Business Statistics: For Contemporary Decision Making, 8th Edition

CHAPTER 16

Analysis of Categorical Data

LEARNING OBJECTIVES

The overall objective of this chapter is to give you an understanding of two statistical techniques used to analyze categorical data, thereby enabling you to:

1. Use the chi-square goodness-of-fit test to analyze probabilities of multinomial distribution trials along a single dimension.

2. Use the chi-square test of independence to perform contingency analysis.

Selecting Suppliers in the Electronics Industry

What criteria are used in the electronics industry to select a supplier? In years past, price has been the dominant criterion of suppliers in many industries, and the supplier with the low bid often got the job. In more recent years, companies have been forced by global competition and a marked increase in quality to examine other aspects of potential suppliers.

Pearson and Ellram investigated the techniques used by firms in the electronics industry to select suppliers, and they wanted to determine if there is a difference between small and large firms in supplier selection. They sent out a survey instrument with questions about criteria used to select and evaluate suppliers, the participation of various functional areas in the selection process, and the formality of methods used in the selection. Of the 210 survey ...