Business Statistics:: The Where, Why, and How of Data Collection

Business Statistics:
Chapter 1
The Where, Why, and How of
Data Collection
QMIS 120, by Dr. M. Zainal
Chapter Goals
After completing this chapter, you should be
able to:
Describe key data collection methods

Know key definitions:
Population vs. Sample
Primary vs. Secondary data types
Qualitative vs. Qualitative data
Time Series vs. Cross-Sectional data
Explain the difference between descriptive and

inferential statistics
Describe different sampling methods
Chap 1-2
Tools of Business Statistics
What is statistics ?
Numerical facts:Average income of Kuwaiti families.

Your monthly expenses.
Wedding cost.
Group of methods used to collect, organize,

present, analyze, and interpret data to make
more effective decisions (educated guess vs.
pure guess).
Chap 1-3
Opening a business without assessing the need

for it may affect its success.
Two fields of study: Mathematical statistics.
Applied statistics.
Types of statistics
Applied statistics can be divided into two areas: descriptive
statistics and inferential statistics.
Chap 1-4
Descriptive statistics
Collecting, presenting, and describing data
Inferential statistics
Drawing conclusions and/or making decisions

concerning a population based only on
sample data
Chap 1-5
Descriptive statistics:
Consists of methods for organizing, displaying, and

describing data in an informative way by using
tables, graphs, and summary measures.
According to bank reports, 20% of the investors in
the KSE declared bankruptcy during 2007. The
statistic 20 describes the number of bankruptcies out
of every 100 KSE investors.
Chap 1-6
Inferential statistics:
Consists of methods that use sample results to help

make decisions or predictions about a population.
One can make some decisions about the political
view of all KU students (around 15000) based on a
sample of 500 students.
Chap 1-7
Descriptive Statistics
Collect data
e.g., Survey, Observation,

Experiments
Present data
e.g., Charts and graphs
Characterize data
e.g., Sample mean =
Chap 1-8
Inferential Statistics
Making statements about a population by

examining sample results
Sample statistics
(known)
Inference
Sample
Population parameters
(unknown, but can
be estimated from
sample evidence)
Population
Chap 1-9
Inferential Statistics
Drawing conclusions and/or making decisions
concerning a population based on sample results.
Estimation
e.g., Estimate the population mean

weight using the sample mean
weight
Hypothesis Testing
e.g., Use sample evidence to test

the claim that the population mean
weight is 120 pounds
Chap 1-10
Tools for Collecting Data

Data Collection Methods
Experiments
Telephone
surveys
Written
questionnaires
Direct observation and

personal interview
Chap 1-11
Survey Design Steps
Define the issue
what are the purpose and objectives of the survey?
Define the population of interest
Develop survey questions
make questions clear and unambiguous
use universally-accepted definitions
limit the number of questions
Chap 1-12
Survey Design Steps

(continued)
Pre-test the survey
pilot test with a small group of participants
assess clarity and length
Determine the sample size and sampling

method
Select sample and administer the survey
Chap 1-13
Types of Questions
Closed-end Questions
Select from a short list of defined choices
Example: Major: __business __liberal arts

__science __other
Open-end Questions
Respondents are free to respond with any value, words, or

statement
Example: What did you like best about this course?
Demographic Questions
Questions about the respondents personal characteristics
Example: Gender: __Female __ Male

Chap 1-14
Populations and Samples
A Population is the set of all items or individuals

of interest
Examples:
All likely voters in the next election

All parts produced today
All sales receipts for November
A Sample is a subset of the population
Examples:
1000 voters selected at random for interview

A few parts selected for destructive testing
Every 100th receipt selected for audit
Chap 1-15
Key Definitions
A population is the entire collection of things

under consideration
A parameter is a summary measure computed to

describe a characteristic of the population
A sample is a portion of the population

selected for analysis
A statistic is a summary measure computed to

describe a characteristic of the sample
Chap 1-16

Population
a b
Sample
cd
ef gh i jk l m n
o p q rs t u v w
x y
gi
o
n
r
u
y
Chap 1-17
Why Sample?
Less time consuming than a census
Less costly to administer than a census
It is possible to obtain statistical results of a

sufficiently high precision based on samples.
Chap 1-18
Sampling Techniques
Sampling Techniques
Nonstatistical Sampling
Convenience
Statistical Sampling
Simple
Random
Systematic
Judgment
Stratified
Cluster
Chap 1-19
Items of the sample are chosen based on

known or calculable probabilities
(Probability Sampling)
Simple Random
Stratified
Systematic
Cluster
Chap 1-20
Simple Random Sampling
Every possible sample of a given size has an

equal chance of being selected
Selection may be with replacement or without
replacement
The sample can be obtained using a table of
random numbers or computer random number
generator
Chap 1-21
Stratified Random Sampling
Divide population into subgroups (called strata)

according to some common characteristic
Select a simple random sample from each
subgroup
Combine samples from subgroups into one
Population
Divided
into 4
strata
Sample
Chap 1-22
Systematic Random Sampling
Decide on sample size: n

