BS Week1

Business Statistics
Introduction
Dr M K BARUA
DEPARTMENT OF MANAGEMENT STUDIES
1
For whom
B.B.A.
M.B.A.
B. Com.
B.E.
Part time professionals
2
What is statistics?
• A branch of mathematics taking and transforming
numbers into useful information for decision makers
• Methods for processing & analyzing numbers
• Methods for helping reduce the uncertainty inherent in

decision making
Types of Statistics
Descriptive Statistics Inferential Statistics
Collecting, summarizing, and Drawing conclusions and/or

describing data making decisions concerning a
population based only on
sample data
Why Study Statistics?
Decision Makers Use Statistics To:
 Present and describe business data and information properly
 Draw conclusions about large groups of individuals or items, using

information collected from subsets of the individuals or items.
 Make reliable forecasts about a business activity??
 Improve business processes.

Why Learn Statistics?
So you are able to make better sense of the
ubiquitous use of numbers:
– Business memos
– Business research
– Technical reports
– Technical journals
– Newspaper articles
– Magazine articles
Topics to be covered
• Introduction, data collection and presenting ,
• Measures of location and dispersion,
• Probability, probability distributions,
• Numerical descriptive measures and basic
probability,
• Discrete and continuous probability distributions,
• Sampling and sampling distributions.
7
• Confidence interval estimation
• One sample tests and hypothesis testing
• Two sample tests and ANOVA
• Chi-Square tests
• Simple linear regression
• Multiple regression basics
• Multiple regression analysis and problems
• Forecasting analysis
8
Introduction and Data Collection
Data: Are collection of any number of related
observations
Data set: A collection of data is data set
Data point: A single observation
Raw data: Information before it arranged and
analyzed
Data: Information + Noise

Example of raw data:
HS Colleage
3.6 2.5
High school and 2.6 2.7
college CGPA
2.7 2.2
3.7 3.2
4.0 3.8
Example of raw data:
2500.35 2500.30
2500.02 2500.10
Pounds of pressure
per square inch that 2500.34 2500.29
concrete can with
stand (10 batches)
2499.00 2499.00
2498.50 2500.00
Criteria/Tests for Evaluating Data
Criteria Issues Remarks
Specifications & Data collection method, response rate, quality & Data should be reliable, valid, &
Methodology analysis of data, sampling technique & size, generalizable to the problem.
questionnaire design, fieldwork.
Assess accuracy by comparing data from
Error & Accuracy Examine errors in approach, different sources.
research design, sampling, data
collection & analysis, & reporting. Census data are updated by syndicated
Currency Time lag between collection & firms.
publication, frequency of updates. The objective determines the relevance of
Objective Why were the data collected? data.
Reconfigure the data to increase their
Nature Definition of key variables, units of usefulness.
measurement, categories used, relationships examined.
Dependability Expertise, credibility, reputation, and trustworthiness of Data should be obtained from an original
the source. source.
Elements, Variables, and Observations
 The elements are the entities on which data are collected.
 A variable is a characteristic of interest for the elements.
 The set of measurements collected for a particular element is called an observation.
 The total number of data values in a data set is the number of elements multiplied by
the number of variables.
Data, Data Sets, Elements, Variables, and Observations
Variables
Element
Names Stock Annual Earn/
Company Exchange Sales($M) Share($)
Dataram AMEX 73.10 0.86

EnergySouth OTC 74.00 1.67
Keystone NYSE 365.70 0.86
LandCare NYSE 111.40 0.33
Psychemedics AMEX 17.60 0.13
Data Set
Business Statistics
Introduction
Dr M K BARUA
1
Types of Statistics
• Statistics
• The branch of mathematics that transforms data into
useful information for decision makers.
Descriptive Statistics Inferential Statistics
Collecting, summarizing, and Drawing conclusions and/or

describing data making decisions concerning a
population based only on
sample data
Descriptive Statistics
• Collect data
– e.g., Survey
• Present data
– e.g., Tables and graphs
• Characterize data
– e.g., Sample mean = X i
n
Inferential Statistics
• Estimation
– e.g., Estimate the population
mean weight using the sample
mean weight
• Hypothesis testing
– e.g., Test the claim that the
population mean weight is 120
pounds
Drawing conclusions about a large group of individuals based on a subset of the large group.
Basic Vocabulary of Statistics
VARIABLE
A variable is a characteristic of an item or individual.
DATA
Data are the different values associated with a variable.
POPULATION
SAMPLE
PARAMETER
STATISTIC
POPULATION
A population consists of all the items or individuals about which you want to draw a conclusion.
Ex: People who live within 25 kms of radius from center of the city.
SAMPLE
A sample is the portion of a population selected for analysis. It has to be representative.
PARAMETER
A parameter is a numerical measure that describes a characteristic of a population.
STATISTIC
A statistic is a numerical measure that describes a characteristic of a sample.
Population vs. Sample
Population Sample
Measures used to describe the Measures computed from

