001 Ebook - Statistical Concepts and Their Applications in Business

Statistical Concepts And Their Application In Business
Lesson 2
Copyright 2014, Simplilearn, All rights reserved.

Agenda
After completing
this course, you will
be able to
understand:
Statistical Methods overview
Population and Samples
Developing a sampling plan and Sampling Methods
What is Descriptive Statistics
What are its components
Business usage of Descriptive Statistics via a Case Study
Probability theory and distributions
Confidence Interval
The concept of tests of significance
One sided and two sided hypothesis testing
The various tests of significance
Non parametric testing

Statistical Methods
Descriptive Statistics
Inferential Statistics
Sample
Population
Measure of Central Tendency
Estimation
Measures of dispersion
Hypothesis Testing
Population and Samples

A population is any entire collection of objects or observations from which we may collect data. It is
the entire group we are interested in, which we wish to describe or draw conclusions about.
For each population there are many possible samples.
It is important that the investigator carefully and completely defines the population before
collecting the sample, including a description of the members to be included.
A sample is a group of units selected from a larger group (the population). By studying the sample it
is hoped to draw valid conclusions about the larger group.
A sample is generally selected for study because the population is too large to study in its entirety.
The sample should be representative of the general population. This is often best achieved by
random sampling.
Developing a sampling plan

Define the target population in terms of number of elements, sampling unit, extent and time.
Select a sampling method probability or non-probability sampling.
Obtain the sampling frame must contain all the potential factors.
Determination of sample size for desired level of accuracy.
Choose data collection method procedure to obtain the data.
Develop operational plan which technique fits the best.
Execute operational plan verification of specified procedure.

Sampling techniques
Sampling
Probability
Simple
Random
Systematic
Convenience
Non-Probability
Stratified
Judgmental
Cluster
Quota
Snowball
Descriptive Statistics
To describe the sample.
To indicate the error associated with results and graphical output.
No of players
40
Player's Age No of players
30
>35
7
20
25-35
15
15-25
34
No of players
10
0
>35
25-35
15-25
Help describe, show and summarize data in a meaningful manner
Mean
Median
Mode
Mean
mean is the average of the numbers
a calculated "central" value of a set of numbers
Median
Median is the number in the middle
Number of values above and below median is same
Mode
Mode is the value that occurs often
A set of data can have more than one mode

35
Frequency
30
25
20
15
10
5
0
6
When to use what?

Mean:
The average is required
The variable is continuous / discrete
Median:
The variable is discrete
There are abnormal extreme values / Non-normal data
The characteristic under study is qualitative
Mode:
The variable is discrete
There are abnormal extreme values
The characteristic under study is qualitative
Measure of Dispersion
The spread or dispersion of a set of scores around some central value

Describes the amount of heterogeneity or variation within a distribution of scores
Measure of Dispersion
Variance
Standard Deviation
Variance and Standard Deviation
Variance is an average of squared deviations about the mean
Standard deviation is the squared root of variance.
Example data : 2,5,5,4,6,8

n= 6
Mean = (2+5+5+4+6+8)/6 = 5
Example data : 2,5,4,6,8

(25)2 + (55)2 + (45)2 + (65)2 + (85)2
Variance =
Standard Deviation = 4 = 2
20
5
=4
Case Study Descriptive Statistics

Business Case: A telecommunications company maintains a customer database that includes, among
other things, information on how much each customer spent on long distance, toll-free, equipment
rental, calling card, and wireless services in the previous month.
The telecom company surveyed 1000 of its customers on all the above services.
Use Descriptive analysis to study customer spending to determine which services are most profitable.
Case Study Descriptive Statistics (Contd.)

