Statistics Assignment 2-2

STAMFORD UNIVERSITY
Department Of Business Administration

Master of Business Administration Program
744, Satmosjid Road
Dhanmondi, Dhaka
◊
Statistics For Business (MAT 421)
Topic:
Submitted by:
Engr. Mohd. Abdus Sattar
ID. MBA 044 12301
Trimester: Spring-2011
Assignment on Statistics
1. Standard Deviation
Example-1: Find (i) Variance, σ² and (ii) Standard Deviation, σ from the following data: 51,
52, 53, 54, 55
Solution:
X X- x (X- x )²
51 -2 4 ( x  x) 2
(i) Standard Deviation, σ =
52 -1 1 n
53 0 0
10
54 1 1 =
55 2 4 5
 x = 265 10 = 2
= 1.414
x =
x =
265
= 53 (ii) Variance, σ² =2
n 5
Example-2: Sales on a number of shops are given in thousand taka as follows:

Sales f
0-5 1
5-10 2 Requird: (i) Variance, σ²
(ii) Standard Deviation, σ
10-15 4 (iii) Coefficient of Variation, CV
15-20 2
20-25 1
Solution:
Sales f Midpoint (x) fx X- x f(X- x )²
0-5 1 2.5 2.5 -10 100
5-10 2 7.5 15 -5 50
10-15 4 12.5 50 0 0
15-20 2 17.5 35 5 50
20-25 1 22.5 22.5 10 100
∑ 10 125 300
x =  fx =
125
= 12.5
n 10
(i) Standard Deviation, σ =  f ( x  x) 2

(ii) Variance, σ² = 30
n
300 
= = 30 (iii) CV = x100
10 x
5.477
= 5.477 = x100
12.5
=43.82%
/conversion/tmp/scratch/57131478.doc****Page 1
Example-3: Sales of company in January and February/2011 are recorded in thousand taka
and presented as follows:
Sales Frequency Requird:
January February (i) Variance, σ² for each month
30-35 1 2
(ii) Standard Deviation, σ for each month
35-40 6 8
(iii) Coefficient of Variation, CV for each
40-45 9 14
month
45-50 12 3
50-55 5 2 (iv) Which month’s average sale is more?
55-60 1 1 v) Which month’s sale is more variable?
Solution:
Sales Midpoint January February
(X) (f1) (f1X) X- x 1 f1(X- x 1)² (f2) (f2X) X- x 2 f2(X- x 2)²
30-35 32.5 1 32.5 -12.5 156.25 2 65.0 -9.67 187.02

35-40 37.5 6 225 -7.5 337.5 8 300 -4.67 174.47
40-45 42.5 9 382.5 -2.5 56.25 14 595 0.33 1.52
45-50 47.5 12 570 2.5 75 3 142.5 5.33 85.23
50-55 52.5 5 262.5 7.5 281.25 2 105 10.33 213.42
55-60 57.5 1 57.5 12.5 156.25 1 57.5 15.33 235.11
∑ 34 1,530 1,062.50 30 1,265.00 896.77
(i) x 1 = =  f 1x =
1530
= 45 (i) x 2 = =  f 2x =
11265
= 42.17
n 34 n 30
(ii) S.D. σ = 29.89 =5.45
(ii) Standard Deviation, σ =  f ( x  x) 2
= 31.25
n (iii) Variance, σ² = 29.89
=5.59  5.45
(iii) CV = x100 = x100
x 42.17
(iii) Variance, σ² = 31.25
 5.59 =12.92%
(iii) CV = x100 = x100 =12.42%
x 45
iv) Average Sale of January is more. (v) Feb. month’s sale is more variable because CV of Feb > CV of Jan
2. Quartile, Decile & Percentile Deviation

Example 4: Sales of a number of shops in thousand taka are given as follows:
3,11, 13, 12, 14, 9, 8, 18, 17 & 24.
Required: (i) Ordered Set, XL , XH, R (ii) Five number summary (XL , Q1, Q2, Q3, XH)
(iii) Inter-Quartile Range (IQR), (iv) Quartile Deviation or Semi Inter-Quartile
Range (SIQR) (v) D3 , D7 (vi) P29, P61 (vi) Inter-fractile Range(IFR) between P29
and P61
Solution:
(i) Ordered Set = 3, 8, 9, 11, 12, 13, 14, 17, 18, 24
XL = 3, XH =24, R = 24-3 =21
(ii) Q1 = P25 = X3 = 9 [ i = .25n= 0.25 x 10 = 2.5, Say 3]
Q2 = P50 = ½ (X5 + X6)= 12.5 [ i = .50n= 0.5 x 10 = 5]
Q3 = P75 = X8 = 17 [ i = .75n= 0.75 x 10 = 7.5, Say 8]
So Five number summary is 3, 9, 12.5, 17, 24