population are called parameters sample data are called statistics
9
Which is better : Samplings or complete enumeration?
Double counting example: Truck association claims that “75 % of the
items you receive at home come from trucks”. Does it mean 25 %
Rail, Airplane, Ship.
Benefits of sample
• Less time
• Less expensive
• Population is large
• Nature of measurement is destructive?
Why Collect Data?
 A marketing research analyst needs to assess the effectiveness of a new television advertisement.
 A pharmaceutical manufacturer needs to determine whether a new drug is more effective than
those currently in use.
 An operations manager wants to monitor a manufacturing process to find out whether the quality
of the product being manufactured is conforming to company standards.
 An auditor wants to review the financial transactions of a company in order to determine whether
the company is in compliance with generally accepted accounting principles.
Why Collect Data?
 Teachers,
 Consultants,
 Industrialists,
 Counselors,
 Administrators,
 Managers,
 Parents, and
 Students, need to seek information in order to perform their jobs.

Sources of Data
 Primary Sources: The data collector is the one using the data for
analysis
 Data from a political survey
 Data collected from an experiment
 Observed data
 Secondary Sources: The person performing data analysis is not

the data collector
 Analyzing census data
 Examining data from print journals or data published on the internet.
Types of Variables
 Categorical (qualitative) variables have values
that can only be placed into categories, such as
“yes” and “no.”
 Numerical (quantitative) variables have values

that represent quantities.
Types of Data
Data
Categorical Numerical
Examples:
 Marital Status
 Political Party
 Eye Color
(Defined categories) Discrete Continuous
Examples: Examples:
 Number of Children  Weight
 Defects per hour  Voltage
(Counted items) (Measured characteristics)
Scales of Measurement
Scales of measurement include:
Nominal Interval
Ordinal Ratio
The scale determines the amount of information contained in the data.
The scale indicates the data summarization and statistical analyses that are most
appropriate.
• Nominal
Data are labels or names used to identify an attribute of the element.
A nonnumeric label or numeric code may be used.

 Nominal
Example:
Students of a university are classified by the school in which they are enrolled
using a nonnumeric label such as Business, Humanities, Education, and so on.
Alternatively, a numeric code could be used for the school variable
(e.g. 1 denotes Business,2 denotes Humanities, 3 denotes Education, and so on).
• Ordinal
The data have the properties of nominal data and
the order or rank of the data is meaningful.

Business Statistics
Introduction
Dr M K BARUA
1
 Nominal
Example:
Students of a university are classified by the school in which they are enrolled
using a nonnumeric label such as Business, Humanities, Education, and so on.
Alternatively, a numeric code could be used for the school variable
(e.g. 1 denotes Business,2 denotes Humanities, 3 denotes Education, and so on).
• Ordinal
The data have the properties of nominal data and
the order or rank of the data is meaningful.

• Ordinal
Example:
Students of a university are classified by their class standing using a nonnumeric label
such as Freshman, Sophomore, Junior, or Senior.
Alternatively, a numeric code could be used for the class standing variable (e.g. 1 denotes
Freshman, 2 denotes Sophomore, 3 denotes Junior, 4 denotes Senior).
 Interval
The data have the properties of ordinal data, and

the interval between observations is expressed in
terms of a fixed unit of measure.
Interval data are always numeric.

• Interval Example:
Melissa has an SAT score of 1205, while Kevin
has an SAT score of 1090. Melissa scored 115
points more than Kevin.
• Ratio
The data have all the properties of interval data
and the ratio of two values is meaningful.
Variables such as distance, height, weight, and time

use the ratio scale.
This scale must contain a zero value that indicates

that nothing exists for the variable at the zero point.
• Ratio
Example:
Melissa’s college record shows 36 credit hours
earned, while Kevin’s record shows 72 credit
hours earned. Kevin has twice as many credit
hours earned as Melissa.
Qualitative and Quantitative Data
Data can be further classified as being qualitative

or quantitative.
The statistical analysis that is appropriate depends

on whether the data for the variable are qualitative
or quantitative.
In general, there are more alternatives for statistical

analysis when the data are quantitative.
Qualitative Data
Labels or names used to identify an attribute of each element
Often referred to as categorical data
Use either the nominal or ordinal scale of measurement
Can be either numeric or nonnumeric
Appropriate statistical analyses are rather limited

Quantitative Data
Quantitative data indicate how many or how much:
discrete, if measuring how many
continuous, if measuring how much
Quantitative data are always numeric.
Ordinary arithmetic operations are meaningful for quantitative data.

