Sesi-1 Descriptive Statistics

BUSINESS STATISTICS
Edi Abdurachman
Session-1
2018
EDI ABDURACHMAN
Education
• S1- IPB- Statistic (1979)
• S2- IPB- Applied Statistics (1981)
• S2 - Iowa State University, USA-Survey Statistics (1983)
• S3 – Statistics-Stochastic Process,
Iowa State University, USA (1986)
Working Experience
• 1979- 2015 MOA
• 1986 – now BINUS University
Position
• Guru Besar Statistika, 2008
• HoP DRM 2015-now
• HoP DCS 2015-now
• Dean of BGP 2015-2018, 2018-2022
WORKING EXPERIENCE-MOA
• 1979-1989 Center for Agricultural Data and
Information : Staff, Section Head, Head of
Division,
• 1989-2010 Agency for Agricultural Research
and Development, Ministri of Agriculture
• 2011 : Director of Agricultural Research
Institute, DKI Province
• 2011-2015 Agency for Agricultural Extension
and Human Resource Development : Director
3
TEACHING EXPERIENCE
• 1979-1981 : IPB Bogor ; Mathematics, Calculus,
Linear Algebra, Statistics, Experimental Design
• 1982-1986 : Iowa State University; Statistical
Analysis
• 1986-Now : BINUS University for S1, S2, S3;
Discreete Mathemathics, Statistical Theory,
Operation Research, Linear Model, Econometrics,
Quantitative Business Analysis, IS Research
Methods, Research Methods, Multivariate
Analysis
4
Establishing A Business Objective Focuses
Data Collection
Examples Of Business Objectives:
 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.
Chap 1-5
Statistics for Managers Using Microsoft Excel® 7e Copyright ©2014 Pearson Education, Inc.
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.
Chap 1-6
SOURCES OF DATA
• Data distributed by an organization or an
individual
• A designed experiment
• A survey
• An observational study
• Data collected by ongoing business activities
Chap 1-7
Examples Of Data Distributed By
Organizations or Individuals
• Financial data on a company provided by
investment services.
• Industry or market data from market research
firms and trade associations.
• Stock prices, weather conditions, and sports
statistics in daily newspapers.
Chap 1-8
Examples of Data From A
Designed Experiment
• Consumer testing of different versions of a
product to help determine which product should
be pursued further.
• Material testing to determine which supplier’s

material should be used in a product.
• Market testing on alternative product promotions

to determine which promotion to use more
broadly.
Chap 1-9
Examples of Survey Data
• Political polls of registered voters during
political campaigns.
• People being surveyed to determine their

satisfaction with a recent product or service
experience.
Chap 1-10
Examples of Data Collected From
Observational Studies
• Market researchers utilizing focus groups to elicit
unstructured responses to open-ended
questions.
• Measuring the time it takes for customers to be

served in a fast food establishment.
• Measuring the volume of traffic through an

intersection to determine if some form of
advertising at the intersection is justified.
Chap 1-11
Examples of Data Collected From Ongoing
Business Activities
• A bank studies years of financial transactions
to help them identify patterns of fraud.
• Economists utilize data on searches done via

Google to help forecast future economic
conditions.
• Marketing companies use tracking data to

evaluate the effectiveness of a web site.
Chap 1-12
Data Is Collected From Either A
Population or A Sample
POPULATION
A population consists of all the items or
individuals about which you want to draw a
conclusion. The population is the “large
group”
SAMPLE
A sample is the portion of a population
selected for analysis. The sample is the “small
group”
Chap 1-13
A Sampling Process Begins With A
Sampling Frame
• The sampling frame is a listing of items that
make up the population
• Frames are data sources such as population
lists, directories, or maps
• Inaccurate or biased results can result if a
frame excludes certain portions of the
population
• Using different frames to generate data can
lead to dissimilar conclusions
Chap 1-14
Types of Samples
Samples
Non-Probability Probability Samples

Samples
Simple Stratified
Random
Judgment Convenience
Systematic Cluster
Chap 1-15
Types of Variables
Variables
Categorical Numerical
Examples:
 Marital Status
 Political Party Discrete Continuous
 Eye Color
(Defined categories) Examples: Examples:
 Number of Children  Weight
 Defects per hour  Voltage
(Counted items) (Measured characteristics)
Chap 1-16
Visualizing Categorical Data Through
Graphical Displays
DCOVA
Categorical
Data
Visualizing Data
Summary Contingency
Table For One Table For Two
Variable Variables
Bar Pareto Side By Side