(iii) Inter-Quartile Range (IQR) = Q3 - Q1 = 17-9 =8
(iv) Quartile Deviation or Semi Inter-Quartile Range (SIQR) = ½ ( Q3- Q1) = 4
(v) D3 = P30 = ½ (X3 + X4)= ½ (9 +11)= 10 [ i = .30n= 0.3 x 10 = 3]
D7 = P70 = ½ (X7 + X8)= ½ (14 +17)= 15.5 [ i = .70n= 0.7 x 10 = 7]
(vi) P29 = X3 = 9 [ i = .29n= 0.29 x 10 = 2.9 Say 3]
P61 = X7 = 14 [ i = .61n= 0.61 x 10 = 6.1 Say 7]
(vii) Inter-fractile Range (IFR) between P29 and P61 = P61 – P29 = 14-9 = 5
Example 5: Sales of a number of shops in thousand taka are given in the following Frequency
Distribution:
Sales f Required: (i) XL , XH, R (ii) Five number summary (XL , Q1, Q2, Q3, XH) (iii)
Inter-Quartile Range (IQR), (iv) Quartile Deviation or Semi Inter-Quartile
40-45 1
Range (SIQR) (v) D3 , D7 (vi) P29, P61 (vi) Inter-fractile Range(IFR) between
45-50 4 P29 and P61
50-55 8
55-60 9
60-65 5
65-70 3
Solution:
Sales f fc
40-45 1 1
45-50 4 5
50-55 8 13
55-60 9 22
60-65 5 27
65-70 3 30
(i) XL=40, XH=70, R = 70-40 = 30
0.5n  fc
(ii) Q2 = Median, Me= L1 + xc
fm
0.5 n = 0.5 x 30 = 15; So, Q2 lies on series 55-60 i.e. Median group is 55-60.
0.5n  fc
So, Q2 = L1 + xc
fm
15  13
= 55 + x5
9
= 56.11
In the same way, 0.25 n = 0.25 x 30 = 7.5; So, Q 1 lies on series 50-55 i.e. Quartile group
is 50-55.
0.25n  fc
So, Q1 = L1 + xc
fm
7 .5  5
= 50 + x5
8
= 51.56
0.75 n = 0.75 x 30 = 22.5; So, Q3 lies on series 60-65 i.e. 3rd Quartile group is 60-65.
0.75n  fc
So, Q3 = L1 + xc
fm
22.5  22
= 60 + x5
5
= 60.5
Five Number Summary = XL , Q1, Q2, Q3, XH = 40, 51.56, 56.11, 60.5, 70
(iii) Inter-Quartile Range (IQR) = Q3- Q1 = 60.5-51.56 = 8.94

(iv) Quartile Deviation or Semi Inter-Quartile Range (SIQR) = ½ ( Q3- Q1) = 4.47
(v) D3 = P30
0.30 n = 0.30 x 30 = 9; So, D3 lies on series 50-55
0.30n  fc
So, D3 = L1 + xc
fm
95
= 50 + x5
8
= 52.5
D7 = P70
0.70 n = 0.70 x 30 = 21; So, D7 lies on series 55-60
0.70n  fc
So, D7 = L1 + xc
fm
21  13
= 55 + x5
9
= 59.44
(vi) 0.29n = 0.29 x 30 = 8.7; So, P29 lies on series 50-55
0.29n  fc
So, P29 = L1 + xc
fm
8 .7  5
= 50 + x5
8
= 52.31
0.61n = 0.61 x 30 =18.3; So, P29 lies on series 55-60
0.61n  fc
So, P61 = L1 + xc
fm
18.3  13
= 55 + x5
9
= 57.94
(vii) Inter-fractile Range (IFR) between P29 and P61 = P61 – P29 = 57.94-52.31 = 5.63
Levin & Rubin Pg 111: SC-3-11

First we arrange the data in ascending order:
59 65 67 68 71 72 75 79 81 83
85 87 88 91 92 93 94 95 100 100
P80 = ½ (X16 + X17)= ½ (93 +94)= 93.5 [ i = .80n= 0.80 x 20 = 16 ]
Levin & Rubin Pg 111: SC-3-12

XL = 3,600, XH =20,300, R = 20,300-3,600 =16,700miles
Q1 = P25 = ½ (X10 + X11)= ½ (8,100 +8,300)= 8,200 miles [ i = .25n= 0.25 x 40 = 10]
Q3 = P75 = ½ (X30 + X31)= ½ (12,700 +12,900)= 12,800miles [ i = .75n= 0.75 x 40 = 30]
Inter-Quartile Range (IQR) = Q3- Q1 = 12,800-8,200 = 4,600miles
Levin & Rubin Pg 111: 3-52

33 45 52 54 55 61 66 68 69 72
74 75 76 77 84 91 91 93 97 99
Q1 = P25 = ½ (X5 + X6)= ½ (55 +61)= 58 [ i = .25n= 0.25 x 20 = 5]

Q3 = P75 = ½ (X15 + X16)= ½ (84 +91)= 87.5 [ i = .75n= 0.75 x 20 = 15]
Inter-Quartile Range (IQR) = Q3- Q1 = 87.5-58 = 29.5