Data
Qualitative Quantitative
Numerical Nonnumerical Numerical
Nominal Ordinal Nominal Ordinal Interval Ratio

Cross-Sectional Data
Cross-sectional data are collected at the same or

approximately the same point in time.
Example: data detailing the number of building

permits issued in June 2017 in each of the District
of India
Time Series Data
Time series data are collected over several time

periods.
Example: data detailing the number of building

permits issued in a city in the last 36 months
Data Sources
• Existing Sources
Within a firm – almost any department

Business database services – NSE.
Government agencies – Ministries
Industry associations – FICCI,CII,etc
Special-interest organizations – AICTE,MCI,Graduate Management

Admission Council
Internet – more and more firms

Data Sources
• Statistical Studies
In experimental studies the variables of interest
are first identified. Then one or more factors are
controlled so that data can be obtained about how
the factors influence the variables.
In observational (nonexperimental) studies no

attempt is made to control or influence the
variables of interest.
a survey is a
good example
Data Acquisition Considerations
Time Requirement
• Searching for information can be time consuming.
• Information may no longer be useful by the time it is available.
Cost of Acquisition
• Organizations often charge for information even when it is not their
• primary business activity.
Data Errors
• Using any data that happens to be available or that were acquired with
• little care can lead to poor and misleading information.
Descriptive Statistics
• Descriptive statistics are the tabular, graphical,
and numerical methods used to summarize data.
Example: Hudson Auto Repair
The manager of Hudson Auto
would like to have a better
understanding of the cost
of parts used in the engine
tune-ups performed in the
shop. He examines 50
customer invoices for tune-ups. The costs of parts,
rounded to the nearest Rs, are listed on the next
slide.
Example: Hudson Auto Repair
91 78 93 57 75 52 99 80 97 62
71 69 72 89 66 75 79 75 72 76
104 74 62 68 97 105 77 65 80 109
85 97 88 68 83 68 71 69 67 74
62 82 98 101 79 105 79 69 62 73
Tabular Summary:
Frequency and Percent Frequency
Parts Parts Percent

Cost (Rs) Frequency Frequency
50-59 2 4
60-69 13 26
??????
70-79 16 32
80-89 7 14
90-99 7 14
100-109 5 10
50 100
Graphical Summary: Histogram
Tune-up Parts Cost
18
16
14
Frequency 12
10
8
6
4
2
Parts
50-59 60-69 70-79 80-89 90-99 100-110 Cost (Rs)
Numerical Descriptive Statistics
 The most common numerical descriptive statistic is the average (or mean).
 Hudson’s average cost of parts, based on the 50 tune-ups studied, is Rs79

(found by summing the 50 cost values and then dividing by 50).
Statistical Inference
Population - the set of all elements of interest in a

particular study
Sample - a subset of the population
Statistical inference - the process of using data obtained

from a sample to make estimates
and test hypotheses about the
characteristics of a population
Census - collecting data for a population
Sample survey - collecting data for a sample

Process of Statistical Inference
1. Population
consists of all 2. A sample of 50
tune-ups. Average engine tune-ups
cost of parts is is examined.
unknown.
4. The sample average

3. The sample data
provide a sample
is used to estimate the average parts cost
population average. of Rs79 per tune-up.
Personal Computer Programs Used For Statistics
• Minitab
– A statistical package to perform statistical analysis
– Designed to perform analysis as accurately as possible
• Microsoft Excel
– A multi-functional data analysis tool
– Can perform many functions but none as well as programs that are dedicated to a single
function.
• Both Minitab and Excel use worksheets to store data

You are using programs properly if you can
• Understand how to operate the program
• Understand the underlying statistical concepts
• Understand how to organize and present information
• Know how to review results for errors
• Make secure and clearly named backups of your work

Lecture Summary
 Reviewed why a manager needs to know statistics
 Introduced key definitions:
 Population vs. Sample
 Primary vs. Secondary data types
 Categorical vs. Numerical data
 Examined descriptive vs. inferential statistics

