February 5, 2014
Statistics in Business
Most people think of numbers when they hear the word statistics. Statistics have been around since the beginning of mankind. It is not just about the numbers, but how they are used to interpret data and trends to predict future success. Statistics are an important aspect of peoples’ daily lives and are extremely valuable in the business world.
Definition, Types, and Levels
Statistics is the science of data and involves gathering, summarizing, classifying, evaluating, organizing, and describing mathematical data (McClave, Benson, & Sincich, 2011) to aid in making more efficient decisions (Lind, Marchal, & Wathen, 2011). There are two types of statistics: descriptive and inferential. Descriptive statistics refers to methods of summarizing, organizing, and presenting data (Lind, Marchal, & Wathen, 2011). Inferential statistics are methods used to gauge a substance of a community on the basis of a selection (Lind, Marchal, & Wathen, 2011). There are four levels of statistics: nominal, ordinal, interval, and ratio. Nominal classifies and counts measured observations, ordinal is used to rank data according to relative value, interval has the same features as ordinal but includes constant size differences, and ratio is the highest level of statistical measurement, specifically for quantitative data (Lind, Marchal, & Wathen, 2011). All types and levels have a significant role in business.
Role of Statistics in Business
Statistics has a very vital role in business and managerial decision-making because it provides the tools for data collection and critical thinking (McClave, Benson, & Sincich, 2011). Critical thinking is the thoughtfully prepared development of skillfully and actively conceptualizing, interpreting, orchestrating, applying, and classifying information (Defining Critical Thinking, 2013). A manager’s ability to think critically is a key attribute in solving problems such as loss of profit or employee productivity. For example, if a business was losing money and wanted to know the reason, managers could conduct research and…