Stat6111 PPT1 R1

STATISTICS
Week 2
Descriptive Statistics
Topics
1. Introduction : Data and Statistics

2. Descriptive Statistics
3. Introduction to Probability
4. Discrete Probability Distributions
5. Continuous Probability Distributions
6. Sampling and Sampling Distributions
7. Interval Estimation
8. Hypothesis Tests
9. Analysis of Variance
10. Simple Linear Regression
Bina Nusantara University 2
References
• Anderson, David R., Sweeney, Dennis J., Williams, Thomas A.

(2011). Statistics for Business and Economics. 11. Cengage
Learning. USA. ISBN: 978-0538481649.

Evaluating and Grading

Learning Outcomes
• LO 1: Explain the data and statistics
• LO 2: Calculate the statistical measurements
• LO 3: Interpret the results of statistical measurements
• LO 4: Apply statistical method to the real problem
• LO 5: Analyze the suitable decision from statistical method solution

(1) Explain the data and statistics
(2) Calculate the statistical measurements
(3) Interpret the results of statistical measurements

1. Summarizing Qualitative Data
2. Summarizing Quantitative Data
3. Measures of Location
4. Measures of Variability

• Frequency Distribution
• Relative Frequency
• Percent Frequency Distribution
• Bar Graph
• Pie Chart

(a) 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.

Example 1: 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 shown below.
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
(b) 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.

(c) 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.


(d) Graph
• A bar graph is a graphical device for depicting qualitative data that
have been summarized in a frequency, relative frequency, or percent
frequency distribution.
• On 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 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.
9
8
Frequency
7
6
5
4
3
2
1
Rating
Poor Below AverageAbove Excellent
Average Average
Source : Anderson, David R., Sweeney, Dennis J., Williams, Thomas A. (2011). Statistics for
Business and Economics. 11. Cengage Learning. USA. ISBN: 978-0538481649.
17
Bina Nusantara University
(e) Pie Chart
• The pie chart is a commonly used graphical device for
presenting relative frequency distributions for qualitative 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.
Exc. Poor
5% 10%
Below
Above Average
Average 15%
45%
Average
25%
Quality Ratings
19
• 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.

• Relative Frequency and Percent Frequency Distributions
• Dot Plot
• Histogram
• Cumulative Distributions
• Ogive
• Stem-and-leaf display
• Cross Tabulations and Scatter Diagrams

Example 5: Hudson Auto Repair
The manager of Hudson Auto would like to get a better picture of
the distribution of costs for engine tune-up parts. A sample of 50
customer invoices has been taken and the costs of parts, rounded
to the nearest dollar, are listed below.
91 78 93 57 75 52 99 80 97 62
71 69 72 89 66 75 79 75 72 76
104 74 62 68 97 105 77 65 80 109
85 97 88 68 83 68 71 69 67 74
62 82 98 101 79 105 79 69 62 73
(a) Frequency Distribution
• Guidelines for Selecting Number of Classes
– Use between 5 and 20 classes.
– Data sets with a larger number of elements
usually require a larger number of classes.
– Smaller data sets usually require fewer classes.

• Guidelines for Selecting Width of Classes
– Use classes of equal width.
– Approximate Class Width =
Largest Data Value  Smallest Data Value

Number of Classes

Number of classes : k = 1+3,3log(n) = 1+3,3log(50) = 6,6 = 6 or 7
If k = 6  Width of classes = (109 - 52)/6 = 9.5 = 10
Cost ($) Frequency
50-59 2
60-69 13
70-79 16
80-89 7
90-99 7
100-109 5
Total 50
• Insights Gained from the Percent Frequency Distribution
– Only 4% of the parts costs are in the $50-59 class.
– 30% of the parts costs are under $70.
– The greatest percentage (32% or almost one-third) of

the parts costs are in the $70-79 class.
– 10% of the parts costs are $100 or more.

(b) Dot Plot
• One of the simplest graphical summaries of data is a dot plot.
• A horizontal axis shows the range of data values.
• Then each data value is represented by a dot placed above the axis.

.. .. . . .
. .. .. .. .. . .
. . . ..... .......... .. . .. . . ... . .. .
50 60 70 80 90 100 110
Cost ($)
(c) Histogram
• Another common graphical presentation of quantitative data is a
histogram.
• The variable of interest is placed on the horizontal axis and the
frequency, relative frequency, or percent frequency is placed on the
vertical axis.
• A rectangle is drawn above each class interval with its height
corresponding to the interval’s frequency, relative frequency, or percent
frequency.
• Unlike a bar graph, a histogram has no natural separation between
rectangles of adjacent classes.
18 Example 7: Hudson Auto Repair
16
14
12
Frequency
10
8
6
4
2 Parts
50 60 70 80 90 100 110 Cost ($)
Business and Economics. 11. Cengage Learning. USA. ISBN: 978-0538481649. 32
(d) Cumulative Distribution
• The cumulative frequency distribution shows the number of
items with values less than or equal to the upper limit of each
class.
• The cumulative relative frequency distribution shows the
proportion of items with values less than or equal to the upper
limit of each class.
• The cumulative percent frequency distribution shows the
percentage of items with values less than or equal to the upper
limit of each class.