2145 2200 2228 2268 2549 2598 2653 2668 2697 2841
3249 3268 3362 3469 3661 3692 3812 3842 3891 3897
a) XL = 2,145, XH =3,897, R = 3,897-2,145 =1752

b) P20 = ½ (X4 + X5)= ½ (2,268 +2,549)= 2,408.5 [ i = .20n= 0.20 x 20 = 4]
P80 = ½ (X16 + X17)= ½ (3,692 +3,812)= 3752 [ i = .80n= 0.80 x 20 = 16]
Inter-fractile Range (IFR) between P20 and P80 = P80 – P20 = 3752-2408.5 = 1,343.5
c) Q1 = P25 = ½ (X5 + X6)= ½ (2,549 +2,598)=2,573.5 [ i = .25n= 0.25 x 20 = 5]
Q3 = P75 = ½ (X15 + X16)= ½ (3,661 +3,692)= 3676.5 [ i = .75n= 0.75 x 20 = 15]
Inter-Quartile Range (IQR) = Q3- Q1 = 3676.5-2573.5 = 1103

69 78 82 84 84 86 87 87 88 88
88 88 89 89 89 92 92 94 94 94
94 95 96 97 98 99 99 102 102 105
P70 = ½ (X21 + X22)= ½ (94 +95)= 94.5 Degrees [ i = .70n= 0.70 x 30 = 21]

51 83 92 93 93 95 101 115 123 125
126 127 129 132 133 135 143 147 157 185
XL = 51, XH =185, R = 185-51 =134

Comment: It is one of the measures of dispersion. But there are more useful measures are
available.

0.10 0.12 0.23 0.32 0.45 0.48 0.50 0.51 0.53 0.58
0.59 0.66 0.67 0.69 0.77 0.83 0.89 0.95 1.10 1.20
XL = 0.10, XH =1.20, R = 1.20-0.10 =1.10 minutes
Q1 = P25 = ½ (X5 + X6)= ½ (0.45 +0.48)=0.465 minutes [ i = .25n= 0.25 x 20 = 5]

Q3 = P75 = ½ (X15 + X16)= ½ (0.77 +0.83)= 0.800 minutes [ i = .75n= 0.75 x 20 = 15]
Inter-Quartile Range (IQR) = Q3- Q1 = 0.800-0.465 = 0.335 minutes
1. What is Dispersion? What are the different measures of dispersion?
Dispersion:
The extent to which the observations in a sample or in a population vary about their mean is known as
Dispersion. A quantity that measures the dispersion in a sample or in a population is known as the
measure of dispersion.
The main measures of dispersions are the range, the semi-inter quartile range or the quartile deviation, the
mean deviation or the average deviation, the variance and the standard deviation.
2. Distinguish between Absolute and Relative measures of dispersion.
Absolute Dispersion is one that measures the dispersion in terms of the same units or the square
units as the units of data. For example: If the units of the data are in taka, meters, kilogram etc, the units
of measures of dispersion will also be in taka, meters, kilogram etc.
 Cannot be used to compare the variation of two or more series. For example: the SD of
the heights of students in inches cannot be compared with the SD of the weights of the
students in pound. Even if the units are identical, for e.g. the comparison of ht. in cm and
length of their noses in cm.
On the contrary, Relative dispersion, sometimes called the coefficient of variation, is one that is
expressed in the form of ratio, percentage and is independent of the measure of units.
3. Explain the following with example:
a) Mean Deviation
The mean deviation, also known as mean absolute deviation or average deviation, of a statistical data is
defined as the arithmetic mean of the numerical values of the deviations of observations from its mean.
M.D. =  xx for ungrouped data

n
= f xx
for grouped data
n
b) Standard Deviation
Standard deviation is the positive square root of the mean square deviation of the observation from their
arithmetic mean.
SD,    ( x  x) For ungrouped data

n
SD,    f ( x  x) For grouped data

n
c) Quartiles
d) Percentiles
e) Inter-Quartile Range (IQR)
f) Semi Inter-Quartile Range (SIQR)
g) Inter-fractile Range (IFR)
Skewness, Moments & Kutosis

Skewness:
Skewness refers to the lack of symmetry. Measures of skewness can be both absolute as well as
relative. Since in a symmetrical distribution mean, median and mode are identical, the more the
mean moves away from the mode, the larger the asymmetry or skewness.
Skewness is measured by the co-efficient of skewness.

1. Karl Pearson’s Co-efficient of Skewness:
Mean  Mode
Skp = or

3( Mean  Median)
Skp =

2. Bowley’s Co-efficient of Skewness (based on quartiles) :

(Q 3  Q 2)  (Q 2  Q1) Q3  Q1  2 Median
SkB = (Q 3  Q1
= (Q3  Q1
3. Kelly’s Co-efficient of Skewness (based on Percentiles or Deciles) :
P 90  P10  2 P 50
SkK = (Based on Percentiles)
P 90  P10
D9  D5  2 D1
SkK = (Based on Deciles)
D 9  D1
If Co-efficient of Skewness,
Sk = 0 , it means the distribution is symmetrical.
Sk > +1 , it means the distribution is Significant positively skewed or skewed to the right.
Sk < -1 , it means the distribution is Significant negatively skewed or skewed to the left..
Sk is more than zero to less than 1 , it means the distribution is moderate positively skewed.
Sk is less than zero to less than -1 , it means the distribution is moderate negatively skewed.
Moments:
Moments are certain mathematical constants used to ascertain the nature and form of a
distribution. The Greek letter μ(mu) is generally used to denote moments.
The rth moment of a variable x about the arithmetic mean x is given by:
 ( x  x)
r
μr = for un-grouped data