Chart Chart Bar Chart
Pie Chart
Chap 2-17
Statistics for Managers using Microsoft Excel® 7e Copyright ©2014 Pearson Education, Inc.
ORGANIZING AND VISUALIZING
DATA
Visualizing Categorical Data:
The 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 which come from the summary table of the variable.
Banking Preference
Banking Preference? % Internet

ATM 16%
In person at branch
Automated or live 2%
telephone
Drive-through service at 17%
Drive-through service at branch
branch
In person at branch 41% Automated or live telephone
Internet 24%
ATM
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Chap 2-19
The 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
Banking Preference? %
16% ATM
ATM 16% 24%
Automated or live 2% 2% Automated or live
telephone telephone
Drive-through service at
Drive-through service at 17%
17% branch
branch
In person at branch
In person at branch 41%
Internet 24% Internet
41%
Chap 2-20
The 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
Chap 2-21
Visualizing Numerical Data By
Using Graphical Displays
DCOVA
Numerical Data
Frequency Distributions
Ordered Array and
Cumulative Distributions
Stem-and-Leaf
Histogram Polygon Ogive
Display
Chap 2-22
Visualizing Numerical Data:
The Histogram
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 8
50 but less than 60 2 .10 10 Histogram: Age Of Students
Total 20 1.00 100
6
Frequency
4
(In a percentage
histogram the vertical
axis would be defined to 2
show the percentage of
observations per class)
0
5 15 25 35 45 55 More
Chap 2-23
The Frequency Polygon
Class
Class Midpoint Frequency
10 but less than 20 15 3
30 but less than 40 35 5 Frequency Polygon: Age Of Students
7
6
Frequency
5
4
3
2
(In a percentage 1
polygon the vertical axis 0
would be defined to 5 15 25 35 45 55 65
show the percentage of
Class Midpoints
observations per class)
Chap 2-24
The Ogive (Cumulative % Polygon)
Lower % less
class than lower
Class boundary boundary
50 but less than 60 50 100 Ogive: Age Of Students
Cumulative Percentage
100
80
60
40
(In an ogive the percentage 20
of the observations less 0
than each lower class
boundary are plotted versus 10 20 30 40 50 60
the lower class boundaries. Lower Class Boundary
Chap 2-25
VISUALIZING TWO NUMERICAL
VARIABLES BY USING GRAPHICAL
DISPLAYS
Two Numerical
Variables
Scatter Time-
Plot Series
Plot
Chap 2-26
Scatter Plot Example
Volume Cost per

per day day Cost per Day vs. Production Volume
23 125
250
26 140
200
Cost per Day
29 146
150
33 160
100
38 167
50
42 170
0
50 188
20 30 40 50 60 70
55 195
Volume per Day
60 200
Chap 2-27
Time Series Plot Example
Number of Number of Franchises, 1996-2004

Year Franchises 120
1996 43 100
Franchises
Number of
1997 54 80
60
1998 60
40
1999 73 20
2000 82 0
2001 95 1994 1996 1998 2000 2002 2004 2006
Year
2002 107
2003 99
2004 95
Chap 2-28
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.
Chap 3-30
Measures of Central Tendency
Central Tendency
Arithmetic Median Mode Geometric Mean

Mean
n
X i
XG  ( X1  X2    Xn )1/ n
X i 1
n Middle value Most Rate of
in the ordered frequently change of
array observed a variable
value over time
Chap 3-31
Measures of Central Tendency:
The Mean
• The arithmetic mean (often just called the

“mean”) is the most common measure of
central tendency
The ith value
Pronounced x-bar
– For a sample
n of size n:
X i
X1  X2    Xn
X i1

n n
Sample size Observed values
Chap 3-32
The Median
• In an ordered array, the median is the “middle”

