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NUMERICAL DESCRIPTIVE

MEASURES
Review

Numerical Descriptive Measures


i. Measures of central tendency, variation and
shape
a. Mean, median and mode
b. Quartiles
c. Geometric mean
d. Range, Interquartile range
e. Mean absolute deviation
f. Variance and standard deviation
g. Coefficient of variation
h. Z scores
i. Shape
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Scope of this lecture

Numerical descriptive measures for a population


i. Mean
ii. Variance and standard deviation
iii. Empirical rule
iv. Chebyshev rule

Example problems

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Population mean, variance and standard
deviation

Population mean for the values Xi (i=1,2,...,N)


is given by,

Population variance

Population standard deviation

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Empirical rule

Empirical rule: variability in the symmetrical


bell-shaped (normal) distribution

i. Appx. 68.3% of the values are within


from the mean
ii. Appx. 95.5% of the values are within
from the mean
iii. Appx. 99.7% of the values are within
from the mean

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Empirical rule

Source: Business statistics, J. K. Sharma

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Population mean, variance and standard
deviation

Ex: Suppose you are in charge of rationing in a


state affected by food shortage. The following
reports arrive from a local investigator:
Daily calorific value of food available per adult
during current period:
Area Mean Std.
Dev.
The estimated requirement of an
A 2500 400
adult is taken as 2800 calories daily
and the absolute min. is 1350. B 2000 200

Comment on the reported figures and determine


which area in your opinion needs more urgent
attention.
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Population mean, variance and standard
deviation

Hint: Assume normal distribution

A: There could be a small amount of population


with limited access to food. Looking into the farther
ends of the distribution,
Area A: = 2500-3*400 = 1300
= 2500+3*400 = 3700
Area B: = 2000 - 3*200 = 1400
= 2000 + 3*200 = 2600

Hence, Area A needs more attention

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Population mean, variance and standard
deviation

Ex: A machine company has a contract with one of


its customers to supply machined pump gears. One
requirement is that the diameter of its gears be
within specific limits. The following data is of
diameters of 20 sample gears.
4.01 4 4.02 4.03 4 3.98 3.99 3.99
4.01 4.02 3.99 3.98 3.97 4 4.02 4.01
4.02 4 4.01 3.99

What can the company say to its customers about


the diameters of 95% of the gears.

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Population mean, variance and standard
deviation
4.5
A: 4
3.5
3
2.5
2
1.5
1
Assuming that the distribution is bell shaped, then
0.5
0
95% of the gear diameters should
1 lie
2 between:
3 4 5 6 7
i.e. [3.970, 4.034] inches.

You can verify it happens to be actually 95%.

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Chebyshev rule

For any data set regardless of the shape of


distribution, the % of values that are found within
the distances of k>1 standard deviations from the
mean must be atleast (1-1/k2)*100%

Ex: 36 students take an exam for which = 80 and


= 6. A rumor says 5 students have scores 62 or
below. Can the rumor be true ?
k = (62-80)/6=-3 => (1-1/k2)=1-1/9=8/9
So, atleast 8/9 fraction of students (i.e. 36*8/9=32)
scored between 62 and 80+3*6=98. So, not more
than 36-32=4 students are outside the range
[62,98]. So the rumor is False. 11
Population - grouped data

Population mean
Population variance
Population standard deviation
Here x is the midpoint of each class

Sample variance
Sample standard deviation

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Population - grouped data

Ex: A collar manufacturer is considering the


production of a new collar to attract young men.
Thus following statistics of neck circumference are
available based on measurement of a typical group
of the college students
Mid value (in
inches) 12 12.5 13 13.5 14 14.5 15 15.5 16
No. of students 2 16 36 60 76 37 18 3 2

Compute std. dev. Using criterion to determine the


largest and smallest size of the collar he should
make to meet the needs of practically all customers
bearing in mind that collar are worn on average half
inch longer than neck size.
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Population - grouped data

X Xf f fX fX2
fX fX2
12 122 2 24 288
24 288
12.5 16
12.5 16200 2500
200 2500
13 36
13 36468 6084
468 6084
13.5 60
13.5 60810 10935
810 10935
14 76
14 761064 14896
1064 14896
14.5 37 536.5 7779.25
14.5 37 536.5 7779.25
15 18 270 4050
15 18 270 4050
15.5 3 46.5 720.75
15.5 3 46.5 720.75
16 2 32 512
Totals 16
250 23451 32
47765 512
Totals 250 3451 47765

mean = 13.804
mean = 13.804
0.713852 0.713852
std.dev. = std. dev. =
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Population - grouped data

