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Copyright, iv
Preface, xxiii
1. Introduction and Data Collection, 1
1.1. Why Learn Statistics, 2
1.2. Statistics for Managers, 2
How This Text is Organized, 3
Using Statistics @ Good Tunes, 4
1.3. Basic Vocabulary of Statistics, 4
1.4. Data Collection, 6
1.5. Types of Variables, 8
Levels of Measurement and Measurement Scales, 9
1.6. Microsoft Excel Worksheets, 11
Worksheet Cells, 11
Designing Effective Worksheets, 12
Summary, 13
Key Terms, 13
Chapter Review Problems, 14
End-of-Chapter Cases, 15
Learning with the Web Cases, 16
References, 17
Excel Companion to Chapter 1, 18
Key Terms, 30
2. Presenting Data in Tables and Charts, 31
Using Statistics @ Choice Is Yours, Part I, 32
2.1. Tables and Charts for Categorical Data, 32
The Summary Table, 33
The Bar Chart, 33
The Pie Chart, 34
The Pareto Diagram, 35
2.2. Organizing Numerical Data, 40
The Ordered Array, 40
The Stem-and-Leaf Display, 41
2.3. Tables and Charts for Numerical Data, 44
The Frequency Distribution, 44
The Relative Frequency Distribution and the Percentage Distribution, 46
The Cumulative Distribution, 47
The Histogram, 47
The Polygon, 50
The Cumulative Percentage Polygon (Ogive), 51
2.4. Cross Tabulations, 54
The Contingency Table, 55
The Side-by-Side Bar Chart, 56
2.5. Scatter Plots and Time-Series Plots, 58
The Scatter Plot, 58
The Time-Series Plot, 59
2.6. Misusing Graphs and Ethical Issues, 62
Microsoft Excel Graphs, 64
Summary, 66
Key Terms, 66
Chapter Review Problems, 67
Managing the Springville Herald, 73
Web Case, 74
References, 74
Excel Companion to Chapter 2, 75
3. Numerical Descriptive Measures, 95
Using Statistics @ Choice Is Yours, Part II, 96
3.1. Measures of Central Tendency, 96
The Mean, 97
The Median, 99
The Mode, 100
Quartiles, 101
The Geometric Mean, 103
3.2. Variation and Shape, 105
The Range, 105
The Interquartile Range, 106
The Variance and the Standard Deviation, 106
The Coefficient of Variation, 110
Z Scores, 111
Shape, 112
Visual Explorations: Exploring Descriptive Statistics, 113
Microsoft Excel Descriptive Statistics Results, 114
3.3. Numerical Descriptive Measures for a Population, 118
The Population Mean, 118
The Population Variance and Standard Deviation, 119
The Empirical Rule, 120
The Chebyshev Rule, 120
3.4. Exploratory Data Analysis, 122
The Five-Number Summary, 123
The Box-and-Whisker Plot, 124
3.5. The Covariance and the Coefficient of Correlation, 127
The Covariance, 127
The Coefficient of Correlation, 128
3.6. Pitfalls in Numerical Descriptive Measures and Ethical Issues, 133
Ethical Issues, 133
Summary, 134
Key Equations, 134
Key Terms, 135
Chapter Review Problems, 135
Managing the Springville Herald, 142
Web Case, 142
References, 142
Excel Companion to Chapter 3, 143
4. Basic Probability, 147
Using Statistics @ The Consumer Electronics Company, 148
4.1. Basic Probability Concepts, 149
Events and Sample Spaces, 150
Contingency Tables, 151
Simple (Marginal) Probability, 151
Joint Probability, 152
General Addition Rule, 154
4.2. Conditional Probability, 157
Computing Conditional Probabilities, 157
Decision Trees, 159
Statistical Independence, 161
Multiplication Rules, 162
Marginal Probability Using the General Multiplication Rule, 163
4.3. Bayes’ Theorem, 166
4.4. Ethical Issues and Probability, 171
4.5. (CD-ROM Topic) Counting Rules, 172
Summary, 172
Key Equations, 172
Key Terms, 172
Chapter Review Problems, 173