n
=
r
f ( x  x)
for grouped data
n
Sk = 1
 32
=
 23
3
=
 23
3
= 3
Kurtosis:
Kurtosis refers to the degree of peaked ness or flatness of the frequency curve of a frequency
distribution and is denoted by the co-efficient of kurtosis,  2 .
4
2 =
 22
 2 = 3, means the distribution is normal and the curve is mesokurtic.
 2 > 3, means the distribution is leftokartic.
 2 < 3, means the distribution is Platykartic.
Sales f
0-5 1
5-10 2 Requird: (i) Find 1 ,  2 ,  3 and  4
(ii) Compute  1 ,  2 and Sk
10-15 4
(iii) Comments on the nature and form of the distribution.
15-20 2
20-25 1
Solution:
Sales f Mid-point fx x- x f ( x  x) f ( x  x) 2 f ( x  x) 3 f ( x  x) 4
x
0-5 1 2.50 2.50 -10.00 -10.00 100.00 -1,000.00 10,000.00
5-10 2 7.50 15.00 -5.00 -10.00 50.00 -250.00 1,250.00
10-15 4 12.50 50.00 0.00 0.00 0.00 0.00 0.00
15-20 2 17.50 35.00 5.00 10.00 50.00 250.00 1,250.00
20-25 1 22.50 22.50 10.00 10.00 100.00 1,000.00 10,000.00
f n 10  fx  125.0 0.00 300.00 0.00 22,500.00
0
x
 fx  12.50
n
(i) 1 
 f ( x  x) = 0 2   f ( x  x) 2
300
  30
n n 10
3 
 f ( x  x) 3

0
0 4 
 f ( x  x) 4 22,500
  2250
n 10 n 10
 32
(ii) 1  0
 23
 2250
 2  42  2  2.5  3 ; So, the distribution is flaty-kartic.
 2 30
Sk = 1  0 means the distribution is symmetrical.
(iii) The distribution is flaty-kartic and the curve is symmetrical.

Sales f
0-5 1
10-15 1
15-20 6
20-25 1
Solution:
X
0-5 1 42.5 42.50 -12.50 -12.50 156.25 -1,953.13 24,414.06
5-10 1 47.5 47.50 -7.50 -7.50 56.25 -421.88 3,164.06
10-15 1 52.5 52.50 -2.50 -2.50 6.25 -15.63 39.06
15-20 6 57.5 345.00 2.50 15.00 37.50 93.75 234.38
20-25 1 62.5 62.50 7.50 7.50 56.25 421.88 3,164.06
f n 10  fx  550.00 0.00 312.50 -1,875.00 31,015.63

x
 fx  55.00
(i) 1 
 f ( x  x) = 0 2   f ( x  x) 2

312.5
 31.25
n n 10
3 
 f ( x  x) 3

 1875
 187.5 4 
 f ( x  x) 4  31,015.63  3101.56
n 10 n 10
 32 ( 187.5) 2
(ii) 1  3   1.152
2 31.253
 4 3101.56
2    3.18  3 ; So, the distribution is lefto-kartic.
 22 31.25 2
 187.5
Sk = 1   1.07 means the curve is significant negatively skewed to the
31.25 3
left.
(iii) The distribution is lefto-kartic and the curve is significant negatively skewed to the left.

Sales f
0-5 1
10-15 1
15-20 1
20-25 1
Solution:
X
0-5 1 42.5 42.50 -7.50 -7.50 56.25 -421.88 3,164.06
5-10 6 47.5 285.00 -2.50 -15.00 37.50 -93.75 234.38
10-15 1 52.5 52.50 2.50 2.50 6.25 15.63 39.06
15-20 1 57.5 57.50 7.50 7.50 56.25 421.88 3,164.06
20-25 1 62.5 62.50 12.50 12.50 156.25 1,953.13 24,414.06
f n 10  fx  500.00 12.50 0.00 312.50 1,875.00 31,015.63
50.00
x
 fx 
n
(i) 1 
 f ( x  x) = 0 2   f ( x  x) 2
312.5
  31.25
n n 10
3 
 f ( x  x) 3

1875
 187.5 4 
 f ( x  x) 4  31,015.63  3101.56
n 10 n 10
 32 187.5 2
(ii) 1    1.152
 23 31.253
 4 3101.56
2    3.18  3 ; So, the distribution is lefto-kartic.
 22 31.25 2
187.5
Sk = 1   1.07 means the curve is significant positively skewed to the right.
31.253
(iii) The distribution is flaty-kartic and the curve is significant positively skewed to the right.
Example-4: The Capital investment of a number of firms recorded in lac taka are presented as
follows:
Capital f
40-45 2
50-55 9
55-60 12
60-65 8
65-70 2
Solution:
Capital f Mid-point, x fx x- x f ( x  x) f ( x  x) 2 f ( x  x) 3 f ( x  x) 4
40-45 2 42.5 85.00 -13.29 -26.58 353.25 -4,694.67 62,392.15

