Preface vii
About the Author xv
1 Introduction to Statistics and Business Analytics 1
Decision Dilemma: Statistics Describe the State of Business in India’s Countryside 1
1.1 Basic Statistical Concepts 3
1.2 Data Measurement 6
1.3 Introduction to Business Analytics 9
Thinking Critically About Statistics in Business Today 15
Decision Dilemma Solved 15
Ethical Considerations 15
Summary / Key Terms / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Digiorno Pizza: Introducing a Frozen Pizza to Compete with Carry-Out 20
Big Data Case 20
References 21
2 Visualizing Data with Charts and Graphs 22
Decision Dilemma: Container Shipping Companies 22
2.1 Frequency Distributions 24
2.2 Quantitative Data Graphs 27
2.3 Qualitative Data Graphs 34
Thinking Critically About Statistics in Business Today 38
2.4 Charts and Graphs for Two Variables 41
2.5 Visualizing Time-Series Data 44
Decision Dilemma Solved 47
Ethical Considerations 48
Summary / Key Terms / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Southwest Airlines 54
Big Data Case 55
3 Descriptive Statistics 56
Decision Dilemma: Laundry Statistics 56
3.1 Measures of Central Tendency 57
3.2 Measures of Variability 65
Thinking Critically About Statistics in Business Today 67
Thinking Critically About Statistics in Business Today 76
3.3 Measures of Shape 78
3.4 Business Analytics Using Descriptive Statistics 81
Decision Dilemma Solved 84
Ethical Considerations 84
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Coca-Cola Develops the African Market 89
Big Data Case 91
4 Probability 92
Decision Dilemma: Equity of the Sexes in the Workplace 92
4.1 Introduction to Probability 93
4.2 Structure of Probability 96
4.3 Marginal, Union, Joint, and Conditional Probabilities 101
Thinking Critically About Statistics in Business Today 102
4.4 Addition Laws 103
4.5 Multiplication Laws 110
4.6 Conditional Probability 115
Thinking Critically About Statistics in Business Today 118
4.7 Revision of Probabilities: Bayes’ Rule 121
Decision Dilemma Solved 125
Ethical Considerations 126
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Colgate-Palmolive Makes a “Total” Effort 131
Big Data Case 131
5 Discrete Distributions 132
Decision Dilemma: Life with a Cell Phone 132
5.1 Discrete Versus Continuous Distributions 133
5.2 Describing a Discrete Distribution 135
5.3 Binomial Distribution 138
Thinking Critically About Statistics in Business Today 147
5.4 Poisson Distribution 149
Thinking Critically About Statistics in Business Today 153
5.5 Hypergeometric Distribution 157
Decision Dilemma Solved 161
Ethical Considerations 162
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Whole Foods Market Grows Through Mergers and Acquisitions 168
Big Data Case 168
6 Continuous Distributions 169
Decision Dilemma: CSX Corporation 169
6.1 The Uniform Distribution 171
6.2 Normal Distribution 175
Thinking Critically About Statistics in Business Today 185
6.3 Using the Normal Curve to Approximate Binomial Distribution Problems 187
Thinking Critically About Statistics in Business Today 193
6.4 Exponential Distribution 194
Decision Dilemma Solved 197
Ethical Considerations 198
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: USAA 203
Big Data Case 203
7 Sampling and Sampling Distributions 205
Decision Dilemma: Toro 205
7.1 Sampling 206
Thinking Critically About Statistics in Business Today 208
Thinking Critically About Statistics in Business Today 214
7.2 Sampling Distribution of x? 217
7.3 Sampling Distribution of p 227
Decision Dilemma Solved 230
Ethical Considerations 230
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: 3M 234
Big Data Case 235
8 Statistical Inference: Estimation for Single Populations 236
Decision Dilemma: Batteries and Bulbs: How Long Do They Last? 236
8.1 Estimating the Population Mean Using the z Statistic (σ Known) 238
8.2 Estimating the Population Mean Using the t Statistic (σ Unknown) 245
Thinking Critically About Statistics in Business Today 250
8.3 Estimating the Population Proportion 251
Thinking Critically About Statistics in Business Today 252
8.4 Estimating the Population Variance 255
8.5 Estimating Sample Size 259
Decision Dilemma Solved 262
Ethical Considerations 263
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: The Container Store 267
Big Data Case 268
9 Statistical Inference: Hypothesis Testing for Single Populations 269
Decision Dilemma: Valero Energy 269
9.1 Introduction to Hypothesis Testing 270
Thinking Critically About Statistics in Business Today 273
9.2 Testing Hypotheses About a Population Mean Using the z Statistic (σ Known) 279
9.3 Testing Hypotheses About a Population Mean Using the t Statistic (σ Unknown) 287
9.4 Testing Hypotheses About a Proportion 294
Thinking Critically About Statistics in Business Today 297
9.5 Testing Hypotheses About a Variance 300
9.6 Solving for Type II Errors 303
Decision Dilemma Solved 311
Ethical Considerations 312
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Frito-Lay Targets the Hispanic Market 316
Big Data Case 317
10 Statistical Inferences About Two Populations 318
Decision Dilemma: L. L. Bean 318
10.1 Hypothesis Testing and Confidence Intervals About the Difference in Two Means Using the z Statistic (Population Variances Known) 321
10.2 Hypothesis Testing and Confidence Intervals About the Difference in Two Means: Independent Samples and Population Variances Unknown 329
