Class 1 - Measures of Central Tendency

Quantitative Methods For
Managers
Course Code: 111401
Academic Session: 2018-19
Instructor: Dr. Sandhya Makkar
Quantitative Methods For Managers:
PRIMARY OBJECTIVE
• Make students familiar with basic statistical
tools and techniques
• Techniques in resolving complex problems
that serve as a valuable guide to decision
makers
Quantitative Methods For Managers:
LEARNING GOALS
• This course will help you develop your skills
and instincts in applying quantitative
methods to formulate, analyze, and solve
management decision-making problems.
• Evaluate and ability to interpret the results of
quantitative analysis.
What you should learn from this
course
• How to collect, store and assess data to aid
decision making
• How to present data visually.
• How to calculate and use key statistics to aid
decision making using Excel/SPSS
• How use data to understand the past and
forecast the future
Aim of the Orientation Classes
What will be the aim???

Aim of the Orientation Classes
• The aim is to brush up your previous

knowledge
• And to bridge the gap among students

COURSE OVERVIEW
Module Session Topic & Reading/s
No. No./s
I 1 -2 Introduction to Statistics: Statistics in business, Importance and Functions of
Statistics, Types of Data, Data Measurement.
Case: DiGiorno Pizza: Introducing a Frozen Pizza to Compete with Carry – Out, Ken
Black (2007), Chapter - 1.
Descriptive Statistics: Tabular and Graphical Presentation: Summarizing Qualitative

Data, Summarizing Quantitative Data, Scatter Diagrams.
Case: Pelican Stores, Anderson, Sweeny, Williams (2007), Chapter 2

Readings:
1. Black, Ken.(2012), Chapter1 & 2
2. Naval Bajpai (2012), Chapter1 & 2
II 3–4 Descriptive Statistics: Numerical Measures: Measures of Central Tendency:
Ungrouped Data, Measures of Variability: Ungrouped Data, Measures of Central
Tendency and Variability: Grouped Data, Measures of Shape-Skewness, Kurtosis.
Descriptive Statistics on Computer
Cases: Pelican Stores, and National Health Care Association, Black, Ken. (2012),
Chapter 3
Readings:
1. Black, Ken. (2012), Chapter 3
2. Naval Bajpai (2012), Chapter 3 & 4
III 5-6 Probability: Concepts of Probability, Experiments and Sample Space, Assigning
probabilities to Experimental Outcomes, Events and their Probabilities, Some basic
Relationships of Probability, Conditional Probability, Baye’s Theorem.
Cases: a. Gender Equity in the Workplace, Ken Black (2007), Chapter 4

b. Cameras and Photo Films Industry: Rapid Growth after Liberalization , Naval
Bajpai (2012), Chapter 5
Readings:
2. Naval Bajpai (2012), Chapter 5
IV 7-8 Distributions of Random Variables:
Discrete Probability Distributions: Random Variables, Discrete Random Variables,

Binomial Probability Distribution, Poisson probability Distribution.
Continuous Probability Distributions: Continuous Random Variables, Uniform
Distribution, Normal Probability Distribution, Exponential Probability Distribution
Using Computer to Solve the above Probability Distributions
Case: Titan Industries Ltd: Providing Real-Value to Customers, Naval Bajpai (2012),
Chapter 6
Readings:
1. Black, Ken. (2012), Chapter 5 & 6
V 9 Sampling Distributions: Sampling Distribution of , Central Limit Theorem, Sampling
Distribution of , Properties of Point Estimators
Readings:
VI 10-11 Interval Estimation: Population mean: known and unknown – Margin of Error
and the Interval Estimate
Readings:
VII 12-13 Statistical Inference: Hypothesis testing for Single Populations: Developing Null &
Alternate Hypotheses, Type I and Type II Errors, Population mean:  known and
Population mean:  unknown – One-Tailed and Two Tailed Test.
Using Computer for Estimation