Web Case, 176
References, 176
Excel Companion to Chapter 4, 177
5. Some Important Discrete Probability Distributions, 179
Using Statistics @ Saxon Home Improvement, 180
5.1. The Probability Distribution for a Discrete Random Variable, 180
Expected Value of a Discrete Random Variable, 181
Variance and Standard Deviation of a Discrete Random Variable, 182
5.2. Covariance and Its Application in Finance, 184
Covariance, 184
Expected Value, Variance, and Standard Deviation of the Sum of Two Random Variables, 186
Portfolio Expected Return and Portfolio Risk, 186
5.3. Binomial Distribution, 189
5.4. Poisson Distribution, 197
5.5. Hypergeometric Distribution, 201
5.6. (CD-ROM Topic) Using the Poisson Distribution to Approximate the Binomial Distribution, 204
Summary, 204
Key Equations, 204
Key Terms, 205
Chapter Review Problems, 206
Managing the Springville Herald, 209
Web Case, 209
References, 210
Excel Companion to Chapter 5, 211
6. The Normal Distribution and Other Continuous Distributions, 217
Using Statistics @ OurCampus!, 218
6.1. Continuous Probability Distributions, 218
6.2. The Normal Distribution, 219
Visual Explorations: Exploring the Normal Distribution, 229
6.3. Evaluating Normality, 234
Comparing Data Characteristics to Theoretical Properties, 234
Constructing the Normal Probability Plot, 236
6.4. The Uniform Distribution, 238
6.5. The Exponential Distribution, 241
6.6. (CD-ROM Topic) The Normal Approximation to the Binomial Distribution, 243
Summary, 243
Key Equations, 243
Key Terms, 243
Chapter Review Problems, 244
Managing the Springville Herald, 246
Web Case, 246
References, 246
Excel Companion to Chapter 6, 247
7. Sampling and Sampling Distributions, 251
Using Statistics @ Oxford Cereals, 252
7.1. Types of Sampling Methods, 252
Simple Random Samples, 253
Systematic Samples, 256
Stratified Samples, 256
Cluster Samples, 257
7.2. Evaluating Survey Worthiness, 258
Survey Error, 259
Ethical Issues, 260
7.3. Sampling Distributions, 261
7.4. Sampling Distribution of the Mean, 262
The Unbiased Property of the Sample Mean, 262
Standard Error of the Mean, 264
Sampling from Normally Distributed Populations, 265
Sampling from Non-Normally Distributed Populations—The Central Limit Theorem, 268
Visual Explorations: Exploring Sampling Distributions, 270
7.5. Sampling Distribution of the Proportion, 272
7.6. (CD-ROM Topic) Sampling From Finite Populations, 275
Summary, 275
Key Equations, 276
Key Terms, 276
Chapter Review Problems, 276
Managing the Springville Herald, 279
Web Case, 279
References, 280
Excel Companion to Chapter 7, 281
8. Confidence Interval Estimation, 283
Using Statistics @ Saxon Home Improvement, 284
8.1. Confidence Interval Estimation for the Mean (σ Known), 285
8.2. Confidence Interval Estimation for the Mean (σ Unknown), 290
Student’s t Distribution, 290
Properties of the t Distribution, 290
The Concept of Degrees of Freedom, 291
The Confidence Interval Statement, 292
8.3. Confidence Interval Estimation for the Proportion, 296
8.4. Determining Sample Size, 299
Sample Size Determination for the Mean, 300
Sample Size Determination for the Proportion, 302
8.5. Applications of Confidence Interval Estimation in Auditing, 306
Estimating the Population Total Amount, 307
Difference Estimation, 308
One-Sided Confidence Interval Estimation of the Rate of Noncompliance with Internal Controls, 311
8.6. Confidence Interval Estimation and Ethical Issues, 313
