Quantitative Methods for

Management
Day-2
Recap..
• Introduction
• Definition
• Terms and terminologies
• Types of statistics
• Types of data
• Levels of measurements
• Application of statistics in business
• Data warehousing & data mining
• Sources of data… ( chapter 1 (1-30])
Classification of data
• Qualitative
• Quantitative
• Geographical
• Chronological
• Time series (is a set of observations collected at usually
discrete and equally spaced time intervals- Eg. Daily closing
stock price of a certain stock recorded over the last six
weeks )
• Cross sectional (observations from different individuals or
groups at a single point in time – inventory of all ice creams
in stock at a particular store)
PRESENTATION OF DATA
TABULAR
DIAGRAMS
GRAPHS
• TABULATION

SPECIMEN OF A TABLE

Stub Caption Total

Stub Body of the table
Entries
Stub entries

Total Grand
Total

Foot Note
Sources
Descriptive Statistics:
Tabular and Graphical Presentations
• Summarizing Categorical Data
 Summarizing Quantitative Data

Categorical data use labels or names

to identify categories of like items.

Quantitative data are numerical values

that indicate how much or how many.
Summarizing Categorical Data
• Frequency Distribution
 Relative Frequency Distribution
 Percent Frequency Distribution
 Bar Chart
 Pie Chart
Frequency Distribution

A frequency distribution is a tabular summary of

data showing the frequency (or number) of items
in each of several non-overlapping classes.

The objective is to provide insights about the data

that cannot be quickly obtained by looking only at
the original data.
Relative Frequency Distribution

The relative frequency of a class is the fraction or

proportion of the total number of data items
belonging to the class.

A relative frequency distribution is a tabular

summary of a set of data showing the relative
frequency for each class.
Percent Frequency Distribution
The percent frequency of a class is the relative
frequency multiplied by 100.

A percent frequency distribution is a tabular

summary of a set of data showing the percent
frequency for each class.
Frequency Distribution…
Example – 4 soft drinks – 15 households
Coke Pepsi 7 Up Coke Mirinda
Coke 7 Up 7 Up Coke Coke
Mirinda 7 Up Coke Mirinda Coke

Drink Frequency
Coke 7
Pepsi 1
Mirinda 3
7 Up 4
Total 15
Frequency Distribution…
Soft Drink Frequency Relative Percent
frequency frequency
Coke 7 0.46 46
Pepsi 1 0.07 7
Mirinda 3 0.20 20
7 Up 4 0.27 27
Total 15 1.00 100
 Frequency Distribution
 Example: Marada Inn

Guests staying at Marada Inn were asked to rate the quality of

their accommodations as being excellent, above average,
average, below average, or poor. The ratings provided by a
sample of 20 guests are:

Below Average Average Above Average

Above Average Above Average Above Average
Above Average Below Average Below Average
Average Poor Poor
Above Average Excellent Above Average
Average Above Average Average
Above Average Average
Frequency Distribution

 Example: Marada Inn

Rating Frequency
Poor 2
Below Average 3
Average 5
Above Average 9
Excellent 1
Total 20
Relative Frequency and
Percent Frequency Distributions
 Example: Marada Inn

Relative Percent
Rating Frequency Frequency
Poor .10 10
Below Average .15 15
Average .25 25 .10(100) = 10
Above Average .45 45
Excellent .05 5
Total 1.00 100

1/20 = .05
Bar Chart
 A bar chart is a graphical device for depicting
qualitative data.
 On one axis (usually the horizontal axis), we specify
the labels that are used for each of the classes.
 A frequency, relative frequency, or percent frequency
scale can be used for the other axis (usually the
vertical axis).
 Using a bar of fixed width drawn above each class
label, we extend the height appropriately.
 The bars are separated to emphasize the fact that each
class is a separate category.
Bar Chart

10 Marada Inn Quality Ratings

9
8
7
Frequency
6
5
4
3
2
1
Rating
Poor Below Average Above Excellent
Average Average
Pareto Diagram

 In quality control, bar charts are used to identify the

most important causes of problems.
 When the bars are arranged in descending order of
height from left to right (with the most frequently
occurring cause appearing first) the bar chart is
called a Pareto diagram.
 This diagram is named for its founder, Vilfredo
Pareto, an Italian economist.
Pie Chart
 The pie chart is a commonly used graphical device
for presenting relative frequency and percent
frequency distributions for categorical data.
 First draw a circle; then use the relative frequencies
to subdivide the circle into sectors that correspond to
the relative frequency for each class.
 Since there are 360 degrees in a circle, a class with a
relative frequency of .25 would consume .25(360) = 90
degrees of the circle.
Pie Chart

Marada Inn Quality Ratings

Excellent
5%
Poor
10%
Below
Average
Above 15%
Average
45%
Average
25%
Example: Marada Inn