45-50 5 47.5 237.50 -8.29 -41.45 343.62 -2,848.61 23,615.01
50-55 9 52.5 472.50 -3.29 -29.61 97.42 -320.50 1,054.45
55-60 12 57.5 690.00 1.71 20.52 35.09 60.00 102.60
60-65 8 62.5 500.00 6.71 53.68 360.19 2,416.89 16,217.36
65-70 2 67.5 135.00 11.71 23.42 274.25 3,211.45 37,606.04
38  fx  2,120.00 -0.02 1,463.82 -2,175.44 140,987.60
 f n
55.79
x
 fx 
n
(i) 1 
 f ( x  x) 
 0.02
0 2 
 f ( x  x) 2

1,463.82
 38.52
n 38 n 38
3 
 f ( x  x) 3

2,175.44
 57.25 4 
 f ( x  x ) 4 140,987.60
  3,710.2
n 38 n 38
 32 57.25 2
(ii) 1    0.057
 23 38.52 3
 3,710.2
 2  42   2.5  3 ; So, the distribution is Platy-kartic.
 2 38.52 2
Sk = 1  0.239 means the curve is moderate positively skewed to the right.
(iii) The distribution is Platy-kartic and the curve is moderate positively skewed to the right.
Correlation Analysis
Correlation:
Study of relationship between variables which are conceptually related.
There are three types of correlation.
1. Simple Correlation-Between two variables
2. Multiple Correlation-Among more than two variables.
3. Spurious Correlation-
 Relationship between variables that cannot be explained with conceptually related
variables.
 Not expandable.
Positive Correlation:
If the relationship between x and y are such that y is directly proportional to x or y increases with
the increase of x, then the relationship is called Positive Relationship.
Negative Correlation
If the relationship between x and y are such that y is inversely proportional to x or y decreases
with the increase of x, then the relationship is called Negative Relationship.
Co-efficient:
Correlation coefficient is the measure of the degree of relationship between the variables.
Correlation is measured by co-efficient of correlation suggested by Karl Pearson’s Product
Moment Correlation defined by:
 x. y
 ( x  x)( y  y)  xy  n
r 
 ( x  x) ( y  y )
2 2
( x) 2
( y ) 2
{ x  2
}{ y 
2
}
n n
r=-1 means Perfect negative correlation
-1<r<0 means weak negative correlation
r=0 means no correlation
0<r<1 means strong positive correlation
r=1 means perfect positive correlation.
Co-efficient of determination, r 2
r 2 refers to the proportion of the dependant variable that can be explained by the independent
variable.
Example:
Shops Capital Profit Reqd:
(Lac tk.) (Lac Tk) (i) Compute the Karl Pearson’s Product moment
1 5 2
correlation coefficient,r
2 10 3
3 15 5 (ii) Evaluate the strength correlation
4 20 8 (iii) Compute the coefficient of determination
5 25 12
(iv) Compute the coefficient of non-determination
(v) Interpret the result.
Solution:
Shops Capital(Lac tk.) Profit (Lac Tk) x2 y2 xy
(x) (y)
1 5 2
25.00 4.00 10.00
2 10 3
100.00 9.00 30.00
3 15 5
225.00 25.00 75.00
4 20 8
400.00 64.00 160.00
5 25 12
625.00 144.00 300.00
75 30 1,375.00 246.00 575.00
(i) Karl Pearson’s Product moment correlation coefficient
 x. y 75.x30
 xy  n 575 
5
r 
( x ) 2
( y ) 2
75 2 30 2
{ x  2
}{ y  2
} (1375  )(246  )
n n 5 5
= 0.973
(ii) as 0<r<1, strong positive correlation.

(iii) Coefficient of determination, r 2 = 0.947
(iv) Coefficient of non-determination, 1- r 2 =1- 0.947=0.053
(v) 94.7% of Profit can be explained by capital investment and 5.3% of profit cannot be
explained by capital investment.
Regression Analysis
Regression:
Regression is the statistical tool with the help of which we are in a position to estimate (or
predict) the unknown values of one variable from known values of another variable. It is used for
estimation and development of model or to study the nature of relationship between the
variables.
y = a + bx of Y on X
 x. y
 xy  n
Where, b =
( x) 2
x 2

n
a= y  bx
( y  yE )2
Standard error, Sp =
n2
Scatter Diagram:
Example-1:
Shop Capital (x) Profit (y) x2 xy yE =-1.5 + 0.5x (y-yE)2
1 5 2 25 10 1 1
2 10 3 100 30 3.5 0.25
3 15 5 225 75 6 1
4 20 8 400 160 8.5 0.25
5 25 12 625 300 11 1
75 30 1375 575 3.5
 x. y 75.30
 xy  n
575 
5
b = = = 0.5
( x) 2 75 2
x 2

n
1375 
5
x =  x = 75 =15; y =  y = 30 =6
n 5 n 5
a= y  bx = 6-0.5 x 15 = -1.5
y = -1.5 + 0.5x
yx=30 = -1.5 +0.5 x 30 = 13.5

yx=35 = -1.5 +0.5 x 35 = 16
yx=40 = -1.5 +0.5 x 40 = 18.5
(y  y E )2
Standard error, Sp =
n2
3.5
=
52
= 1.08
Example-2 (Ref. Levin Rubin Pg 671 SC 12-2:
Sl x y x2 xy
1 13 6.2 169 80.6
2 16 8.6 256 137.6
3 14 7.2 196 100.8
4 11 4.5 121 49.5
5 17 9 289 153
6 9 3.5 81 31.5
7 13 6.5 169 84.5
8 17 9.3 289 158.1
9 18 9.5 324 171
10 12 5.7 144 68.4
140 70 2038 1035
 x. y 140.70
 xy  n
1035 
10
b = = = 0.705
( x) 2 140 2
x 2

