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1 Excel 2007 for Business Statistics

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3 Thomas J. Quirk Excel 2007 for Business Statistics A Guide to Solving Practical Business Problems

5 This book is dedicated to the more than 3,000 students I have taught at Webster University s campuses in St. Louis, London, and Vienna; the students at Principia College in Elsah, Illinois; and the students at the Cooperative State University of Baden-W urttemburg in Heidenheim, Germany. These students taught me a great deal about the art of teaching. I salute them all, and I thank them for helping me to become a better teacher.

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7 Preface Excel 2007 for Business Statistics: A Guide to Solving Practical Business Problems helps anyone who wants to learn the basics of applying Excel s powerful statistical tools to their business or to their classes. If understanding statistics isn t your strongest suit, you are not mathematically inclined, or you are wary of computers, then this is the book for you. You ll learn how to perform key statistical tests in Excel without being overwhelmed by statistical theory. This book clearly and logically shows how to run statistical tests to solve practical business problems. Excel is a widely available computer program for students, instructors, and business managers. It is also an effective teaching and learning tool for quantitative analyses in business courses. Its powerful computational ability and graphical functions make learning statistics much easier than in years past. However, this is the first book to showcase Excel s usefulness in teaching business statistics. And it focuses exclusively on this topic in order to render the subject matter applicable and practical and easy to comprehend and apply. Unique features of this book: Includes 165 color screen shots so you can be sure you are performing Excel steps correctly. You will be told each step of the way, not only how to use Excel, but also why you are doing each step. Includes specific objectives embedded in the text for each concept, so you can know the purpose of the Excel steps. You will learn both how to write statistical formulas using Excel and how to use Excel s drop-down menus that will create the formulas for you. Statistical theory and formulas are explained in clear language without bogging you down in mathematical fine points. Practical examples of problems are taken from several functional areas of business, including marketing, management, human resources, and production. vii

9 Acknowledgements Excel 2007 for Business Statistics: A Guide to Solving Practical Business Problems is the result of inspiration from three important people: my two daughters and my wife. Jennifer Quirk McLaughlin invited me to visit her M.B.A. classes several times at the University of Witwatersrand in Johannesburg, South Africa. These visits to a first-rate M.B.A. program convinced me there was a need for a book to teach students how to solve practical business problems using Excel. Meghan Quirk-Horton s dogged dedication to learning the many statistical techniques needed to complete her Ph.D. dissertation illustrated the need for a statistics book that would make this daunting task more user-friendly. And Lynne Buckley-Quirk was the number-one cheerleader for this project from the beginning, always encouraging me and helping me remain dedicated to completing it. Sue Gold, a reference librarian at Webster University in St. Louis, was a valuable colleague in helping me to do key research and was a steady supporter of this idea. Brad Wolaver of Webster University improved my Office 2007 skills in many ways. Hannah Bracken at Springer guided this book through the production process and was a pleasure to work with. Marc Strauss, my editor at Springer, caught the spirit of this idea in our first phone conversation and shepherded this book through the idea stages until it reached its final form. His encouragement and support were vital to this book seeing the light of day. I thank him for being such an outstanding product champion throughout this process. ix

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11 Contents 1 Sample Size, Mean, Standard Deviation, and Standard Error of the Mean Mean Standard Deviation Standard Error of the Mean Sample Size, Mean, Standard Deviation, and Standard Error of the Mean Using the Fill/Series/Columns Commands Changing the Width of a Column Centering Information in a Range of Cells Naming a Range of Cells Finding the Sample Size Using the ¼COUNT Function Finding the Mean Score Using the ¼AVERAGE Function Finding the Standard Deviation Using the ¼STDEV Function Finding the Standard Error of the Mean Saving a Spreadsheet Printing a Spreadsheet Formatting Numbers in Currency Format (Two Decimal Places) Formatting Numbers in Number Format (Three Decimal Places) End-of-Chapter Practice Problems Reference Random Number Generator Creating Frame Numbers for Generating Random Numbers Creating Random Numbers in an Excel Worksheet xi

