Business Statistics For Dummies

Book Preface

Have you always been scared to death of statistics? You and just about everyone else! The equations are extremely intimidating, and the terminology sounds so . . . boring.

Why, then, is statistics so important? All business disciplines can be analyzed with statistical principles. Statistics make it possible to analyze real world problems with actual data, so that we can understand if our marketing strategy is really working, or how much a company should charge for its products, or any of a million other practical questions.

Without a formal framework for analyzing these types of situations, it would be impossible to have any confidence in our results. This is where the science of statistics comes in. Far from being an overbearing collection of equations, it is a logical framework for analyzing practical business problems with real-world data.

This book is designed to show you how to apply statistics to practical situations in a step-by-step manner, so that by the time you’re done, you’ll know as much about statistics as people with far more education in this area!

About This Book

All business degrees require at least some statistics courses, and there’s a good reason for that! All business disciplines are empirical by nature, meaning that they need to analyze actual data to be successful. The purpose of this book is to:
✓ Give you the principles on which statistical analysis is based
✓ Provide you with many worked-out examples of these principles so that you can master them
✓ Improve your understanding of the circumstances in which each statistical technique should be used

As a For Dummies title, this book is organized into modules; you can skip around and learn about various statistical techniques in the order that suits you. In cases where the contents of a chapter are based on previous readings, you are guided back to the original material. Along the way, there are many helpful tips and reminders so that you get the most out of each chapter.
I explain each equation in great detail, and all key terms are explained in depth. You will also find a summary of key formulas at the back of the book along with important statistical tables.

This book can’t make you an expert in statistics, but provides you with a way of improving your knowledge very quickly so that you can use statistics in practical settings right away.

Foolish Assumptions

I am willing to make the following assumptions about you as the reader of this book:
✓ You need to use the techniques in this book in a practical setting and have little or no previous experience with statistics.
OR
✓ You’re a student who feels overwhelmed by a traditional statistics course and feels the need for more background. You can benefit from seeing more examples of the material; statistics is a science that can be learned through practice!
OR
✓ You’re simply interested in improving your knowledge of this field. In all of these cases, you’re extremely well motivated and can put as much effort into learning statistics as you need. Congratulations! Your reward for reading this book will be a greater understanding of business statistics.

Icons Used in This Book

The following icons are designed to help you use this book quickly and easily. Be sure to keep an eye out for them.

The Remember icon points to information that’s especially important to remember for exam purposes.
The Tip icon presents information like a memory acronym or some other aid to understanding or remembering material.
When you see this icon, pay special attention. The information that follows may be somewhat difficult, confusing, or harmful.
The Technical Stuff icon is used to indicate detailed information; for some people, it might not be necessary to read or understand.

Contents at a Glance
Introduction ………………………………………………………. 1
Part I: Getting Started with Business Statistics………….. 5
Chapter 1: The Art and Science of Business Statistics ………………………………………….7
Chapter 2: Pictures Tell the Story: Graphical Representations of Data ……………….23
Chapter 3: Finding a Happy Medium: Identifying the Center of a Data Set…………..39
Chapter 4: Searching High and Low: Measuring Variation in a Data Set………………55
Chapter 5: Measuring How Data Sets Are Related to Each Other ………………………..71
Part II: Probability Theory and Probability
Distributions ……………………………………………………. 91
Chapter 6: Probability Theory: Measuring the Likelihood of Events……………………93
Chapter 7: Probability Distributions and Random Variables …………………………….111
Chapter 8: The Binomial, Geometric, and Poisson Distributions……………………….121
Chapter 9: The Uniform and Normal Distributions: So Many Possibilities! ………..139
Chapter 10: Sampling Techniques and Distributions…………………………………………165
Part III: Drawing Conclusions from Samples…………… 185
Chapter 11: Confidence Intervals and the Student’s t-Distribution ……………………187
Chapter 12: Testing Hypotheses about the Population Mean ……………………………201
Chapter 13: Testing Hypotheses about Multiple Population Means…………………..233
Chapter 14: Testing Hypotheses about the Population Mean ……………………………251
Part IV: More Advanced Techniques:
Regression Analysis and Forecasting……………………. 281
Chapter 15: Simple Regression Analysis……………………………………………………………283
Chapter 16: Multiple Regression Analysis: Two or More
Independent Variables …………………………………………………………………………………..309
Chapter 17: Forecasting Techniques: Looking into the Future…………………………..327
Part V: The Part of Tens ……………………………………. 351
Chapter 18: Ten Common Errors That Arise in Statistical Analysis …………………..353
Chapter 19: Ten Key Categories of Formulas for Business Statistics …………………361
Index ……………………………………………………………. 373