(e) Ogive
• An ogive is a graph of a cumulative distribution.
• The data values are shown on the horizontal axis.
• Shown on the vertical axis are the:
– cumulative frequencies, or
– cumulative relative frequencies, or
– cumulative percent frequencies
• The frequency (one of the above) of each class is plotted as a point.
• The plotted points are connected by straight lines.
• Ogive
– Because the class limits for the parts-cost data are
50-59, 60-69, and so on, there appear to be one-unit
gaps from 59 to 60, 69 to 70, and so on.
– These gaps are eliminated by plotting points halfway
between the class limits.
– Thus, 59.5 is used for the 50-59 class, 69.5 is used
for the 60-69 class, and so on.
(f) Stem-and-Leaf Display
• A stem-and-leaf display shows both the rank order and shape
of the distribution of the data.
• It is similar to a histogram on its side, but it has the advantage
of showing the actual data values.
• The first digits of each data item are arranged to the left of a
vertical line.
• To the right of the vertical line we record the last digit for each
item in rank order.
• Each line in the display is referred to as a stem.
• Each digit on a stem is a leaf.
(g) Cross Tabulations and Scatter Diagrams
• Thus far we have focused on methods that are used to
summarize the data for one variable at a time.
• Often a manager is interested in tabular and graphical methods

that will help understand the relationship between two variables.
• Crosstabulation and a scatter diagram are two methods for

summarizing the data for two (or more) variables simultaneously.

• Crosstabulation is a tabular method for summarizing the data
for two variables simultaneously.
• Crosstabulation can be used when:
– One variable is qualitative and the other is quantitative
– Both variables are qualitative
– Both variables are quantitative
• The left and top margin labels define the classes for the two
variables.

Example 11: Finger Lakes Homes
• Crosstabulation
The number of Finger Lakes homes sold for each style and
price for the past two years is shown below.
• Insights Gained from the Preceding Cross tabulation
– The greatest number of homes in the sample (19)

are a split-level style and priced at less than or
equal to $99,000.
– Only three homes in the sample are an A-Frame

style and priced at more than $99,000.

Cross Tabulation: Row or Column Percentages
• Converting the entries in the table into row percentages or column

percentages can provide additional insight about the relationship
between the two variables.

Example 12: Finger Lakes Homes
• Row Percentages
Price Home Style
Range Colonial Ranch Split A-Frame Total
< $99,000 32.7 10.91 34.55 21.82 100
> $99,000 26.67 31.11 35.56 6.67 100
Note: row totals are actually 100.01 due to rounding.

Scatter Diagram
• A scatter diagram is a graphical presentation of the relationship
between two quantitative variables.
• One variable is shown on the horizontal axis and the other
variable is shown on the vertical axis.
• The general pattern of the plotted points suggests the overall
relationship between the variables.

• A Positive Relationship
• A Negative Relationship
x

• No Apparent Relationship
y
x
Example 13: Panthers Football Team

Example 13: Panthers Football Team
• The preceding scatter diagram indicates a positive relationship
between the number of interceptions and the number of points
scored.
• Higher points scored are associated with a higher number of
interceptions.
• The relationship is not perfect; all plotted points in the scatter
diagram are not on a straight line.

Tabular and Graphical Procedures

Example 14: Apartment Rents
• Mean  xi 34 , 356
x   490.80
n 70
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
• Median
• The median is the measure of location most often reported for
annual income and property value data.
• A few extremely large incomes or property values can inflate the
mean.
• The median of a data set is the value in the middle when the data
items are arranged in ascending order.
• For an odd number of observations, the median is the middle value.
• For an even number of observations, the median is the average of
the two middle values.
• Median = 50th percentile
i = (p/100) n = (50/100)70 = 35.5
Averaging the 35th and 36th data values:
425
Median430= (475
430+ 475)/2
435 =435
475 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
• Mode
• The mode of a data set is the value that occurs with greatest
frequency.
• The greatest frequency can occur at two or more different

values.
• If the data have exactly two modes, the data are bimodal.
• If the data have more than two modes, the data are multimodal.

• 450 occurred most frequently (7 times)
Mode = 450
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
• Percentiles
• A percentile provides information about how the data are spread

over the interval from the smallest value to the largest value.
• Admission test scores for colleges and universities are frequently

reported in terms of percentiles.