8.7. (CD-ROM Topic) Estimation and Sample Size Determination for Finite Populations, 314
Summary, 314
Key Equations, 314
Key Terms, 315
Chapter Review Problems, 315
Managing the Springville Herald, 320
Web Case, 321
References, 321
Excel Companion to Chapter 8, 322
9. Fundamentals of Hypothesis Testing: One-Sample Tests, 327
Using Statistics @ Oxford Cereals, Part II, 328
9.1. Hypothesis-Testing Methodology, 328
The Null and Alternative Hypotheses, 328
The Critical Value of the Test Statistic, 330
Regions of Rejection and Nonrejection, 330
Risks in Decision Making Using Hypothesis-Testing Methodology, 331
9.2. Z Test of Hypothesis for the Mean (σ Known), 334
The Critical Value Approach to Hypothesis Testing, 334
The p-Value Approach to Hypothesis Testing, 337
A Connection Between Confidence Interval Estimation and Hypothesis Testing, 340
9.3. One-Tail Tests, 342
The Critical Value Approach, 342
The p-Value Approach, 343
9.4. t Test of Hypothesis for the Mean (σ Unknown), 346
The Critical Value Approach, 347
The p-Value Approach, 349
Checking Assumptions, 349
9.5. Z Test of Hypothesis for the Proportion, 353
The Critical Value Approach, 354
The p-Value Approach, 355
9.6. Potential Hypothesis-Testing Pitfalls and Ethical Issues, 357
9.7. (CD-ROM Topic) The Power of a Test, 359
Summary, 359
Key Equations, 360
Key Terms, 360
Chapter Review Problems, 360
Managing the Springville Herald, 363
Web Case, 363
References, 363
Excel Companion to Chapter 9, 364
10. Two-Sample Tests, 369
Using Statistics @ BLK Foods, 370
10.1. Comparing the Means of Two Independent Populations, 370
Z Test for the Difference Between Two Means, 370
Pooled-Variance t Test for the Difference Between Two Means, 371
Confidence Interval Estimate of the Difference Between Two Means, 376
Separate-Variance t Test for the Difference Between Two Means, 377
10.2. Comparing the Means of Two Related Populations, 381
Paired t Test, 382
Confidence Interval Estimate for the Mean Difference, 387
10.3. Comparing Two Population Proportions, 390
Z Test for the Difference Between Two Proportions, 390
Confidence Interval Estimate for the Difference Between Two Proportions, 394
10.4. F Test for the Difference Between Two Variances, 397
Finding Lower-Tail Critical Values, 398
Summary, 404
Key Equations, 405
Key Terms, 406
Chapter Review Problems, 406
Managing the Springville Herald, 411
Web Case, 411
References, 412
Excel Companion to Chapter 10, 413
11. Analysis of Variance, 421
Using Statistics @ Perfect Parachutes, 422
11.1. The Completely Randomized Design: One-Way Analysis of Variance, 422
F Test for Differences Among More Than Two Means, 422
Multiple Comparisons: The Tukey-Kramer Procedure, 429
ANOVA Assumptions, 431
Levene’s Test for Homogeneity of Variance, 432
11.2. The Factorial Design: Two-Way Analysis of Variance, 436
Testing for Factor and Interaction Effects, 437
Interpreting Interaction Effects, 443
Multiple Comparisons: The Tukey Procedure, 445
11.3. (CD-ROM Topic) The Randomized Block Design, 449
Summary, 449
Key Equations, 450
Key Terms, 451
Chapter Review Problems, 451
Managing the Springville Herald, 455
Web Case, 456
References, 457
Excel Companion to Chapter 11, 458
12. Chi-Square Tests and Nonparametric Tests, 461
Using Statistics @ T.C. Resort Properties, 462
12.1. Chi-Square Test for the Difference Between Two Proportions (Independent Samples), 462
