Business Statistics

Preface vii


About the Authors xiii


Unit I Introduction


1 Introduction to Statistics and Business Analytics 1-1


Decision Dilemma: Statistics Describe the State of Business in India’s Countryside 1-1


Introduction 1-2


1.1 Basic Statistical Concepts 1-3


1.2 Variables, Data, and Data Measurement 1-5


Thinking Critically About Statistics in Business Today 1.1 1-6


1.3 Big Data 1-10


1.4 Business Analytics 1-12


1.5 Data Mining and Data Visualization 1-14


Decision Dilemma Solved 1-17


Key Considerations 1-17


Why Statistics is Relevant 1-17


Summary of Learning Objectives / Key Terms / Supplementary Problems / Exploring the Databases with Business Analytics Case: Canadian Farmers Dealing with Stress 1-20


Big Data Case 1-21


Using the Computer 1-21


2 Visualizing Data with Charts and Graphs 2-1


Decision Dilemma: Energy Consumption Around the World 2-1


Introduction 2-2


2.1 Frequency Distributions 2-3


2.2 Quantitative Data Graphs 2-7


2.3 Qualitative Data Graphs 2-12


Thinking Critically About Statistics in Business Today 2.1 2-13


2.4 Charts and Graphs for Two Variables 2-18


2.5 Visualizing Time-Series Data 2-22


Decision Dilemma Solved 2-26


Key Considerations 2-27


Why Statistics is Relevant 2-27


Summary of Learning Objectives / Key Terms /


Supplementary Problems / Exploring the Databases with Business Analytics Case: Southwest Airlines and WestJet Airlines Ltd. 2-33


Big Data Case 2-35


Using the Computer 2-35


3 Descriptive Statistics 3-1


Decision Dilemma: Laundry Statistics 3-1


Introduction 3-2


3.1 Measures of Central Tendency 3-2


3.2 Measures of Variability 3-10


Thinking Critically About Statistics in Business Today 3.1 3-11


Thinking Critically About Statistics in Business Today 3.2 3-22


3.3 Measures of Shape 3-24


3.4 Business Analytics Using Descriptive Statistics 3-29


Decision Dilemma Solved 3-31


Key Considerations 3-31


Why Statistics is Relevant 3-31


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Coca-Cola Develops the African Market 3-37


Big Data Case 3-38


Using the Computer 3-38


4 Probability 4-1


Decision Dilemma: Education, Gender, and Employment 4-1


Introduction 4-2


4.1 Introduction to Probability 4-2


4.2 Structure of Probability 4-5


4.3 Marginal, Union, Joint, and Conditional Probabilities 4-11


4.4 Addition Laws 4-13


4.5 Multiplication Laws 4-20


4.6 Conditional Probability 4-26


Thinking Critically About Statistics in Business Today 4.1 4-27


4.7 Revision of Probabilities: Bayes’ Rule 4-31


Decision Dilemma Solved 4-35


Key Considerations 4-36


Why Statistics is Relevant 4-36


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics


Case: Bluewater Recycling Association Offers Bigger Bins 4-41


Big Data Case 4-42


Unit II Distributions and Sampling


5 Discrete Distributions 5-1


Decision Dilemma: Life with a Cellphone 5-1


Introduction 5-2


5.1 Discrete Versus Continuous Distributions 5-2


5.2 Describing a Discrete Distribution 5-4


5.3 Binomial Distribution 5-8


Thinking Critically About Statistics in Business Today 5.1 5-11


5.4 Poisson Distribution 5-19


Thinking Critically About Statistics in Business Today 5.2 5-20


5.5 Hypergeometric Distribution 5-28


Decision Dilemma Solved 5-32


Key Considerations 5-33


Why Statistics is Relevant 5-33


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Whole Foods Market Grows Through Mergers and Acquisitions 5-38


Big Data Case 5-39


Using the Computer 5-39


6 Continuous Distributions 6-1


Decision Dilemma: CSX Corporation 6-1


Introduction 6-2


6.1 Uniform Distribution 6-2


6.2 Normal Distribution 6-6


Thinking Critically About Statistics in Business Today 6.1 6-6


6.3 Using the Normal Curve to Approximate Binomial Distribution Problems 6-17


6.4 Exponential Distribution 6-23


Decision Dilemma Solved 6-27


Key Considerations 6-28


Why Statistics is Relevant 6-28


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Mercedes Goes after Younger Buyers 6-33