Readings:
VIII 14-15 Statistical Inference: Hypothesis Testing for Two Populations: Hypotheses Testing for
the Difference Between Two Population Means:  1 and  2 known and
also  1 and  2 unknown, Inference About the Difference Between two Related
Populations Means (Matched Samples)
Using Computer for Hypothesis Testing
Case : Par, Inc.: Manufacturer of Golf Equipment, Anderson, Sweeny, Williams
(2012), Chapter 10
Readings:
IX 16 Variance Analysis: Inference about a Population Variance, Inference about two
Population Variance, One Way ANOVA
Using Computer for ANOVA
Case: Wentworth Medical Center, Anderson, Sweeny, Williams (2012),
Chapter 13
Readings:
X 17-18 Linear Regression and Correlation Analysis: The Coefficient of Correlation, The
Coefficient of Determination, Testing the significance of Correlation Coefficient,
Simple Linear Regression, Determining the Equation of a Regression Line, The
Standard Error of Estimate, Assumptions Underlying Linear Regression
Case: Measuring Stock Market Risk. Chapter 14
Readings:
XI 19-20 Presentations
Evaluation
1 INTERNAL ASSESMENT 60 MARKS
a. Mid Term Exam 20 Marks
b. Assignments/Caselets 10 Marks
c. Quiz 15 marks
d. Project Presentation 15 Marks
2 END TERM EXAM 40 MARKS
Readings
Essential Readings
Text Book
• Applied Business Statistics, Black,Ken (ed 7) ,
• “Statistics for Business and Economics (2012)”, Anderson,
Sweeny and Williams, Cengage Learning Publication.
Suggested Readings
• “Business Statistics (2012)”, Naval Bajpai, Pearson
Publication.
• “Basic Statistics for Business and Economics (2006)” Lind,
Marchal, Wathen, McGraw –Hill International Edition.
• “Business Statistics - In Practise (2010)”, Bowerman,
Connell, Murphree
What is Statistics??
Statistics
• Collection : Types of Sources of Data
• Presentation: Graphs
• Analysis: Estimation
• Interpretation: Hypothesis Testing
of Data
The science that deals with the collection,

presentation , analysis, interpretation, of data
• Why you should learn Statistics??
• You want to buy a battery for your car. How will you decide which brand is good or
bad.
• You are on a diet for weight loss, how will you decide which food to buy
• Your company has created a new drug that may cure arthritis. How would you
conduct a test to confirm the drug's effectiveness?
• The latest sales data have just come in, and your boss wants you to prepare a
report for management on places where the company could improve its business.
What should you look for?
• As a manager you would have to analyse the salary of your executives vs the salary
of the executives of your competitor.(satisfaction level/ avg working hours)
• Able to effectively conduct research
• Statistics is to be able to read journals
• Develop critical and analytic thinking skills
• To act like an informed consumer
• Tool to make an educated decision

Types of Statistical Analysis
Two phases of statistics:
 Descriptive Statistics:
Describes the characteristics of a data using
information collected on it.
Avg life of batteries, average salaries etc.
 Inferential
Draws conclusions on process parameters based
on information contained in a sample.
Uses probability
Types of Statistical Analysis
Inferential Statistics
Descriptive Statistics
•Probability
• Measure of Central
• Estimation
Tendency
•Hypothesis
• Analyze relationships
•Measures of Dispersion
Data Types
Data
Categorical Numerical
(Qualitative) (Quantitative)
Discrete Continuous
Data Types
• Qualitative (or categorical) data consist of values
that can be separated into different categories
that are distinguihed by some non numeric
characteristic. Like eye colour, hair colour,
favourite actor, defective or non defective,
gender etc
• Quantitative data consist of values representing
counts or measurements. Like height of students,
average salary of employees, no.of working hours
etc.
Quantitative Data (Discrete)
Discrete data. Data values can only be
whole no. Counted data or attribute data.
Examples include:
How many of the products are defective?
How often are the machines repaired?
How many people are absent each day?
Quantitative Data (Continuous)
contd..
Continuous data. Data values can be any

real number. Measured data.
Examples include:
How long is each item?
How long did it take to complete the task?
What is the weight of the product?
Length, volume, time
Determine whether the data described are qualitative
or quantitative(Discrete/Continuous)
• The number of textbooks owned by a student

• The incomes of college graduates
• The gender of college graduates
• The position of faculty as Lecturer, Assistant
professor etc.
• How many days did it rain last month?
• What kind of performance was achieved?
• Number of defectives
• Temperature of each day of last month
COLLECTION
How do we collect data??