n
2038 
10
x =  x = 140 =14 y =  y = 70 =7
n 10 n 10
a= y  bx = 7-0.705 x 14 = -2.87
y = -2.87 + 0.705x
yx=10 = -2.87 +0.705 x 10 = 4.18
yx=13 = -2.87 +0.705 x 13 = 6.295
yx=20 = -2.87 +0.705 x 20 = 11.23
Probability
Event :
An event is a possible outcomes of an experiment or a result of a trial or an observation.
Experiment:
An experiment is any process or study which results in the collection of data, the outcome of
which is unknown. In statistics, the term is usually restricted to situations in which the researcher
has control over some of the conditions under which the experiment takes place.
Relative Frequency Definition of Probability:

The ratio of the number of occurances of an event to the number of possible occurances in an
experiment is referred to as the relative frequency. Two definitions in terms of relative frequency
can be given as follows:
a) If an experiment is performed n times under the same conditions and there are ‘a’
outcomes, a≤n, favoring an event, then an estimate of the probability of that event is the
ratio a/n.
b) The estimate of probability of event, a/n approaches a limit, the true probability of the
event when n approaches to infinity is given by,
a
P(E) = Limit
n
n→ 
Random Variables
When the numerical value of a variable is determined by a chance event, that variable is called a
random variable.
Random Variables are of two types:

1. Discrete (Integer)
Continuous (Integer or Non-integer)
The Classical Definition of Probability:
This definition is for equally likely outcomes. If an experiment can produced mutually
exclusive and equally likely outcomes out of which outcomes are favorable to the occurrence
of event , then the probability of is denoted by and is defined as the ratio . Thus
the probability of is given by

0  P(X)  1
Condition for Classical Probability:

 mutually exclusive
 and equally likely outcomes
Each outcome of an experiment has the same chance of appearing as any other and,
therefore, can be assigned same weight (probability) for its occurrence as any other.
Subjective Probability:
A probability derived from an individual’s personal judgment about whether a specific outcome
is likely to occur. Subjective probabilities contain no formal calculations and only reflects the
subjects opinions and past experience.
Sample Space:
Example 1: Toss a coin. What is the probability of getting head or tail?

Solution: P(H or T) = ½ =0.5
Example-2:
Economic f
Condition
S 3
G 4
D 2
B 1
n= 10
Reqd.
2
(i) P(D) = =0.2 = 20%
10
4
(ii) P(G) = =0.4 = 40%
10
3
(iii) P(S) = =0.3 = 30%
10
1
(iv) P(B) = =0.1 = 10%
10
0
(v) P(W) = =0.0 = 0%
10
Example-3:
5
P(R) = =0.625 = 62.5% 5R 3W
8
3
P(R) = =0.375 = 37.5%
8
0
P (B) = =0.0 = 0.0%
8
Example-4:
Opinion M F
Strongly Support 9 10
Mildly Support 11 3
Undecided 2 2
Mildly Opposed 4 8
Strongly Opposed 4 7
n= 30 30
(i) P( M) Strongly Support = 8

