# Quantitative Method for Multidimensional Management and Group Decision Making

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Methods for Describing Sets of Data Class 1
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Numerical Methods for Quantitative Data

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Describing Data
Data Qualitative Data Graphical Methods Numerical Methods Quantitative Data Graphical Methods Numerical Methods

Many

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Standard Notation
Measure Mean Stand. Dev. Variance Size
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Sample X S S n
2

Population µ σ σ
2

N

Quantitative Data Properties
Central Tendency (Location)

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Quantitative Data Properties
Central Tendency (Location) Variation (Dispersion)

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Quantitative Data Properties
Central Tendency (Location) Variation (Dispersion)

Shape
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Numerical Methods for Quantitative Data
Numerical Data Properties Central Tendency
Mean Median Mode

Variation
Range Variance

Shape
Skew

Interquartile Range Standard Deviation

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Central Tendency

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Numerical Methods for Quantitative Data
Numerical Data Properties Central Tendency
Mean
Median Mode

Variation
Range Variance

Shape
Skew

Interquartile Range

Standard Deviation

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Mean
1. 2. 3. 4. Measure of central tendency Most common measure Acts as ‘balance point’ Affected by extreme values (‘outliers’)

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Mean
1. 2. 3. 4. 5. Measure of central tendency Most common measure Acts as ‘balance point’ Affected by extreme values (‘outliers’) Formula (sample mean) X=
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∑ Xi i =1
n

n

X1 + X 2 +  + X n = n

Mean Example
Raw Data: 10.3 4.9 8.9 11.7 6.3 7.7 X=

∑ Xi i =1
n

n

X1 + X 2 + X 3 + X 4 + X 5 + X 6 = 6

10.3 + 4.9 + 8.9 + 11.7 + 6.3 + 7.7 = 6 = 8.30
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Numerical Methods for Quantitative Data
Numerical Data Properties Central Tendency
Mean

Variation
Range Variance

Shape
Skew

Median
Mode

Interquartile Range

Standard Deviation

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Median
1. Measure of central tendency 2. Middle value in ordered sequence
 

If odd n, middle value of sequence If even n, average of 2 middle values

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Median
1. Measure of central tendency 2. Middle value in ordered sequence
 

If odd n, middle value of sequence If even n, average of 2 middle values

3. Position of median in sequence n +1 Positioning Point = 2
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Median
1. Measure of central tendency 2. Middle value in ordered sequence
 

If odd n, middle value of sequence If even n, average of 2 middle values

3. Position of median in sequence n +1 Positioning Point = 2 4. Not affected by extreme values
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Median Example Odd-Sized Sample
Raw Data: 24.1 22.6 21.5 23.7 22.6 Ordered: 21.5 22.6 22.6 23.7 24.1 Position: 1 2 3 4 5 n +1 5 +1 Positioning Point = = = 3.0 2 2 Median = 22.6
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Median Example Even-Sized Sample
Raw Data: 10.3 4.9 8.9 11.7 6.3 7.7 Ordered: 4.9 6.3 7.7 8.9 10.3 11.7 Position: 1 2 3 4 5 6 n +1 6 +1 Positioning Point = = = 3.5 2 2 7.7 + 8.9 Median = = 8.30 2
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Numerical Methods for Quantitative Data
Numerical Data Properties Central Tendency
Mean Median

Variation
Range Variance

Shape
Skew

Interquartile Range

Mode

Standard Deviation

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Mode
1. Measure of central tendency 2. Value that occurs most often 3. Not affected by extreme values 4. May be no mode or several modes 5. May be used for quantitative & qualitative data
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Mode Example
No Mode Raw Data: 10.3 4.9 8.9 11.7 6.3 7.7 One Mode Raw Data: 6.3 4.9 8.9 6.3 4.9 4.9 More Than 1 Mode Raw Data: 21 28
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28

41

43

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Thinking Challenge
You’re a financial analyst for Prudential-Bache Securities. You have collected the following closing stock prices of new stock issues: 17, 16, 21, 18, 13, 16, 12, 11. Describe the stock prices in terms of central tendency.
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Alone Group Class

Central Tendency Solution*
Mean X=

∑ Xi i =1
n

n

X1 + X 2 +  + X 8 = 8

17 + 16 + 21 + 18 + 13 + 16 + 12 + 11 = 8 = 15.5
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Central Tendency Solution*
Median Raw Data: 17 16 21 18 13 16 12 11 Ordered: 11 12 13 16 16 17 18 21 Position: 1 2 3 4 5 6 7 8 n +1 8 +1 Positioning Point = = = 4.5 2 2 16 + 16 Median = = 16 2 1 - 25

