Chapter 1

The Where, Why,

and How of Data
Collection

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 1
Learning Outcomes

1. Know the key data collection methods.

2. Know the difference between a population and a
sample.
3. Understand the similarities and differences
between different sampling methods.
4. Understand how to categorize data by type and
level of measurement.

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 2
1.1 What is Business Statistics?
A collection of procedures and techniques
used to convert data into meaningful
information in a business environment

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 3
What We Will Learn
DATA ANALYSIS
The gathering, display, and summary of data

PROBABILITY
The laws of chance in and out of the casino

STATISTICAL INFERENCE
The science of drawing statistical conclusions from
specific data, using a knowledge of probability

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 4
Data
Variables
Observations

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 5
Statistical Procedures - Descriptive
• Descriptive Statistics: Procedures and
techniques designed to DESCRIBE data

• Charts, graphs,
tables (Ch. 2)

N
• Numerical åx i
Sum of all data values
measures (Ch. 3) Average = i =1
=
N Number of data values
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 6
Statistical Procedures - Inferential
• Inferential Statistics: Tools and techniques that help
decision makers to draw INFERENCES from a set
of data
• Estimation (Ch. 8)
Ex: Estimate the average starting salary of all
MiraCosta graduates based on the average
income of a sample of 2018 graduates.
• Hypothesis Testing (Ch. 9)
Ex: Use sample evidence to test the claim that the
average starting salary of a MiraCosta graduate
exceeds $45,000 per year.
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 7
Business Statistics & Careers
• U.S. News & World Report best jobs:
– Statistician, Operations-Research Analyst
– 30% job growth
• Median Statistician Salary: $71,361
• Other related careers:
✓Actuaries ✓Data Analysts
✓Auditors ✓Marketing Managers
✓Budget Analysts ✓Operations Mgmt
✓Market Research ✓Financial Analysts

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 8
1.2 Procedures for Collecting
Data
Data Collection Techniques

Experiments
Telephone surveys

Written
questionnaires and
surveys

Direct observation
and personal
interview

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 9
Experiments
• Experiment
– A process that produces a single outcome
whose result cannot be predicted with certainty.
• Experimental design
– A plan for performing an experiment in which
the variable of interest is defined. One or more
factors are identified to be manipulated,
changed, or observed so that the impact (or
influence) on the variable of interest can be
measured or observed.
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 10
Telephone Surveys

• Typical Applications
– Political Polls
– Market Research
– Customer Satisfaction Studies
– Healthcare Studies
• What are some issues or challenges?
– Respondents Screen Calls or Hang Up
– Respondents Not Home
– Requires Trained Callers
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 11
Written Questionnaires / Surveys
• Differences from Telephone Surveys
– Must be Carefully Formatted
– Need Motivational Statement of Purpose
– Can More Easily Allow for Open-Ended Questions
– Less Expensive to Administer
• Typical Applications
– Employee Surveys
– College Course/Professor Evaluations
– Customer Satisfaction Studies
– Academic Research
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 12
Written Questionnaires / Surveys

• Advantages
– Questions are Standardized for All Respondents
– If On-Line, Data are Captured Electronically
– Potentially Allows for More Questions
• Disadvantages
– Responses May Not Be Timely
– Potentially Low Response Rate (5-10%)
– No Chance to Clarify Questions

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 14
Types of Questions
• Demographic Questions: related to respondents’
backgrounds, characteristics, and attributes
– Ex: What is your race/ethnicity?
• Closed-End Questions: respondents get to select
from a short list of defined choices
– Ex: “To which political party do you belong?
Republican? Democratic? Other?”
• Open-End Questions: respondents have the freedom
to respond with any value, words, or statements
– Ex: “Why did you choose to attend Miracosta
College?”
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 15
Which Question is Better?
Why?
A) Do you agree with most other reasonably minded
people that the city should spend more money on
neighborhood parks?

OR

B) In your opinion, should the city increase spending

on neighborhood parks?

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 16
Which Question is Better?
Why?
A) How much money do you make at your job?

OR

B) Which of the following categories best reflects your

weekly income from your current job?
Under $500 $500–$1,000 Over $1,000

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 17
Observations
• Direct Observations
– Data that are being collected is physically
observed and the data recorded based on what
takes place in the process.
– Subjective and time-consuming
• Typical Applications
– Determine Customer Product Preferences
– Determine Rate of Seatbelt Use
– Assess Compliance to Company Safety Policies

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 18
Interviews
• Personal Interviews
– Structured: questions are scripted
– Unstructured: begin with one or more broadly
stated questions, with further questions being
based on the responses
• Typical Applications
– Customer Satisfaction Measurement
– Supplier Qualification Assessment
– Health Status Measurement

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 19
Other Data Collection Techniques

• Focus Groups
– A group interview using a facilitator to obtain
data about the group’s perspectives / opinions
– The members of the group have some
common attributes
• Documents and Records
– Studying existing data (secondary data)
contained in databases, financial records,
annual reports, etc.

