,SOLUTION MANUAL FOR APPLIED STATISTICS IN BUSINESS AND
ECONOMICS 6TH EDITION (INDIAN EDITION) BY DAVID DOANE,
LORI SEWARD
Chapter 1
Overview of Statistics
1.1 a. Statistics can be used to 1) determine what a typical commission is and then 2) use that
value to identify commissions that appear to be unusually high.
b. She could use statistics to show the average energy use compared to previous models.
She could also use statistics to show how durable the monitor would be in the field.
c. He could use statistics to calculate the average absenteeism at each plant and then
compare across the three plants.
d. He could calculate average number of defects in each shipment. He could determine
variation in number of defects between the three shipments.
Learning Objective: 01-1
1.2 a. He could calculate the job turnover for each gender for each restaurant. He could then
look at the difference between the various restaurants as well as the difference between
genders.
b. He could calculate the average number of emails received and sent for employees in
different job classifications and make comparisons.
c. The portfolio manager could calculate both the average return and the variation on return
for the six different investments and make comparisons.
d. By studying the busiest times of day for surgery, the administrator could work with
surgeons to spread their surgeries out to better use the facilities. He might also look at
which surgeries take the longest and which are shorter to help with scheduling.
Learning Objective: 01-1
1.3 a. The average business school graduate should expect to use computers to manipulate the
data.
b. Answers will vary. Weak quantitative skills lead to poor decision making because data-
based decision making is a hallmark of successful businesses. If one cannot analyze
data or understand summary analyses, one will be making decisions without full
information.
Learning Objective: 01-2
1.4 a. Answers will vary. Why Not Study: It is difficult to become a statistical “expert” after
taking one introductory college course. A business person should hire statistical experts
and have faith that those who are using statistics are doing it correctly. Why Study: In
fact, most college graduates will use statistics every day. Relying on a consultant to
perform simple or even complex statistical analyses means turning over part of the
business decision-making to someone who doesn’t know your business as well as you
do.
b. Answers will vary. Answers provided in part a will be similar for the subjects of
accounting. Foreign languages are essential in this global business environment of
today. While learning a foreign language can take considerably more time as an adult,
1
,the investment is worth it. Businesses are looking for college graduates that have
2
, quantitative skills and speak a foreign language. Chinese and Spanish are popular
choices.
c. To arrive at an absurd result, and then conclude the original assumption must have been
wrong, since it gave us this absurd result. This is also known as proof by contradiction.
It makes use of the law of excluded middle — a statement which cannot be false, must
then be true. If you state that you will never use statistics in your business profession
then you might conclude that you shouldn’t study statistics. However, the original
assumption of never using statistics is wrong; therefore the conclusion of not needing to
study statistics is also wrong.
Learning Objective: 01-2
1.5 a. Answers will vary.
b. An hour with an expert at the beginning of a project could be the smartest move a
manager can make. A consultant is helpful when your team lacks certain critical skills,
or when an unbiased or informed view cannot be found inside your organization.
Expert consultants can handle domineering or indecisive team members, personality
clashes, fears about adverse findings, and local politics. As in any business decision, the
costs of paying for statistical assistance must be weighed against the benefits. Costs
are: statistician’s time, more time invested in the beginning of a project which may
mean results are not immediate. Benefits include: better sampling strategies which can
result in more useful data, a better understanding of what information can be extracted
from the data, greater confidence in the results.
Learning Objective: 01-2
1.6 a. The ethical issue is that credit card companies are using unfair marketing practices to
entice students to use credit cards. Students are a vulnerable group that has not been
educated about personal finance. Credit card companies are also purchasing student
lists from universities and various student groups. This is also an unethical practice by
the universities.
b. They used an in-person survey given to 1500 students. These students were randomly
solicited at popular places on campus. The sampling technique was a convenience
sample. The report did not attempt to make inferences about the population of college
students. The report simply provided statistics collected from their sample. The naïve
reader would most likely make the inference that the numbers from the sample apply to
the population as a whole. This should be made clearer in the report.
c. The subjects surveyed include 1) how students pay for their education, 2) how they use
credit cards, 3) how many of them use credit cards, and 4) attitudes toward credit card
marketing on campus. It would be interesting to see what the questions were and how
they were worded.
d. Because the survey focused on students’ opinions and did not provide information about
credit card use by the general population it is difficult to conclude that the marketing
practices companies use on campuses are different from those used to market cards to
the general public. Furthermore, it was not obvious that those students who had credit
cards obtained those cards as a direct result of the campus marketing efforts. What was
impressive was the amount of research the group did to support their claims of
unethical practices. The references to other reports and court cases were a better support
for their claims in question 1.
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