N
Valid
N
Min
Max
Mean
Standard Deviation
Long distance last month
1000
1000
0.90
99.95
11.72
10.36
Toll free last month
1000
475
0.00
173.00
13.27
16.90
Equipment last month
1000
386
0.00
77.70
14.21
19.07
Calling card last month
1000
678
0.00
109.25
13.78
14.08
Wireless last month
1000
296
0.00
111.95
11.58
19.72
On average, customers spend the most on equipment rental, but there is a lot of variation in the
amount spent.
Customers with calling card service spend only slightly less, on average, than equipment rental
customers, and there is much less variation in the values.
The real problem here is that most customers don't have every service, so a lot of 0's are being
counted. One solution to this problem is to treat 0's as missing values so that the analysis for each
service becomes conditional on having that service.
Probability Theory
Probability is a branch of mathematics that deals with the uncertainty of an event happening in
the future.
Probability value always occurs within a range of 0 to 1.
Probability of an event, P(E) = No. of favorable occurrences

No. of possible occurrences
HEAD
TAIL
Assigning Probabilities
Classical method based on equally likely
outcomes.
E.g.: Rolling a dice.
No. of
No. of
cars used days
Probability
(3/60)=0.05
10
(10/60)=0.17
E.g.: A car agency has 5 cars. His past record

as shown in the table shows his cars used in past
60 days.
16
(16/60)=0.27
15
(15/60)=0.25
Subjective method - based on judgment.
(9/60)=0.15
E.g.: 75% chance that England will adopt to

Euro currency by 2020.
(7/60)=0.11
Relative frequency method based on

experimentation or historical data.
Probability Distribution
Probability distribution for a random variable gives information about how the probabilities are
distributed over the values of that random variable.
Its defined by f(x) which gives probability of each value.
E.g. Suppose we have sales data for AC sale in last 300 days.
Probability of units sold,
No. of days
f(x)
Units sold
0
10
0.03
55
0.18
150
0.5
55
0.18
25
0.08
0.02
Probability of units sold, f(x)

0.6
0.4
Probability
of units
sold, f(x)
0.2
0
Probability Theory
Binominal Distribution satisfies:
A fixed number of trials
Each trial is independent of the others
The probability of each outcome remains constant from trial to trial.
Examples of binomial experiments

Tossing a coin 20 times, what is probability of getting head 5 times?
Getting a diamond King from a pack of 52 cards.
Case StudyBinomial Distribution

Example of binomial distribution: Amir buys a chocolate bar every day during a promotion that says
one out of six chocolate bars has a gift coupon within. Answer the following questions :
What is the distribution of the number of chocolates with gift coupons in seven days?
What is the probability that Amir gets no chocolates with gift coupons in seven days?
Amir gets no gift coupons for the first six days of the week. What is the chance that he will get a one
on the seventh day?
Amir buys a bar every day for six weeks. What is the probability that he gets at least three gift
coupons?
How many days of purchase are required so that Amirs chance of getting at least one gift coupon is
0.95 or greater?
(Assume that the conditions of binomial distribution apply: the outcomes for Amirs purchases are
independent, and the population of chocolate bars is effectively infinite.)
Case StudyBinomial Distribution (contd.)

Steps:
Formula = nCr pr q n-r
Where n is the no. of trials , r is the number of successful outcomes , p is the probability of success,
and q is the probability of failure.
Other important formulae include
p+q=1
Hence, q = 1 p
Thus,
p = 1/6
q = 5/6
Case StudyBinomial Distribution (contd.)

1.
Distribution of number of chocolates with gift coupons in 7 days: 7C r (1/6)r (5/6)7-r
2.
Probability of failing 7 days : P(X=0) =(5/6)7
3.
Probability of winning a coupon on the 7th day : 1/6
4.
The number of winning at least 3 wrappers in six weeks:
P(X 3)=1 P(X2)