 Reviewed data types
 Discussed Minitab and Microsoft Excel terms
Business Statistics
Introduction
Dr M K BARUA
1
For whom
B.B.A.
M.B.A.
B. Com.
B.E.
Part time professionals
2
What is statistics?
• A branch of mathematics taking and transforming
numbers into useful information for decision makers
• Methods for processing & analyzing numbers
• Methods for helping reduce the uncertainty inherent in

decision making
Presenting Data in Tables and Charts
Categorical Data Are Summarized By Tables & Graphs
Categorical Data
Tabulating Data Graphing Data
Summary Bar Charts Pie Charts Pareto

Table Chart
Organizing Categorical Data: Summary Table
 A summary table indicates the frequency, amount, or percentage of
items in a set of categories so that you can see differences between
categories.
Banking Preference? Percent

ATM 16%
Automated or live telephone 2%
Drive-through service at branch 17%
In person at branch 41%
Internet 24%
Bar and Pie Charts
• Bar charts and Pie charts are often used

for categorical data.
• Length of bar or size of pie slice

shows the frequency or percentage
for each category.
Organizing Categorical Data: Bar Chart
 In a bar chart, a bar shows each category, the length of which represents the amount, frequency or percentage
of values falling into a category.
Banking Preference
Internet
In person at branch
Drive-through service at branch
Automated or live telephone
ATM
0% 20% 40% 60%

Organizing Categorical Data: Pie Chart
 The pie chart is a circle broken up into slices that represent categories. The size of each slice of the pie varies
according to the percentage in each category.
Banking Preference
ATM
Automated or live
16% 2% telephone
24%
Drive-through service at
17% branch
41% In person at branch
Internet
Organizing Categorical Data: Pareto Chart
• Used to portray categorical data (nominal scale)
• A vertical bar chart, where categories are shown in descending
order of frequency
• A cumulative polygon is shown in the same graph
• Used to separate the “vital few” from the “trivial many”
Organizing Categorical Data: Pareto Chart
Pareto Chart For Banking Preference
100% 100%
% in each category
80% 80%
Cumulative %
(line graph)
(bar graph)
60% 60%
40% 40%
20% 20%
0% 0%
In person Internet Drive- ATM Automated
at branch through or live
service at telephone
branch
Tables and Charts for Numerical Data
Numerical Data
Frequency Distributions and

Ordered Array Cumulative Distributions
Stem-and-Leaf
Display Histogram Polygon Ogive
Organizing Numerical Data: Ordered Array
 An ordered array is a sequence of data, in rank order, from the smallest value to the largest value.
 Shows range (minimum value to maximum value)
 May help identify outliers (unusual observations)
 Which values appear more than one
 Divide data in sections ( Day students- 1/3rd of data below 18, 2/3rd below 22,etc)
Age of Day Students

Surveyed
16 17 17 18 18 18
College
Students 19 19 20 20 21 22
22 25 27 32 38 42
Night Students
18 18 19 19 20 21
23 28 32 33 41 45
Stem-and-Leaf Display
• A simple way to see how the data are

distributed and where concentrations
of data exist
METHOD:Separate the sorted data series

into leading digits (the stems) and
the trailing digits (the leaves)
Organizing Numerical Data: Stem and Leaf Display
 A stem-and-leaf display organizes data into groups (called

stems) so that the values within each group (the leaves)
branch out to the right on each row.
Age of Day Students

Age of College Students
Surveye
d
16 17 17 18 18 18 Day Students Night Students
College 19 19 20 20 21 22
Stem Leaf Stem Leaf
Students 22 25 27 32 38 42
1 67788899 1 8899
Night Students
18 18 19 19 20 21 2 0012257 2 0138
23 28 32 33 41 45
3 28 3 23
4 2
4 15
Stem and Leaf plot for decimal numbers
Organizing Numerical Data: Frequency Distribution
 The frequency distribution is a summary table in which the data are arranged into numerically
ordered classes.
 You must give attention to selecting the appropriate number of class groupings for the table, determining
a suitable width of a class grouping, and establishing the boundaries of each class grouping to avoid
overlapping.
 The number of classes depends on the number of values in the data. With a larger number of values,
typically there are more classes. In general, a frequency distribution should have at least 5 but no more
than 15 classes.
 To determine the width of a class interval, you divide the range (Highest value–Lowest value) of the
data by the number of class groupings desired.
Organizing Numerical Data: Frequency Distribution Example
Example: A manufacturer of insulation randomly selects 20 winter days and records the daily
high temperature
24, 35, 17, 21, 24, 37, 26, 46, 58, 30, 32, 13, 12, 38, 41, 43, 44, 27, 53, 27
 Sort raw data in ascending order:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
 Find range: 58 - 12 = 46
 Select number of classes: 5 (usually between 5 and 15)
 Compute class interval (width): 10 (46/5 then round up)
 Determine class boundaries (limits):
 Class 1: 10 to less than 20
 Compute class midpoints: 15, 25, 35, 45, 55
 Count observations & assign to classes
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
Relative
Class Frequency Percentage
Frequency
10 but less than 20 3 .15 15
20 but less than 30 6 .30 30
30 but less than 40 5 .25 25
40 but less than 50 4 .20 20
50 but less than 60 2 .10 10
Total 20 1.00 100