Central Tendency Solution*
Mode Raw Data: 17 16 21 18 13 16 12 11 Ordered: 11 12 13 16 16 17 18 21

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Summary of Central Tendency Measures
Measure Equation Mean Σ Xi / n Median (n+1) Position 2 Mode none Description Balance Point Middle Value When Ordered Most Frequent

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Variation

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Numerical Methods for Quantitative Data
Numerical Data Properties Central Tendency
Mean Median Mode

Variation
Range
Variance

Shape
Skew

Interquartile Range

Standard Deviation

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Range
1. Measure of dispersion 2. Difference between largest & smallest observations Range = X l argest − X smallest 3. Ignores how data are distributed
7 8 9 10 7 8 9 10

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Numerical Methods for Quantitative Data
Numerical Data Properties Central Tendency
Mean Median Mode

Variation
Range

Shape
Skew

Interquartile Range

Variance Standard Deviation

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Variance & Standard Deviation
1. Measures of dispersion 2. Most common measures 3. Consider how data are distributed

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Variance & Standard Deviation
1. Measures of dispersion 2. Most common measures 3. Consider how data are distributed 4. Show variation about mean (X or µ)
 X = 8.3
4 6
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8 10 12

Sample Variance Formula
X h ∑c i − X i =1
2 n

S =

2

n −1

cX − Xh +cX − Xh +  +cX − Xh =
2 2 2 1 2 n

n −1

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Sample Variance Formula

S =

2

∑c i =1
1

n

Xi − X n −1
2

h
2 2

n - 1 in denominator! (Use N if Population Variance)

cX − Xh +cX − Xh +  +cX − Xh =
2 2 n

n −1

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Sample Standard Deviation Formula
S = S2 X h ∑c i − X i =1
2 n

=

n −1

cX − Xh +cX − Xh +  +cX − Xh =
2 2 2 1 2 n

n −1

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Variance Example
Raw Data: 10.3 4.9 8.9 11.7 6.3 7.7 S2 = S
2

X h ∑c i − X i =1
2

n

10 4 7 a .3 − 8.3f +a .9 − 8.3f +  +a.7 − 8.3f =
2 2

n −1

where X =

∑ Xi i =1
n

n

= 8.3
2

= 6.368
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6 −1

Thinking Challenge
You’re a financial analyst for Prudential-Bache Securities. You have collected the following closing stock prices of new stock issues: 17, 16, 21, 18, 13, 16, 12, 11. What are the variance and standard deviation of the stock prices?
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Alone Group Class

Variation Solution*
Sample Variance Raw Data: 17 16 21 18 13 16 12 11
S = S
2 2

X h ∑c i − X i =1
2

n

17 16 11 a − 15.5f +a − 15.5f +  +a − 15.5f =
2 2

n −1

where X =

∑ Xi i =1
n

n

= 15.5
2

= 11.14
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8 −1

Variation Solution*
Sample Standard Deviation
X h ∑c i − X i =1
2 n

S= S =

2

n −1

= 11.14 = 3.34

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Summary of Variation Measures
Measure Range Interquartile Range Standard Deviation (Sample) Standard Deviation (Population) Variance (Sample)
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Equation Description Xlargest - Xsmallest Total Spread Q3 - Q1 Spread of Middle 50%
2

∑ (X

i

− X) − µ)
2

n −1

∑ (Xi

N

X Σ(Xi - )2 n-1

Shape

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Numerical Methods for Quantitative Data
Numerical Data Properties Central Tendency
Mean Median Mode

Variation
Range Variance

Shape
Skew

Interquartile Range Standard Deviation

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Shape
1. 2. Describes how data are distributed Measured by skew (symmetry)

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Shape
1. 2. Describes how data are distributed Measured by skew (symmetry)
Symmetric
Mean= Median= Mode

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Shape
1. 2. Describes how data are distributed Measured by skew (symmetry)
Symmetric

Left-Skewed

Mean Median Mode Mean= Median= Mode

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Shape
1. 2. Describes how data are distributed Measured by skew (symmetry)
Symmetric Right-Skewed

Left-Skewed

Mean Median Mode Mean= Median= Mode Mode Median Mean

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