number (50% above, 50% below)
11 12 13 14 15 16 17 18 19 20 11 12 13 14 15 16 17 18 19 20
Median = 13 Median = 13
• Not affected by extreme values
Chap 3-33
Locating the Median
• The location of the median when the values are in numerical order
(smallest to largest):
n 1
Median position  position in the ordered data
2
• If the number of values is odd, the median is the middle number
• If the number of values is even, the median is the average of the two
middle numbers
Note that n  1is not the value of the median, only the position of
2
the median in the ranked data
Chap 3-34
The Mode
• Value that occurs most often
• Not affected by extreme values
• Used for either numerical or categorical
(nominal) data
• There may may be no mode
• There may be several modes
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 0 1 2 3 4 5 6
No Mode
Chap 3-35
Mode = 9
Which Measure to Choose?
 The mean is generally used, unless extreme
values (outliers) exist.
 The median is often used, since the median is
not sensitive to extreme values. For example,
median home prices may be reported for a
region; it is less sensitive to outliers.
 In some situations it makes sense to report
both the mean and the median.
Chap 3-36
Measure of Central Tendency For The Rate Of
Change Of A Variable Over Time:
The Geometric Mean & The Geometric Rate of
Return
 Geometric mean
 Used to measure the rate of change of a variable over time
X G  ( X1  X 2    X n ) 1/ n
 Geometric mean rate of return

 Measures the status of an investment over time
RG  [(1  R1 )  (1  R2 )    (1  Rn )]1/ n  1
 Where Ri is the rate of return in time period i
Chap 3-37
The Geometric Mean Rate of Return:
Example
An investment of $100,000 declined to $50,000 at the end of
year one and rebounded to $100,000 at end of year two:
X1  $100,000 X2  $50,000 X3  $100,000
50% decrease 100% increase
The overall two-year return is zero, since it started and ended

at the same level.
Chap 3-38
The Geometric Mean Rate of
Return: Example (continued)
Use the 1-year returns to compute the arithmetic mean

and the geometric mean:
Arithmetic
(.5)  (1) Misleading result
mean rate X   .25  25%
2
of return:
Geometric R G  [(1  R1 )  (1  R2 )    (1  Rn )]1 / n  1 More

mean rate of  [(1  (.5))  (1  (1))]1 / 2  1 representative
return:
 [(. 50)  (2)]1 / 2  1  11 / 2  1  0% result
Chap 3-39
Measures of Variation
Variation
Range Variance Standard Coefficient

Deviation of Variation
 Measures of variation give

information on the spread
or variability or
dispersion of the data
values.
Same center,
Chap 3-40 different variation
Measures of Variation:
The Range
 Simplest measure of variation
 Difference between the largest and the smallest values:
Range = Xlargest – Xsmallest
Example:
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Range = 13 - 1 = 12
Chap 3-41
Why The Range Can Be Misleading
 Ignores the way in which data are distributed

7 8 9 10 11 12 7 8 9 10 11 12
Range = 12 - 7 = 5 Range = 12 - 7 = 5
 Sensitive to outliers
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,5
Range = 5 - 1 = 4
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,120
Range = 120 - 1 = 119
Chap 3-42
The Sample Variance
• Average (approximately) of squared deviations
of values from the mean
– Sample variance: n
 i
(X  X ) 2
S2  i 1
n -1
Where X = arithmetic mean

n = sample size
Xi = ith value of the variable X
Chap 3-43
The Sample Standard Deviation
• Most commonly used measure of variation

• Shows variation about the mean
• Is the square root of the variance
• Has the same units as the original data
– Sample standard deviation:
 i
(X  X ) 2
S i 1
n -1
Chap 3-44
The Standard Deviation
Steps for Computing Standard Deviation
1. Compute the difference between each value and the

mean.
2. Square each difference.
3. Add the squared differences.
4. Divide this total by n-1 to get the sample variance.
5. Take the square root of the sample variance to get
the sample standard deviation.
Chap 3-45
Sample Standard Deviation:
Calculation Example
Sample
Data (Xi) : 10 12 14 15 17 18 18 24
n=8 Mean = X = 16
(10  X)2  (12  X)2  (14  X)2    (24  X)2

S
n 1
(10  16)2  (12  16)2  (14  16)2    (24  16)2


8 1
130 A measure of the “average”

  4.3095
7 scatter around the mean
Chap 3-46
Comparing Standard Deviations
Data A
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 S = 3.338
Data B Mean = 15.5

11 12 13 14 15 16 17 18 19 20
S = 0.926
21
Data C Mean = 15.5

S = 4.567
11 12 13 14 15 16 17 18 19 20 21
Chap 3-47
Comparing Standard Deviations
Smaller standard deviation
Larger standard deviation
Chap 3-48
Summary Characteristics
 The more the data are spread out, the greater the
range, variance, and standard deviation.
 The more the data are concentrated, the smaller

the range, variance, and standard deviation.
 If the values are all the same (no variation), all

these measures will be zero.
 None of these measures are ever negative.
Chap 3-49
The Coefficient of Variation
• Measures relative variation

