PowerPoint Presentation Package* to Accompany: Statistics for Business and Statistics (5th Edition) by Paul Newbold, William L. Carlson, and Betty M. Thorne *by Mark P. Karscig; Department of Economics and Finance, Central Missouri State University

Chapter 1 Why Study Statistics?

Dealing with Uncertainty Everyday decisions are based on incomplete information

The price of IBM stock will be higher in six months than it is now. Dealing with Uncertainty The price of IBM stock will be higher in six months than it is now. versus The price of IBM stock is likely to be higher in six months than it is now.

Dealing with Uncertainty If the federal budget deficit is as high as predicted, interest rates will remain high for the rest of the year. versus If the federal budget deficit is as high as predicted, it is probable that interest rates will remain high for the rest of the year.

Sampling Population and Sample A population is the complete set of all items in which an investigator is interested. A population is the set of all of the outcomes from a system or process that is to be studied. N represents population size.

Examples of Populations Names of all registered voters in the United States. Incomes of all families living in Daytona Beach. Annual returns of all stocks traded on the New York Stock Exchange. Grade point averages of all the students in your university.

Sampling Population and Sample A sample is an observed subset of population values with sample size given by n.

Sampling Random Samples Simple random sampling is a procedure in which every possible sample of n objects is equally likely to be chosen.

Sampling Random Samples Simple random sampling is a procedure in which every possible sample of n objects is equally likely to be chosen. The resulting sample is usually called a random sample.

Statistical Thinking Statistical thinking is a philosophy of learning and action based on the following fundamental principles: All work occurs in a system of interconnected processes; Variation exists in all processes, and Understanding and reducing variation are the keys to success.

Statistical Thinking Systems and Processes A system is a number of components that are logically and sometimes physically linked together for some purpose.

Statistical Thinking Systems and Processes A process is a set of activities operating on a system that transforms inputs to outputs. A business process is groups of logically related tasks and activities, that when performed utilizes the resources of the business to provide definitive results required to achieve the business objectives.

Making Decisions Data, Information, Knowledge Data: specific observations of measured numbers. Information: processed and summarized data yielding facts and ideas. Knowledge: selected and organized information that provides understanding, recommendations, and the basis for decisions.

Making Decisions Descriptive and Inferential Statistics Descriptive Statistics include graphical and numerical procedures that summarize and process data and are used to transform data into information.

Making Decisions Descriptive and Inferential Statistics Inferential Statistics provide the bases for predictions, forecasts, and estimates that are used to transform information to knowledge.

The Journey to Making Decisions Knowledge Experience, Theory, Literature, Inferential Statistics, Computers Information Descriptive Statistics, Probability, Computers Begin Here: Identify the Problem Data

Key Words Data Descriptive Statistics Inferential Statistics Information Knowledge Population Process Sample Simple Random Sampling Statistical Thinking System