 Insights Gained from the Preceding Pie Chart

• One-half of the customers surveyed gave Marada
a quality rating of “above average” or “excellent”
(looking at the left side of the pie). This might
please the manager.
• For each customer who gave an “excellent” rating,
there were two customers who gave a “poor”
rating (looking at the top of the pie). This should
displease the manager.
Summarizing Quantitative Data
• Frequency Distribution
 Relative Frequency and
Percent Frequency Distributions
 Dot Plot
 Histogram
 Cumulative Distributions
 Ogive
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.
 Ungrouped Versus Grouped Data
• Ungrouped data
• have not been summarized in any way
• are also called raw data
• Grouped data
• have been organized into a frequency
distribution
 ARRANGE (ARRAY)
ARRANGE (ARRAY)
RAW DATA
(OR)
INDIVIDUAL UNARRANGE
UNARRANGE (RANDOM)
(RANDOM)
SERIES
INCLUSIVE
INCLUSIVE
DISCRETE SERIES
DISCRETE SERIES

EXCLUSIVE

GROUPED CONTINUOUS SERIES

EXCLUSIVE

SERIES/ OPEN END

DATA CONTINUOUS SERIES

OPEN END
COMMULATIVE FREQUENCY LESS THAN

CUMMULATIVE FREQUENCY LESS THAN

MORE THAN

BIVARIATE DATA
MORE THAN
Frequency Distribution
• It is a tabular summary of data showing the number
of items in each of the non overlapping classes
• A table that organises data into classes or groups of
values
• They divide a range into equal classes

Width of CI =

Largest data value – Smallest

___________________________________________
# of Class Intervals
Frequency Distribution…
 Table with two columns listing:
Each and every group or class or interval
of values
Associated frequency of each group
• Number of observations assigned to
each group
• Sum of frequencies is number of
observations
• N for population
• n for sample
Frequency Distribution…
 Class midpoint is the middle value of a group or
class or interval
 Relative frequency is the percentage of total

observations in each class

Sum of relative frequencies = 1
Example of Ungrouped Data
42 26 32 34 57

30 58 37 50 30

53 40 30 47 49
Ages of a Sample of
Managers from
50 40 32 31 40 Urban Child Care
52 28 23 35 25 Centers in the
United States
30 36 32 26 50

55 30 58 64 52

49 33 43 46 32

61 31 30 40 60

74 37 29 43 54
Frequency Distribution of Child
Care Manager’s Ages

Class Interval Frequency

20-under 30 6
30-under 40 18
40-under 50 11
50-under 60 11
60-under 70 3
70-under 80 1
Data Range

42 26 32 34 57 Range = Largest - Smallest

30 58 37 50 30

53 40 30 47 49
= 74 - 23
50 40 32 31 40 = 51
52 28 23 35 25

30 36 32 26 50

55 30 58 64 52 Smallest
49 33 43 46 32

61 31 30 40 60 Largest
74 37 29 43 54
Number of Classes and Class Width
• The number of classes should be between 5 and 15.
• Fewer than 5 classes cause excessive summarization.
• More than 15 classes leave too much detail.
• Class Width
• Divide the range by the number of classes for an
approximate class width
• Round up to a convenient number

51
Approximat e Class Width = = 8.5
6
Class Width = 10
Relative Frequency
Relative
Class Interval Frequency Frequency
20-under 30 6 .12
30-under 40 18 .36
40-under 50 11 .22
50-under 60 11 .22
60-under 70 3 .06
70-under 80 1 .02
Total 50 1.00
• LESS THAN CUMULATIVE FREQUENCY SERIES

NO. OF
HOURS
WORKERS

LESS THAN 10 5
LESS THAN 30 15
LESS THAN 60 30
LESS THAN 90 50
• MORE THAN CUMULATIVE FREQUENCY SERIES

PROFITS (RS. IN LAKHS) NO. OF COMPANIES

MORE THAN 100 150

MORE THAN 150 90
MORE THAN 200 40
MORE THAN 250 5
• INCLUSIVE CLASS INTERVAL

CLASS INTERVAL FREQUENCY

10 – 19 17
20 – 29 15
30 – 39 12
40 – 49 10
• EXCLUSIVE CLASS INTERVAL

NO. OF
REVENUE (RS.)
PRODUCTS
100 – 200 15
200 – 300 20
300 – 400 10
400 – 500 5
TOTAL 50
• OPEN END CLASS INTERVAL

SALARY (RS.) NO. OF CLERKS

LESS THAN 1500 10
1500 – 1700 25
1700 – 1900 45
1900 – 2100 11
MORE THAN 2100 9
TOTAL 100
Cumulative Frequency
Cumulative
Class Interval Frequency Frequency
20-under 30 6 6
30-under 40 18 24
40-under 50 11 35
50-under 60 11 46
60-under 70 3 49
70-under 80 1 50
Total 50
Class Midpoints, Relative Frequencies, and
Cumulative Frequencies

