UNIVERSITY OF BOTSWANA
DEPARTMENT OF STATISTICS
STA 114: BUSINESS STATISTICS I
LECTURE NOTES
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Introduction
• The word statistics as we understand it
today refers to the collection, organizing
and interpreting numerical information (also
called data) with a view to explaining
salient features that may exist between
events and hence drawing meaningful
conclusions.
However the occurrence of these events
cannot be predicted with certainty.
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Introduction cont…
The word statistics has two
meaning:
i) A collection of numerical information
is called statistics.
ii) The science of collecting,
organizing, presenting, analysing and
interpreting data to assist in making
more effective decisions.
3
Introduction cont…
Statistics is a useful tool for policy
formulation and decision making in all
fields.
In the Business field, decisions that affect
profitability and sustainability of a business
venture are made at all levels of a
business based on statistics
• The aim of this course is to equip you with
statistical methods that are widely used for
analysing and solving business problems.
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Introduction cont…
Examples of Uses of Statistics
Of many, few examples of uses of statistics are
given below:
i. Where to locate your stores for maximum
profitability?
ii. Which advertising media is most effective?
iii. Who are the company’s high value customers?
iv. Whether females buy more of a particular
product than males
v. Forecasting the sales of a company in a
particular season or year 5
Introduction cont…
In this Chapter, we briefly discuss
elementary statistical concepts
that provide the necessary
foundation for more advanced
topics in any area of statistics.
Further information on each of the
concepts can be found in the
recommended textbooks or any
introductory statistical textbooks.
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1.2 BASIC CONCEPTS AND DEFINITION
Data: numerical values , facts
measurements or observations that arise
from variables
Examples:
Birth and Death registration data
STA 114B register
Tourism statistics
Transport statistics
Census: Collecting data from all population
members.
Survey: Collecting data from sample members
only.
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BASIC CONCEPTS AND DEFINITION
Population: The entire collection of objects
or people from which information is required
is called population. Individual members of
the population are called units.
Sample: a subset of the population.
Sample Data: The data collected from
survey are often referred to as a sample
(short for sample data).
Variable: A characteristic that assumes
different
values for different entities
e.g. age, gender, distance
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Types of Variables
Variable
Quantitati Qualitati
ve ve
Continuo
Discrete Nominal Ordinal
us
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Types of variables
Quantitative Variables: variables that
yield measurable values or scores and
frequencies e.g. heights and weights of
first year students at a university,
women employed in a company, time
taken to complete a project.
QualitativeVariables: when the values
of the variables cannot be expressed
numerically but rather are descriptive
in nature or just a classification, they
are described as qualitative variables.
Example: gender (male, female).
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Types of quantitative variables
A discrete variable is characteristic of an
object that can take only countable finite
or infinite values
A continuous variable has values that
arise out of a measurement. These values
are uncountable, i.e. given an interval a
continuous variable will take any value
within that interval.
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Scales of Measurement
Apart from measurement of data in terms of discrete or
continuous form as shown above, it is important to
appreciate that different levels or scales of measurement
are used for different types of variables.
This is important since choice of method of statistical data
analysis depends partly on the nature of the data available
and the scale of measurement that applies.
Two factors that determine amount of information that can
be provided by a variable:
◦ a) Measurement error: There is obviously some
measurement error involved in every measurement
◦ b) Variable’s type of Scale of measurement
Specifically, a variable is classified as having either
(i) nominal, (ii) ordinal, (iii) interval or (iv) ratio
scales of measurement
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Measurement Scales
Nominal scale: The observations simply define
qualitative categories. That is, can be measured
only in terms of whether the individual items belong
to some distinctively different categories but, we
cannot quantify or even rank order those categories.
For example, all we can say is that two individuals
are different in terms of variable X (e.g., they are of
different race) but, we cannot say which one "has
more" of the quality represented by the variable.
Examples of variables with a nominal scale:
Gender, race, colour, city, marital status, house
number
Remark: Basic arithmetic operations cannot be
aplied in the case of nominal data
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Measurement Scales
Ordinal scale allows us to rank order the
items we measure in terms of which has less
and which has more of the quality represented
by the variable, but still they do not allow us to
say "how much more."
That is a scale of measurement for a variable is
ordinal when the data have properties of
nominal data but, the variable can now be used
to arrange data in a meaningful order
Example: The socioeconomic status of
families: Know that upper-middle class is higher
than middle but, we cannot say that it is, for
example, 18% higher.
Remark: Even if observations are given
numeric codes indicating rank order, basic14
Measurement Scales
Interval scale allows us not only to rank order the
items measured but, also to quantify and compare the
sizes of differences between them.
That is a scale of measurement for a variable is interval
when the data have properties of ordinal data but, the
interval between observations can be expressed in
terms of a fixed unit of measurement
Example: Temperature, with fixed unit of measurement
as a degree Fahrenheit or Celsius. We can say that a
temperature of 40 degrees is higher than a temperature
of 30 degrees and, that an increase from 20 to 40
degrees is twice as much as an increase from 30 to 40
degrees.
Note: The value of zero on an interval scale is not
meaningful in the sense of indicating that nothing exists
Remark: Data on interval scale are always numeric
and, hence, the basic arithmetic operations do make15
Measurement Scales
Ratio scale: Has all the properties of interval variable but,
in addition, the ratio of two observations is meaningful
In this case, the value of zero is meaningful and indicates
that nothing exists for the variable at that point
Thus, allows for statements such as x is two times more
than y.
Examples: Height, weight, distance, time, space, cost. We
can compare rations of these measurements.
For example, as the Kelvin temperature scale is a ratio
scale, not only can we say that a temperature of 200
degrees is higher than one of 100 degrees, we can
correctly state that it is twice as high.
Remark a): Since the ratio data have all the properties of
interval data, the basic arithmetic operations do make
sense
Remark b): Most statistical data analysis procedures do
not distinguish between the interval and ratio properties of
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the measurement scales.
Measurement Scales
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Classification of Numerical Data
Data
Discrete data Continuous
data
Nomina Ordinal
Interva Ratio
l Interval Ratio
Scale l scale scale
scale scale scale
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Exercises
Inthe Business field, decisions that
affect profitability and sustainability of a
business venture are generally made at
all levels of a business based on
statistics. (Yes/No)
List three examples of uses of statistics.
List three main types of data sources.
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Exercises
Define variable with suitable examples.
Nominal scale observations simply define --Fill
the blank-----. (Ans. qualitative categories)
Data on interval scale are always numeric and,
hence, the basic arithmetic operations do make
sense (Yes/No)
What is the difference between ratio and interval
scales of measurement? Give relevant examples.
Define population.
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