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 21
Other Data Collection Techniques

• Bar Codes

– Bar code provides information about a product

(price, supplier, etc.)
– Bar code scanner automatically captures data
• Radio Frequency Identification Device (RFID)
– Transmitting Devices Attached to a Product
– RFID Receiver Reads Data Signal
– Holds More Data than a Bar Code

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 22
Data Collection Issues
Data Accuracy
Interviewer Bias
Nonresponsive Bias
Selection Bias
Observer Bias
Measurement Error
Internal Validity
External Validity
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 23
1.3 Populations, Samples, and
Sampling Techniques
• Population
– The set of all objects or individuals of interest
or the measurements obtained from all objects
or individuals of interest
• Take a Sample
– Studying a subset of the population
• Take a Census
– Studying the entire population

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 24
Population vs. Sample vs. Census
Population: Our population of interest is MiraCosta
College students in 2017, total of 14,773 students. To
understand how much sleep they get nightly:
• We can take a census of all 14,773 students, or
• We can take a sample of 300 students

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 25
Parameters
“P for Population”
• Parameters
– Descriptive numerical measures, such as an
average or a proportion, that are computed
from an entire population
– Example: The average time it takes for all
Miracosta College students to find parking
on campus on Mondays
– Example: The proportion of all university
students in California who have more than
$40,000 in student loans
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 26
Statistics
“S for Sample”
• Statistics
– Descriptive numerical measures, such as an
average or a proportion, that are computed
from a sample selected from a population
– Example: The average credits taken by a
sample of students at MiraCosta College
– Example: The proportion of defective phones
in a sample of iphones selected from phones
made by Apple

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 27
Population vs. Sample
• Find a partner near you
• Come up with an example of a population
and sample, including the parameters and
statistics (descriptive numerical measures
such as an average or a proportion) that
could be developed
• Be ready to share out to the class

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 28
Sampling Techniques
Sampling Techniques Methods that use
Methods that use selection techniques
non-chance based on chance
processes selection

Nonstatistical Sampling Statistical Sampling

(Probability Sampling)

Convenience Judgment Ratio Simple Systematic

Random

Stratified Cluster

Allows every item in the population to

have a known or calculable chance
of being included in the sample

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 29
Simple Random Sampling
• Every possible sample of a given size has
an equal chance of being selected
• Selection may be with replacement or
without replacement
• The sample can be obtained using a table
of random numbers or computer random
number generator

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 30
Stratified Random Sampling
• Divide population into subgroups (called strata)
based on some common characteristic (e.g. gender,
income level, etc.)
• Select a simple random sample from each subgroup
• Combine samples from subgroups into one

Population
divided
into 4
strata

Sample
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 31
Stratified Sampling Example

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 32
Systematic Random Sampling
• Decide on desired sample size: n
• Divide N, the population, by n, the sample size.
N / n = kth item
• Randomly select one item between 1 and k
• Select every kth individual thereafter
– N = population of 12 people
– n = sample of 4 people
– k = 12 / 4 = every 3rd person

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 33
Cluster Sampling
• Divide population into several “clusters,” each
representative of the population (e.g., geographical)
• Select a simple random sample of clusters
– All items in the selected clusters can be used, or
items can be chosen from a cluster using another
probability sampling technique
Population
divided into
16 clusters
Randomly selected
clusters for sample

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 34
Cluster Sampling
• Example:
A warehouse manager wishes to select a
statistical sample of products that are located
across the warehouse in 10 aisles, in bins
stacked three high, in 20 stacks per aisle. A
total of 10 x 3 x 20 = 600 bins are in the
warehouse. Each bin is a cluster.

Randomly select 5 clusters (bins) and sample

each item in the 5 bins selected.

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 35
Sampling Techniques:
Check In
Which sampling method would most likely be
used in each of the following situations:
a. an interview conducted with mayors of a
sample of cities in Florida
b. a poll of voters regarding a referendum
calling for a national value-added tax
c. a survey of customers entering a shopping
mall in Minneapolis

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 36
Sampling Methods - Summary

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 37
1.4 Data Types and Data Measurement
Levels

The starting point in analyzing data is to know

what kind of data you have collected.
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 38
Data Types
• Quantitative: measurements whose values
are inherently numerical
– discrete (e.g. number of children), Ch. 5
– continuous (e.g. weight, volume) , Ch. 6
• Qualitative: data whose measurement scale
is inherently categorical
– E.g. marital status, political affiliation, eye
color

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 39
Data Types
• Time-Series:
– a set of consecutive data values observed at
successive points in time (e.g. stock price
on daily basis for a year)
• Cross-Sectional:
– A set of data values observed at a fixed point
in time (e.g. bank data about its loan
customers in September)

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 40
Data Timing Example

Sales (in $1000s)

2009 2010 2011 2012 Time
Atlanta 435 460 475 490 Series
Boston 320 345 375 395 Data
Cleveland 405 390 410 395
Denver 260 270 285 280

Cross Sectional
Data
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 41
Data Measurement Levels
HIGHEST LEVEL
Measurable and true Height, Age,
Ratio Data
zero exists Salary
QUANTITATIVE
Can be measured, Temperature,
Interval Data
but has no true zero Time of Day

Ordered categories, Satisfaction,

Ordinal Data
rank, scaling Ratings
QUALITATIVE
Categories, labels, Gender, Major,
Nominal Data
names Marital Status
LOWEST LEVEL
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 42
Data Measurement Levels:
Let’s Practice
• In groups of 4,
identify as many
Data Measurement
Levels as you can.
• Be ready to share
out to the class.

Maame Biney is the first black woman to qualify for the U.S.
Olympic speed skating team. The 17-year-old native of Ghana
finished the 500 meter race in first place with a time of 43.35
seconds. The ideal temperature for short track speed skating ice
is 22.1° F.
ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 43
Data Categorization: Check In
14 factors (variables) Cross-sectional data

Qualitative, nominal-level data Quantitative, ratio-level data

ALWAYS LEARNING Copyright © 2018, 2014, 2011 Pearson Education, Inc. Slide - 45