Tabulating Numerical Data: Cumulative Frequency
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
Cumulative Cumulative
Frequency Percentage
10 but less than 20 3 15 3 15

20 but less than 30 6 30 9 45
30 but less than 40 5 25 14 70
40 but less than 50 4 20 18 90
50 but less than 60 2 10 20 100
Total 20 100
Why Use a Frequency Distribution?
• It condenses the raw data into a more useful form

• It allows for a quick visual interpretation of the data
• It enables the determination of the major characteristics of
the data set including where the data are concentrated /
clustered
Frequency Distributions: Some Tips
• Different class boundaries may provide different pictures for the same data (especially
for smaller data sets)
• Shifts in data concentration may show up when different class boundaries are chosen
• As the size of the data set increases, the impact of alterations in the selection of class
boundaries is greatly reduced
• When comparing two or more groups with different sample sizes, you must use either a
relative frequency or a percentage distribution
Organizing Numerical Data: The Histogram
 A vertical bar chart of the data in a frequency distribution is called a histogram.
 In a histogram there are no gaps between adjacent bars.
 The class boundaries (or class midpoints) are shown on the horizontal axis.
 The vertical axis is either frequency, relative frequency, or percentage.
 The height of the bars represent the frequency, relative frequency, or percentage.
Relative
Frequency
10 but less than 20 3 .15 15

20 but less than 30 6 .30 30
30 but less than 40 5 .25 25 Histogram: Daily High Temperature
40 but less than 50 4 .20 20
50 but less than 60 2 .10 10 7
Total 20 1.00 100
6
5
Frequency
4
(In a percentage histogram
the vertical axis would be
3
defined to show the percentage 2
of observations per class)
1
0
5 15 25 35 45 55 More
Organizing Numerical Data: The Polygon
 A percentage polygon is formed by having the midpoint of each class
represent the data in that class and then connecting the sequence of
midpoints at their respective class percentages.
 The cumulative percentage polygon, or ogive, displays the variable of

interest along the X axis, and the cumulative percentages along the Y axis.
 Useful when there are two or more groups to compare.

Graphing Numerical Data:The Frequency Polygon
Class
Class Frequency
Midpoint
10 but less than 20 15 3
30 but less than 40 35 5 Frequency Polygon: Daily High Temperature
7
6
Frequency
5
4
3
2
(In a percentage polygon the 1
vertical axis would be defined to 0
show the percentage of 5 15 25 35 45 55 65
observations per class)
Class Midpoints
Business Statistics
Introduction
Dr M K BARUA
1
Relative
Frequency
10 but less than 20 3 .15 15

20 but less than 30 6 .30 30
30 but less than 40 5 .25 25 Histogram: Daily High Temperature
40 but less than 50 4 .20 20
50 but less than 60 2 .10 10 7
Total 20 1.00 100
6
5
Frequency
4
(In a percentage histogram
the vertical axis would be
3
defined to show the percentage 2
of observations per class)
1
0
5 15 25 35 45 55 More
Organizing Numerical Data: The Polygon
 A percentage polygon is formed by having the midpoint of each class
represent the data in that class and then connecting the sequence of
midpoints at their respective class percentages.
 The cumulative percentage polygon, or ogive, displays the variable of

interest along the X axis, and the cumulative percentages along the Y axis.
 Useful when there are two or more groups to compare.

