Statistics for Managers

Using Microsoft® Excel

4th Edition

Chapter 1

Introduction and Data Collection

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-

Hall, Inc. Chap 1-1
 Chapter Goals
After completing this chapter, you should be
able to:
 Explain key definitions:
♦ Population vs. Sample ♦ Primary vs. Secondary Data
♦ Parameter vs. Statistic ♦ Descriptive vs. Inferential Statistics
 Describe key data collection methods
 Describe different sampling methods
 Probability Samples vs. Nonprobability Samples
 Select a random sample using a random numbers table
 Identify types of data and levels of measurement
 Describe the different types of survey error
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-2
 Why a Manager Needs to
Know about Statistics

To know how to:

 properly present information
 draw conclusions about populations based
on sample information
 improve processes
 obtain reliable forecasts

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-3
 Key Definitions
 A population (universe) is the collection of all
items or things under consideration
 A sample is a portion of the population
selected for analysis
 A parameter is a summary measure that
describes a characteristic of the population
 A statistic is a summary measure computed
from a sample to describe a characteristic of
the population

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-4
 Population vs. Sample

Population Sample

a b cd b c
ef gh i jk l m n gi n
o p q rs t u v w o r u
x y z y

Measures used to describe Measures computed from

the population are called sample data are called
parameters statistics
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-5
 Two Branches of Statistics

 Descriptive statistics
 Collecting, summarizing, and describing data
 Inferential statistics
 Drawing conclusions and/or making decisions
concerning a population based only on sample
data

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-6
 Descriptive Statistics

 Collect data
 e.g., Survey
 Present data
 e.g., Tables and graphs
 Characterize data
X i
 e.g., Sample mean = n

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-7
 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.

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-8
 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

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-9
 Data Sources
Primary Secondary
Data Collection Data Compilation

Print or Electronic

Observation Survey

Experimentation

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-10
 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

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-11
 Types of Samples Used

 Nonprobability Sample
 Items included are chosen without regard to
their probability of occurrence

 Probability Sample
 Items in the sample are chosen on the basis
of known probabilities

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-12
 Types of Samples Used
(continued)

Samples

Non-Probability Probability Samples

Samples

Simple Stratified
Judgement Chunk Random

Systematic Cluster
Quota Convenience

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-13
 Probability Sampling

 Items in the sample are chosen based on

known probabilities

Probability Samples

Simple
Random Systematic Stratified Cluster

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-14
 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

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-15
 Systematic Samples
 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
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-16
 Stratified Samples
 Divide population into two or more subgroups (called
strata) according to some common characteristic
 A simple random sample is selected from each subgroup,
with sample sizes proportional to strata sizes
 Samples from subgroups are combined into one

Population
Divided
into 4
strata

Sample
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-17
 Cluster Samples
 Population is divided into several “clusters,”
each representative of the population
 A simple random sample of clusters is selected
 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

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-18
 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)
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-19
 Types of Data

Data

Categorical Numerical

Examples:
 Marital Status
 Political Party Discrete Continuous
 Eye Color
Examples: Examples:
(Defined categories)
 Number of Children  Weight
 Defects per hour  Voltage
(Counted items) (Measured characteristics)

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-20
 Levels of Measurement
and Measurement Scales
Differences between Highest Level
measurements, true Ratio Data
zero exists Strongest forms of
measurement

Differences between
measurements but no Interval Data
true zero

Ordered Categories
Higher Level
(rankings, order, or Ordinal Data
scaling)

Categories (no Lowest Level

ordering or direction) Nominal Data Weakest form of
measurement
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc.
 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

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-22
 Types of Survey Errors
 Coverage error or selection bias
 Exists if some groups are excluded from the frame and
have no chance of being selected
 Non response error or bias
 People who do not respond may be different from those
who do respond
 Sampling error
 Variation from sample to sample will always exist
 Measurement error
 Due to weaknesses in question design, respondent
error, and interviewer’s effects on the respondent

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-23
 Types of Survey Errors
(continued)

 Coverage error Excluded from

frame
 Non response error Follow up on
nonresponses
 Sampling error
Random
differences from
 Measurement error sample to sample

Bad or leading
question
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-24
 Chapter Summary

 Reviewed why a manager needs to know statistics

 Introduced key definitions:
♦ Population vs. Sample ♦ Primary vs. Secondary data types
♦ Qualitative vs. Qualitative data ♦ Time Series vs. Cross-Sectional data

 Examined descriptive vs. inferential statistics

 Described different types of samples
 Reviewed data types and measurement levels
 Examined survey worthiness and types of survey
errors
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 1-25