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To all PGDM

Students

from

Ritesh Singhal

{M.Sc.(Maths), MIT, M.Phil.}

Ritesh Singhal

Statistics

The systematic and scientific treatment of

quantitative measurement is precisely

known as statistics.

Statistics may be called as science of

counting.

Statistics is concerned with the collection,

classification (or organization),

presentation and analysis of data which

are measurable in numerical terms.

Ritesh Singhal

Stages of Statistical Investigation

Collection of Data

Organization of data

Presentation of data

Analysis

Interpretation of Results

Ritesh Singhal

Statistics

It is divided into two major parts: Descriptive and

Inferential Statistics.

Descriptive statistics, is a set of methods to describe

data that we have collected. i.e. summarization of data.

Inferential statistics, is a set of methods used to

make a generalization, estimate, prediction or decision.

When we want to draw conclusions about a distribution.

Ritesh Singhal

Collection of Data

Data can be collected by two ways:

>>> Primary Data Collection

It is the data collected by a particular person

or organization for his own use.

>>> Secondary Data Collection

It is the data collected by some other person

or organization, but the investigator also

get it for his use.

Ritesh Singhal

Methods of Primary data collection

Direct personal interview

Data through questionnaire

Indirect investigation

Etc.

Ritesh Singhal

Methods of Secondary data collection

Data collected through newspapers &

periodicals.

Data collected from research papers.

Data collected from government

officials.

Data collected from various NGO, UN,

UNESCO, WHO, ILO, UNICEF etc.

Other published resources

Ritesh Singhal

Classification of data

Classification is a process of

arranging data into sequences and

groups according to their common

characteristics or separating them

into different but related parts.

It is a process of arranging data into

various homogeneous classes and

subclasses according to some

common characteristics.

Ritesh Singhal

Presentation of Data

Data should be presented in such a

manner, so that it may be easily

understood and grasped, and the

conclusion may be drawn promptly from

the data presented. e.g.

>>> Histogram

>>> Frequency polygon & curve

>>> Pie Chart

>>> Ogives

>>> Pictogram & Cartogram

>>> Bar Chart

Ritesh Singhal

Variables

Discrete Variable

e.g. No. of books, table, chairs

Continuous Variable

Quantitative Variable

Qualitative Variable

Ritesh Singhal

Frequency Distribution

The observations can be recorded by three

ways:

1. Individual Series

Data recorded for individual member.

2. Discrete Series

This variable can assume values after an

interval (or jumps).

3. Continuous Series

Here the variable may be having any value,

integer or fraction.

Ritesh Singhal

Statistics functions & Uses

It simplifies complex data

It provides techniques for comparison

It studies relationship

It helps in formulating policies

It helps in forecasting

It is helpful for common man

Statistical methods merges with speed of

computer can make wonders; SPSS, STATA

MATLAB, MINITAB etc.

Ritesh Singhal

Scope of Statistics

In Business Decision Making

In Medical Sciences

In Actuarial Science

In Economic Planning

In Agricultural Sciences

In Banking & Insurance

In Politics & Social Science

Ritesh Singhal

Distrust & Misuse of Statistics

Statistics is like a clay of which one

can make a God or Devil.

Statistics are the liers of first order.

Statistics can prove or disprove

anything.

Ritesh Singhal

Measure of Central Tendency

It is a single value represent the entire

mass of data. Generally, these are the

central part of the distribution.

It facilitates comparison & decision-

making

There are mainly three type of measure

1. Arithmetic mean

2. Median

3. Mode

Ritesh Singhal

Arithmetic Mean

This single representative value can be

determined by:

A.M. =Sum/No. of observations

Properties:

1. The sum of the deviations from AM is always

zero.

2. If every value of the variable increased or

decreased by a constant then new AM will

also change in same ratio.

Ritesh Singhal

Arithmetic Mean (contd..)

multiplied or divide by a constant

then new AM will also change in same

ratio.

4. The sum of squares of deviations

from AM is minimum.

5. The combined AM of two or more

related group is defined as

Ritesh Singhal

Median

The median is that value of the

variable which divides the group into

two equal parts, one part comprising

all values greater, and the other part

having lesser value than median.

Determination of Median

>>> Find the size of (N+1)/2 th item.

Ritesh Singhal

Mode

Mode is that value which occurs most

often in the series.

It is the value around which, the

items tends to be heavily

concentrated.

It is important average when we talk

about “most common size of shoe or

shirt”.

Ritesh Singhal

Relationship among Mean, Median

& Mode

For a symmetric distribution:

Mode = Median = Mean

The empirical relationship between mean,

median and mode for asymmetric

distribution is:

Mode = 3 Median – 2 Mean

Ritesh Singhal

Skewness

Mode: Peak of the curve.

Median: Divide the curve into two equal

parts.

Mean: Center of gravity of the curve.