Graphing Numerical Data:The Frequency Polygon
Class
Class Frequency
Midpoint
30 but less than 40 35 5 Frequency Polygon: Daily High Temperature
7
6
Frequency
5
4
3
2
(In a percentage polygon the 1
vertical axis would be defined to 0
show the percentage of 5 15 25 35 45 55 65
observations per class)
Class Midpoints
Graphing Cumulative Frequencies: The Ogive (Cumulative % Polygon)
Relative
Frequency
10 but less than 20 3 .15 15

20 but less than 30 6 .30 30
Lower % less 30 but less than 40 5 .25 25
class than lower 40 but less than 50 4 .20 20
Class boundary boundary 50 but less than 60 2 .10 10
10 but less than 20 10 15 Total 20 1.00 100

Ogive: Daily High Temperature
Cumulative Percentage
100
80
60
40
20
(In an ogive the percentage of the
observations less than each lower 0
class boundary are plotted versus the
lower class boundaries.
10 20 30 40 50 60
Lower Class Boundary
Cross Tabulations
• Used to study patterns that may exist between two
or more categorical variables.
• Cross tabulations can be presented in

Contingency Tables
Cross Tabulations: The Contingency Table
 A cross-classification (or contingency) table presents the results of two categorical variables.
The joint responses are classified so that the categories of one variable are located in the rows
and the categories of the other variable are located in the columns.
 The cell is the intersection of the row and column and the value in the cell represents the data
corresponding to that specific pairing of row and column categories.
Cross Tabulations: The Contingency Table
A survey was conducted to study the importance of brand name to consumers as compared to a few years ago. The
results, classified by gender, were as follows:
Importance of Brand Name Male Female Total

More 450 300 750
Equal or Less 3300 3450 6750
Total 3750 3750 7500

Scatter Plots
 Scatter plots are used for numerical data consisting of paired observations taken from
two numerical variables
 One variable is measured on the vertical axis and the other variable is measured on the
horizontal axis
 Scatter plots are used to examine possible relationships between two numerical variables
Scatter Plot Example
Cost per Day vs. Production Volume

Volume per day Cost per day
23 125 250
26 140 200
Cost per Day

150
29 146
100
33 160 50
38 167 0
20 30 40 50 60 70
42 170
Volume per Day
50 188
55 195
60 200
Time Series Plot
• A Time Series Plot is used to study patterns in the values of a

numeric variable over time
• The Time Series Plot:

– Numeric variable is measured on the vertical axis and the time period is
measured on the horizontal axis
Time Series Plot Example
Year Number of Franchises
1996 43 Chart Title
1997 54 120
1998 60
100
1999 73
2000 82 80
2001 95 60
2002 107
40
2003 99
2004 95 20
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Principles of Excellent Graphs
 The graph should not distort the data.
 The graph should not contain unnecessary adornments (sometimes referred to as chart
junk).
 The scale on the vertical axis should begin at zero.
 All axes should be properly labeled.
 The graph should contain a title.
 The simplest possible graph should be used for a given set of data.
Graphical Errors: Chart Junk
Bad Presentation
Good Presentation
Minimum Wage
Minimum Wage
1960: $1.00 $
1970: $1.60 4
1980: $3.10 2
0
1990: $3.80
1960 1970 1980 1990
Graphical Errors: Chart Junk
Bad Presentation Good Presentation
Minimum Wage Minimum Wage

1960: $1.00
$
4
1970: $1.60
2
1980: $3.10
0
1990: $3.80 1960 1970 1980 1990
Graphical Errors: No Relative Basis

A’s received by A’s received by
Freq. students. % students.
30%
300
200 20%
100 10%
0 0%
FR SO JR SR FR SO JR SR
FR = Freshmen, SO = Sophomore, JR = Junior, SR = Senior

Graphical Errors: No Relative Basis

A’s received by A’s received by
Freq. students. % students.
30%
300
200 20%
100 10%
0 0%
FR SO JR SR FR SO JR SR
FR = Freshmen, SO = Sophomore, JR = Junior, SR = Senior

Graphical Errors: Compressing the Vertical Axis

Quarterly Sales Quarterly Sales
$ $
200 50
100 25
0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Graphical Errors: Compressing the Vertical Axis

Quarterly Sales Quarterly Sales
$ $
200 50
100 25
0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Graphical Errors: No Zero Point on the Vertical Axis
Bad Presentation
Monthly Sales $
$ Good Presentations
45
45
42 Monthly Sales
42 39
39 36
36 0
J F M A M J J F M A
Graphing the first six months of sales M J

Graphical Errors: No Zero Point on the Vertical Axis
Bad Presentation Good Presentations
Monthly Sales $ Monthly Sales

$ 45
45
42
42 39
39 36
36 0
J F M A M J J F M A M J
Graphing the first six months of sales

Summary
In this class, we have
 Organized categorical data using the summary table, bar chart, pie chart, and Pareto chart.
 Organized numerical data using the ordered array, stem-and-leaf display, frequency distribution,
histogram, polygon, and ogive.
 Examined cross tabulated data using the contingency table.
 Developed scatter plots and time series graphs.
 Examined the do’s and don'ts of graphically displaying data.

