1. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-1 Inferential Statistics for Forecasting Dr. Ghada Abo-zaid Inferential Statistics for Forecasting Dr. Ghada Abo-zaid

2. Learning Outcomes Know statistical terms such as population, sample, variable, data, parameter,...etc. Know the difference between descriptive statistics and inferential statistics. Identify the different types of data (e.g. nominal, ordinal, interval, and ratio) Summarize the data as an indicator for decision making. Know the features of normal distribution. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-2

3. Test the normality of data set. Select the appropriate statistical model for estimating the parameter from a sample (e.g. simple linear regression, multiple regression model) Know the concept of hypothesis test. recognize the difference between type I and type II error. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-3

4. Select the appropriate test for numeric data according to its distribution as well as how many samples do you have? (e.g. t-test, Z- test, Interpret the obtained results and set a statistical report. Computer Lab: Using SPSS software. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-4

5. © 2002 Prentice-Hall, Inc.Chap 1-5 Basic Business Statistics (8 th Edition) Chapter 1 Introduction and Data Collection

6. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-6 Chapter Topics Why a manager needs to know about statistics The growth and development of modern statistics Key definitions Descriptive versus inferential statistics

7. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-7 Chapter Topics Why data are needed Types of data and their sources Design of survey research Types of sampling methods Types of survey errors (continued)

8. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-8 Why a Manager Needs to Know about Statistics To know how to properly present information To know how to draw conclusions about populations based on sample information To know how to improve processes To know how to obtain reliable forecasts

9. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-9 The Growth and Development of Modern Statistics Needs of government to collect data on its citizens The development of the mathematics of probability theory The advent of the computer

10. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-10 Key Definitions A population (universe) is the collection of things under consideration A sample is a portion of the population selected for analysis A parameter is a summary measure computed to describe a characteristic of the population A statistic is a summary measure computed to describe a characteristic of the sample

11. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-11 Population and Sample PopulationSample Use parameters to summarize features Use statistics to summarize features Inference on the population from the sample

12. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-12 Statistical Methods Descriptive statistics Collecting and describing data Inferential statistics Drawing conclusions and/or making decisions concerning a population based only on sample data

13. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-13 Descriptive Statistics Collect data e.g. Survey Present data e.g. Tables and graphs Characterize data e.g. Sample mean =

14. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-14 Inferential Statistics Estimation e.g.: Estimate the population mean weight using the sample mean weight Hypothesis testing e.g.: Test the claim that the population mean weight is 120 pounds Drawing conclusions and/or making decisions concerning a population based on sample results.

15. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-15 Why we need data?

16. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-16 Why We Need Data To provide input to survey To provide input to study To measure performance of service or production process To evaluate conformance to standards To assist in formulating alternative courses of action To satisfy curiosity

17. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-17 What is data sources? What is data sources?

18. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-18 Data Sources Primary Data Collection Secondary Data Compilation Observation Experimentation Survey Print or Electronic

19. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-19 Types of Data

20. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-20 Design of Survey Research Choose an appropriate mode of response Reliable primary modes Personal interview Telephone interview Mail survey Less reliable self-selection modes (not appropriate for making inferences about the population) Television survey Internet survey Printed survey on newspapers and magazines Product or service questionnaires

21. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-21 Design of Survey Research Identify broad categories List complete and non-overlapping categories that reflect the theme Formulate accurate questions Make questions clear and unambiguous. Use universally-accepted definitions Test the survey Pilot test the survey on a small group of participants to assess clarity and length (continued)

22. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-22 Design of Survey Research Write a cover letter State the goal and purpose of the survey Explain the importance of a response Provide assurance of respondent’s anonymity Offer incentive gift for respondent participation (continued)

23. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-23 Reasons for Drawing a Sample Less time consuming than a census Less costly to administer than a census Less cumbersome and more practical to administer than a census of the targeted population

24. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-24 Types of Sampling Methods Quota Samples Non-Probability Samples JudgementChunk Probability Samples Simple Random Systematic Stratified Cluster

25. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-25 Probability Sampling Subjects of the sample are chosen based on known probabilities Probability Samples Simple Random SystematicStratifiedCluster

26. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-26 Simple Random Samples Every individual or item from the frame has an equal chance of being selected Selection may be with replacement or without replacement Samples obtained from table of random numbers or computer random number generators

27. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-27 Decide on sample size: n Divide frame of N individuals into groups of k individuals: k=n/n Randomly select one individual from the 1 st group Select every k-th individual thereafter Systematic Samples N = 64 n = 8 k = 8 First Group

28. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-28 Stratified Samples Population divided into two or more groups according to some common characteristic Simple random sample selected from each group The two or more samples are combined into one

29. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-29 Cluster Samples Population divided into several “clusters,” each representative of the population Simple random sample selected from each The samples are combined into one Population divided into 4 clusters.

30. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-30 Advantages and Disadvantages Simple random sample and systematic sample Simple to use May not be a good representation of the population’s underlying characteristics Stratified sample Ensures representation of individuals across the entire population Cluster sample More cost effective Less efficient (need larger sample to acquire the same level of precision)

31. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-31 Evaluating Survey Worthiness What is the purpose of the survey? Is the survey based on a probability sample? Coverage error – appropriate frame Nonresponse error – follow up Measurement error – good questions elicit good responses Sampling error – always exists

32. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-32 Types of Survey Errors Coverage error Non response error Sampling error Measurement error Excluded from frame. Follow up on non responses. Chance differences from sample to sample. Bad Question!

33. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-33 Chapter Summary Addressed why a manager needs to know about statistics Discussed the growth and development of modern statistics Addressed the notion of descriptive versus inferential statistics Discussed the importance of data

34. Basic Business Statistics, 8e © 2002 Prentice-Hall, Inc. Chap 1-34 Chapter Summary Defined and described the different types of data and sources Discussed the design of survey Discussed types of sampling methods Described different types of survey errors (continued)