Lets talk before we start '''

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Lets talk before we start ...
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Managers often observe a problem and associate
some prior actions (or decisions) to be the cause
of that problem.
For example, if there is an increase in
advertising expenses and a decrease in sales,
should advertising be abandoned?
It is dangerous to generalize on the basis of a
single event (or observation).
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A better approach is Management by
Fact Management by Fact is Developing a
model of the situation that explains the
relationship between the variables
In modern business Management by Fact is the
basis for better decision.
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• Data Analysis and
• Decision Modeling

are important tools of Management by Fact.
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Data Analysis

• The word in modern business for experience is
  called data.
• Data is Experience
• If you dont collect data you are wasting your
  experience.
• Although data is experience it is coded in
  numbers.
• To decipher data or to understand it you need to
  analyze it (Data Analysis).

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The whole purpose of this course could be
expressed as
How to structure effectively Decision Problems
into Decision Models?
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Lets structure previous Problem into an
effective Decision Model.
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Steps in Decision Modeling

• Define the Problem (sales are declining)

• Develop a Model or Hypothesis
• (Sales f(Price, Quality, Advertisement Efforts,
  economic conditions, diversification,
  competitors, legal environment, etc)

• Test the Model or Hypothesis
• (obtain data, determine data type, choose
  appropriate statistical tool)

• Make Decision.

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Learning Objective of the Course

• Using Data in
• Evaluating and
• Solving
• Business Problems.

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"... önce kendinize çeki düzen verin. Kendinize
çeki düzen verebilmek için önce düsüncelerinizi
yoluna koyun.Düsüncelerinizi yoluna koyabilmek
içinse, önce bilgi eksikliklerinizi giderirn."

Konfiçyus
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Topics of the Course

• Data Business Decision
• Displaying Summarizing Data
• Random Variables Probability Distribution
• Continuous Probability Distribution
• Statistical Sampling Analysis
• Hypothesis Testing (1 sample)
• Hypothesis Testing (2 samples)
• ANOVA
• Simple Multiple Linear Regression
• Issues Regarding Regression Models
• Statistical Forecasting Models
• Optimization (Introduction)

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Technical Note

• When you start with an excel session
• Change the language to US English
• Change Format/Cells to Number, use 1000 separator
  ,
• Use negative Number -1,234.10

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Data Business Decision

• (Lesson - 01)
• Role of Data in modern Organization

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Management by Fact

• As a manager you observed a decline in
  Stockholder satisfaction. (the Business
  Situation)
• You believe that the Stockholder satisfaction is
  a function of Revenues, Profits Before Taxes,
  Return on Assets and Earnings per Share. (the
  Model, and the variables)
• You analyze the data on these variables and
  decide on increasing Earnings per Share. (the
  Decision)
• You are managing by Fact

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Management by Fact

• Managing based on models that explain the
  relationship between
• the Business Situation and
• Decision
• is called
• Management by Fact.

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Management by Fact Tools

• Data Analysis
• Decision Modeling
• One of the most important tool for data
  analysis is Statistics.

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Role of Data Analysis in Business

• is to extract larger meaning from data
• in order to support
• Evaluation and
• Decision-making.

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Types of Business Data

• Customer Satisfaction Data.
• Financial Data
• Market Performance Data
• Human Resources Data
• Supplier and Partner Performance Data
• Organizational Effectiveness Data.

End-User Satisfaction, etc.
EPS, ROI, etc.
Market share, Sales, etc
Employee satisfaction etc
Defects, etc.
Response Time, etc.
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Statistics

• - Definition
• Role
• Types

• is science of
• Collecting,
• Organizing,
• Interpreting, and
• Presenting
• data.

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Statistics

• - Definition
• Role
• Types

• to Draw Inferences
• (Increases in Sales are not stable)
• to Monitor the Effectiveness of
• business processes.
• (Customer Satisfaction Customer Satisfaction
  Index)

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Statistics

• - Definition
• Role
• Types

• Descriptive Statistics
• (Gender distribution of customers)
• Statistical Inference
• (Impact of age on color preference)
• Predictive Statistics.
• (Number of expected visitors next year)

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Decision Model

• - Definition
• Role
• Types

• is
• Logical or
• Mathematical
• representation of a business situation (or
  problem)
• Room_Sales f(Room_Price, Advertisement,
  Service_Quality, etc.).

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Decision Model

• - Definition
• Role
• Types

• is to establish a relationship between
• Actions and
• Results.
• ( 5 ? Room_Rates ? 3 ? Room_Sales )

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Decision Model

• - Definition
• Role
• Types

• Regression Models
• Forecasting Models
• Selection Models
• Simulation Models
• Optimization Models.

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Types of Data Scales

• Ratio ( natural zero, fixed unite of measure,
  Sales)
• Interval (no natural zero, fixed unite of
  measure, C)

• Ordinal (no fixed unite of measurement, ranking,
  Priorities)
• Categorical / Nominal (no ranking, Religion)
• No meaningful comparison of ranges, averages, and
  other statistics.

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Data Scales in SPSS

• Scale Data
• (both Ratio or Interval data are grouped under
  this name)
• Ordinal Data
• Categorical Data

• Numeric Data (Scale Ordinal data)
• String Data (Categorical data)

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ExampleTypes of Data Scales

• Trees are surveyed and their species and height
  are measured. The levels of measurement for the
  two variables (species and height) are
• Nominal (Categorical) and Interval
• Ratio and Interval
• Categorical (Nominal) and Ratio
• Ordinal and Full

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ExampleTypes of Data Scales (cont.)

• Which of the following variables is measured at
  the Ordinal level?
• Mean annual rainfall (e.g. millimeters)
• Town Post-codes (e.g. 2840)
• Accommodation ratings (e.g. 5 star, 4 star)
• Temperature (e.g. degrees Celsius)

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ExampleTypes of Data Scales (cont.)

• Which of the following is NOT measured at the
  Nominal level of measurement?
• Eye Color
• Income Tax Bracket
• Country of birth
• Post-code

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How Data are used in Evaluating and Solving
Business Problems
Role of Statistics in Business Is to draw
inferences and to monitor the effectiveness of
business processes. Statistics is science of
Collecting, Organizing, Interpreting, and
Presenting data.
Role of Decision Modeling in Business Is to
establish a relationship between actions and
results. Decision Model is logical or
mathematical relation of a business situation (or
problem).
Role of Data Analysis in Business Is to extract
larger meaning from data to support evaluation
and decision making. One of the most important
tool for data analysis is statistics.
Regression Models Forecasting Models
Selection Models Simulation Models
Optimization Models
Descriptive Statistics Statistical
Inference Predictive Statistics
Customer Satisfaction Data Market
Performance Data Human Resources Data
Supplier Performance Data Effectiveness Data
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Next Lesson

• (Lesson - 02)
• Displaying Summarizing Data