Relative Cumulative
Class Interval Frequency Midpoint Frequency Frequency
20-under 30 6 25 .12 6
30-under 40 18 35 .36 24
40-under 50 11 45 .22 35
50-under 60 11 55 .22 46
60-under 70 3 65 .06 49
70-under 80 1 75 .02 50
Total 50 1.00
Cumulative Relative Frequencies
Cumulative
Relative Cumulative Relative
Class Interval Frequency Frequency Frequency Frequency
20-under 30 6 .12 6 .12
30-under 40 18 .36 24 .48
40-under 50 11 .22 35 .70
50-under 60 11 .22 46 .92
60-under 70 3 .06 49 .98
70-under 80 1 .02 50 1.00
Total 50 1.00
Frequency Distribution…
Example – BMW manufactures racing cars and
has gathered the follg info on the number of
models of engines in different size categories used
in the racing market it serves.

Engine Size # of Engine Size # of

cu inches models cu inches models
101 – 150 1 301 – 350 17
151 – 200 7 351 – 400 16
201 – 250 7 401 – 450 15
251 – 300 8 451 – 500 7
Frequency Distribution…
- Construct a cumulative relative frequency distribution.

- 70% of engine models are larger than what size?

- What is the approx middle value in the original data set?

- If BMW designs a fuel injection system that can be used

on engines upto 400 cu inches, about what % of engine
models will not be able to use the system?
 Common Statistical Graphs
• Histogram -- vertical bar chart of frequencies
• Frequency Polygon -- line graph of frequencies
• Ogive -- line graph of cumulative frequencies
• Pie Chart -- proportional representation for
categories of a whole
• Stem and Leaf Plot
• Pareto Chart
• Scatter Plot Exploratory Data Analysis
Bar Chart (Illustration)

Figure 1-11: SHIFTING GEARS

Quartely net income for General Motors (in billions)

1.5

1.2

0.9

0.6

0.3

0.0
1Q 2Q 3Q 4Q 1Q
2003 C4 2004
Pie Chart Calculations for Company A

2d Quarter
Truck
Production
Company Proportion Degrees

A 357,411 .388 140

B 357, 411 354,936 .386 139

=
C 920,190 160,997 .175 63

D 34,099 .388 .037

360 = 13

E 12,747 .014 5
Totals 920,190 1.000 360
PIE DIAGRAM
Complaints by Amtrak Passengers

COMPLAINT NUMBER PROPORTION DEGREES

Stations, etc. 28,000 .40 144.0

Train 14,700 .21 75.6

Performance
Equipment 10,500 .15 50.4

Personnel 9,800 .14 50.6

Schedules, 7,000 .10 36.0

etc.
Total 70,000 1.00 360.0

2-48
Complaints by Amtrak Passengers

Schedules,
Personnel Etc.
14% 10%

Equipment
15%

Stations, Etc.
40%
Train
Performance
21%
Histogram
 A histogram is a chart made of bars of
different heights.
Widths and locations of bars correspond to
widths and locations of data groupings
Heights of bars correspond to frequencies or
relative frequencies of data groupings
Frequency Histogram
Relative Frequency Histogram
 Histogram

Class Interval Frequency

20
20-under 30 6
30-under 40 18

Frequency
40-under 50 11

10
50-under 60 11
60-under 70 3
70-under 80 1

0
0 10 20 30 40 50 60 70 80
Years
 Histogram Construction

Class Interval Frequency

20
20-under 30 6
30-under 40 18

Frequency
40-under 50 11

10
50-under 60 11
60-under 70 3
70-under 80 1

0
0 10 20 30 40 50 60 70 80
Years
 Frequency Polygon

Class Interval Frequency

20
20-under 30 6
30-under 40 18

Frequency
40-under 50 11

10
50-under 60 11
60-under 70 3
70-under 80 1

0
0 10 20 30 40 50 60 70 80
Years
 Ogive

Cumulative

60
Class Interval Frequency
20-under 30 6

40
Frequency
30-under 40 24
40-under 50 35

20
50-under 60 46
60-under 70 49

0
0 10 20 30 40 50 60 70 80
70-under 80 50
Years
 Relative Frequency Ogive
Cumulative
Relative

Cumulative Relative Frequency

Class Interval Frequency 1.00
0.90
20-under 30 .12 0.80
0.70
30-under 40 .48 0.60
40-under 50 .70 0.50
0.40
50-under 60 .92 0.30
0.20
60-under 70 .98 0.10
70-under 80 1.00 0.00
0 10 20 30 40 50 60 70 80
Years
Safety Examination Scores
for Plant Trainees
Raw Data Stem Leaf

