Business Reference Guide: The Financial Applications of Mathematical Statistics
ebook
By The Editors of Salem Press

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This volume begins with an essay by Ruth A. Wienclaw that offers a sweeping overview of the underlying concepts
and uses of statistics. While she acknowledges that “statistics allow one to organize and interpret data that would
otherwise be incomprehensible,” she also notes that for statistics to be useful, “one must recognize… that there is an
underlying uncertainty and variability in data and collections of data.” She continues by outlining some of the errors
that can negatively impact results and by stressing the importance of choosing correct techniques before observing
how statistics only yield probabilities, not exact results. Two specific types of statistics, as discussed by Wienclaw, are
descriptive statistics and inferential statistics. Individuals and business often use descriptive statistics to help organize
and describe data. Inferential statistics, on the other hand, are most often used in the analysis of data and allow people
to develop conclusions about the data and the coinciding statistical significance. An example of a field that employs
the use of both types of statistics is engineering. Engineers use descriptive and inferential statistics to test hypotheses,
help with product design, and enact quality control measures. One of the common quality control tools is quality control
charts. These charts help managers monitor processes to determine whether or not the process is under control.
Engineers also use statistics to evaluate, improve, and optimize the processes in a manufacturing system. Proper usage
allows organizations to maintain high levels of effectiveness and efficiency.