• 90th Percentile
i = (p/100)n = (90/100)70 = 63
Averaging the 63rd and 64th data values:
90th Percentile = (580 + 590)/2 = 585
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

• Quartiles
• Quartiles are specific percentiles
• First Quartile = 25th Percentile
• Second Quartile = 50th Percentile = Median
• Third Quartile = 75th Percentile

• Third Quartile
Third quartile = 75th percentile
i = (p/100)n = (75/100)70 = 52.5 = 53
Third quartile = 525
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
• It is often desirable to consider measures of variability
(dispersion), as well as measures of location.
• For example, in choosing supplier A or supplier B we might

consider not only the average delivery time for each, but also the
variability in delivery time for each.

• Range
• Interquartile Range
• Variance
• Standard Deviation
• Coefficient of Variation

(a) Range
• The range of a data set is the difference between the largest
and smallest data values.
• It is the simplest measure of variability.
• It is very sensitive to the smallest and largest data values.

• Range
Range = largest value - smallest value
Range = 615 - 425 = 190
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
(b) Interquartile Range
• The interquartile range of a data set is the difference between
the third quartile and the first quartile.
• It is the range for the middle 50% of the data.
• It overcomes the sensitivity to extreme data values.

• Interquartile Range
3rd Quartile (Q3) = 525
1st Quartile (Q1) = 445
Interquartile Range = Q3 - Q1 = 525 - 445 = 80
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
(c) Variance
• The variance is a measure of variability that utilizes all the data.
• It is based on the difference between the value of each

observation (xi) and the mean (x for a sample, m for a
population).

(d) Standard Deviation
• The standard deviation of a data set is the positive square root
of the variance.
• It is measured in the same units as the data, making it more
easily comparable, than the variance, to the mean.
• If the data set is a sample, the standard deviation is denoted s.
s  s2
• If the data set is a population, the standard deviation is denoted
(sigma).
 2
Example 21:
• Variance and Standard Deviation
• Variance = 64
• Standard deviation = 8

Exercises
1. The following data are for 30 observations involving two qualitative
variables, x and y. The categories for x are A, B, and C; the
categories for y are 1 and 2.

Exercises
a. Develop a crosstabulation for the data, with x as the row variable

and y as the column variable.
b. Compute the row percentages.
c. Compute the column percentages.
d. What is the relationship, if any, between x and y?

Exercises
2. Consider the following data and corresponding weights.
a.Compute the weighted mean.
b.Compute the sample mean of the four data values without
weighting.

• Anderson, David R., Sweeney, Dennis J., Williams, Thomas A. (2011).
Statistics for Business and Economics. 11. Cengage Learning. USA.
ISBN: 978-0538481649.

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STATISTICS

1. Introduction : Data and Statistics

• Anderson, David R., Sweeney, Dennis J., Williams, Thomas A.

Bina Nusantara University 3

Bina Nusantara University 4

• LO 1: Explain the data and statistics

• LO 2: Calculate the statistical measurements

• LO 3: Interpret the results of statistical measurements

• LO 4: Apply statistical method to the real problem

• LO 5: Analyze the suitable decision from statistical method solution

Bina Nusantara University 5

(2) Calculate the statistical measurements

(3) Interpret the results of statistical measurements

Bina Nusantara University 6

2. Summarizing Quantitative Data

Bina Nusantara University 7

• Percent Frequency Distribution

Bina Nusantara University 9

• The objective is to provide insights about the data that cannot

Bina Nusantara University 10

• A relative frequency distribution is a tabular summary of a set

Bina Nusantara University 13

• A percent frequency distribution is a tabular summary of a

Bina Nusantara University 14

Bina Nusantara University 15

Bina Nusantara University 20

Bina Nusantara University 22

Bina Nusantara University 24

– Use classes of equal width.

– Approximate Class Width =

Largest Data Value  Smallest Data Value

Bina Nusantara University 25

– Only 4% of the parts costs are in the $50-59 class.

– 30% of the parts costs are under $70.

– The greatest percentage (32% or almost one-third) of

– 10% of the parts costs are $100 or more.

Bina Nusantara University 28

• A horizontal axis shows the range of data values.

Bina Nusantara University 29

Bina Nusantara University 34

• Often a manager is interested in tabular and graphical methods

• Crosstabulation and a scatter diagram are two methods for

Bina Nusantara University 40

• Crosstabulation can be used when:

– One variable is qualitative and the other is quantitative

– Both variables are qualitative

– Both variables are quantitative

Bina Nusantara University 41

– The greatest number of homes in the sample (19)

– Only three homes in the sample are an A-Frame

Bina Nusantara University 43

• Converting the entries in the table into row percentages or column

Bina Nusantara University 44

Note: row totals are actually 100.01 due to rounding.

Bina Nusantara University 45

Bina Nusantara University 46

Bina Nusantara University 48

Bina Nusantara University 50

Bina Nusantara University 51

Bina Nusantara University 52

• The greatest frequency can occur at two or more different

Bina Nusantara University 57

• A percentile provides information about how the data are spread