For a positively skewed distribution:

Mean>Median>Mode

For a Negatively skewed distribution:

Mean<Median<Mode

Ritesh Singhal

Dispersion or Variation

The average does not enable us to

draw a full picture of the distribution.

So a further description is necessary

to get a better description.

The extent or degree to which data

tends to spread around an average is

called dispersion & Variation.

Ritesh Singhal

Objectives

For judging the reliability of averages.

Comparison of distributions

Useful for controlling variability

Useful in further analysis

Ritesh Singhal

Measure of Dispersion

Range

Inter quartile Range

Mean Deviation

Standard Deviation

Ritesh Singhal

Range

Range is the difference between the

largest and the smallest observation.

Range = L-S

It is easy to calculate and provides a

full picture of variation of the data

quickly.

It is crude measure & not based on all

the observations.

Ritesh Singhal

Correlation Analysis

Correlation denotes the degree of

interdependence between variables or

the tendency of simultaneous variation

between variables.

Types of Correlation:

1. Positive & Negative

Ritesh Singhal

Positive & Negative Correlation

Positive Negative

Income Vs Price Vs

Expenditure Consumption

Agricultural Prod Day temp Vs Sale

Vs Rainfall of Woolen clothes

Sales Vs Advt Expd

Cost of raw

material Vs Cost of

Industrial Prod

Ritesh Singhal

Measure of Correlation

Scatter Diagram Method

Karl Pearson’s Coefficient of

Correlation

Spearman’s Coefficient of Rank

Correlation

Concurrent Deviation Method

Ritesh Singhal

Scatter Diagram Method

It is a graphical method to find the

correlation between variables.

Here the pair of the observations are

plotted on a 2-D space.

After joining the these points we can

have the idea about the relationship

between variables.

Ritesh Singhal

Karl-Pearson’s coefficient of

correlation (r)

The value of r lying between -1 and

+1 i.e., -1≤r ≤+1

Coefficient of correlation is

independent of change origin and

scale.

Coefficient ‘r’ is symmetric rxy=ryx

The Probable error of ‘r’ is used to

interpreting its estimated value.

Ritesh Singhal

Spearman’s Coefficient of Rank

Correlation

Karl-Pearson’s method discusses the

relationship between the quantitative

variable where as Spearman’s

coefficient suitable for qualitative

variable like, rank given to the

participant in any contest by two

judges and we want to measure the

relationship between rank given by

these judges.

Ritesh Singhal

Concurrent Deviation Method

This is the simplest method in which

only the direction of change is taken

into consideration rather than

magnitude of variation.

It gives a general idea about the

correlation between variables quickly.

Ritesh Singhal

Regression Analysis

It is concerned with the formulation

and determination of algebraic

expression for the relationship

between variables.

For this purpose we use regression

lines.

These regression line are used for

predicting the value of one variable

from that of other.

Ritesh Singhal

Regression Analysis contd..

predicted is called dependent

(Explained) variable and the variable

used for prediction is called independent

(Explanatory) variable.

This method first introduced by “Sir

Francis Galton”.

It helps in prediction & estimation.

Ritesh Singhal

Properties of Regression Lines &

Coefficient

The regression line Y on X is used to

estimate the best value of Y (Dep.)

for a given value of X (Indep.).

The regression line X on Y is used to

estimate the best value of X (Dep.)

for a given value of Y (Indep.).

Both the regression coefficients are

independent of change of origin &

scale.

Ritesh Singhal

Properties of Regression Lines &

Coefficient (contd..)

r = ±√ byx bxy

Both the regression coefficient should

have same sign.

Both the regression coefficient could

not more than one simultaneously.

Regression coefficient denotes the rate

of change. i.e. byx measure the change

in Y for a unit change in X.

Ritesh Singhal

Properties of Regression Lines &

Coefficient (contd..)

If r=0, both lines perpendicular to

each other.

If the regression lines are identical,

the correlation between the variable

is perfect.

Ritesh Singhal

Standard Error of Estimate

It provides us a measure of scatter of

the observations about an average

line, the standard error of estimate of

Y on X is:

SY.X = √ [Σ(Y-Yest)2 / N]

Ritesh Singhal

Probability

Probability is a concept which

numerically measures the degree of

uncertainty or certainty of the

occurrence of any event. i.e. the

chance of occurrence of any event.

The probability of an event A is

No. of Favorable cases

P(A)= Total No. of Cases

Ritesh Singhal

Probability

If P(A)=0, Impossible Event

If P(A)=1, Sure Event

0≤P(A)≤1

P(A)= Probability of occurrence

P(Ā)= Probability of Non-occurrence

P(A) + P(Ā) = 1

Ritesh Singhal

Some Keywords

Equally Likely Events: When the

chance of occurrence of all the events

are same in an experiment.