• Always in percentage (%)
• Shows variation relative to mean
• Can be used to compare the variability of two or
more sets of data measured in different units
 S 
CV   
 X   100%
 
Chap 3-50
Comparing Coefficients of Variation
• Stock A:
– Average price last year = $50
– Standard deviation = $5
S $5
CVA     100%   100%  10%
X $50 Both stocks
• Stock B: have the same
standard
– Average price last year = $100 deviation, but
stock B is less
– Standard deviation = $5 variable relative
to its price
S $5
CVB     100%   100%  5%
X $100
Chap 3-51
Comparing Coefficients of Variation
(continued)
• Stock A:
– Average price last year = $50
– Standard deviation = $5
S $5
 
CVA     100%   100%  10%
X $50 Stock C has a
• Stock C: much smaller
standard
– Average price last year = $8 deviation but a
much higher
– Standard deviation = $2 coefficient of
variation
 S  $2
CVC     100%   100%  25%

X  $8
Chap 3-52
Locating Extreme Outliers:
Z-Score
 To compute the Z-score of a data value, subtract the
mean and divide by the standard deviation.
 The Z-score is the number of standard deviations a

data value is from the mean.
 A data value is considered an extreme outlier if its Z-

score is less than -3.0 or greater than +3.0.
 The larger the absolute value of the Z-score, the

farther the data value is from the mean.
Chap 3-53
Shape of a Distribution
• Describes how data are distributed
• Two useful shape related statistics are:
– Skewness
• Measures the extent to which data values are not
symmetrical
– Kurtosis
• Kurtosis affects the peakedness of the curve of the
distribution—that is, how sharply the curve rises
approaching the center of the distribution
Chap 3-54
Shape of a Distribution (Skewness)
• Measures the extent to which data is not

symmetrical
Left-Skewed Symmetric Right-Skewed

Mean < Median Mean = Median Median < Mean
Skewness
Statistic < 0 0 >0
Chap 3-55
Shape of a Distribution -- Kurtosis measures how
sharply the curve rises approaching the center of
the distribution)
Sharper Peak
Than Bell-Shaped
(Kurtosis > 0)
Bell-Shaped
(Kurtosis = 0)
Flatter Than
Bell-Shaped
(Kurtosis < 0)
Chap 3-56
Quartile Measures:
Locating Quartiles
Find a quartile by determining the value in the

appropriate position in the ranked data, where
First quartile position: Q1 = (n+1)/4 ranked value
Second quartile position: Q2 = (n+1)/2 ranked value
Third quartile position: Q3 = 3(n+1)/4 ranked value
where n is the number of observed values
Chap 3-57
Quartile Measures:
Calculation Rules
• When calculating the ranked position use the
following rules
– If the result is a whole number then it is the ranked
position to use
– If the result is a fractional half (e.g. 2.5, 7.5, 8.5, etc.)

then average the two corresponding data values.
– If the result is not a whole number or a fractional half

then round the result to the nearest integer to find
the ranked position.
Chap 3-58
Quartile Measures:
Locating Quartiles
Sample Data in Ordered Array: 11 12 13 16 16 17 18 21 22
(n = 9)
Q1 is in the (9+1)/4 = 2.5 position of the ranked data
so use the value half way between the 2nd and 3rd values,
so Q1 = 12.5
Q1 and Q3 are measures of non-central location

Q2 = median, is a measure of central tendency
Chap 3-59
Quartile Measures
Calculating The Quartiles: Example
Sample Data in Ordered Array: 11 12 13 16 16 17 18 21 22
(n = 9)
Q1 is in the (9+1)/4 = 2.5 position of the ranked data,
so Q1 = (12+13)/2 = 12.5
Q2 is in the (9+1)/2 = 5th position of the ranked data,

so Q2 = median = 16
Q3 is in the 3(9+1)/4 = 7.5 position of the ranked data,

so Q3 = (18+21)/2 = 19.5
Q1 and Q3 are measures of non-central location
Q2 = median, is a measure of central tendency
Chap 3-60
Quartile Measures:
The Interquartile Range (IQR)
• The IQR is Q3 – Q1 and measures the spread in the middle