1. Use these data to construct relative frequency using (a) 7 equal
intervals and 13 equal intervals.
83 51 66 61 82 65 54 56 92 60 65 87 68 64 51 70 75 66
74 68 44 55 78 69 98 67 82 77 79 62 38 88 76 99 84 47
60 42 66 74 91 71 83 80 68 65 51 56 73 55
(b) Is policy appropriate for 50 % age people.

© Which distribution is better for (a)
(d) Could you estimate which interval is better between 45-50?
23
7 intervals 13 Intervals
Class Relative Class Relative Class Relative
Frequency Frequency Frequency
30-39 0.02 35-39 0.02 70-74 0.10
40-49 0.06 40-44 0.04 75-79 0.10
50-59 0.16 45-49 0.02 80-84 0.12
60-69 0.32 50-54 0.08 85-89 0.04
70-79 0.20 90-94 0.04
55-59 0.08
80-89 0.16 95-99 0.04
60-64 0.10
90-99 0.08
65-69 0.22 1.00
1.00
The 13-interval distribution gives a better estimate because it has a class for 45-49, whereas
the 7-interval distribution lumps together all observations between 40 and 49.
24
76-2. Construct a frequency distribution for these given data and a
relative frequency distribution. Use intervals of 6 days.
4 12 8 14 11 6 7 13 13 11 11 20 5 19 10 15 24 7 29 6
25
2. Construct a frequency distribution for these (20) given data and a
relative frequency distribution. Use intervals of 6 days.
4 12 8 14 11 6 7 13 13 11 11 20 5 19 10 15 24 7 29 6
Class 1-6 7-12 13-18 19-24 25-30

Frequency 4 8 4 3 1
Relative 0.20 0.40 0.20 0.15 0.05
Frequency
26
3. The frequency distribution of 150 people who use ski lift. Construct a histogram for these data.
Class Relative Frequency Class Relative Frequency
(weight-pounds )
75-89 10 150-164 23
90-104 11 165-179 9
105-119 23 180-194 9
120-134 26 195-209 6
135-149 31 210-224 2
(a) What can you see from histogram which you cannot infer from the
frequency distribution.
Histogram of Class
35
30
25
Frequency
20
15
10
0
82.5 97.5 112.5 127.5 142.5 157.5 172.5 187.5 202.5 217.5
Class
28
29
30
31
32
33
34
35
Solution:
1 T 11 F 21 F 31 C
2 T 12 F 22 D 32 E
3 F 13 T 23 B 33 E
4 F 14 T 24 A 34 E
5 T 15 F 25 C 35 E
6 T 16 F 26 C 36 B
7 T 17 T 27 A 37 Incomplete, biased
8 T 18 F 28 D 38 Representative
9 F 19 T 29 B 39 Data array, frequency distribution
10 F 20 F 30 E 40 Population, Sample
36
Numerical Descriptive Measures
Summary Definitions
• The central tendency is the extent to which all the data values group around a typical
or central value.
• The variation is the amount of dispersion, or scattering, of values
• The shape is the pattern of the distribution of values from the lowest value to the
highest value.
Measures of Central Tendency: The Mean
• The arithmetic mean (often just called
“mean”) is the most common measure of central tendency
• For a sample of size n:
The ith value

Pronounced x-bar
X i
X1  X 2    Xn
X i1

Sample size n n
Observed values
Measures of Central Tendency: The Mean
(continued)
• The most common measure of central tendency

• Mean = sum of values divided by the number of values
• Affected by extreme values (outliers)
0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10
Mean = 3 Mean = 4
1  2  3  4  5 15 1  2  3  4  10 20
 3  4
5 5 5 5
Mean for Grouped Data
Formula for Mean is given by X
 f(X)
n
Where
= Mean
X
 f(X) = Sum of cross products of frequency in each class with midpoint X of each class
n = Total number of observations (Total frequency) = f
Mean for Grouped Data
Example
Find the arithmetic mean for the following continuous frequency distribution:
Class 0-1 1-2 2-3 3-4 4-5 5-6

