Business statistics takes the data analysis tools from
elementary statistics and applies them to business
Many of the tools used in business statistics
are built on ones you’ve probably already come
across in basic math: mean, mode and median,
bar graphs and the bell curve, and basic
probability. Hypothesis testing (where you test
out an idea) and regression analysis (fitting
data to an equation) builds on this foundation.
Describing Populations and Samples
Is called Descriptive Statistics the process of
describing populations and samples
Measure of central tendency
where the bulk of the data lies. It
includes finding the mean, mode and
the formula is
x̄ = (Σ xi) / n Population mean:
μ = (Σ * X) / N. They are solved
in the same way: add the
items together and then
divide by the number of items
in the set.
Measures of dispersion
How much is your data set spread out
around the mean? Is there a big difference
between your highest and lowest values?
Can be answered by finding the
interquartile range, variance and standard
The interquartile range is
especially useful if you are
more interested in where
the bulk of your data lies
and less interested in
Measures of Association
Informs you about trends in data.
This might show a high or low
connection (“correlation”) between
different factors and final cost.
If the price of tomatoes
goes up, it directly
affects the price of
Probabilities and Random Variables
Probability is the
the basic formula is
P(A) = number of outcomes that give A / number of possible outcomes = r / n
There are dozens of ways to figure
out probabilities. It largely
depends on what you want to
know. For example, something
happening or not happening,
choosing people or items.
In algebra, “x” or “y” can
represent a number, like
3,14,or 22.5. In statistics, a
random variable must be
linked to a random event or
Includes the binomial
distribution. In a binomial
experiment, there are only
two outcomes (such as yes /
no or success / failure).
The formula is
Continuous probability distributions
Can take on an infinite number of different values.