(ix) P( F) Mildly Opposed =
30
9
=0.30 = 30% =0.267 = 26. 7%
30
7
11 (x) P( F) Strongly Opposed =
(ii) P( M) Mildly Support = 30
30
=0.233 = 2.33%
=0.367 = 36.7%
(xi) P( W) Strongly Support =
2
(iii) P( M) Undecided =
30 19
=0.317 = 31.7%
=0.0667 = 6.67% 60
4 14
(iv) P( M) Mildly Opposed = (xii) P( W) Mildly Support =
30 60
=0.133 = 13.3% =0.233 = 23.3%
(v) P( M) Strongly Opposed = 4
(xiii) P( W) Undecided =
60
4
=0.133 = 13.3% =0.0667 = 6.67%
30
(xiv) P( W) Mildly Opposed = =
10
(vi) P( F) Strongly Support =
30 12
=0.20 = 20%
=0.333 = 33.3% 60
3 (xv) P( W) Strongly Opposed =
(vii) P( F) Mildly Support =
30
11
=0.1 = 10% =0.183= 18.3%
60
2
(viii) P( F) Undecided =
30
=0.0667 = 6.67%
Ref. Levin & Ruvin. Pg 168
Example-5 (iv) P ( A Black Two or a Black three)=
4 4
(i) P(A Seven) = =0.0769 = 7.69% =0.0769 = 7.69%
52 52
26 (v) P ( A red face card-King, Queen, or
(ii) P (A Black Card) = =0.50 = 50%
52
6
8 Jack) = =0.1154 = 11.54%
(iii) P ( An ace or a king) = =0.1538 = 15.38% 52
52
Example-6
Worksheet for Calculation:
Deposit (Lac f
Tk.)
Days P(X) =
n
fc F(X) =
fc X. P(X) X2 X2. P(X)
n
(X) (f)
1 2 3 4 5 6 7 8
5 10 0.10 10 0.10 0.50 25 2.50
10 20 0.20 30 0.30 2.00 100 20.00
15 40 0.40 70 0.70 6.00 225 90.00
20 20 0.20 90 0.90 4.00 400 80.00
25 10 0.10 100 1.00 2.50 625 62.50
2.
n= 100 E(X)=∑XP(X) 15.00 ∑ X P(X) 255.00
20 fc
(i) P (X=10) = =0.20 = 20% (vii) F(X) = [Done in
100 n
40 Column (5) ]
(ii) P (X =15) = = 0.40 = 40%
100
(viii) E(X) = ∑X.P(X) [ Done in
70
(iii) P (X  15) = = 0.70 = 70% Column (6) ]
100
90 (ix) Var (X) = ∑X2.P(X) –
(iv) P(X  20) = = 0.90 = 90%
100 [E(X)]2
80 = 255 - 152
(v) P (10  X  20) = = 0.80 =80%
100
= 30
f
(vi) P(X) = [Done in (x) S.D. (X) = Var ( X )
n
Column (3) ] = 30
= 5.47
Example-7
Sonali Bank Head Office has kept a record of the number of grievances of the employees filed
per week for last 50 weeks. The results are shown as below:
Worksheet for Calculation:
No of f
No of grievances P(X) = fc fc X. P(X) X2 X2. P(X)
weeks n F(X) =
n
(X) (f)
1 2 3 4 5 6 7 8
0 2 0.04 2 0.04 0.00 0 0.00
1 18 0.36 20 0.40 0.36 1 0.36
2 25 0.50 45 0.90 1.00 4 2.00
3 4 0.08 49 0.98 0.24 9 0.72
4 1 0.02 50 1.00 0.08 16 0.32
n= 50 E(X)=∑XP(X) 1.68 ∑ X2. P(X) 3.40
4
(i) P (X=3) = =0.08 = 8%
50
f
(ii) P(X) = [Done in Column (3) ]
n
fc
(iii) F(X) = [Done in Column (5) ]
n
(iv) E(X) = ∑X.P(X) [ Done in Column (6) ]
(v) Var (X) = ∑X2.P(X) – [E(X)]2
= 3.40 – 1.682
= 0.5776
(vi) S.D. (X) = Var ( X )
= 0.5776
= 0.76
2. Rules of Probability:
1. Total Rule of Probability
P (A  B ) = P (A) + P(B) – P (A  B) For not mutually exclusive event
= P (A) + P(B) For mutually exclusive event
Example 1: Determine the probabilities of the following events in drawing a card from a
standard deck of 52 cards.
13 4 1 16
(i) P (S  K ) = P (S) + P(K) – P (S  K) = + - =
52 52 52 52
13 13 26
(ii) P (S  C ) = P (S) + P(K) – P (S  K) = + - 0=
52 52 52
13 4 1 16
(iii) P (D  Q ) = P (S) + P(K) – P (S  K) = + - =
52 52 52 52
4 4 8
(iv) P (Q  J ) = P (S) + P(K) – P (S  K) = + - 0=
52 52 52
2. Multiplication Theorem of Probability:

P (A  B) = P (A) . P (B/A)
= P (B). P (A/B)
Or, P (B/A) = P (A  B)/P (A)
Or, P (A/B) = P (A  B)/P (B)
Example-2:
Gender Efficient (E) Inefficient (I) Total
Male (M) 28 12 40
Female (F) 55 5 60
Total 83 17 100
(i) P(M) = 0.40 = 40%

(ii) P(F) = 0.60 = 60%
(iii) P(I) = 0.17 = 17%
(iv) P(E) = 0.83 = 83%
(v) P (M  E) = 0.28=28%
(vi) P (M  I) = 0.12 = 12%
(vii) P (F  E) = 0.55 = 55%
(viii) P (F  I) = 0.05 =5%
(ix) P (M  E ) = 40% + 83%-28% = 95%
(x) P (M  I ) = 40% + 17%-12% = 45%
(xi) P (F  E ) = 60% + 83%-55% = 88%
(xii) P (F  I ) = 60% + 17%-5% = 72%
(xiii) P (M/E ) = P (M  E)/P(E) = 0.28/0.83 = 33.73%
(xiv) P (M/I ) = P (M  I)/P(I) = 0.12/0.17 = 70.59%
(xv) P (F/E ) = P (F  E)/P(E) = 0.55/0.83 = 66.27%
(xvi) P (F/I ) = P (F  I)/P(I) = 0.5/0.17 = 29.41%
Sl. 2 Ref: Supplied Sheet

An Experiment consists of counting the number of dishonored cheques received by a large bank
branch at Motijheel area of Dhaka city. The management of the Bank branch has kept a record of
such cheques received per day a period of 200days. The data is shown below:
Number of Dishonored Cheques Number of Days

0 8
1 12
2 20
3 60
4 40
5 30
6 20
7 10
Total 200
(i) Develop a probability distribution for the above data.