Divide frame of N individuals into groups of k
individuals: k=N/n
Randomly select one individual from the 1st

group
Select every kth individual thereafter
N = 64
n=8
First Group
k=8
Chap 1-23
Cluster Sampling
Divide population into several clusters, each

representative of the population
Select a simple random sample of clusters
All items in the selected clusters can be used, or items can be

chosen from a cluster using another probability sampling
technique
Population
divided into
16 clusters.
Randomly selected
clusters for sample
Chap 1-24
Basic Terms
Element, Variable, observation, and data

set
An element or member of a sample or population

is a specific subject or object (person, firm, item,
countryetc.).
A variable is a characteristic under study that
assumes different values for different element.
The value of a variable for an element is called
observation or measurement.
Chap 1-25
Basic Terms
2001 Sales of three U.S. Companies
Variable
An element
Company
2001 Sales (million of dollars)
IBM
85,866
Dell Computer
31,168
GM
177,260
Data
set
An observation
Chap 1-26
Data Types
Data
Qualitative
(Categorical)
Quantitative
(Numerical)
Examples:
Marital Status
Political Party
Eye Color
(Defined categories)
Discrete
Examples:
Number of Children
Defects per hour
(Counted items)
Continuous
Examples:
Weight
Voltage
(Measured
characteristics)
Chap 1-27
Data Types
Time Series Data
Ordered data values observed over time
Cross Section Data
Data values observed at a fixed point in time
Chap 1-28
Data Types
Sales (in $1000s)
2003
2004
2005
2006
Atlanta
435
460
475
490
Boston
320
345
375
395
Cleveland
405
390
410
395
Denver
260
270
285
280
Time
Series
Data
Cross Section
Data
Chap 1-29
Data Measurement Levels

Measurements
Rankings
Ordered Categories
Categorical Codes
ID Numbers
Category Names
Ratio/Interval Data
Ordinal Data
Nominal Data
Highest Level
Complete Analysis
Higher Level
Mid-level Analysis
Lowest Level
Basic Analysis
Chap 6-30
Statistics and Ethics
People often use statistics to persuade others to

their opinions, it can lead to the misuse of statistics
in several ways:
Choosing a sample that ensures results in favoring your desired outcome

(biased sample)
Making the differences seems greater than they actually look in graphs
Chap 1-31
Chapter Summary
Reviewed key data collection methods
Introduced key definitions:

Primary vs. Secondary data types
Qualitative vs. Quanitative data
Time Series vs. Cross-Sectional data
Examined descriptive vs. inferential statistics
Described different sampling techniques
Reviewed data types and measurement levels
Chap 1-32
Copyright
The materials of this presentation were mostly
taken from the PowerPoint files accompanied
Business Statistics: A Decision-Making Approach,
7e 2008 Prentice-Hall, Inc.
Chap 6-33

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Business Statistics:

QMIS 120, by Dr. M. Zainal

Describe key data collection methods

Primary vs. Secondary data types

Qualitative vs. Qualitative data

Time Series vs. Cross-Sectional data

Explain the difference between descriptive and

Describe different sampling methods

QMIS 120, by Dr. M. Zainal

Tools of Business Statistics

Numerical facts:Average income of Kuwaiti families.

Group of methods used to collect, organize,

QMIS 120, by Dr. M. Zainal

Tools of Business Statistics

Opening a business without assessing the need

QMIS 120, by Dr. M. Zainal

Tools of Business Statistics

Collecting, presenting, and describing data

Drawing conclusions and/or making decisions

QMIS 120, by Dr. M. Zainal

Tools of Business Statistics

Consists of methods for organizing, displaying, and

QMIS 120, by Dr. M. Zainal

Tools of Business Statistics

Consists of methods that use sample results to help

QMIS 120, by Dr. M. Zainal

e.g., Survey, Observation,

e.g., Charts and graphs

e.g., Sample mean =

QMIS 120, by Dr. M. Zainal

Making statements about a population by

QMIS 120, by Dr. M. Zainal

e.g., Estimate the population mean

e.g., Use sample evidence to test

QMIS 120, by Dr. M. Zainal

Tools for Collecting Data

QMIS 120, by Dr. M. Zainal

Direct observation and

Survey Design Steps

Define the issue

what are the purpose and objectives of the survey?

Define the population of interest

Develop survey questions

make questions clear and unambiguous

use universally-accepted definitions

limit the number of questions

QMIS 120, by Dr. M. Zainal

Survey Design Steps

Pre-test the survey

pilot test with a small group of participants

assess clarity and length

Determine the sample size and sampling

Select sample and administer the survey

QMIS 120, by Dr. M. Zainal

Select from a short list of defined choices

Example: Major: __business __liberal arts

Respondents are free to respond with any value, words, or

Example: What did you like best about this course?

Questions about the respondents personal characteristics

Example: Gender: __Female __ Male

Populations and Samples

A Population is the set of all items or individuals

All likely voters in the next election

Example: Major: business liberal arts

Example: Gender: Female Male