Business Statistics

Introduction
Dr M K BARUA
DEPARTMENT OF MANAGEMENT STUDIES

1
 For whom
B.B.A.
M.B.A.
B. Com.
B.E.
Part time professionals

2
 What is statistics?
• A branch of mathematics taking and transforming
numbers into useful information for decision makers

• Methods for processing & analyzing numbers

• Methods for helping reduce the uncertainty inherent in

decision making
Presenting Data in Tables and Charts
 Categorical Data Are Summarized By Tables & Graphs

Categorical Data

Tabulating Data Graphing Data

Summary Bar Charts Pie Charts Pareto

Table Chart
Organizing Categorical Data: Summary Table
 A summary table indicates the frequency, amount, or percentage of
items in a set of categories so that you can see differences between
categories.

Banking Preference? Percent

ATM 16%
Automated or live telephone 2%
Drive-through service at branch 17%
In person at branch 41%
Internet 24%
 Bar and Pie Charts

• Bar charts and Pie charts are often used

for categorical data.

• Length of bar or size of pie slice

shows the frequency or percentage
for each category.
 Organizing Categorical Data: Bar Chart
 In a bar chart, a bar shows each category, the length of which represents the amount, frequency or percentage
of values falling into a category.

Banking Preference

Internet

In person at branch

Drive-through service at branch

Automated or live telephone

ATM

0% 20% 40% 60%

 Organizing Categorical Data: Pie Chart
 The pie chart is a circle broken up into slices that represent categories. The size of each slice of the pie varies
according to the percentage in each category.

Banking Preference

ATM

Automated or live
16% 2% telephone
24%
Drive-through service at
17% branch

41% In person at branch

Internet
 Organizing Categorical Data: Pareto Chart
• Used to portray categorical data (nominal scale)
• A vertical bar chart, where categories are shown in descending
order of frequency
• A cumulative polygon is shown in the same graph
• Used to separate the “vital few” from the “trivial many”
Organizing Categorical Data: Pareto Chart

Pareto Chart For Banking Preference

100% 100%
% in each category

80% 80%

Cumulative %
(line graph)
(bar graph)

60% 60%

40% 40%

20% 20%

0% 0%
In person Internet Drive- ATM Automated
at branch through or live
service at telephone
branch
Tables and Charts for Numerical Data

Numerical Data

Frequency Distributions and

Ordered Array Cumulative Distributions

Stem-and-Leaf
Display Histogram Polygon Ogive
 Organizing Numerical Data: Ordered Array
 An ordered array is a sequence of data, in rank order, from the smallest value to the largest value.
 Shows range (minimum value to maximum value)
 May help identify outliers (unusual observations)
 Which values appear more than one
 Divide data in sections ( Day students- 1/3rd of data below 18, 2/3rd below 22,etc)

Age of Day Students

Surveyed
16 17 17 18 18 18
College
Students 19 19 20 20 21 22
22 25 27 32 38 42
Night Students
18 18 19 19 20 21
23 28 32 33 41 45
 Stem-and-Leaf Display

• A simple way to see how the data are

distributed and where concentrations
of data exist

METHOD:Separate the sorted data series

into leading digits (the stems) and
the trailing digits (the leaves)
 Organizing Numerical Data: Stem and Leaf Display

 A stem-and-leaf display organizes data into groups (called

stems) so that the values within each group (the leaves)
branch out to the right on each row.

Age of Day Students

Age of College Students
Surveye
d
16 17 17 18 18 18 Day Students Night Students
College 19 19 20 20 21 22
Stem Leaf Stem Leaf
Students 22 25 27 32 38 42
1 67788899 1 8899
Night Students
18 18 19 19 20 21 2 0012257 2 0138
23 28 32 33 41 45
3 28 3 23
4 2
4 15
Stem and Leaf plot for decimal numbers
 Organizing Numerical Data: Frequency Distribution
 The frequency distribution is a summary table in which the data are arranged into numerically
ordered classes.

 You must give attention to selecting the appropriate number of class groupings for the table, determining
a suitable width of a class grouping, and establishing the boundaries of each class grouping to avoid
overlapping.

