

50 60 70 80 90 100 11050 60 70 80 90 100 110

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Numerical Descriptive StatisticsNumerical Descriptive Statistics• The most common numerical descriptive The most common numerical descriptive

statistic is the statistic is the averageaverage (or (or meanmean). ). • Hudson’s average cost of parts, based on Hudson’s average cost of parts, based on

the 50 tune-ups studied, is $79 (found by the 50 tune-ups studied, is $79 (found by summing the 50 cost values and then summing the 50 cost values and then dividing by 50).dividing by 50).

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Statistical Inference Statistical Inference

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

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Process of Statistical InferenceProcess of Statistical Inference

1. 1. Population Population consists of allconsists of all

tune-ups. Averagetune-ups. Averagecost of parts iscost of parts is

unknownunknown.

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

is examined.is examined.

3. 3. The sample data The sample data provide a sampleprovide a sampleaverage cost ofaverage cost of

$79 per tune-up.$79 per tune-up.

4. 4. The value of the The value of the sample average is usedsample average is usedto make an estimate ofto make an estimate of the population average.the population average.

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Using Excel for Statistical AnalysisUsing Excel for Statistical Analysis

Statistical analysis typically involves working Statistical analysis typically involves working with with large amounts of datalarge amounts of data..

Computer softwareComputer software is typically used to conduct is typically used to conduct the analysis.the analysis.

Frequently the data that is to be analyzed Frequently the data that is to be analyzed resides in a resides in a spreadsheetspreadsheet..

Modern spreadsheet packages are capable of Modern spreadsheet packages are capable of data management, analysis, and presentation.data management, analysis, and presentation.

MS ExcelMS Excel is the most widely available is the most widely available spreadsheet software in business spreadsheet software in business organizations.organizations.

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In using Excel for statistical analysis, 3 tasks In using Excel for statistical analysis, 3 tasks might be needed.might be needed.• Enter DataEnter Data• Enter Functions and FormulasEnter Functions and Formulas• Apply ToolsApply Tools

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Data SetData Set

A B C D

1 Customer Invoice #Parts

Cost ($)Labor

Cost ($)2 Sam Abrams 20994 91 1853 Mary Gagnon 21003 71 2054 Ted Dunn 21010 104 1925 ABC Appliances 21094 85 1786 Harry Morgan 21116 62 2427 Sara Morehead 21155 78 1488 Vista Travel, Inc. 21172 69 1659 John Williams 21198 74 190

Note: Rows 10-51 are not shown.Note: Rows 10-51 are not shown.

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Formula WorksheetFormula Worksheet

C D E F G

1Parts

Cost ($)Labor

Cost ($)2 91 185 Average Parts Cost =AVERAGE(C2:C51)3 71 2054 104 1925 85 1786 62 2427 78 1488 69 1659 74 190

Note: Rows 10-51 and Columns A-B are not shown.Note: Rows 10-51 and Columns A-B are not shown.

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Value WorksheetValue Worksheet

C D E F G

1Parts

Cost ($)Labor

Cost ($)2 91 185 Average Parts Cost 793 71 2054 104 1925 85 1786 62 2427 78 1488 69 1659 74 190

Note: Rows 10-51 and Columns A-B are not shown.Note: Rows 10-51 and Columns A-B are not shown.

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End of Chapter 1End of Chapter 1

Documents

1 1 Slide © 2001 South-Western /Thomson Learning Anderson Sweeney Williams Anderson Sweeney Williams Slides Prepared by JOHN LOUCKS CONTEMPORARYBUSINESSSTATISTICS