50% of the data
• The IQR is also called the midspread because it covers the

middle 50% of the data
• The IQR is a measure of variability that is not influenced by

outliers or extreme values
• Measures like Q1, Q3, and IQR that are not influenced by
outliers are called resistant measures
Chap 3-61
Calculating The Interquartile Range
Example:
Median X
X Q1 Q3 maximum
minimum (Q2)
25% 25% 25% 25%
12 30 45 57 70
Interquartile range
= 57 – 30 = 27
Chap 3-62
The Five Number Summary
The five numbers that help describe the center,

spread and shape of data are:
 Xsmallest
 First Quartile (Q1)
 Median (Q2)
 Third Quartile (Q3)
 Xlargest
Chap 3-63
Relationships among the five-number summary
and distribution shape

Median – Xsmallest Median – Xsmallest Median – Xsmallest
> ≈ <
Xlargest – Median Xlargest – Median Xlargest – Median
Q1 – Xsmallest Q1 – Xsmallest Q1 – Xsmallest
> ≈ <
Xlargest – Q3 Xlargest – Q3 Xlargest – Q3

Median – Q1 Median – Q1 Median – Q1
> ≈ <
Q3 – Median Q3 – Median Q3 – Median

Chap 3-64
Five Number Summary and
The Boxplot
• The Boxplot: A Graphical display of the data
based on the five-number summary:
Xsmallest -- Q1 -- Median -- Q3 -- Xlargest
Example:
25% of data 25% 25% 25% of data

of data of data
Xsmallest Q1 Median Q3 Xlargest
Chap 3-65
Five Number Summary:
Shape of Boxplots
• If data are symmetric around the median then the box and
central line are centered between the endpoints
Xsmallest Q1 Median Q3 Xlargest
• A Boxplot can be shown in either a vertical or horizontal

orientation
Chap 3-66
Distribution Shape and
The Boxplot
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q 2 Q3
Chap 3-67
Boxplot Example
• Below is a Boxplot for the following data:
Xsmallest Q1 Q2 / Median Q3 Xlargest
0 2 2 2 3 3 4 5 5 9 27
00 22 33 55 27
27
• The data are right skewed, as the plot depicts

Chap 3-68
Numerical Descriptive Measures for a
Population
 Descriptive statistics discussed previously described a sample,
not the population.
 Summary measures describing a population, called

parameters, are denoted with Greek letters.
 Important population parameters are the population mean,

variance, and standard deviation.
Chap 3-69
Numerical Descriptive Measures
for a Population: The mean µ
• The population mean is the sum of the values in
the population divided by the population size, N
X i
X1  X2    XN
 i1

N N
Where μ = population mean
N = population size
Chap 3-70
Numerical Descriptive Measures For A
Population: The Variance σ2
• Average of squared deviations of values from
the mean
N
– Population variance:  (X  μ)
i
2
σ2  i1
N
Where μ = population mean

N = population size
Chap 3-71
Numerical Descriptive Measures For A Population:
The Standard Deviation σ
• Most commonly used measure of variation

• Shows variation about the mean
• Is the square root of the population variance
• Has the same units as the original data
N
– Population standard deviation:  i

(X  μ) 2
σ i1
N
Chap 3-72
Sample statistics versus
population parameters
Measure Population Sample
Parameter Statistic
Mean
 X
Variance
2 S2
Standard
Deviation
 S
Chap 3-73
The Empirical Rule
• The empirical rule approximates the variation of

data in a bell-shaped distribution
• Approximately 68% of the data in a bell shaped
distribution is within 1 standard deviation of the
mean or μ  1σ
68%
μ
μ  1σ
Chap 3-74
The Empirical Rule
• Approximately 95% of the data in a bell-shaped distribution lies
within two standard deviations of the mean, or µ ± 2σ
• Approximately 99.7% of the data in a bell-shaped distribution lies

within three standard deviations of the mean, or µ ± 3σ
95% 99.7%
μ  2σ μ  3σ
Chap 3-75
Using the Empirical Rule
 Suppose that the variable Math SAT scores is
bell-shaped with a mean of 500 and a standard
deviation of 90. Then,
 68% of all test takers scored between 410 and 590
(500 ± 90).
 95% of all test takers scored between 320 and 680
(500 ± 180).
 99.7% of all test takers scored between 230 and
770 (500 ± 270).
Chap 3-76
Two Measures Of The Relationship
Between Two Numerical Variables
• The Covariance
• The Coefficient of Correlation
Chap 3-77
The Covariance
• The covariance measures the strength of the linear
relationship between two numerical variables (X & Y)
• The sample covariance:

n
 ( X  X)( Y  Y)
i i
cov ( X , Y )  i1
n 1
• Only concerned with the strength of the relationship
• No causal effect is implied
Chap 3-78
Interpreting Covariance
• Covariance between two variables:
cov(X,Y) > 0 X and Y tend to move in the same direction
cov(X,Y) < 0 X and Y tend to move in opposite directions
cov(X,Y) = 0 X and Y are independent
• The covariance has a major flaw:

– It is not possible to determine the relative strength
of the relationship from the size of the covariance
Chap 3-79
Coefficient of Correlation
• Measures the relative strength of the linear

relationship between two numerical variables
• Sample coefficient of correlation:
cov (X , Y)
r
SX SY
where n
 (X  X)(Y  Y)
n n
i i  (X  X)
i
2
 i
(Y  Y ) 2
cov (X , Y)  i1
SX  i1
SY  i1
n 1 n 1 n 1
Chap 3-80
Features of the
Coefficient of Correlation
• The population coefficient of correlation is referred as ρ.
• The sample coefficient of correlation is referred to as r.
• Either ρ or r have the following features:
– Unit free
– Ranges between –1 and 1
– The closer to –1, the stronger the negative linear relationship
– The closer to 1, the stronger the positive linear relationship
– The closer to 0, the weaker the linear relationship
Chap 3-81
Scatter Plots of Sample Data with
Various Coefficients of Correlation
Y Y
X X
r = -1 r = -.6
Y
Y Y
X X X
Chap 3-82
r = +1 r = +.3 r=0
PERSONAL ASSIGNMENT-1
• Identify one industry of your interest (eg.
Banking, Insurance, Leasing, etc)
• Collect some secondary data related to the
industry identified above
• Do some statistical descriptive analysis and
evaluate
• Submit next week
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BUSINESS STATISTICS

 A pharmaceutical manufacturer needs to determine whether a

 An operations manager wants to monitor a manufacturing

 An auditor wants to review the financial transactions of a

• Material testing to determine which supplier’s

• Market testing on alternative product promotions

• People being surveyed to determine their

• Measuring the time it takes for customers to be

• Measuring the volume of traffic through an

• Economists utilize data on searches done via

• Marketing companies use tracking data to

Non-Probability Probability Samples

Bar Pareto Side By Side

Banking Preference? % Internet

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Pareto Chart For Banking Preference

10 but less than 20 3 .15 15

Volume Cost per

Number of Number of Franchises, 1996-2004

Arithmetic Median Mode Geometric Mean

• The arithmetic mean (often just called the

• In an ordered array, the median is the “middle”

 Geometric mean rate of return

X1  $100,000 X2  $50,000 X3  $100,000

50% decrease 100% increase

The overall two-year return is zero, since it started and ended

Use the 1-year returns to compute the arithmetic mean

Geometric R G  [(1  R1 )  (1  R2 )    (1  Rn )]1 / n  1 More

Range Variance Standard Coefficient

 Measures of variation give

Range = Xlargest – Xsmallest

 Ignores the way in which data are distributed

Where X = arithmetic mean

• Most commonly used measure of variation

1. Compute the difference between each value and the

(10  X)2  (12  X)2  (14  X)2    (24  X)2

(10  16)2  (12  16)2  (14  16)2    (24  16)2

130 A measure of the “average”

Data B Mean = 15.5

Data C Mean = 15.5

Smaller standard deviation

Larger standard deviation

 The more the data are concentrated, the smaller

 If the values are all the same (no variation), all

 None of these measures are ever negative.

• Measures relative variation

 The Z-score is the number of standard deviations a

 A data value is considered an extreme outlier if its Z-

 The larger the absolute value of the Z-score, the

• Measures the extent to which data is not

Left-Skewed Symmetric Right-Skewed

Find a quartile by determining the value in the

First quartile position: Q1 = (n+1)/4 ranked value

Second quartile position: Q2 = (n+1)/2 ranked value

Third quartile position: Q3 = 3(n+1)/4 ranked value

where n is the number of observed values

– If the result is a fractional half (e.g. 2.5, 7.5, 8.5, etc.)

– If the result is not a whole number or a fractional half

Q1 and Q3 are measures of non-central location