=1 (P(X=0)+P(X=1)+P(X=2)
=1 (0.0005+0.0040+0.0163)
= 0.979
5.
Number of purchase days required so that probability of success is greater than 0.95:
P(X 1) 0.95 = 1 P(X 0) 0.95
= 1 P(X=0) 0.05
= n 16.43 (applying log function)
= 17days.
Normal Distribution
A Normal distribution is a theoretical model of the whole population.
It is perfectly symmetrical about the central value; the mean represented by zero.
Mean
Median
Mode
Poisson distribution
Discrete probability distribution for events that happen randomly in time
Following conditions need to be satisfied
The event results in a success or failure
The average number of successes, is known
Probability of success is proportional to the region/time
Probability of success in an extremely small region/time is almost zero.
Properties: Mean and variance is equal, and is denoted by .
Examples
Average number of houses sold by a company is 5 per day. What is the probability that exactly 4
houses will be sold tomorrow?
Average number of births in a hospital is 2.1 births per hour. What is the probability that there
will be exactly 6 births in the next two hours?
Skewness and Kurtosis

Skewness measure of deviation from symmetry
Difference between median and mean
Right or left skewed
Skewness negative more negative values (Left skewed)
Skewness positive more positive values (Right skewed)
Kurtosis measure of peakedness of the distribution
High kurtosis tall peak, rapid decline in the tails
Low kurtosis flat peaks, gradual decline in the tails
Extreme case uniform distribution
Case Study Skewness and Kurtosis

N
Skewness
Kurtosis
Statistic
Std. Error
Statistic
Std. Error
Long distance last month
1000
2.966
0.077
14.012
0.155
Toll free last month
475
3.465
0.112
26.735
0.224
Equipment last month
386
0.756
0.124
0.641
0.248
Calling card last month
678
2.150
0.094
7.572
0.187
Wireless last month
296
1.359
0.142
3.079
0.282
Equipment last month data is more accurate in nature and its SD is comparatively lower than the
other measures.
Conclusion - Equipment is the segment where the telecom company is getting more profits than
the others and it can invest more .
Confidence interval
Its a rule for a population parameter to determine an interval that is likely to include the parameter
based on the sample information.
Supposing that a random variable has been taken and the random samples were taken repeatedly
from the population, certain percentage of interval contains unknown value.
In such case, if population is repeatedly sampled and intervals calculated in that fashion then 95%
of interval contains true value of the unknown parameter.
This interval is then said to be 95% confident for the population proportion.
Data Requirements
Confidence level
Statistic
Margin of error
Range of the confidence interval = sample statistic + margin of error.
The uncertainty associated with the confidence interval is specified by the confidence level.
How to Construct a Confidence Interval

Identify a sample statistic - Choose the statistic that will be used to estimate a population
parameter.
Select a confidence level - It describes the uncertainty of a sampling method.
Find the margin of error.

Margin of error = Critical value * Standard error of statistic
Specify the confidence interval - The range of the confidence interval is defined by the following
equation.
Confidence interval = sample statistic + Margin of error
Tests of Significance
Tests used in assessing the evidence in favor of or against a given assumption
Begins with a Null Hypothesis, H0
Tests either validate the null hypothesis, or reject it in favor of an Alternate Hypothesis, Ha
Two types of tests
One sided tests
Two sided tests
Results decided by calculating the p-value
Interpretation:
If p-value is less than the significance level , reject the null hypothesis.
General values of are 0.05, 0.01.
General Assumptions:
The distribution is almost normal
The samples in the distribution have almost unequal variances
One Sided Hypothesis Testing

0 = null value
Null hypothesis : = 0
Alternative hypothesis : < 0 OR > 0
Example : Lets say a student has been given a question to find out whether
the average time for the school bus to reach his home from school is more
than 45 minutes.
Null Value: 0 = 45 minutes
Null Hypothesis : = 45
Alternative Hypothesis : > 45
Using one of various hypothesis tests, calculate p-value and reject null hypothesis if p-value is
less than 0.05.
Two Sided Hypothesis Testing

