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1 Introduction

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August 23, 2010 Welcome to BUAD 310: Applied Business Statistics Jinchi Lv, IOM Department 1

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Syllabus The goal of this course is to develop a student’s ability to analyze business problems using statistics and to think critically about data Key topics covered in this course include exploratory data analysis, sampling distribution, estimation, hypothesis testing, regression analysis, and model building 2
Class Survey It is a quick survey to gather some information about the class that we will use throughout this course Please hand it in at the end of the class 3

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Outline for Today Why is statistics a critically useful tool in the business world? What is statistics? Overview of the course Misleading results and wrong decisions without thinking critically Some key statistical concepts 4
Why is Statistics Critically Useful in Business? The castaway model A quantitatively skilled person with no knowledge of statistics on a deserted island with lots of paper, pencils, and time How to build a good model to take account of variation or uncertainty in business applications and to make reliable forecasts? Where to start with vast and complex data? Can one really trust the decision based on a particular way of analyzing data? 5

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What is Statistics? Some basic ideas Statistics as a discipline Questions we can answer with statistics Variation, patterns and models 6
What is Statistics? Statistics as a discipline Science and art of extracting answers from data It extracts from data useful information about some characteristic of a particular group or about some aspect of a particular object that is not readily known or completely uncertain In the presence of variation or uncertainty, we need to gather information and draw conclusions (make intelligent judgments and informed decisions) 7

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What is Statistics? Statistical reasoning will one day be as important to good citizenship as the ability to read and write – H.G. Wells For most of us, that day has come A statistic is a property of data Statistics can be numbers (like an average) or graphs that display information (like a timeplot) 8
What is Statistics? Typical questions statistics help to answer Which customers are interested in an MP3 player? How much are customers willing to pay for an MP3 player? Why does a shopper choose a particular box of cereal? 9

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What is Statistics? Variation, patterns and models Variation refers to differences among items/individuals or fluctuations over time Patterns are systematic or predictable features in data Models break down variation into a pattern and unexplained variation 10
What is Statistics? Statistical models Key to extracting answers from data Good models simplify reality Finding real patterns helps us to understand data, plan for the future, and make better decisions 11

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Statistics are Everywhere!
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