Statistics in Business

Dr. Ahmed Abdulrazzaq Mohammed

Department of Data Science & Information
Technology -UT

by/Dr .Ahmed abdulrazzaq Mohammed

 LECTURE (5)


Measures of Dispersion
 Variance
 Standard Deviation
 Coefficient of Variation

Measure of the Skewness & the Kurtosis

by/Dr .Ahmed abdulrazzaq Mohammed

The Standard Deviation
Steps for Calculating Standard Deviation

1. Calculate the difference between each

value and the mean.
2. Square each difference.
3. Add the squared differences.
4. Divide this total by n to the variance.
5. Take the square root of the sample
variance to get the standard deviation.

by/Dr.Ahmed abdulrazzaq Mohammed

 The Standard Deviation& The variance

 Raw Data

The Standard Deviation

The variance
N

 (X
N
 X)  i
2
i (X  X ) 2

S.D  i 1
S.2  i 1
N N
Where
Xi : Observation
X the mean

N: Sample size

by/Dr.Ahmed abdulrazzaq Mohammed

 The Standard Deviation& The variance
 Grouped Data
The variance
The Standard Deviation
N

i i
N

 f (X  X )
i i
2 f (X  X ) 2

S.D  i 1
S.2  i 1

f i f i

Where
Xi : mid-point
: X: the mean

by/Dr.Ahmed abdulrazzaq Mohammed

Example1:compute the S.D for the following data
20 ,30,40,50 ,60,70,90,95
Solution n

X i
20  30    95
1- commutation of the mean X  i 1
  56.87
n 8
2 computation of The mean deviation

xi 𝒙𝒊 -𝒙 𝟐
𝒙𝒊 −𝒙

20 -37 1369
30 -27 729
40 -17 289
50 -7 49
60 3 9
70 13 169
90 33 1089
95 38 1444
sum 5147
by/Dr.Ahmed abdulrazzaq Mohammed
 N

 i
(X  X ) 2

S.D  i 1
N

5147
S.D   643.375  25.36
8

by/Dr.Ahmed abdulrazzaq Mohammed

 Example2:compute the S.D for the
following data
Class f X XF (𝒙𝒊 − 𝒙) (𝒙𝒊 − 𝒙)2 Fi(𝒙𝒊 − 𝒙)2

10-20 4
15 60 -19 361 1444
20-30 6
25 150 -9 81 486
30-40 5
35 175 1 1 5
40-50 3
45 135 11 121 363
50-60 4
55 220 21 441 1764
sum 22
740 4062
n

X i Fi
740
X  i 1
n
  34
F
22
i
i 1
by/Dr.Ahmed abdulrazzaq Mohammed
 The Standard Deviation

i i
f (X  X ) 2

S.D  i 1

f i

4062
S.D   184.63  13.58
22

The variance
N

i i
f (X  X ) 2

S2  184.63
S. 
2 i 1

f i

by/Dr.Ahmed abdulrazzaq Mohammed

Measures of Dispersion:
The Coefficient of Variation
 Measures relative variation
 Always in percentage (%)
 Shows relative variation to mean

 S.D 
CV    *100

 X 

by/Dr.Ahmed abdulrazzaq Mohammed

 Example3:compute the C.V for the data
in Example2

 S.D 
CV    *100

 X 
 13.58 
CV    *100  39.96%
 34 

by/Dr.Ahmed abdulrazzaq Mohammed

 

Measures of the Skewness & the

Kurtosis
 The shape of the distribution provides information
about the central tendency and variability of
measurements.
 Three common shapes of distributions are:
◦ Normal: bell-shaped curve; symmetrical
◦ Skewed: non-normal; non-symmetrical; can be
positively or negatively skewed
◦ Multimodal: has more than one peak (mode
 When the median and the mean are different, the
distribution is skewed. The greater the difference, the
greater the skew

by/Dr.Ahmed abdulrazzaq Mohammed

 

Measures of the Skewness & the

Kurtosis

Mean Mean Mean

Mode Mode
Median
Median Mode
Median

Negatively Symmetric Positively

Skewed (Not Skewed) Skewed

by/Dr.Ahmed abdulrazzaq Mohammed

 ◦ Normal Distribution

40

35

30

25
Frequency

20 Frequency

15

10

0
10 - 15 - 20 - 25 - 30 - 35 -
< 10 > 39
14 19 24 29 34 39
Frequency 1 3 17 33 33 17 3 1
Number of Days

by/Dr.Ahmed abdulrazzaq Mohammed

 ◦ Positive Skewed Distribution

Age Distribution
60

50

40
Frequency

30

20

10

0
> 59 50 - 59 40 - 49 30 - 39 20 - 29 < 20
Frequency 40 50 40 20 15 12
Age Groups

by/Dr.Ahmed abdulrazzaq Mohammed

 ◦ Negative Skewed Distribution

1200

1000

800
Frequency

600

400

200

0
<100 100 - 199 200 - 299 300 - 399 400 - 499 500 - 600
Frequency 300 500 600 1000 1100 950
GRE - Numerical Scores

by/Dr.Ahmed abdulrazzaq Mohammed

Measures of Symmetry
 Pearson’s Skewness Coefficient
Formula = (mean-median)
SD
 Skewness values > 0.2 or < 0. 2 indicate
severe skewness

by/Dr.Ahmed abdulrazzaq Mohammed

Kurtosis
A measure of whether the curve of a
distribution is:
 Bell-shaped -- Mesokurtic
 Peaked -- Leptokurtic
 Flat -- Platykurtic

by/Dr.Ahmed abdulrazzaq Mohammed

 Formula = Kurtosis coefficient NB
Standard error of
kurtosis
 Kurtosisvalues >+1.96 SD
indicate severe kurtosis
NB: Calculating kurtosis coefficient & its
standard error is an option in most
descriptive statistics modules in
statistics programs

by/Dr.Ahmed abdulrazzaq Mohammed