0 = null value
Null hypothesis : = 0
Alternative hypothesis : 0
Example : Lets say a student has been given a question to find out whether the average time
for the school bus to reach his home from school is 45 minutes or not.
Null Value: 0 = 45 minutes
Null Hypothesis : = 45
Alternative Hypothesis : 45
Using one of various hypothesis tests, calculate p-value and reject null hypothesis if p-value is
less than 0.05.
Tests of Significance
One sample z-test
Two sample z-test
One sample t-test
Two sample t-test
Paired t-test
Chi Squared test
F test - Analysis of Variance (ANOVA)
F test - Regression
Chi- Squared tests

Compare the observed result against an expected result based on a hypothesis
Steps:
State the null hypothesis
Prepare the contingency table for the variable
Determine the expected results
Calculate the chi-squared value
Calculate the degrees of freedom
Based on the above, calculate the p-value
If p-value < 0.05, reject the null hypothesis.
Test of independence:
Verify if two variables are independent
Same steps as above.
Case StudyChi-Squared Test

A city has a newly opened nuclear plant, and there are families staying dangerously close to the
plant. A health safety officer wants to take this case up to provide relocation for the families that
live in the surrounding area. To make a strong case, he wants to prove with numbers that an
exposure to radiation levels is leading to an increase in diseased population. He formulates a
contingency table of exposure and disease.
Does the data suggest an association between the disease and exposure?
Disease
Total
Exposure
Yes
No
Yes
37
13
50
No
17
53
70
Total
54
66
120
Case StudyChi-Squared Test (contd.)

Steps:
Calculate the number of individuals of exposed and unexposed groups expected in each disease
category (yes and no) if the probabilities were the same.
If there were no effect of exposure, the probabilities should be same and the chi-squared
statistic would have a very low value.
Proportion of population exposed = (50/120) = 0.42
Proportion of population not exposed = (70/120) = 0.58
Thus, expected values:
Population with disease = 54
Exposure Yes : 54 * 0.42 = 22.5
Exposure No : 54 * 0.58 = 31.5
Population without disease = 66
Exposure Yes : 66 * 0.42 = 27.5
Exposure No : 66 * 0.58 = 38.5
Case StudyChi-Squared Test (contd.)

Calculate the Chi-squared statistic
2 =
=
= 29.1
Calculate the degrees of freedom :
(Number of rows 1) X (Number of columns 1)
df = (2 1) X (2 1) = 1
Calculate the p-value from the chi-squared table
For chi-squared value 29.1 and degrees of freedom = 1, from the table, p-value is < 0.001
Interpretation: There is 0.001 chance of obtaining such discrepancies between expected and
observed values if there is no association
Conclusion : There is an association between the exposure and disease.
ANOVA
Analysis of Variance used to compare more than two groups
Extension of the independent t-tests
Factor variable variable defining the groups
Response variable variable being compared

One way ANOVA
Groups of a single variable
E.g. : Is there a difference in students scores based on the row he is seated
front/middle/back?
Two way ANOVA
Two independent variables
E.g. : Does the race and gender affect a persons yearly income?
Case StudyOne Way ANOVA

Marks obtained in the same subject by 3 students belonging to three different schools are given
below.
Does the data suggest any association between schools and marks?
School
Marks
82
83
38
83
78
59
97
68
55
Basic Idea : Partition the total variation in the data into the variance between groups and variance
within groups.
Case StudyOne Way ANOVA (contd.)

Steps:
Calculate the means
School A : mean(82,83,97) = 87.3
School B : mean(83,78,68) = 76.3
School C : mean(38,59,55) = 50.6
Calculate the grand mean
Grand mean = mean(82,83,97,83,78,68,39,59,55) = 71.4
Calculating the variations
Sum of Squared Deviations about the grand mean, across all observed values : SSTotal = 2630.2
Sum of Squared Deviations of group mean about the grand mean three group means against
the grand mean : SSBetween = 2124.2
Sum of Squared Deviations of observations within a group about their group mean; added
across all groups : SSWithin = 506
Case StudyOne Way ANOVA (contd.)