 The number of classes depends on the number of values in the data. With a larger number of values,
typically there are more classes. In general, a frequency distribution should have at least 5 but no more
than 15 classes.

 To determine the width of a class interval, you divide the range (Highest value–Lowest value) of the
data by the number of class groupings desired.
 Organizing Numerical Data: Frequency Distribution Example

Example: A manufacturer of insulation randomly selects 20 winter days and records the daily
high temperature

24, 35, 17, 21, 24, 37, 26, 46, 58, 30, 32, 13, 12, 38, 41, 43, 44, 27, 53, 27
Organizing Numerical Data: Frequency Distribution Example
 Sort raw data in ascending order:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
 Find range: 58 - 12 = 46
 Select number of classes: 5 (usually between 5 and 15)
 Compute class interval (width): 10 (46/5 then round up)
 Determine class boundaries (limits):
 Class 1: 10 to less than 20
 Class 2: 20 to less than 30
 Class 3: 30 to less than 40
 Class 4: 40 to less than 50
 Class 5: 50 to less than 60
 Compute class midpoints: 15, 25, 35, 45, 55
 Count observations & assign to classes
 Organizing Numerical Data: Frequency Distribution Example
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58

Relative
Class Frequency Percentage
Frequency
10 but less than 20 3 .15 15
20 but less than 30 6 .30 30
30 but less than 40 5 .25 25
40 but less than 50 4 .20 20
50 but less than 60 2 .10 10

Total 20 1.00 100

Tabulating Numerical Data: Cumulative Frequency
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58

Cumulative Cumulative
Class Frequency Percentage
Frequency Percentage

10 but less than 20 3 15 3 15

20 but less than 30 6 30 9 45
30 but less than 40 5 25 14 70
40 but less than 50 4 20 18 90
50 but less than 60 2 10 20 100
Total 20 100
 Why Use a Frequency Distribution?

• It condenses the raw data into a more useful form

• It allows for a quick visual interpretation of the data
• It enables the determination of the major characteristics of
the data set including where the data are concentrated /
clustered
 Frequency Distributions: Some Tips
• Different class boundaries may provide different pictures for the same data (especially
for smaller data sets)

• Shifts in data concentration may show up when different class boundaries are chosen

• As the size of the data set increases, the impact of alterations in the selection of class
boundaries is greatly reduced

• When comparing two or more groups with different sample sizes, you must use either a
relative frequency or a percentage distribution
 Organizing Numerical Data: The Histogram
 A vertical bar chart of the data in a frequency distribution is called a histogram.

 In a histogram there are no gaps between adjacent bars.

 The class boundaries (or class midpoints) are shown on the horizontal axis.

 The vertical axis is either frequency, relative frequency, or percentage.

 The height of the bars represent the frequency, relative frequency, or percentage.
 Organizing Numerical Data: The Histogram

Relative
Class Frequency Percentage
Frequency

10 but less than 20 3 .15 15

20 but less than 30 6 .30 30
30 but less than 40 5 .25 25 Histogram: Daily High Temperature
40 but less than 50 4 .20 20
50 but less than 60 2 .10 10 7
Total 20 1.00 100
6
5

Frequency
4
(In a percentage histogram
the vertical axis would be
3
defined to show the percentage 2
of observations per class)
1
0
5 15 25 35 45 55 More
 Organizing Numerical Data: The Polygon
 A percentage polygon is formed by having the midpoint of each class
represent the data in that class and then connecting the sequence of
midpoints at their respective class percentages.

 The cumulative percentage polygon, or ogive, displays the variable of

interest along the X axis, and the cumulative percentages along the Y axis.

 Useful when there are two or more groups to compare.

 Graphing Numerical Data:The Frequency Polygon
Class
Class Frequency
Midpoint
10 but less than 20 15 3
20 but less than 30 25 6
30 but less than 40 35 5 Frequency Polygon: Daily High Temperature
40 but less than 50 45 4
7
50 but less than 60 55 2
6

Frequency
5
4
3
2
(In a percentage polygon the 1
vertical axis would be defined to 0
show the percentage of 5 15 25 35 45 55 65
observations per class)
Class Midpoints