Mutually Exclusive Events: If the

occurrence of any one of them

prevents the occurrence of other in

the same experiment.

Sample Space: the set of all possible

outcomes.

Ritesh Singhal

Some Keywords

Independent Events: If two or more

events occur in such a way that the

occurrence of one does not effect the

occurrence of other.

Dependent Events: If the occurrence

of one event influences the

occurrence of the other.

Ritesh Singhal

Classical or Priori Probability

If a trial result in ‘n’ exhaustive,

mutually exclusive and equally likely

cases and ‘m’ of them are favorable

to the happenings of an event E, then

the probability ‘P’ of happening of E is

given by:

P(E) = m / n

Ritesh Singhal

Empirical or Posteriori Probability

The classical def requires that ‘n’ is

finite and that all cases are equally

likely.

This condition is very restrictive and

can not cover all situations.

The above conditions are not

necessarily active in this case.

Ritesh Singhal

Fundamental rule of counting

If an event can occur in ‘m’ ways and

following it, a second event can occur

in ‘n’ ways, then these two event in

succession can occur in ‘mxn’ ways.

E.g. A tricolor can be formed out of 6

colors in 6x5x4=120 ways.

No. of words of 3 characters out of 26

alphabets 26x25x24= 15600 ways.

Ritesh Singhal

Permutations

The different arrangement can be

made out of a given no. of things by

taking some or all at a time are called

permutations.

P (n,r) = n! / (n-r)!

E.g. permutations made with letters

a,b,c by taking two at a time:

P(3,2)=6

ab, ba, ac, ca, bc, cb

Ritesh Singhal

Combinations

The combination of ‘n’ different

objects taken ‘r’ at a time is a

selection of ‘r’ out of ‘n’ objects with

no attention given to order of

arrangement

C (n,r) = n!/r!(n-r)!

e.g. From 5 boys & 6 girls a group of 3

is to be formed having 2 boys & 1 girl

is C(5,2) x C(6,1) = 60 ways

Ritesh Singhal

Example

A coin is tossed three times. Find the

probability of getting:

i) Exactly one head

ii) Exactly two head

iii) One or two head

Ritesh Singhal

Example

One card is randomly drawn from a pack

of 52 cards. Find the probability that

i) Drawn card is red

ii) Drawn card is an ace

iii) Drawn card is red and king

iv) Drawn card is red or king

Ritesh Singhal

Example

A bag contains 3 red, 6 white and 7

blue balls. Two balls are drawn at

random. Find the probability that

i) Both the balls are white.

ii) Both the balls are blue.

iii) One ball is red & other is white.

iv) One ball is white & other is blue.

Ritesh Singhal

Addition Theorem

For any two event A and B the

probability for the occurrence of A or

B is given by:

P(AUB)= P(A) + P(B) – P(AПB)

If A & B are mutually Exclusive then

P(AПB)=0

P(AUB)= P(A) + P(B)

Ritesh Singhal

Multiplication or Conditional

Probability

The probability of an event B when it

is known that the event A has

occurred already:

P(B/A)= P(AПB) / P(A) ;if P(A)>0

ie. P(AПB)= P(A).P(B/A)

If A and B are Independent event:

P(AПB)= P(A).P(B)

Ritesh Singhal

Example

A bag contains 25 balls numbered from 1

to 25. Two balls are drawn at random from

the bag with replacement. Find the

probability of selecting:

i) Both odd numbers.

ii) One odd & one even.

iii) At least one odd.

iv) No odd numbers.

v) Both even numbers.

Ritesh Singhal

Example

Five men in a company of 20 are

graduate. If 3 men are picked up at

random, what is the probability that

they are all graduate? What is the

probability that at least one is

graduate.

Ritesh Singhal

Example

The probability that A hits a target is

1/3 and the probability that B hits the

target is 2/5. What is the probability

that the target will be hit, if each one

of A and B shoots at the target.

Ritesh Singhal

Expected Value of Probability

Let X be the random variable with the

following distribution:

X : x1 x2 x3………..

P(X) :P(x1) P(x2) P(x3)……..

Expected Value is given by:

E(X) = Σ xi . P (xi)

Ritesh Singhal

Example

A player tossed two coins. If two

heads show he wins Rs. 4. if one

head shows he wins Rs. 2, but if two

tails show he pays Rs. 3 as penalty.

Calculate the expected value of the

game to him.

Solution:

E(X)= (-3) ¼ + (2) ½ + (4) ¼ =1.25

Ritesh Singhal

Example

An insurance company sells a

particular life insurance policy with a

face value of Rs. 1000 and a yearly

premium of Rs. 20. If 0.2% of the

policy holder can be expected to die

in the course of a year, what would

be the company’s expected earning

per policy holder per year.

E(X)= (-980) 0.002 + (20) 0.998=18

Ritesh Singhal

Theoretical Probability Distribution

Ritesh Singhal

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