Calculate the degrees of freedom for every variance
dfTotal = Number of observations 1 = 9 -1 = 8
dfBetween = Number of groups -1 = 3-1 = 2
dfWithin = Number of observations number of groups = 9-3 = 6
Calculate the Mean Squared Variances
Mean Squared variance between groups : MSBetween= SSBetween /dfBetween = 2124.2/2 = 1062.1
Mean Squared variance within groups : MSWithin= SSWithin /dfWithin = 506/6 = 84.3
Calculate the f-statistic
F-value : MSBetween /MSWithin= 1062.1/84.3 = 12.59
Calculate the p-value from the F-table

p-value for given f-value 12.59 and degrees of freedom 2 and 6 is 0.007
Conclusion : Since the p-value is less than alpha, we can conclude by rejecting the null hypothesis,
that there is a difference in the marks obtained by students belonging to different groups.
Non Parametric Testing

Referred to as distribution free, as they dont involve making assumptions of any data.
They have lower power than the parametric tests and hence are always given the second
preference after the parametric tests.
These tests are typically focused on median rather than mean.

They involve straight-forward procedures like counting and ordering.
There are at least one non-parametric test done for each parametric test and are classified into the
following categories.
Tests of differences between groups (independent samples)
Tests of differences between variables (dependent variables)
Tests of relationships between variables.
Non Parametric Tests

Test
Parametric
Non Parametric
One Qualitative Response

Variable
One Sample Test
Sign Test
One Quantitative Response

Variable Two Values from
Paired Samples
Paired sample t-test
Wilcoxon Signed Rank Test

Variable One Qualitative
Independent Variable with
two groups
Two Independent Sample ttest
Wilcoxon Rank Sum or Mann

Whitney Test

Variable One Qualitative
Independent Variable with
three or more groups
ANOVA
Kruskall Wallis
Correlation
Measure of association between variables
Positive and negative correlation, ranging between +1 and -1
Positive correlation example:
Earning and expenditure
Negative correlation example
Speed and time
Parametric normal distribution and homogenous variance

Pearson correlation
Non parametric no assumptions, nominal variables
Spearman correlation
Correlation coefficient
r : correlation coefficient
+1 : Perfectly positive
-1 : Perfectly negative
0 0.2 : No or very weak association

0.2 0.4 : Weak association
0.4 0.6 : Moderate association
0.6 0.8 : Strong association
0.8 1 : Very strong to perfect association
Summary
Here is a quick
recap of what we
have learned in this
lesson
Overview of statistical methods
Descriptive statistics Measures of Central Tendency and Measures of

Dispersion
A business case study to understand the concepts of descriptive statistics
Probability distribution
What are tests of significance
The process flow of hypothesis testing
One sided and two sided hypothesis tests
Various tests used in calculating the p-value
What is non parametric testing and why is it used
Non parametric alternatives for the usual tests of significance
Quiz
QUIZ
1
Which of the following is NOT a part of measure of central tendency?
a.
Mean
b. Median
c.
Mode
d.
Standard Deviation
QUIZ
1
Which of the following is NOT a part of measure of central tendency?
a.
Mean
b. Median
c.
Mode
d.
Standard Deviation
Answer: d
Explanation: Standard Deviation is used to measure dispersion and not to measure central
tendency.
Calculate the mean, median and mode of the following data and choose the right
option:
QUIZ
2
13, 3, 10, 9, 7, 10, 12, 8, 6

a.
Mean = 8.67, Median = 9, Mode = 10
b. Mean = 9, Median = 9, Mode = 10

c.
Mean = 9, Median = 10, Mode = 9
d.
Calculate the mean, median and mode of the following data and choose the right
option:
QUIZ
2
13, 3, 10, 9, 7, 10, 12, 8, 6

