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Numerical Measures
Chapter 03
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
LEARNING OBJECTIVES
3-2
Parameter vs. Statistics
PARAMETER A measurable characteristic of a
population.
3-3
LO 3-1 Explain the concept of
central tendency.
Central Tendency –
Measures of Location
The purpose of a measure of location is to
pinpoint the center of a distribution of data.
There are many measures of location. We will
consider four:
1. The arithmetic mean
2. The weighted mean
3. The median
4. The mode
3-4
LO 3-2 Identify and compute
the arithmetic mean.
3-5
LO 3-2
Population Mean
For ungrouped data, the population mean is the
sum of all the population values divided by the total
number of population values:
3-6
LO 3-2
3-7
LO 3-2
This is a population because we are considering all the exits on I-75 in the state of
Kentucky.
3-8
LO 3-2
Sample Mean
3-9
LO 3-2
3-10
LO 3-2
3-11
LO 3-3 Compute and interpret
the weighted mean.
Weighted Mean
3-12
LO 3-3
3-13
LO 3-4 Determine the median.
The Median
MEDIAN The midpoint of the values after they have been
ordered from the smallest to the largest, or the largest to the
smallest.
3-14
LO 3-4
EXAMPLES – Median
The ages for a sample of five The heights of four
college students are: basketball players, in inches,
21, 25, 19, 20, 22 are:
EXAMPLES – Median
3-16
LO 3-4
EXAMPLES – Median
Original sample data set:
The Mode
3-18
LO 3-5
Example – Mode
Using the data regarding the
distance in miles between
exits on I-75 through
Kentucky. The information is
repeated below. What is the
modal distance?
3-19
LO 3-5
A company has
developed five bath
oils. The bar chart on
the right shows the
results of a marketing
survey designed to
find which bath oil
consumers prefer.
3-20
LO 3-2,4,5
3-21
LO 3-2,4,5
The Relative Positions of the Mean, Median,
and the Mode
3-22
LO 3-6 Explain and apply
Dispersion measures of dispersion.
A measure of location, such as the mean or the median, only describes the center of the
data. It is valuable from that standpoint, but it does not tell us anything about the
spread of the data.
For example, if your nature guide told you that the river ahead averaged 3 feet in depth,
would you want to wade across on foot without additional information? Probably not.
You would want to know something about the variation in the depth.
A second reason for studying the dispersion in a set of data is to compare the spread in two
or more distributions.
3-23
LO 3-6
Measures of Dispersion
Range
Mean Deviation
3-24
LO 3-6
EXAMPLE – Range
The number of cappuccinos sold at the Starbucks location in the Orange
Country Airport between 4 and 7 p.m. for a sample of 5 days last year
were 20, 40, 50, 60, and 80. Determine the range for the number of
cappuccinos sold.
3-25
LO 3-6
Mean Deviation
3-26
LO 3-6
x=
x = 20 + 40 + 50 + 60 + 80 = 50
n 5
3-27
LO 3-6
Step 3: Sum the absolute differences found in step 2, then divide by the
number of observations
3-28
LO 3-7 Compute and interpret the
standard deviation.
The variance and standard deviations are nonnegative and are zero
only if all observations are the same.
For populations whose values are near the mean, the variance and
standard deviation will be small.
For populations whose values are dispersed from the mean, the
population variance and standard deviation will be large.
The variance overcomes the weakness of the range by using all the
values in the population 3-29
LO 3-7
3-30
LO 3-7
= x 19 + 17 + ... + 34 + 10 348
= = = 29
N 12 12
3-31
LO 3-7
The number of traffic citations issued during the last 12 months in Beaufort
County, South Carolina, is reported below:
2
=
(X − ) 2
=
1,488
= 124
N 12
3-33
LO 3-7
Sample Variance
Where :
s 2 is the sample variance
X is the value of each observatio n in the sample
X is the mean of the sample
n is the number of observatio ns in the sample
3-34
LO 3-7
3-35
LO 3-7
Where :
s 2 is the sample variance
X is the value of each observatio n in the sample
X is the mean of the sample
n is the number of observatio ns in the sample
3-36
LO 3-7
Interpretations and Uses of the
Standard Deviation
The standard deviation is commonly used as a
measure to compare the spread in two or more
sets of observations.
Biweekly $
Invested in Dupree
Paint Company
Georgia Texas
Standard
$7.51 $10.74
Deviation
3-37
LO 3-8 Explain Chebyshev’s Theorem
and the Empirical Rule.
Chebyshev’s Theorem
The arithmetic mean biweekly amount contributed by the Dupree Paint
employees to the company’s profit-sharing plan is $51.54, and the
standard deviation is $7.51. At least what percent of the
contributions lie within plus 3.5 standard deviations and minus 3.5
standard deviations of the mean?
3-38
LO 3-8
3-39
Ethics and Reporting Rules
3-40