Lord Kelvin

1
Lord Kelvin

• "In physical science the first essential step in
  the direction of learning any subject is to find
  principles of numerical reckoning and practicable
  methods for measuring some quality connected with
  it. I often say that when you can measure what
  you are speaking about, and express it in
  numbers, you know something about it but when
  you cannot measure it, when you cannot express it
  in numbers, your knowledge is of a meagre and
  unsatisfactory kind it may be the beginning of
  knowledge, but you have scarcely in your thoughts
  advanced to the state of Science, whatever the
  matter may be." PLA, 1883-05-03
• "To measure is to know.
• "If you can not measure it, you can not improve
  it.
• "The true measure of a man is what he would do if
  he knew he would never be caught."

2
Qualitative Data
Labels or names used to identify an attribute of
each element
Often referred to as categorical data
Use either the nominal or ordinal scale of
measurement
Can be either numeric or nonnumeric
Appropriate statistical analyses are rather
limited
3
Quantitative Data
Quantitative data indicate how many or how
much
discrete, if measuring how many
continuous, if measuring how much
Quantitative data are always numeric.
Ordinary arithmetic operations are meaningful
for quantitative data.
4
Scales of Measurement
Data
Qualitative
Quantitative
Numerical
Numerical
Nonnumerical
Nominal
Ordinal
Nominal
Ordinal
Interval
Ratio
5
Cross-Sectional Data
Cross-sectional data are collected at the same
or approximately the same point in time.
Example data detailing the number of building
permits issued in June 2003 in each of the
counties of Ohio
6
Time Series Data
Time series data are collected over several
time periods.
Example data detailing the number of building
permits issued in Lucas County, Ohio in each of
the last 36 months
7
Data Sources

• Existing Sources

Within a firm almost any department
Business database services Dow Jones Co.
Government agencies - U.S. Department of Labor
Industry associations Travel Industry
Association
of America
Special-interest organizations Graduate
Management
Admission Council
Internet more and more firms
8
Data Sources

• Statistical Studies

In experimental studies the variables of
interest are first identified. Then one or more
factors are controlled so that data can be
obtained about how the factors influence the
variables.
In observational (nonexperimental) studies no
attempt is made to control or influence the
variables of interest.
a survey is a good example
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Data Acquisition Considerations
Time Requirement

• Searching for information can be time
  consuming.

• Information may no longer be useful by the
  time it
• is available.

Cost of Acquisition

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

Data Errors

• Using any data that happens to be available or
• that were acquired with little care can
  lead to poor
• and misleading information.

10
Descriptive Statistics

• Descriptive statistics are the tabular,
  graphical, and numerical methods used to
  summarize data.

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Example Hudson Auto Repair
The manager of Hudson Auto would like to have a
better understanding of the cost of parts used in
the engine tune-ups performed in the shop. She
examines 50 customer invoices for tune-ups. The
costs of parts, rounded to the nearest dollar,
are listed on the next slide.
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Example Hudson Auto Repair

• Sample of Parts Cost for 50 Tune-ups

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Tabular Summary Frequency and Percent
Frequency
Parts Cost ()
Percent Frequency
Parts Frequency
2 13 16
7 7 5 50
50-59 60-69 70-79 80-89
90-99 100-109
4 26 32 14
14 10 100
(2/50)100
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Graphical Summary Histogram
Tune-up Parts Cost
Frequency
Parts Cost ()
50-59 60-69 70-79 80-89 90-99 100-110
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Numerical Descriptive Statistics

• The most common numerical descriptive
  statistic
• is the average (or mean).

• Hudsons average cost of parts, based on the
  50
• tune-ups studied, is 79 (found by summing
  the
• 50 cost values and then dividing by 50).

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Statistical Inference
- the set of all elements of interest in a
particular study
Population
Sample
- a subset of the population
- the process of using data obtained from a
sample to make estimates and test hypotheses
about the characteristics of a population
Statistical inference
Census
- collecting data for a population
Sample survey
- collecting data for a sample
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Process of Statistical Inference
1. Population consists of all tune-ups.
Average cost of parts is unknown.
2. A sample of 50 engine tune-ups is examined.
3. The sample data provide a sample average
parts cost of 79 per tune-up.
4. The sample average is used to estimate the
population average.
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Computers and Statistical Analysis

• Statistical analysis often involves working
  with
• large amounts of data.

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

• Statistical software packages such as
  Microsoft Excel
• and Minitab are capable of data management,
  analysis,
• and presentation.

• Instructions for using Excel and Minitab are
  provided
• in chapter appendices.

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Lesson Summary

• Developed and appreciation for the application of
  statistics in business and economics
• Attained a better understanding of what is data
• Are able to describe the sources of data
• Now understand the uses of descriptive statistics
• Started understanding the uses of statistical
  inference
• Gained an appreciation of the importance of
  computers in performing statistical analysis