Collection of data
Primary Data Secondary Data
observation
Obtained from publihed
sources
Experimentation
Questioning
Primary Data - Examples
• Surveys
• Focus groups
• Questionnaires
• Personal/group interviews
• Experiments and observational study
Secondary Data
• Secondary data – data someone else has
collected
• Obtained from public sources
• You can see library helves for the same
(publihed in books, journals etc.)
• Company’s publihed sales data
ACTIVITY
Descriptive Statistics
Measure of Central Measures of

Tendency : Dispersion
•Mean Range
•Median Standard Deviation
•Mode Variation
Coefficient of
Variation
Describing and summarizing the data
Data can be represented by graphs like
• Bar Graphs
• Histograms
• Pie Charts etc.
These visual displays allow you to quickly
recognize patterns in the distribution of data.
Company : 100 , 121 , 164 , 78 ,Idea Company Sales
Idea 1 00
-10 121
Honda Vodafone 121
Airtel 164
Vodafone
Aircel Airtel Aircel 78
MTNL -10
Company Company Sales ( In Rs

Idea 1 00 Crores)
Vodafone 121 Idea 1 00
Airtel 164 Vodafone 121
Aircel 78 Airtel 164
Honda -10 Aircel 78
MTNL 10
Company Sales ( In Rs
Crores) ( 2011) Which company has highest sales in 2011.
Idea 1 00
Vodafone 121 What can be the reason for other companies
to be low
Airtel 164
Aircel 78
MTNL 10
Sales(in Rs. Crores)

180
160
140
120
100
Sales(in Rs. Crores)
80
60
40
20
0
Idea Vodafone Airtel Aircel MTNL
Which country has maximum
consumption of oil and gas?
How much energy does most

countries use?
What can be the reason for same?
Prepare a bar graph and histogram for the data

Bar Graph and Histogram
• Bar Graph: Simply countries on X axis and oil
consumption on Y axis (in equal intervals)
Histogram: Make a frequency Distribution Table(Oil

consumption in range of 100)
• Histogram: a. Oil consumption in range of 100 on
X axis
– No. of companies falling in that range on Y axis
What information can you cull out of both graphs?

Bar Graph
Energy Consumption(in millions of tonnes)
1600
1400
1200
1000
800
Energy Consumption(in millions of tonnes)

600
400
200
0
Histogram from Frequency Dist
Energy No. of Use Data Analysis Tool Pack in Add Ins
Consumption countries
100 3
200 9
300 2 Histogram
10
400 1 9
500 1 8
600 0 No. of countries 7

6
700 0 5
800 0 4 Frequency
3
900 0 2
1000 0 1
1100 0 0
1200 0 Energy Consumption

1300 0
1400 0
1500 1
Histogram
• A histogram shows us where the data tend to
cluster. What are the most common values?
The least common?
• Then we can analyze the reasons for the same
Outliers
• In many data sets, there
are occasional values
that fall far from the
rest of the data. For
example, if we graph the
age distribution of
students in a college
course, we might see a
data point at 75 years.
Data points like this one
that fall far from the rest
of the data are known as
outliers.
Why outlier exist? How to treat it
• We might discover that the data point refers
to a 75 year-old retiree, taking the course for
fun.
how to handle the outlier
• leave the outlier alone
• remove it
• change it to a corrected value
Summarizing Categorical Data
• Frequency Distribution
 Relative Frequency Distribution
 Percent Frequency Distribution
 Bar Chart
 Pie Chart
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: Holiday Inn

Guests staying at Holiday 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:
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
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied
Slide 45
or duplicated, or posted to a publicly accessible website, in whole or in part.
Rating Frequency
Poor 2
Below Average 3
Average 5
Above Average 9
Excellent 1
Total 20
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.
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.
Relative Frequency and
Percent Frequency Distributions
Relative Percent
Rating Frequency Frequency
Poor .10 10
Below Average .15 15
Average .25 25 .10(100) = 10
Above Average .45 45
Excellent .05 5
Total 1.00 100
1/20 = .05
Bar Chart
 A bar chart is a graphical device for depicting
qualitative data.
 On one axis (usually 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 other axis (usually 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.
Bar Chart
10 Holiday Inn Quality Ratings

9
8
7
Frequency
6
5
4
3
2
1
Rating
Poor Below Average Above Excellent
Average Average
Pie Chart
 The pie chart is a commonly used graphical device
for presenting relative frequency and percent
frequency distributions for categorical 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.
Relative
Angle(degrees)
Rating Frequency
Poor .10 36
Below Average .15 54
Average .25 90 .10(360) = 36
Above Average .45 162
Excellent .05 18
Total 1.00 100
1/20 = .05
Pie Chart
Holiday Inn Quality
Ratings
Excellent
5%
Poor
10%
Below
Average
Above 15%
Average
45%
Average
25%
Example: Holiday Inn
 Insights Gained from the Preceding Pie Chart

