1. McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. A PowerPoint Presentation Package to Accompany Applied Statistics in Business & Economics, 4 th edition David P. Doane and Lori E. Seward Prepared by Lloyd R. Jaisingh

2. 1-2 Overview of Statistics Chapter 1 Chapter Contents 1.1 What is Statistics? 1.1 What is Statistics? 1.2 Why Study Statistics? 1.2 Why Study Statistics? 1.3 Uses of Statistics 1.3 Uses of Statistics 1.4 Statistical Challenges 1.4 Statistical Challenges 1.5 Critical Thinking 1.5 Critical Thinking

3. 1-3 Overview of Statistics Chapter 1 Chapter Learning Objectives LO1-1: Define statistics and explain some of its uses in business. business. LO1-2: List reasons for a business student to study statistics. LO1-3: State the common challenges facing business professionals using statistics. professionals using statistics. LO1-4: List and explain common statistical pitfalls.

4. 1-4 Statistics is the science of collecting, organizing, analyzing, interpreting, and presenting data. A statistic is a single measure (number) used to summarize a sample data set. For example, the average height of students in a university. Chapter 1 LO1-1: Define statistics and explain some of its uses in business. business. For heights of students, a gown manufacturer may need to know the average height for the length of the gowns or an architect may need to know the maximum height to design the height of the door ways of the class rooms. LO1-2: List reasons for a business student to study statistics. Knowing statistics will make you a better consumer of other people's data. You should know enough to handle everyday data problems, to feel confident that others cannot deceive you with spurious arguments, and to know when you've reached the limits of your expertise. Here are some reasons to study statistics. LO1-1 1.1 What is Statistics? 1.1 What is Statistics?

5. 1-5 1.2 Why Study Statistics? Communication Computer Skills Understanding the language of statistics facilitates communication and improves problem solving. The use of spreadsheets for data analysis and word processors or presentation software for reports improves upon your existing life skills. Chapter 1 Information Management Information Management Statistics help summarize large amounts of data and reveal underlying relationships. Technical Literacy Career opportunities are in growth industries propelled by advanced technology. The use of statistical software help to increase your technical literacy. LO1-2

6. 1-6 Career Advancement Career Advancement Quality Improvement Quality Improvement Statistical literacy can enhance your upward career mobility. Statistics helps firms oversee their suppliers, monitor their internal operations and identify problems. Chapter 1 Two primary kinds of statistics: Descriptive statistics – the collection, organization, presentation and summary of data. Inferential statistics – generalizing from a sample to a population, estimating unknown parameters, drawing conclusions, making decisions. 1.2 Why Study Statistics? LO1-2

7. 1-7 1.3 Uses of Statistics Chapter 1LO1-1

8. 1-8 Auditing Auditing Marketing Marketing Sample from over 12,000 invoices to estimate the proportion of incorrectly paid invoices. Identify likely repeat customers for Amazon.com and suggests co-marketing opportunities based on a database of 5 million Internet purchases. Chapter 1 Health Care Evaluate 100 incoming patients using a 42-item physical and mental assessment questionnaire. Quality Improvement Initiate a triple inspection program, setting penalties for workers who produce poor-quality output. 1.3 Uses of Statistics LO1-1

9. 1-9 Purchasing Purchasing Medicine Medicine Determine the defect rate of a shipment and whether that rate has changed significantly over time. Determine whether a new drug is really better than the placebo or if the difference is due to chance. Chapter 1 Operations Management Manage inventory by forecasting consumer demand. Product Warranty Determine the average dollar cost of engine warranty claims on a new hybrid engine. LO1-1 1.3 Uses of Statistics

10. 1-10 Is technically current (e.g., software-wise). Communicates well. Is proactive. Has a broad outlook. Is flexible. Focuses on the main problem. Meets deadlines Knows his/her limitations and is willing to ask for help. Can deal with imperfect information. Has professional integrity. The Ideal Data Analyst The Ideal Data Analyst 1.4 Statistical Challenges 1.4 Statistical Challenges Chapter 1 LO1-3: State the common challenges facing business professionals using statistics. professionals using statistics. LO1-3

11. 1-11 Imperfect Data and Practical Constraints Imperfect Data and Practical Constraints State any assumptions and limitations and use generally accepted statistical tests to detect unusual data points or to deal with missing data. You will face constraints on the type and quality of data you can collect. Chapter 1 Business Ethics Treating customers in a fair and honest manner. Complying with laws that prohibit discrimination. Ensuring that products and services meet safety regulations Standing behind warranties. Advertising in a factual and informative manner. Employees should be encouraged to ask questions and voice concerns about the company’s business practices. Responsible for accurately reporting information to management. LO1-3 1.4 Statistical Challenges 1.4 Statistical Challenges

12. 1-12 Ethical standards for the Data Analyst Know and follow accepted procedures. Maintain data integrity..Carry out accurate calculations. Report procedures faithfully. Protect confidential information. Cite sources. Acknowledge sources of financial support. Chapter 1 Using Consultants Hire consultants at the beginning of the project, when your team lacks certain skills or when an unbiased or informed view is needed. LO1-3 1.4 Statistical Challenges 1.4 Statistical Challenges

13. 1-13 Communicating with Numbers Communicating with Numbers Numbers have meaning only when communicated in the context of a certain situation. Presentation should be such that managers will quickly understand the information they need to use in order to make good decisions. Chapter 1 Skills Needed for Success in Business 1.4 Statistical Challenges 1.4 Statistical Challenges LO1-3

14. 1-14 Statistics is an essential part of critical thinking because it allows us to test an idea against empirical evidence. Empirical Data represent data collected through observation and experiments. Statistical tools are used to compare prior ideas with empirical data but pitfalls do occur. 1.5 Critical Thinking Chapter 1 LO1-4: List and explain common statistical pitfalls LO1-4: List and explain common statistical pitfalls. Pitfall 1: Making Conclusions about a Large Population from a Small Sample Pitfall 2: Making Conclusions from Nonrandom Samples Pitfall 2: Making Conclusions from Nonrandom Samples Pitfall 3: Conclusions From Rare Events Pitfall 4: Using Poor Survey Methods Pitfall 5: Assuming a Causal Link Based on Observations Pitfall 6: Generalization to Individuals from Observations about Groups LO1-4

15. 1-15 Pitfall 7: Unconscious Bias Pitfall 8: Significance versus Importance Chapter 1LO1-4 1.5 Critical Thinking