12.2. Chi-Square Test for Differences Among More Than Two Proportions, 470
The Marascuilo Procedure, 474
12.3. Chi-Square Test of Independence, 477
12.4. McNemar Test for the Difference Between Two Proportions (Related Samples), 483
12.5. Wilcoxon Rank Sum Test: Nonparametric Analysis for Two Independent Populations, 486
12.6. Kruskal-Wallis Rank Test: Nonparametric Analysis for the One-Way ANOVA, 493
12.7. (CD-ROM Topic) Chi-Square Test for a Variance or Standard Deviation, 497
Summary, 498
Key Equations, 499
Key Terms, 499
Chapter Review Problems, 499
Managing the Springville Herald, 503
Web Case, 505
References, 505
Excel Companion to Chapter 12, 506
13. Simple Linear Regression, 511
Using Statistics @ Sunflowers Apparel, 512
13.1. Types of Regression Models, 512
13.2. Determining the Simple Linear Regression Equation, 514
The Least-Squares Method, 515
Visual Explorations: Exploring Simple Linear Regression Coefficients, 518
Predictions in Regression Analysis: Interpolation Versus Extrapolation, 519
Computing the Y Intercept, b₀, and the Slope, b₁, 519
13.3. Measures of Variation, 524
Computing the Sum of Squares, 524
The Coefficient of Determination, 526
Standard Error of the Estimate, 528
13.4. Assumptions, 529
13.5. Residual Analysis, 530
Evaluating the Assumptions, 530
13.6. Measuring Autocorrelation: The Durbin-Watson Statistic, 534
Residual Plots to Detect Autocorrelation, 534
The Durbin-Watson Statistic, 536
13.7. Inferences About the Slope and Correlation Coefficient, 539
t Test for the Slope, 539
F Test for the Slope, 540
Confidence Interval Estimate of the Slope (β₁), 542
t Test for the Correlation Coefficient, 542
13.3. Estimation of Mean Values and Prediction of Individual Values, 546
The Confidence Interval Estimate, 546
The Prediction Interval, 547
13.9. Pitfalls in Regression and Ethical Issues, 550
Summary, 554
Key Equations, 555
Key Terms, 556
Chapter Review Problems, 556
Managing the Springville Herald, 562
Web Case, 563
References, 563
Excel Companion to Chapter 13, 564
14. Introduction to Multiple Regression, 571
Using Statistics @ OmniFoods, 572
14.1. Developing a Multiple Regression Model, 572
Interpreting the Regression Coefficients, 573
Predicting the Dependent Variable Y, 575
14.2. r², Adjusted r², and the Overall F Test, 577
Coefficient of Multiple Determination, 578
Adjusted r², 578
Test for the Significance of the Overall Multiple Regression Model, 579
14.3. Residual Analysis for the Multiple Regression Model, 581
14.4. Inferences Concerning the Population Regression Coefficients, 583
Tests of Hypothesis, 583
Confidence Interval Estimation, 585
14.5. Testing Portions of the Multiple Regression Model, 587
Coefficients of Partial Determination, 590
14.6. Using Dummy Variables and Interaction Terms in Regression Models, 592
Interactions, 595
Summary, 602
Key Equations, 604
Key Terms, 604
Chapter Review Problems, 605
Managing the Springville Herald, 608
Web Case, 608
References, 608
Excel Companion to Chapter 14, 609
15. Multiple Regression Model Building, 613
Using Statistics @ WTT-TV, 614
15.1. The Quadratic Regression Model, 614
Finding the Regression Coefficients and Predicting Y, 615
Testing for the Significance of the Quadratic Model, 617
Testing the Quadratic Effect, 618
The Coefficient of Multiple Determination, 620
15.2. Using Transformations in Regression Models, 622
The Square-Root Transformation, 622
The Log Transformation, 623