• One-half of the customers surveyed gave Holiday
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.
Summarizing Quantitative Data
 Frequency Distribution
 Relative Frequency and
 Dot Plot
 Histogram
 Cumulative Distributions
 Ogive
Slide 56
 Example: Rama Auto Repair

The manager of Rama Auto would like to gain a
better understanding of the cost of parts used in the
engine tune-ups performed in the shop. he examines
50 customer invoices for tune-ups. The costs of parts,
rounded to the nearest Rs., are listed on the next
slide.
Slide 57

Sample of Parts Cost(Rs.) for 50 Tune-ups
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
Slide 58
The three steps necessary to define the classes for a

frequency distribution with quantitative data are:
1. Determine the number of non-overlapping classes.
2. Determine the width of each class.
3. Determine the class limits.
Slide 59
 Guidelines for Determining the 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.
The goal is to use enough classes to show the

variation in the data, but not so many classes
that some contain only a few data items.
Slide 60
 Guidelines for Determining the Width of Each Class

• Use classes of equal width.
• Approximate Class Width =
Largest Data Value  Smallest Data Value

Number of Classes
Making the classes the same

width reduces the chance of
inappropriate interpretations.
Slide 61

If we choose six classes:
Approximate Class Width = (109 - 52)/6 = 9.5  10 or 9
Parts Cost (Rs.) Frequency
50-59 2
60-69 13
70-79 16
80-89 7
90-99 7
100-109 5
Total 50
Slide 62
Parts Relative Percent

Cost (Rs.) Frequency Frequency
50-59 .04 4
60-69 .26 2/50 26 .04(100)
70-79 .32 32
80-89 .14 14 Percent
frequency is
90-99 .14 14 the relative
100-109 .10 10 frequency
Total 1.00 100 multiplied
by 100.
Slide 63
Insights Gained from the % Frequency Distribution:
• Only 4% of the parts costs are in the Rs.50-59 class.
• 30% of the parts costs are under Rs.70.
• The greatest percentage (32% or almost one-third)
of the parts costs are in the Rs.70-79 class.
• 10% of the parts costs are Rs.100 or more.
Slide 64
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.
Slide 65
Dot Plot
Tune-up Parts Cost
50 60 70 80 90 100 110
Cost (Rs.)
Slide 66
Histogram
 Another common graphical presentation of

quantitative data is a histogram.
 The variable of interest is placed on the horizontal
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.
Slide 67
Histogram

18
Tune-up Parts Cost
16
14
12
Frequency
10
8
6
4
2
Parts
5059 6069 7079 8089 9099 100-110 Cost (Rs.)
Slide 68
Histograms Showing Skewness
 Symmetric
• Left tail is the mirror image of the right tail
• Examples: heights and weights of people
.35
.30
Relative Frequency
.25
.20
.15
.10
.05
0
Slide 69
 Moderately Skewed Left

• A longer tail to the left
• Example: exam scores
.35
.30
Relative Frequency
.25
.20
.15
.10
.05
0
Slide 70
 Moderately Right Skewed

• A Longer tail to the right
• Example: housing values
.35
.30
Relative Frequency
.25
.20
.15
.10
.05
0
Slide 71
 Highly Skewed Right

• A very long tail to the right
• Example: executive salaries
.35
.30
Relative Frequency
.25
.20
.15
.10
.05
0
Slide 72
Cumulative Distributions
Cumulative frequency distribution  shows the

number of items with values less than or equal to the
upper limit of each class..
Cumulative relative frequency distribution – shows

the proportion of items with values less than or
equal to the upper limit of each class.
Cumulative percent frequency distribution – shows

the percentage of items with values less than or
equal to the upper limit of each class.
Slide 73
 The last entry in a cumulative frequency distribution

always equals the total number of observations.
 The last entry in a cumulative relative frequency
distribution always equals 1.00.
 The last entry in a cumulative percent frequency
distribution always equals 100.
Slide 74
 Rama Auto Repair
Cumulative Cumulative
Cumulative Relative Percent
Cost (Rs.) Frequency Frequency Frequency
< 59 2 .04 4
< 69 15 .30 30
< 79 31 2 + 13 .62 15/50 62 .30(100)
< 89 38 .76 76
< 99 45 .90 90
< 109 50 1.00 100
Slide 75
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.
Slide 76
Ogive
 Rama Auto Repair