Big Data Case 6-33


Using the Computer 6-34


7 Sampling and Sampling Distributions 7-1


Decision Dilemma: What is the Attitude of Maquiladora Workers? 7-1


Introduction 7-2


7.1 Sampling 7-2


Thinking Critically About Statistics in Business Today 7.1 7-9


7.2 Sampling Distribution of x¯ 7-14


7.3 Sampling Distribution of p 7-23


Decision Dilemma Solved 7-26


Key Considerations 7-26


Why Statistics is Relevant 7-26


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics


Case: 3M 7-30


Big Data Case 7-31


Using the Computer 7-31


Unit III Making Inferences About Population Parameters


8 Statistical Inference: Estimation for Single Populations 8-1


Decision Dilemma: Batteries and Bulbs: How Long Do They Last? 8-1


Introduction 8-2


8.1 Estimating the Population Mean Using the z Statistic (σ Known) 8-3


8.2 Estimating the Population Mean Using the t Statistic (σ Unknown) 8-10


Thinking Critically About Statistics in Business Today 8.1 8-10


8.3 Estimating the Population Proportion 8-16


Thinking Critically About Statistics in Business Today 8.2 8-16


8.4 Estimating the Population Variance 8-20


8.5 Estimating Sample Size 8-23


Decision Dilemma Solved 8-27


Key Considerations 8-28


Why Statistics is Relevant 8-28


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: The Container Store 8-32


Big Data Case 8-34


Using the Computer 8-34


9 Statistical Inference: Hypothesis Testing for Single Populations 9-1


Decision Dilemma: Business Referrals 9-1


Introduction 9-2


9.1 Introduction to Hypothesis Testing 9-3


9.2 Testing Hypotheses About a Population Mean Using the z Statistic (σ Known) 9-12


9.3 Testing Hypotheses About a Population Mean Using the t Statistic (σ Unknown) 9-19


9.4 Testing Hypotheses About a Proportion 9-25


Thinking Critically About Statistics in Business Today 9.1 9-25


9.5 Testing Hypotheses About a Variance 9-30


9.6 Solving for Type II Errors 9-33


Decision Dilemma Solved 9-40


Key Considerations 9-41


Why Statistics is Relevant 9-41


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: A&W’s New Menu Targets Meat Alternatives 9-46


Big Data Case 9-47


Using the Computer 9-47


10 Statistical Inferences About Two Populations 10-1


Decision Dilemma: L.L. Bean 10-1


Introduction 10-2


10.1 Hypothesis Testing and Confidence Intervals About the Difference in Two Means Using the z Statistic: Population Variances Known 10-4


10.2 Hypothesis Testing and Confidence Intervals About the Difference in Two Means Using the t Statistic: Independent Samples with Population Variances Unknown 10-12


Thinking Critically About Statistics in Business Today 10.1 10-13


10.3 Statistical Inferences for Two Related Populations 10-22


10.4 Statistical Inferences About Two Population Proportions, p1 − p2 10-31


10.5 Testing Hypotheses About Two Population Variances 10-37


Decision Dilemma Solved 10-44


Key Considerations 10-45


Why Statistics is Relevant 10-45


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics


Case: Seitz LLC: Producing Quality Gear-Driven and Linear-Motion Products 10-52


Big Data Case 10-53


Using the Computer 10-53


11 Analysis of Variance and Design of Experiments 11-1


Decision Dilemma: Job and Career Satisfaction of Foreign Self-Initiated Expatriates 11-1


Introduction 11-2


11.1 Introduction to Design of Experiments 11-3


11.2 The Completely Randomized Design (One-Way ANOVA) 11-5


Thinking Critically About Statistics in Business Today 11.1 11-6


11.3 Multiple Comparison Tests 11-16


11.4 The Randomized Block Design 11-24


11.5 A Factorial Design (Two-Way ANOVA) 11-33


Decision Dilemma Solved 11-45


Key Considerations 11-46


Why Statistics is Relevant 11-46


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: ASCO Valve Canada’s RedHat Valve 11-52


Big Data Case 11-53


Using the Computer 11-54


Unit IV Regression Analysis and Forecasting


12 Correlation and Simple Regression Analysis 12-1


Decision Dilemma: Predicting International Hourly Wages by the Price of a Big MacTM 12-1


Introduction 12-2


12.1 Correlation 12-2


Thinking Critically About Statistics in Business Today 12.1 12-4


12.2 Introduction to Simple Regression Analysis 12-6


12.3 Determining the Equation of the Regression Line 12-8


12.4 Residual Analysis 12-14


12.5 Standard Error of the Estimate 12-21


12.6 Coefficient of Determination 12-24


12.7 Hypothesis Tests for the Slope of the Regression Model and for the Overall Model 12-27


12.8 Estimation 12-32


12.9 Using Regression to Develop a Forecasting Trend Line 12-36


12.10 Interpreting the Output 12-42


Decision Dilemma Solved 12-43


Key Considerations 12-43


Why Statistics is Relevant 12-44


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Caterpillar, Inc. 12-50


Big Data Case 12-51


Using the Computer 12-52


13 Multiple Regression Analysis 13-1


Decision Dilemma: Will You Like Your New Job? 13-1


Introduction 13-2


13.1 The Multiple Regression Model 13-2


13.2 Significance Tests of the Regression Model and Its Coefficients 13-10


13.3 Residuals, Standard Error of the Estimate, and R2 13-14


Thinking Critically About Statistics in Business Today 13.1 13-14


13.4 Interpreting Multiple Regression Computer Output 13-20


13.5 Using Regression Analysis: Some Caveats 13-23


Decision Dilemma Solved 13-27


Key Considerations 13-28


Why Statistics is Relevant 13-28


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Starbucks Introduces Debit Card 13-32