Frequency 1 4 8 7 3 2
Solution for the Example
A B C D
1 Class X (mid f fX
pt)
2 0-1 0.5 1 0.5
3 1-2 1.5 4 6.0
4 2-3 2.5 8 20.0
5 3-4 3.5 7 24.5
6 4-5 4.5 3 13.5
7 5-6 5.5 2 11.0
8 Totals 25 75.5
9 Mean 3.02
Applying the formula X 

 f(X) = 75.5/25=3.02
n
Mean
Class interval f
0 49.99 78
50 99.99 123
100 149.99 187
150 199.99 82
200 249.99 51
250 299.99 47
300 349.99 13
350 399.99 9
400 449.99 6
450 499.99 4
600
Class interval f
0 49.99 78
50 99.99 123
100 149.99 187
150 199.99 82
200 249.99 51
250 299.99 47
300 349.99 13
350 399.99 9
400 449.99 6
450 499.99 4
600
By taking mid values as 25, 75,… 475.
X
 f(X)
n f(X) = 85350
Mean: 142.25 n=600
Mean using coding:
Class f
0-7 2
8-15 6
16-23 3
24-31 5
32-39 2
40-47 2
Mean=x0 + w * (Summation of u*f))

n
w=numerical width of class interval

X0=value of midpoint assigned code 0
Mean using coding:
Class mid f Code (u) u*f
0-7 3.5 2 -2 -4
8-15 11.5 6 -1 -6
16-23 19.5 3 0
24-31 ?? 5 1 ??
32-39 ?? 2 2 4
40-47 43.5 2 3 6
20 5
Mean=x0 + w * (Summation of u*f))

n
= 19.5+8* (5) / (20) = 21.5
w=numerical width of class interval

X0=value of midpoint assigned code 0

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Business Statistics

• Methods for processing & analyzing numbers

• Methods for helping reduce the uncertainty inherent in

Collecting, summarizing, and Drawing conclusions and/or

 Draw conclusions about large groups of individuals or items, using

 Make reliable forecasts about a business activity??

 Improve business processes.

Data: Information + Noise

Criteria Issues Remarks

 A variable is a characteristic of interest for the elements.

 The set of measurements collected for a particular element is called an observation.

Dataram AMEX 73.10 0.86

Descriptive Statistics Inferential Statistics

Collecting, summarizing, and Drawing conclusions and/or

Measures used to describe the Measures computed from

 Students, need to seek information in order to perform their jobs.

 Secondary Sources: The person performing data analysis is not

 Numerical (quantitative) variables have values

The scale determines the amount of information contained in the data.

Data are labels or names used to identify an attribute of the element.

A nonnumeric label or numeric code may be used.

A nonnumeric label or numeric code may be used.

A nonnumeric label or numeric code may be used.

The data have the properties of ordinal data, and

Interval data are always numeric.

Variables such as distance, height, weight, and time

This scale must contain a zero value that indicates

Data can be further classified as being qualitative

The statistical analysis that is appropriate depends

In general, there are more alternatives for statistical

Often referred to as categorical data

Use either the nominal or ordinal scale of measurement

Can be either numeric or nonnumeric

Appropriate statistical analyses are rather limited

discrete, if measuring how many

continuous, if measuring how much

Quantitative data are always numeric.

Ordinary arithmetic operations are meaningful for quantitative data.

Numerical Nonnumerical Numerical

Nominal Ordinal Nominal Ordinal Interval Ratio

Cross-sectional data are collected at the same or

Example: data detailing the number of building

Time series data are collected over several time

Example: data detailing the number of building

Within a firm – almost any department

Industry associations – FICCI,CII,etc

Special-interest organizations – AICTE,MCI,Graduate Management

Internet – more and more firms

In observational (nonexperimental) studies no

Parts Parts Percent

 Hudson’s average cost of parts, based on the 50 tune-ups studied, is Rs79

Population - the set of all elements of interest in a

Statistical inference - the process of using data obtained

Sample survey - collecting data for a sample

4. The sample average

• Both Minitab and Excel use worksheets to store data

• Understand how to operate the program

• Understand the underlying statistical concepts

• Understand how to organize and present information

• Know how to review results for errors

• Make secure and clearly named backups of your work

 Examined descriptive vs. inferential statistics

• Methods for processing & analyzing numbers