Mean = 13.804 and std. dev. = 0.71385

Hence, largest and smallest sizes are:


= 13.8043*0.71385 = 15.945 and 11.66

Since customers wear collar half inch longer, 0.5


has to be added to the above two values

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Population - grouped data

Ex: The breaking strength of 80 test pieces of a


certain alloy are:

Calculate the average breaking Breaking No. of


strength
Strength of the alloy and the standard pieces
44-46 3
Deviation. Calculate the percentage of46-48 24
Observations lying between . 48-50 27
50-52 21
52-54 5

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Population - grouped data

X fX fX
f fXfX
2
fX2
45 345 135
3 6075
135 6075
47 2447 1128
24 53016
1128 53016
49 2749 1323
27 64827
1323 64827
51 2151 1071
21 54621
1071 54621
53 553 265
5 14045
265 14045
19258 19258
Totals 80
Totals 3922
80 4
3922 4

mean = mean = 49.025 49.025


1.9619 1.9619
std. dev. = std. dev. = 82 82

= 49.0252*1.962 = 45.103 and 52.949 i.e. ~45


and ~53.
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Population - grouped data

Lets assume equal number of observations spread


within lower and upper limits of each class.

45 is midpoint of class 44-46 of freq. 3 => 1.5 freq.


in this range
53 is midpoint of class 52-54 of freq. 5 => 2.5 freq.
in this range

So, total observations between 45 and 53 are


1.5+24+27+21+2.5 = 76

% observations in = (76/80)*100 = 95%


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Example problems

Ex: A sociologist has been studying the yearly


changes in the no. of convicts assigned to the
largest correctional facility in the state. Most recent
data on % increase in the no. of prisoners are
200 200 200 200 200
2002 3 4 5 6 7
-5% 6% 9% 4% 7% -6%

a) Calculate avg. % increase from 2002-2005


b) A new penal code was passed in 2001.
Previously the prison population grew at a rate of
about 2% per year. What seems to be the effect
of the new penal code.
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Example problems

A: Since we have % growth rate given annually,


G.M. is appropriate here.

a) G.M. =
= 1.03365
This is an avg. rate of 3.365% increase per year

b) G.M. =
This is 1.74% increase per year. Therefore with
the new penal code, the growth of no. of convicts
decreased from 2% to 1.74% per year.

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Example problems

Ex: A person owns 2 petrol filling stations A and B.


At A, a representative sample of 200 consumers
who purchase petrol was taken:
No. of No. of
liters consumers
0 and < 2 15
2 and < 4 40
4 and < 6 65
6 and < 8 40
8 and < 10 30
10 and over 10
A similar sample at B gives a mean of 4 liters and
std. dev. of 2.2 liters. At which station is purchase of
petrol relatively more variable ?

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Example problems

A: We are comparing two different samples here.


So we compare them using coefficient of variation

No. of No. of Mid


liters consumers point fx fx2
0 and < 2 15 1 15 15
2 and < 4 40 3 120 360
4 and < 6 65 5 325 1625
6 and < 8 40 7 280 1960
8 and < 10 30 9 270 2430
10 and over 10 11 110 1210
Totals 200 1120 7600

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Example problems

A: At station A,

5.6
Mean = 5.6

std. dev. =
2.57682 2.57682

CV =
46.01464% 46.01464%

At station B,
CV = 2.2/4*100 = 55%

Hence purchase at B is more variable than in A.

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Example problems

Sampling
Summary tables
Bar, pie, pareto charts

Frequency distributions (relative, percentage)


Cumulative distribution
Histogram, Polygon
Cross tabulations, side-by-side bar charts
Scatter diagram, Time-series plot

Mean, median and mode


Quartiles
Range, Interquartile range
Mean absolute deviation
Variance and standard deviation
Coefficient of variation
Z scores
Shape
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References

1. M. Levine, T.C. Krehbiel, M.L. Berenson and P. K.


Viswanathan, Business Statistics: A First
Course, Pearson Education, 5th Ed., 2011.

2. Bruce L. Bowerman, Richard T. OConnell, Emily


S. Murphree,
Business statistics in practice, 5th Edition.

3. J. K. Sharma, Business Statistics, 4th Edition.

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