12 xii Contents 2.3 Sorting Frame Numbers into a Random Sequence Printing an Excel File So That All of the Information Fits onto One Page End-of-Chapter Practice Problems Reference Confidence Interval About the Mean Using the TINV Function and Hypothesis Testing Confidence Interval About the Mean How to Estimate the Population Mean Estimating the Lower Limit and the Upper Limit of the 95% Confidence Interval About the Mean Estimating the Confidence Interval of the Chevy Impala in Miles Per Gallon Where Did the Number 1.96 Come from? Finding the Value for t in the Confidence Interval Formula Using Excel s TINV Function to Find the Confidence Interval About the Mean Using Excel to Find the 95% Confidence Interval for a Car s Miles per Gallon Claim Hypothesis Testing Hypotheses Always Refer to the Population of People or Events that You Are Studying The Null Hypothesis and the Research (Alternative) Hypothesis The 7 Steps for Hypothesis Testing Using the Confidence Interval About the Mean Alternative Ways to Summarize the Result of a Hypothesis Test Different Ways to Accept the Null Hypothesis Different Ways to Reject the Null Hypothesis End-of-Chapter Practice Problems References One-Group t-test for the Mean The 7 STEPS for Hypothesis-Testing Using the One-Group t-test STEP 1: State the Null Hypothesis and the Research Hypothesis STEP 2: Select the Appropriate Statistical Test STEP 3: Decide on a Decision Rule for the One-Group t-test STEP 4: Calculate the Formula for the One-Group t-test... 69

13 Contents xiii STEP 5: Find the Critical Value of t in the t-table in Appendix E STEP 6: State the Result of Your Statistical Test STEP 7: State the Conclusion of Your Statistical Test in Plain English! One-Group t-test for the Mean Can You Use Either the 95% Confidence Interval About the Mean or the One-Group t-test When Testing Hypotheses? End-of-Chapter Practice Problems References Two-Group t-test of the Difference of the Means for Independent Groups The 9 STEPS for Hypothesis-Testing Using the Two-Group t-test STEP 1: Name One Group, Group 1, and the Other Group, Group STEP 2: Create a Table That Summarizes the Sample Size, Mean Score, and Standard Deviation of Each Group STEP 3: State the Null Hypothesis and the Research Hypothesis for the Two-Group t-test STEP 4: Select the Appropriate Statistical Test STEP 5: Decide on a Decision Rule for the Two-Group t-test STEP 6: Calculate the Formula for the Two-Group t-test STEP 7: Find the Critical Value of t in the t-table in Appendix E STEP 8: State the Result of Your Statistical Test STEP 9: State the Conclusion of Your Statistical Test in Plain English! FORMULA #1: Both Groups Have More than 30 People in Them An Example of Formula #1 for the Two-Group t-test FORMULA #2: One or Both Groups Have Less than 30 People in Them End-of-Chapter Practice Problems References

14 xiv Contents 6 Correlation and Simple Linear Regression What Is a Correlation? Understanding the Formula for Computing a Correlation Understanding the Nine Steps for Computing a Correlation, r Using Excel to Compute a Correlation Between Two Variables Creating a Chart and Drawing the Regression Line onto the Chart Using Excel to Create a Chart and the Regression Line Through the Data Points Printing a Spreadsheet so That the Table and Chart Fit Onto One Page Finding the Regression Equation Installing the Data Analysis ToolPak into Excel Using Excel to Find the SUMMARY OUTPUT of Regression Finding the Equation for the Regression Line Using the Regression Line to Predict the y-value for a Given x-value Adding the Regression Equation to the Chart How to Recognize Negative Correlations in the SUMMARY OUTPUT Table Printing Only Part of a Spreadsheet Instead of the Entire Spreadsheet Printing Only the Table and the Chart on a Separate Page Printing Only the Chart on a Separate Page Printing Only the SUMMARY OUTPUT of the Regression Analysis on a Separate Page End-of-Chapter Practice Problems References Multiple Correlation and Multiple Regression Multiple Regression Equation Finding the Multiple Correlation and the Multiple Regression Equation Using the Regression Equation to Predict Annual Sales Using Excel to Create a Correlation Matrix in Multiple Regression End-of-Chapter Practice Problems References

15 Contents xv 8 One-Way Analysis of Variance (ANOVA) Using Excel to Perform a One-Way Analysis of Variance (ANOVA) How to Interpret the ANOVA Table Correctly Using the Decision Rule for the ANOVA F-Test Testing the Difference Between Two Groups Using the ANOVA t-test Comparing Dierberg s Versus Shop n Save in Their Prices Using the ANOVA t-test End-of-Chapter Practice Problems References Appendix A: Answers to End-of-Chapter Practice Problems Appendix B: Practice Test References Appendix C: Answers to Practice Test Appendix D: Statistical Formulas Appendix E: t-table Index

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