86 77 91 60 55 2 3
76 92 47 88 67 3 9
4 79
23 59 72 75 83
5 569
77 68 82 97 89
6 07788
81 75 74 39 67 7 0245567789
79 83 70 78 91 8 11233689
9 11247
68 49 56 94 81
Pareto Chart
100 100%
90 90%
80 80%
70 70%
Frequency 60 60%
50 50%
40 40%
30 30%
20 20%
10 10%
0 0%
Poor Short in Defective Other
Wiring Coil Plug
Scatter Plot
Registered Gasoline Sales
Vehicles (1000's of
(1000's) Gallons) 200

Gasoline Sales
5 60
100
15 120

9 90
0
15 140 0 5 10 15
Registered Vehicles
20

7 60
Time Plot
M o n th ly S te e l P r o d u c tio n

8 .5

7 .5
M ill io n s o f T o n s

6 .5

5 .5

M o n th J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O
Cross Tabulation
• Understanding relationship between 2 variables
• Example – Quality rating of meals of various prices at 10
restaurants

# Rating Price # Rating Price

1 Good 18 7 Excellent 19
2 Very Good 22 8 Very Good 11
3 Good 28 9 Good 23
4 Excellent 38 10 Very Good 13
5 Good 33 11 Excellent 18
6 Very Good 28 12 Excellent 33
Cross Tabulation…
• One variable is qualitative (Rating) and the other quantitative( Price) –
Row % included

Price
Rating 10 - 19 20 - 29 30 - 39 Total
Good 1 2 1 4
25% 50% 25% 100%

Very Good 2 2 0 4
50% 50% 100%

Excellent 2 0 2 4
50% 50% 100%

Total 5 4 3 12
Cross Tabulation …
Problem - In a study of job satisfaction for 4 occupations
– higher the scores indicate high satisfaction – Provide a
cross tab of occupation & satisfaction score

Lawyer 44 Comp Analyst 54 Lawyer 53

Doctor 80 Lawyer 42 Physiatrist 48

Lawyer 62 Physiatrist 59 Doctor 62

Physiatrist 55 Doctor 79 Lawyer 86

Lawyer 64 Physiatrist 76 Comp Analyst 79

Comp Analyst 73 Doctor 50 Physiatrist 60

Physiatrist 86 Comp Analyst 86 Doctor 52

Lawyer 71 Comp Analyst 50 Lawyer 79

Doctor 78 Physiatrist 76 Comp Analyst 69

• TWO WAY FREQUENCY SERIES/BIVARIATE SERIES

CLASS
0–5 5 – 10 10 – 15 15 – 20
INTERVAL
0 – 10 1 - 2 -
10 – 20 4 3 - -
20 – 30 - - 1 -
30 – 40 2 - 1 -
Tabular and Graphical Methods
Data

Categorical Data Quantitative Data

Tabular Graphical Tabular Graphical

Methods Methods Methods Methods

• Frequency • Bar Chart • Frequency

Distribution Distribution • Histogram
• Pie Chart
• Rel. Freq. Dist. • Rel. Freq. Dist. • Ogive
• Percent Freq. • % Freq. Dist. • Stem-and-
Distribution • Cum. Freq. Dist. Leaf Display
• Cross tabulation • Cum. Rel. Freq. • Scatter
Distribution Diagram
• Cum. % Freq.
Distribution
• Cross tabulation
Methods of Summarizing Data
Tabular Graphical
Presentation Presentation
Frequency Distribution Dot Plot, Line Chart
Relative Frequency Distribution Histogram
Percent Frequency Distribution Bar diagram, Pie
Cumulative Frequency Distribution Ogive, Freq polygon
Cum Relative Frequency Distribution Freq Curve
Cum Percent Frequency Distribution Stem & Leaf Display
Cross tabulation Scatter Diagram
• END OF CHAPTER 2

Descriptive statistics: Tabular and Graphical Displays

(Page :33-98)
• The response to a question has three alternatives: A, B and C. A
sample of 120 responses provides 60 A, 24 B and 36 C. Show the
frequency and relative frequency distributions.
• A partial relative frequency distribution is given .
Class Relative frequency
A 0.22
B 0.18
C 0.40
D

• What is the relative frequency of class D?

• The total sample size is 200. what is the frequency of class D?
• Show the frequency distribution.
• Show the percent frequency distribution
• A questionnaire provides 58 yes, 42 no and 20 no-opinion answers.
• In the construction of a pie chart , how many degrees would be in the section
of the pie showing the Yes answers?
• How many degrees would be in the section of the pie showing the No
answers.