Statistics for business decision making and analysis robert stine and foster chapter 01

Chapter Introduction Copyright © 2011 Pearson Education, Inc 1.1 What is Statistics? Some Basic Ideas  Statistics as a discipline  Questions we can answer with statistics  Variation, patterns and models of 18 Copyright © 2011 Pearson Education, Inc 1.1 What is Statistics? Statistics as a Discipline  Science and art of extracting answers from data  A statistic is a property of data  Statistics can be numbers (like an average) or graphs that display information (like a timeplot) of 18 Copyright © 2011 Pearson Education, Inc 1.1 What is Statistics? Typical Questions Statistics Help to Answer  Which customers are interested in an MP3 player?  How much are customers willing to pay for an MP3 player?  Why does a shopper choose a particular box of cereal? of 18 Copyright © 2011 Pearson Education, Inc 1.1 What is Statistics? Variation, Patterns and Models  Variation refers to differences among items / individuals or fluctuations over time  Patterns are systematic or predictable features in data  Models break down variation into a pattern and unexplained variation of 18 Copyright © 2011 Pearson Education, Inc 1.1 What is Statistics? Statistical Models  Key to extracting answers from data  Good models simplify reality  Finding real patterns helps us to understand data, plan for the future, and make better decisions of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Predicting Employment of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Predicting Employment  Back in September 2005, how could you forecast employment in October?  Use monthly employment data for U.S beginning January 2003  Prepare a timeplot (a chart of values ordered in time) to display monthly employment data of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Timeplot of Employment Data 10 of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Linear Pattern and Region of Uncertainty 11 of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Conclusions  Extrapolating the pattern (line) into the future provides a forecast for October  Actual employment for October is less than expected and below the anticipated range  This surprising result breaks from the pattern and deserves attention (the Katrina effect?) 12 of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Pricing a Car 13 of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Pricing a Car  Is $22,000 too much to spend on a 2002 BMW 325i with 53,000 miles?  Get prices for a sample of certified used BMW’s from the Philadelphia area in November 2005  Prepare a scatterplot (a graph showing pairs of values) of price versus mileage for this sample 14 of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Scatterplot of Price Versus Mileage 15 of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Line and Region of Uncertainty 16 of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Conclusions  The range of uncertainty is so wide because factors other than mileage affect price  This model uses all of the data to answer the question about one used car (borrowing strength)  $22,000 isn’t too much to pay (it is less than predicted by our line and within the range) 17 of 18 Copyright © 2011 Pearson Education, Inc 1.3 How to Use This Book The Four M’s     Motivation: reason for answering a question or solving a problem Method: plan for addressing the problem Mechanics: performing the calculations, generating graphs and displays Message: explanation of conclusions 18 of 18 Copyright © 2011 Pearson Education, Inc  ... helps us to understand data, plan for the future, and make better decisions of 18 Copyright © 2011 Pearson Education, Inc 1.2 Previews Predicting Employment of 18 Copyright © 2011 Pearson Education,... with statistics  Variation, patterns and models of 18 Copyright © 2011 Pearson Education, Inc 1.1 What is Statistics? Statistics as a Discipline  Science and art of extracting answers from data...  Statistics can be numbers (like an average) or graphs that display information (like a timeplot) of 18 Copyright © 2011 Pearson Education, Inc 1.1 What is Statistics? Typical Questions Statistics