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STAT*2060: Statistics for Business DecisionsCourse Lecture NotesWINTER 2019Corresponding Textbook Chapters and Unit Exercises:Section 1: Chapter 1, No unit exercisesSection 2: Chapter 2, Unit 1 ExercisesSection 3: Chapter 3, Unit 2 ExercisesSection 4: Chapter 4, Unit 3 ExercisesSection 5: Chapter 5, Unit 4 ExercisesSection 6: Chapter 6, Unit 5 ExercisesSection 7: Chapter 7, Unit 6 ExercisesSection 8: Chapter 8, Unit 7 ExercisesSection 9: Chapter 9, Unit 8 ExercisesSection 10: Chapter 10, Unit 9 ExercisesSection 11: Chapter 11, Unit 10 ExercisesSection 12: Chapter 13, Unit 12 ExercisesSection 13: Chapter 15, Unit 14 Exercises
1What is Statistics?STATISTIC: A characteristic of a sampleSTATISTICS: The science of collecting, analyzing, interpreting, presenting, and makingconclusions from data.Statistics is a science that allows us to answer questions such as:•Does there exist a relationship between the amount of money spent on an advertising campaign,and the resulting sales?•Does one chemotherapy drug result in higher proportions of colon cancer survivors than anotherchemotherapy drug?•Can a grocery store chain use population demographics (population size, household income, house-hold demographics (kids, no kids, pets, etc.)) to predict average monthly revenue?To answer these (and other!) questions, we must:1
2Data Collection: Terminology and TechniquesEXAMPLE: In order to get the information on Canadians found in the infographic above, Maclean’sMagazine interviewed 150,000 Canadians.Among the questions asked, Maclean’s was interested indetermining how much, on average, Canadians spend on dining out at restaurants each year. Basedon the 150,000 Canadians interviewed, the average yearly expenditure on restaurants was found to be$2066.Use this (fictional) example to define some important terms:Population:The set ofallindividuals of interest.Sample:A subset of the population.(Experimental) Unit:The object/subject on which a measurement is taken.Parameter:A numerical characteristic of the population.Statistic:A numerical characteristic of the sample.Variable:The characteristic of interest.Inferential Statistics:How do we obtain a sample, or collect sample data?2
2.1Types of StudiesWhen collecting data, it first must be decided what type of study will be conducted. There are twomain types of studies we’ll consider:Observational Study:Units in the study are observed and information on different variables isrecorded, but no conditions are actually imposed by the investigators.Surveys: Surveys are a type of observational study, where responses to specific questions from individ-uals included in the study are recorded.Designed Experiment: Units in the study are randomly assigned to specific conditions created bythe investigators.Data can also be obtained from an individual or organization directly (for example, asking a businessfor their sales records for the past year).Advantages of observational studies:Disadvantage of observational studies: susceptible tolurking variables.Lurking variables are unknown factors that can affect the variables of interest, and may cause an ap-parent relationship between them that does not actually exist.3