(ii) Determine the cumulative probability distribution F(X)
(iii) What is the probability that in given day the branch receives less than or equal to 4
dishonored cheques?
(iv) What is probability that in a day the bank receives more than3 bad cheques?
(v) What is the expected number of dishonored cheques per day?
(vi) Determine the standard deviation.
The Record of Janata Bank kept over last 300 days shows the following number frauds occurred
in different branches over the country:
Number of Frauds Number of Days

0 45
1 75
2 120
3 45
4 15
Total 300
(i) Develop a probability distribution for the daily frauds occurred in bank branches.
(ii) Determine the cumulative probability distribution F(X)
(iii) What is the probability that in given day there will be no fraud occurred?
(iv) What is the probability that in given day there will be atleast 1 fraud occurred?
(v) What is probability that in a day the bank receives more than3 bad cheques?
(vi) Determine the expected number of frauds and its variances.

IDCL is lease financing firm. The number of new clients that they have obtained each month has
ranged from 0 to 6. The number of new clients has the probability distribution which is shown
below:
Number of New Clients Probability

0 0.05
1 0.10
2 0.15
3 0.35
4 0.20
5 0.10
6 0.05
Total 1.00
(i) What is the expected number of new clients per month?

(ii) Determine the variance and standard variation.
A company sells its products to wholesaler in batched of 1000 units only. The daily demand for
their respective probabilities are given below:
Demands Probability
0 0.1
1000 0.2
2000 0.3
3000 0.2
4000 0.1
Total 0.90
(i) Determine the expected daily demand.

(ii) Assume that the sells their product at Tk. 3.75 per unit. What is the expected daily
revenue?
(iii) Determine the standard deviation of daily demand.
(iv) It is known that the company has a Tk. 3000 per day fixed cost and the variable cost
per unit is Tk. 0.90. If the company produces a number equal to the expected daily
demand, what is the expected total cost?
(v) What is the expected daily profit or loss?

Statistics Assignment 2-2

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Statistics Assignment 2-2

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STAMFORD UNIVERSITY

Department Of Business Administration

Example-2: Sales on a number of shops are given in thousand taka as follows:

(i) Standard Deviation, σ =  f ( x  x) 2

55-60 1 1 v) Which month’s sale is more variable?

30-35 32.5 1 32.5 -12.5 156.25 2 65.0 -9.67 187.02

2. Quartile, Decile & Percentile Deviation

So Five number summary is 3, 9, 12.5, 17, 24

(i) XL=40, XH=70, R = 70-40 = 30

(iii) Inter-Quartile Range (IQR) = Q3- Q1 = 60.5-51.56 = 8.94

0.61n = 0.61 x 30 =18.3; So, P29 lies on series 55-60

Levin & Rubin Pg 111: SC-3-11

P80 = ½ (X16 + X17)= ½ (93 +94)= 93.5 [ i = .80n= 0.80 x 20 = 16 ]

Levin & Rubin Pg 111: SC-3-12

Levin & Rubin Pg 111: 3-52

Q1 = P25 = ½ (X5 + X6)= ½ (55 +61)= 58 [ i = .25n= 0.25 x 20 = 5]

Levin & Rubin Pg 111: 3-53

a) XL = 2,145, XH =3,897, R = 3,897-2,145 =1752

Levin & Rubin Pg 111: 3-54

Levin & Rubin Pg 111: 3-55

XL = 51, XH =185, R = 185-51 =134

Levin & Rubin Pg 111: 3-56

XL = 0.10, XH =1.20, R = 1.20-0.10 =1.10 minutes

Q1 = P25 = ½ (X5 + X6)= ½ (0.45 +0.48)=0.465 minutes [ i = .25n= 0.25 x 20 = 5]

1. What is Dispersion? What are the different measures of dispersion?

2. Distinguish between Absolute and Relative measures of dispersion.

3. Explain the following with example:

M.D. =  xx for ungrouped data

SD,    ( x  x) For ungrouped data

SD,    f ( x  x) For grouped data

Skewness, Moments & Kutosis

Skewness is measured by the co-efficient of skewness.

2. Bowley’s Co-efficient of Skewness (based on quartiles) :

3. Kelly’s Co-efficient of Skewness (based on Percentiles or Deciles) :

μr = for un-grouped data

(iii) The distribution is flaty-kartic and the curve is symmetrical.

Example-2: Sales on a number of shops are given in thousand taka as follows:

Example-3: Sales on a number of shops are given in thousand taka as follows:

40-45 2 42.5 85.00 -13.29 -26.58 353.25 -4,694.67 62,392.15

(ii) as 0<r<1, strong positive correlation.

yx=30 = -1.5 +0.5 x 30 = 13.5

Relative Frequency Definition of Probability:

Random Variables are of two types:

the probability of is given by

Condition for Classical Probability:

Example 1: Toss a coin. What is the probability of getting head or tail?

(i) P( M) Strongly Support = 8

2. Multiplication Theorem of Probability:

Or, P (B/A) = P (A  B)/P (A)

Or, P (A/B) = P (A  B)/P (B)

(i) P(M) = 0.40 = 40%

Sl. 2 Ref: Supplied Sheet

Number of Dishonored Cheques Number of Days

(i) Develop a probability distribution for the above data.

Number of Frauds Number of Days

Sl. 4 Ref: Supplied Sheet

Number of New Clients Probability

(i) What is the expected number of new clients per month?

(i) Determine the expected daily demand.

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