Over 100 years ago H.G. Wells commented "statistical thinking will one day be as necessary as the ability to read and write". As we journey through the new millennium, the issue facing business managers is not a shortage of information but how to use the available information to make better decisions.
Managers need an understanding of statistics for the following four key
1. To know how to properly present and describe information
2. To know how to draw conclusions about large populations based only on information obtained from samples
3. To know how to improve processes
4. To know how to obtain reliable forecasts
Historically, the growth and development of modern statistics can be traced
to three separate phenomena: the needs of government to collect data on
its citizenry, the development of the mathematics of probability theory, and the
advent of the computer. Total Quality management is the application of
statistical methods and the use of statistical thinking on the part of managers
throughout a company. Statistical thinking is defined as thought processes
that focus on ways to understand, manage, and reduce variation.
Statistical thinking includes the recognition that data are inherently
variable and that the identification, measurement, control. and reduction of
variation provide opportunities for quality improvement.
Descriptive statistics can be defined as those methods involving the collection, presentation, and characterization of a set of data in order to describe the various features of that set of data properly. Inferential statistics can be defined as those methods that make possible the estimation of a characteristic of a population or the making of a decision concerning a population based only on sample results.
A population is the totality of items or things under consideration.
A sample is the portion of the population that is selected for analysis.
A parameter is a summary measure that is computed to describe a characteristic of an entire population.
(P - parameter, P-population)
A statistic is a summary measure that is computer to describe a characteristic from only a sample of the population. (S - statistic, S- Sample)
Reasons for data collection:
needed to provide the necessary input to a survey
needed to provide the necessary input to a study
needed to measure performance of an ongoing service or production process
needed to evaluate conformance to standards
needed to assist in formulating alternative courses of action in a decision-making process
needed to satisfy our curiosity
Methods of data collection:
obtain data already published
design an experiment to obtain the necessary data
conduct a survey
make observations through an observational study.