15.3. Collinearity, 625
15.4. Model Building, 627
The Stepwise Regression Approach to Model Building, 628
The Best-Subsets Approach to Model Building, 629
Model Validation, 634
15.5. Pitfalls in Multiple Regression and Ethical Issues, 635
Pitfalls in Multiple Regression, 635
Ethical Issues, 635
Summary, 636
Key Equations, 637
Key Terms, 637
Chapter Review Problems, 637
The Mountain States Potato Company, 640
Web Case, 641
References, 641
Excel Companion to Chapter 15, 642
16. Time-Series Forecasting and Index Numbers, 645
Using Statistics @ The Principled, 646
16.1. The Importance of Business Forecasting, 646
16.2. Component Factors of the Classical Multiplicative Time-Series Model, 647
16.3. Smoothing an Annual Time Series, 649
Moving Averages, 650
Exponential Smoothing, 652
16.4. Least-Squares Trend Fitting and Forecasting, 655
The Linear Trend Model, 656
The Quadratic Trend Model, 658
The Exponential Trend Model, 659
Model Selection Using First, Second, and Percentage Differences, 661
16.5. Autoregressive Modeling for Trend Fitting and Forecasting, 666
16.6. Choosing an Appropriate Forecasting Model, 675
Performing a Residual Analysis, 676
Measuring the Magnitude of the Residual Error Through Squared or Absolute Differences, 676
The Principle of Parsimony, 677
A Comparison of Four Forecasting Methods, 677
16.7. Time-Series Forecasting of Seasonal Data, 680
Least-Squares Forecasting with Monthly or Quarterly Data, 681
16.8. Index Numbers, 687
Price Indexes, 687
Aggregate Price Indexes, 689
Weighted Aggregate Price Indexes, 691
Some Common Price Indexes, 693
16.9. Pitfalls Concerning Time-Series Forecasting, 694
Summary, 695
Key Equations, 696
Key Terms, 697
Chapter Review Problems, 697
Managing the Springville Herald, 700
Web Case, 700
References, 701
Excel Companion to Chapter 16, 702
17. Decision Making, 705
Using Statistics @ Reliable Fund, 706
17.1. Payoff Tables and Decision Trees, 706
17.2. Criteria for Decision Making, 711
Expected Monetary Value, 711
Expected Opportunity Loss, 713
Return-to-Risk Ratio, 715
17.3. Decision Making with Sample Information, 720
17.4. Utility, 725
Summary, 726
Key Equations, 726
Key Terms, 726
Chapter Review Problems, 727
Web Case, 729
References, 730
Excel Companion to Chapter 17, 731
18. Statistical Applications in Quality Management, 733
Using Statistics @ Beachcomber Hotel, 734
18.1. Total Quality Management, 734
18.2. Six Sigma Management, 737
18.3. The Theory of Control Charts, 737
18.4. Control Chart for the Proportion: The p Chart, 740
18.5. The Red Bead Experiment: Understanding Process Variability, 746
18.6. Control Charts for the Range and the Mean, 748
The R Chart, 748
The X̄ Chart, 751
18.7. Process Capability, 754
Customer Satisfaction and Specification Limits, 755
Capability Indexes, 757
CPL, CPU, and C_pk, 758
Summary, 760
Key Equations, 761
Key Terms, 762
Chapter Review Problems, 762
The Harnswell Sewing Machine Company Case, 765
Managing the Springville Herald, 768
References, 769
Excel Companion to Chapter 18, 771
Appendices, 775
A. Review of Arithmetic, Algebra, and Logarithms, 776
B. Summation Notation, 778
C. Statistical Symbols and Greek Alphabet, 781
D. Student CD-ROM Contents, 782
E. Tables, 789
F. FAQs About Using Microsoft Excel and PHStat2, 814
Self-Test Solutions and Answers to Select Even-Numbered Problems, 817
Index, 853
Key Formulas, B-1

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