Introduction to Statistics

In business world, Statistics is primarily used for summarizing the business data, for drawing conclusion from those data, for making reliable forecasts about business activities and for improving the business processes.

Terminology

• Variable is a characteristic of an item or individual
• Data are the different values associated with a variable
• Population is a set of all data that you want to draw conclusion about
• Sample is a portion of population selected for analysis

Types of Data

1.      Categorical or Qualitative

2.      Numerical or Quantitative

·         Continuous

·         Discrete

Various Measurement Scales

Stanley Smith Stevens proposed his theory in a 1946 Science article titled "On the theory of scales of measurement". Stevens claimed that all measurement in science was conducted using four different types of scales. Stevens unified both qualitative (which are described by his "nominal" scale) and quantitative (to a different degree, all the rest of his scales).

1)      Non-metric Scale

a)      Nominal Scale: Qualitative type of data e.g. gender is measured on nominal scale. It includes both dichotomous and non- dichotomous nominal. One can assign the numbers on this scale but these are just the labels

b)      Ordinal Scale: Ordinal scales record information about the rank order of scores. Ordinal measurements describe order, but not relative size or degree of difference between the items measured

2)      Metric Scale

a)      Interval Scale: Interval scales tell us about the order of data points, and the size of the intervals in between data points. Quantitative attributes are all measurable on interval scales, as any difference between the levels of an attribute can be multiplied by any real number to exceed or equal another difference. Zero is relative. E.g. temperature, rating.

b)      Ratio Scale: A ratio scale is an interval scale with a true zero point. Most measurement in the physical sciences and engineering is done on ratio scales. Zero is zero – absolute. E.g. Sales

Organization of Numerical Data

1)      Ordered Array:

a)      Stem and leaf display: A basic stem-and-leaf display contains two columns separated by a vertical line. The left column contains the stems and the right column contains the leaves. Stem-and-leaf displays are useful for displaying the relative density and shape of the data. They are also useful for highlighting outliers and finding the mode. However, stem-and-leaf displays are only useful for moderately sized data sets (around 15-150 data points).

2)      Frequency Distributions:

a)      Tables

b)      Histograms: Histogram is one of the tool of Seven Basic Tools of Quality