This lecture re-hashes the rationale behind the Student's t-test, the Chi-squared test, and methods in hypothesis testing in general (both parametric and non-parametric). It then discusses issues in taking data both across simulation replications and within simulation replications and introduces the concepts of non-terminating systems (and their steady-state simulation models) and terminating systems (and their transient simulation models). Finally, how these ideas are implemented in Arena is demonstrated. The rest of the Arena demonstration will be continued in the next lecture.