a.
b. Mean = 9, Median = 9, Mode = 10

c.
Mean = 9, Median = 10, Mode = 9
d.
Answer: a.
Mean is the average of all the values, median is the middle value and the mode is the most
commonly occurring value.
QUIZ
3
Which of the following values of correlation coefficient corresponds to a perfectly

positive correlation
a.
b. +1
c.
-1
d.
QUIZ
3
Which of the following values of correlation coefficient corresponds to a perfectly

positive correlation
a.
b. +1
c.
-1
d.
Answer: b.
Explanation: Correlation coefficient ranges from +1 to -1, with +1 being perfectly positive
and -1 being perfectly negative.
QUIZ
4
Calculate the variance of the following data and choose the right option:
5,10,12,4,8,9,16
a.
15.41
b. 14.41
c.
9.14
d.
12.41
QUIZ
4
Calculate the variance of the following data and choose the right option:
5,10,12,4,8,9,16
a.
15.41
b. 14.41
c.
9.14
d.
12.41
Answer: b.
Variance is the average of squared deviations about the mean, given by
From the research question below, choose the alternative hypothesis from the
following options.
QUIZ
5
Given a sample of body temperatures of 50 persons, and the average temperature 0 ,

decide if the average body temperature has increased over time.
a.
= 0
b. > 0
c.
< 0
d.
From the research question below, choose the alternative hypothesis from the
following options.
QUIZ
5
Given a sample of body temperatures of 50 persons, and the average temperature 0 ,

decide if the average body temperature has increased over time.
a.
= 0
b. > 0
c.
< 0
d.
Answer: b.
Explanation: The question forms a one sided hypothesis, checking if the average
temperature has increased, that is, if > 0
QUIZ
6
Choose the commonly used value for significance level from the values given below
a.
0.1
b. 0.5
c.
1.0
d.
0.05
QUIZ
6
Choose the commonly used value for significance level from the values given below
a.
0.1
b. 0.5
c.
1.0
d.
0.05
Answer: d.
Explanation: The commonly used value for significance levels are 0.01 and 0.05.
QUIZ
7
Which of the following tests is a non parametric test?
a.
Paired t-test
b. Independent t-test
c.
Sign Test
d.
Analysis of Variance
QUIZ
7
Which of the following tests is a non parametric test?
a.
Paired t-test
b. Independent t-test
c.
Sign Test
d.
Analysis of Variance
Answer: c.
Explanation: T-tests and ANOVA are used in parametric testing.
QUIZ
8
Which of the following conditions binomial distribution does not satisfy?
a. A fixed number of trials

b. Each trial is independent of the others
c. The probability of each outcome remains constant from trial to trial.
d. Normal distribution
QUIZ
Which of the following conditions binomial distribution does not satisfy?
a. A fixed number of trials