Thinking Critically About Statistics in Business Today 337
10.3 Statistical Inferences for Two Related Populations 339
10.4 Statistical Inferences About Two Population Proportions, p1 − p2 348
10.5 Testing Hypotheses About Two Population Variances 355
Decision Dilemma Solved 363
Ethical Considerations 364
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Five Guys 370
Big Data Case 371
11 Analysis of Variance and Design of Experiments 372
Decision Dilemma: Job and Career Satisfaction of Foreign Self-Initiated Expatriates 372
11.1 Introduction to Design of Experiments 373
11.2 The Completely Randomized Design (One-Way ANOVA) 376
11.3 Multiple Comparison Tests 387
Thinking Critically About Statistics in Business Today 395
11.4 The Randomized Block Design 396
11.5 A Factorial Design (Two-Way ANOVA) 405
Decision Dilemma Solved 418
Ethical Considerations 419
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: The Clarkson Company: A Division of Tyco International 425
Big Data Case 426
12 Simple Regression Analysis and Correlation 427
Decision Dilemma: Predicting International Hourly Wages by the Price of a Big Mac 427
12.1 Correlation 428
12.2 Introduction to Simple Regression Analysis 432
12.3 Determining the Equation of the Regression Line 433
12.4 Residual Analysis 439
12.5 Standard Error of the Estimate 446
12.6 Coefficient of Determination 449
12.7 Hypothesis Tests for the Slope of the Regression Model and Testing the Overall Model 451
Thinking Critically About Statistics in Business Today 453
12.8 Estimation 456
12.9 Using Regression to Develop a Forecasting Trend Line 460
12.10 Interpreting the Output 466
Decision Dilemma Solved 468
Ethical Considerations 469
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Caterpillar, Inc. 475
Big Data Case 476
13 Multiple Regression Analysis 477
Decision Dilemma: Are You Going to Hate Your New Job? 477
13.1 The Multiple Regression Model 478
13.2 Significance Tests of the Regression Model and Its Coefficients 485
13.3 Residuals, Standard Error of the Estimate, and R2 489
Thinking Critically About Statistics in Business Today 494
13.4 Interpreting Multiple Regression Computer Output 495
Decision Dilemma Solved 497
Ethical Considerations 498
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Starbucks Introduces Debit Card 502
Big Data Case 503
14 Building Multiple Regression Models 504
Decision Dilemma: Predicting CEO Salaries 504
14.1 Nonlinear Models: Mathematical Transformation 505
14.2 Indicator (Dummy) Variables 518
Thinking Critically About Statistics in Business Today 521
14.3 Model-Building: Search Procedures 522
14.4 Multicollinearity 532
14.5 Logistic Regression 535
Decision Dilemma Solved 542
Ethical Considerations 543
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Virginia Semiconductor 548
Big Data Case 550
15 Time-Series Forecasting and Index Numbers 551
Decision Dilemma: Forecasting Air Pollution 551
15.1 Introduction to Forecasting 552
15.2 Smoothing Techniques 557
Thinking Critically About Statistics in Business Today 566
15.3 Trend Analysis 567
15.4 Seasonal Effects 574
15.5 Autocorrelation and Autoregression 581
15.6 Index Numbers 587
Decision Dilemma Solved 594
Ethical Considerations 596
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Debourgh Manufacturing Company 602
Big Data Case 604
16 Analysis of Categorical Data 605
Decision Dilemma: Selecting Suppliers in the Electronics Industry 605
16.1 Chi-Square Goodness-of-Fit Test 606
16.2 Contingency Analysis: Chi-Square Test of Independence 613
Thinking Critically About Statistics in Business Today 619
Decision Dilemma Solved 620
Ethical Considerations 620
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Foot Locker in the Shoe Mix 623
Big Data Case 624
17 Nonparametric Statistics 625
Decision Dilemma: How is the Doughnut Business? 625
17.1 Runs Test 628
17.2 Mann-Whitney U Test 632
17.3 Wilcoxon Matched-Pairs Signed Rank Test 639
17.4 Kruskal-Wallis Test 647
Thinking Critically About Statistics in Business Today 651
17.5 Friedman Test 651
17.6 Spearman’s Rank Correlation 656
Decision Dilemma Solved 659
Ethical Considerations 660
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Schwinn 666
Big Data Case 667
18 Statistical Quality Control 668
Decision Dilemma: Italy’s Piaggio Makes a Comeback 668
18.1 Introduction to Quality Control 669
Thinking Critically About Statistics in Business Today 678
18.2 Process Analysis 679
18.3 Control Charts 686
Decision Dilemma Solved 701
Ethical Considerations 702
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Standard Motor Products 708
Big Data Case 709
19 Decision Analysis 710
Decision Dilemma: Decision-making at the CEO Level 710
19.1 The Decision Table and Decision-making Under Certainty 711
19.2 Decision-making Under Uncertainty 713
Thinking Critically About Statistics in Business Today 717
19.3 Decision-making Under Risk 720
19.4 Revising Probabilities in Light of Sample Information 729
Decision Dilemma Solved 737
Ethical Considerations 737
Summary / Key Terms / Formulas / Supplementary Problems / Exploring the Databases with Business Analytics
Chapter Case: Fletcher-Terry: On The Cutting Edge 741
Big Data Case 742
Appendix A Tables 743
Appendix B Answers to Selected Odd-Numbered Quantitative Problems 784
Glossary 793
Index 801