Big Data Case 13-34


Using the Computer 13-34


14 Building Multiple Regression Models 14-1


Decision Dilemma: Predicting CEO Salaries 14-1


14.1 Nonlinear Models: Mathematical Transformation 14-2


Thinking Critically About Statistics in Business Today 14.1 14-4


14.2 Indicator (Dummy) Variables 14-16


14.3 Model Building: Search Procedures 14-21


14.4 Multicollinearity 14-31


14.5 Logistic Regression 14-34


Decision Dilemma Solved 14-41


Key Considerations 14-41


Why Statistics is Relevant 14-42


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Ceapro Turns Oats into Beneficial Products 14-48


Big Data Case 14-49


Using the Computer 14-49


15 Time-Series Forecasting and Index Numbers 15-1


Decision Dilemma: Forecasting Air Pollution 15-1


Introduction 15-2


15.1 Introduction to Forecasting 15-2


15.2 Smoothing Techniques 15-7


15.3 Trend Analysis 15-17


Thinking Critically About Statistics In Business Today 15.1 15-17


15.4 Seasonal Effects 15-24


15.5 Autocorrelation and Autoregression 15-29


15.6 Index Numbers 15-36


Decision Dilemma Solved 15-42


Key Considerations 15-45


Why Statistics is Relevant 15-45


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Dofasco Changes Its Style 15-52


Big Data Case 15-53


Using the Computer 15-53


Unit V Special Topics


16 A nalysis of Categorical Data 16-1


Decision Dilemma: Selecting Suppliers in the Electronics Industry 16-1


Introduction 16-2


16.1 Chi-Square Goodness-of-Fit Test 16-2


16.2 Contingency Analysis: Chi-Square Test of Independence 16-9


Thinking Critically About Statistics in Business Today 16.1 16-10


Decision Dilemma Solved 16-16


Key Considerations 16-16


Why Statistics is Relevant 16-17


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Foot Locker in the Shoe Mix 16-20


Big Data Case 16-21


Using the Computer 16-21


17 Nonparametric Statistics 17-1


Decision Dilemma: How is the Doughnut Business Doing? 17-1


Introduction 17-2


17.1 Runs Test 17-3


17.2 Mann-Whitney U Test 17-8


Thinking Critically About Statistics in Business Today 17.1 17-8


17.3 Wilcoxon Matched-Pairs Signed Rank Test 17-16


17.4 Kruskal-Wallis Test 17-23


17.5 Friedman Test 17-27


17.6 Spearman’s Rank Correlation 17-32


Decision Dilemma Solved 17-36


Key Considerations 17-37


Why Statistics is Relevant 17-37


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Schwinn 17-43


Big Data Case 17-44


Using the Computer 17-45


18 Statistical Quality Control 18-1


Decision Dilemma: Italy’s Piaggio Makes a Comeback 18-1


Introduction 18-2


18.1 Introduction to Quality Control 18-2


Thinking Critically About Statistics in Business Today 18.1 18-7


18.2 Process Analysis 18-12


18.3 Control Charts 18-18


Decision Dilemma Solved 18-32


Key Considerations 18-32


Why Statistics is Relevant 18-33


Summary of Learning Objectives / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics Case: Catalyst Paper Introduces Microsoft Dynamics CRM 18-38


Big Data Case 18-39


19 Decision Analysis 19-1


Decision Dilemma: Decision-Making at the CEO Level 19-1


Introduction 19-2


19.1 The Decision Table and Decision-Making Under Certainty 19-3


19.2 Decision-Making Under Uncertainty 19-5


Thinking Critically About Statistics in Business Today 19.1 19-5


19.3 Decision-Making Under Risk 19-13


19.4 Revising Probabilities in Light of Sample Information 19-21


Decision Dilemma Solved 19-29


Key Considerations 19-30


Why Statistics is Relevant 19-30


Summary of Learning Objectives / Key Terms / Formula / Supplementary Problems / Exploring the Databases with Business Analytics Case: Fletcher-Terry: On the Cutting Edge 19-34


Big Data Case 19-35


Appendix A Tables A-1


Appendix B Making Inferences About Population Parameters: A Brief Summary B-1


Appendix C Answers to Selected Odd-Numbered Quantitative Problems C-1


Glossary G-1


Index I-1