b. Each trial is independent of the others
c. The probability of each outcome remains constant from trial to trial.
d. Normal distribution
Answer: d.
Explanation: Normal distribution. Rest of the things are satisfied by binomial distribution.
QUIZ
9
Which is not a part of descriptive statistics?
a. Sample
b. Measure of central tendency
c. Measures of dispersion
d. Hypothesis testing
QUIZ
Which is not a part of descriptive statistics?
a. Sample
b. Measure of central tendency
c. Measures of dispersion
d. Hypothesis testing
Answer: d.
Explanation: Hypothesis testing is not a part of descriptive statistics, it is a part of inferential
statistics.
QUIZ
10
Which is used to calculate the central value of numbers?
a. Median
b. Mode
c. Mean
d. Standard deviation
QUIZ
Which is used to calculate the central value of numbers?
10
a. Median
b. Mode
c. Mean
Answer: c.
Explanation: Mean is used to calculate the central value or average of an given value of
numbers.
QUIZ
11
Which is used to find the highest frequency in a given value of numbers?
a. Median
b. Mode
c. Mean
QUIZ
Which is used to find the highest frequency in a given value of number?
11
a. Median
b. Mode
c. Mean
Answer: b.
Explanation: Mode is used to calculate the highest frequency which is being occurred in a
given value of numbers.
QUIZ
12
Which is used to measure the dispersion in a given set of numbers?
a. Median
b. Mode
c. Mean
QUIZ
Which is used to measure the dispersion in a given set of numbers?
12
a. Median
b. Mode
c. Mean
Answer: d.
Explanation: Standard deviation is used to measure the dispersion in a given set of numbers.
QUIZ
13
Probability of an event always lies between?
a. 0 and 1
b. -1 and 1
c. Negative and positive
d. Only positive
QUIZ
Probability of an event always lies between?
13
a. 0 and 1
b. -1 and 1
c. Negative and positive
d. Only positive
Answer: a.
Explanation: The probability of an event always lies between 0 and 1 i.e. success or failure
of that event
QUIZ
14
Which is used to measure the peakedness of distribution?
a. Skewness
b. Outlier
c. Kurtosis
d. Variance
QUIZ
Which is used to measure the peakedness of distribution?
14
a. Skewness
b. Outlier
c. Kurtosis
d. Variance
Answer: c.
Explanation: Kurtosis is mainly used to measure the peakedness of the distribution of a
particular data set .
QUIZ
15
Which is the measure of deviation from symmetry?
a. Skewness
b. Outlier
c. Kurtosis
d. Variance
QUIZ
Which is the measure of deviation from symmetry?
15
a. Skewness
b. Outlier
c. Kurtosis
d. Variance
Answer: a.
Explanation: Skewness is the measure of deviation from symmetry and this maybe left
skewed or right skewed.
QUIZ
16
If p value is less than 0.05?
a. Accept null hypothesis

b. Reject null hypothesis
c. Reject alternate hypothesis
d. None of the above
QUIZ
If p value is less than 0.05?
16
a. Accept null hypothesis

b. Reject null hypothesis
c. Reject alternate hypothesis
d. None of the above
Answer: b.
Explanation: If the p value is less than 0.05, i.e., p<0.05. we reject the true null hypothesis.
Thank You


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Statistical Concepts And Their Application In Business

Copyright 2014, Simplilearn, All rights reserved.

Statistical Methods overview

Population and Samples

Developing a sampling plan and Sampling Methods

What is Descriptive Statistics

What are its components

Business usage of Descriptive Statistics via a Case Study

Probability theory and distributions

The concept of tests of significance

One sided and two sided hypothesis testing

The various tests of significance

Non parametric testing

Measure of Central Tendency

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Population and Samples

Developing a sampling plan

Execute operational plan verification of specified procedure.

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Measure of Central Tendency

Help describe, show and summarize data in a meaningful manner

Measure of Central Tendency

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mean is the average of the numbers

a calculated "central" value of a set of numbers

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Median is the number in the middle

Number of values above and below median is same

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Mode is the value that occurs often

A set of data can have more than one mode

When to use what?

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The spread or dispersion of a set of scores around some central value

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Variance and Standard Deviation

Variance is an average of squared deviations about the mean

Standard deviation is the squared root of variance.

Example data : 2,5,5,4,6,8

Example data : 2,5,4,6,8

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Case Study Descriptive Statistics

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Case Study Descriptive Statistics (Contd.)

Long distance last month

Toll free last month

Equipment last month

Calling card last month

Wireless last month

Probability of an event, P(E) = No. of favorable occurrences

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E.g.: A car agency has 5 cars. His past record

Subjective method - based on judgment.

E.g.: 75% chance that England will adopt to

Relative frequency method based on

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Probability of units sold, f(x)

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The probability of each outcome remains constant from trial to trial.

Examples of binomial experiments

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Case StudyBinomial Distribution

Case StudyBinomial Distribution (contd.)