• 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.
Slide 77
Ogive with Cumulative Percent Frequencies
100 Tune-up Parts Cost

Cumulative Percent Frequency
80
60 (89.5, 76)
40
20
Parts
Cost (Rs.)
50 60 70 80 90 100 110
Slide 78
Crosstabulations 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 variables
simultaneously.
Slide 79
Crosstabulation
 A crosstabulation is a tabular summary of data for

two variables.
 Crosstabulation can be used when:
• one variable is qualitative and the other is
quantitative,
• both variables are qualitative, or
• both variables are quantitative.
 The left and top margin labels define the classes for
the two variables.
Slide 80
Crosstabulation
 Example: Gaur Sons Homes

The number of Gaur Sons homes sold for each
style and price for the past two years is shown below.
quantitative categorical
variable variable
Price Home Style
Range 1 BHK 2 BHK 3 BHK Luxury Total
< Rs.300,000 18 6 19 12 55
> Rs.300,000 12 14 16 3 45
Total 30 20 35 15 100
Slide 81
Crosstabulation

Insights Gained from Preceding Crosstabulation
• The greatest number of homes (19) in the sample
are a 3 BHK-level style and priced at less than
Rs.300,000.
• Only three homes in the sample are an Luxury
style and priced at Rs.300,000 or more.
Slide 82
Crosstabulation
Frequency
 Example: Gaur Sons Homes distribution
for the
price range
variable
Price Home Style

< Rs.300,000 18 6 19 12 55
> Rs.300,000 12 14 16 3 45
Total 30 20 35 15 100
Frequency distribution for

the home style variable
Slide 83
Crosstabulation: 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.
Slide 84
Crosstabulation: Row Percentages
Price Home Style

< Rs.300,000 32.73 10.91 34.55 21.82 100
> Rs.300,000 26.67 31.11 35.56 6.67 100
Note: row totals are actually 100.01 due to rounding.
(1 BHK and > Rs.300K)/(All > Rs.300K) x 100 = (12/45) x 100
Slide 85
Crosstabulation: Column Percentages
Price Home Style

Range 1 BHK 2 BHK 3 BHK Luxury
< Rs.300,000 60.00 30.00 54.29 80.00
> Rs.300,000 40.00 70.00 45.71 20.00
Total 100 100 100 100
(1 BHK and > Rs.300K)/(All 1 BHK) x 100 = (12/30) x 100
Slide 86
Scatter Diagram and Trendline
 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 trendline provides an approximation of the
relationship.
Slide 87
Scatter Diagram
 A Positive Relationship
Slide 88
Scatter Diagram
 A Negative Relationship
Slide 89
Scatter Diagram
 No Apparent Relationship
Slide 90
Scatter Diagram
 Example: Panthers Advertising Co.

The Panthers Advertising Co. is interested in
investigating the relationship, if any, between
TV commericials and sales of a product.
x = Number of y = Number of
Interceptions Units Sold
1 14
3 24
2 18
1 17
3 30
Slide 91
Scatter Diagram
y
35
30
25
Units Sold
20
15
10
5
0 x
0 1 2 3 4
Number of Interceptions
Slide 92
Example: Panthers Football Team
 Insights Gained from the Preceding Scatter Diagram

• The scatter diagram indicates a positive relationship
between the number of interceptions and the
units sold.
• Higher sales 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.
Slide 93
Scatter Diagram and Trendline
Scatter Diagram for the Panthers

35
30
Points Scored.
25
Number of
20
15
10
5
0
0 1 2 3 4
Number of Interceptions
Slide 94
Tabular and Graphical Methods
Data
Categorical Data Quantitative Data
Tabular Graphical Tabular Graphical

Methods Methods Methods Methods
• Frequency • Bar Chart • Frequency • Dot Plot

Distribution • Pie Chart Distribution • Histogram
• Rel. Freq. Dist. • Rel. Freq. Dist. • Ogive
• Percent Freq. • % Freq. Dist. • Stem-and-
Distribution • Cum. Freq. Dist. Leaf Display
• Crosstabulation • Cum. Rel. Freq. • Scatter
Distribution Diagram
• Cum. % Freq.
Distribution
• Crosstabulation
Slide 95
Measures of Central Tendency
• Mean
Median
Mode
Quartiles
Deciles
Percentiles
Slide 96
Arithmetic Mean
Mean is the central value of the data and
represents the whole data.
Mean = Sum of all the observations
Number of Observation
Excel function: =AVERAGE(Array)

What is the Mean
Histogram
10
0
100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 More
Frequency
What is the Mean
Histogram
10
0
100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 More
Frequency
235.25 The distribution is strongly skewed to the right:

the high value of US consumption pulls the mean to a
value higher than the consumption of most other
countries.
Median
• The median is the middle value of a data set
whose values are arranged in numerical order.
Half the values are higher than the median,
and half are lower.
Median – Discrete Series
• It appears in the middle of an ordered
sequence. Divides data in two equal parts
Steps
1. Arrange data in ascending or descending
order
2. If no. of observations(N) are odd, then
 N 1 
th
Median    term
 2 
3. If no. of observations (N) are even, then
th th
N N 
  term    1 term
Median    2 
2
2
Using Excel function: =MEDIAN(Array) Find the
median of the above data
Where is the outlier??
• Mean > median—Outlier is present at the
upper level (take 5% of mean)
• Mean<median– Outlier if present at the lower
level (take 5% of mean)
• Mean is affected in the presence of outlier
but median does not
• By contrast, the median is not biased by
outliers and is often a better value to
represent skewed data.
Where is the Outlier?
• Difference of Mean and Median > 5% percent
of mean => there is presence of outlier
BEST MEASURE is :MEDIAN(Statistician)
Difference of mean and median < 5% of mean

=> No outlier => Mean or median would be the
best measure (they are equivalent)
Mode
• A third statistic to represent the "center" of a
data set is its mode: the data set's most
frequently occurring value.
Mode
• Number which occurs most frequently
• Excel function: =MODE(Array)
Relation when asymmetric distribution

Mode = 3 Median – 2 Mean

Class 1 - Measures of Central Tendency

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Quantitative Methods For

What will be the aim???

• The aim is to brush up your previous

• And to bridge the gap among students

Descriptive Statistics: Tabular and Graphical Presentation: Summarizing Qualitative

Case: Pelican Stores, Anderson, Sweeny, Williams (2007), Chapter 2

Cases: a. Gender Equity in the Workplace, Ken Black (2007), Chapter 4

IV 7-8 Distributions of Random Variables:

Discrete Probability Distributions: Random Variables, Discrete Random Variables,

Using Computer to Solve the above Probability Distributions

Using Computer for Estimation

The science that deals with the collection,

• Statistics is to be able to read journals

• Develop critical and analytic thinking skills

• To act like an informed consumer

• Tool to make an educated decision

Continuous data. Data values can be any

• The number of textbooks owned by a student

How do we collect data??

Primary Data Secondary Data

Measure of Central Measures of

•Median Standard Deviation

Company Company Sales ( In Rs

Sales(in Rs. Crores)

How much energy does most

What can be the reason for same?

Prepare a bar graph and histogram for the data

Histogram: Make a frequency Distribution Table(Oil

What information can you cull out of both graphs?

Energy Consumption(in millions of tonnes)

600 0 No. of countries 7

1200 0 Energy Consumption

A frequency distribution is a tabular summary of

The objective is to provide insights about the data

 Example: Holiday Inn

 Example: Holiday Inn

The relative frequency of a class is the fraction or

A relative frequency distribution is a tabular

A percent frequency distribution is a tabular

10 Holiday Inn Quality Ratings

 Insights Gained from the Preceding Pie Chart

 Example: Rama Auto Repair

 Example: Rama Auto Repair

The three steps necessary to define the classes for a

 Guidelines for Determining the Number of Classes

The goal is to use enough classes to show the

 Guidelines for Determining the Width of Each Class

Largest Data Value  Smallest Data Value

Making the classes the same

 Example: Rama Auto Repair

Parts Relative Percent

 One of the simplest graphical summaries of data is a

 Example: Rama Auto Repair

Tune-up Parts Cost

 Another common graphical presentation of

 Example: Rama Auto Repair

 Moderately Skewed Left

 Moderately Right Skewed

 Highly Skewed Right

Cumulative frequency distribution  shows the

Cumulative relative frequency distribution – shows

Cumulative percent frequency distribution – shows

 The last entry in a cumulative frequency distribution