Quantitative Techniques

Descriptive Statistics
SUMEETHA SHARMA
Statistics in Business
 Every minute of the working day, decisions are made by businesses
around the world that determine whether companies will be profitable
and growing or whether they will stagnate and die.
 Most of these decisions are made with the assistance of information
gathered about the market place, the economic and financial
environment, the workforce, the competition and other factors.
 Such information comes usually in the form of data or is accompanied by
data.
 Business Statistics provides the tool through which such data are
collected, analyzed and summarized and presented to facilitate the
decision making process.
 Statistics/Data Analysis: The science dealing with collection,
presentation/visualization, analysis, and interpretation of numerical data.
Descriptive Statistics/ Descriptive
Analytics
 Most of the statistical information in media, company, reports etc.
consists of data that are summarized and presented in a form that
is easy for the reader to understand. Such summaries of data,
which may be tabular, graphical, or numerical are referred to as
descriptive statistics.
 Descriptive Analytics: If a business analyst or a researcher is using
data gathered on a group to describe or reach conclusions about
that same group, the statistics are called Descriptive analytics.
(Mean, Median, Mode, Percentiles)
Frequency Tables
 Frequency distribution: It is a tabular
summary of data showing the number
(frequency) of observation in each of
several nonoverlapping categories or
classes.
 While constructing a frequency distribution, the
business researcher should first determine the range
of the data. The range often is defined as the
difference between the largest and smallest numbers.
Frequency Tables
 The second step in constructing a frequency
distribution is to determine how many classes it
will contain. One rule of thump is to select
between 5 and 15 classes.
 After selecting the number of classes, the
researcher must determine the width of the class
interval. An approximation of the class width can
be calculated by dividing the range by the
number of classes.
𝐻𝑖𝑔ℎ𝑒𝑠𝑡 𝑣𝑎𝑙𝑢𝑒 − 𝐿𝑜𝑤𝑒𝑠𝑡 𝑣𝑎𝑙𝑢𝑒
 𝐼𝑛𝑡𝑒𝑟𝑣𝑎𝑙 𝑤𝑖𝑑𝑡ℎ =
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑐𝑙𝑎𝑠𝑠𝑒𝑠
Basic Concepts of Constructing
Frequency Distribution
 Class Midpoint : The midpoint of each class interval is called the class
midpoint and is sometimes referred to as class mark. It is the
representative value for each class.
 Relative frequency: It is the proportion of total frequency that is in any
given class interval in a frequency distribution.
𝐹𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦 𝑜𝑓 𝑡ℎ𝑒 𝑐𝑙𝑎𝑠𝑠
𝑃𝑟𝑜𝑝𝑜𝑟𝑡𝑖𝑜𝑛 = 𝑟𝑒𝑙𝑎𝑡𝑖𝑣𝑒 𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦 =
𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑏𝑠𝑒𝑟𝑣𝑎𝑡𝑖𝑜𝑛𝑠

 Cumulative frequency: It is a running total of frequencies through the

classes of a frequency distribution. The concept of cumulative
frequency is used in many areas, including sales cumulated over a fiscal
year, sports scores during contest, years of service, the cost of doing
business over a period of time.
Example 1: Ungrouped Data Table
Frequency Table
Soft Drink Frequency Cumulative Relative Percentage
Frequency Frequency Frequency
Coca-Cola 19 19 0.38 38

Diet Coke 8 27 0.16 16

Dr. Pepper 5 32 0.10 10

Pepsi 13 45 0.26 26

Sprite 5 50 0.10 10

Total 50 1.00 100

Example 2: Grouped Data Table
Frequency Table (Exclusive data)
Audit Time Frequency Cumulative Relative Percentage
(Days) Frequency Frequency Frequency
10-15 4 4 0.20 20

15-20 8 12 0.40 40

20-25 5 17 0.25 25

25-30 2 19 0.10 10

30-35 1 20 0.05 5

Total 20 1.00 100

1. Obtain the frequency distribution of 60 years of
Unemployment data for Canada (grouped data)

2. Obtain the relative frequency and cumulative

frequency distributions for the example of
unemployment rate in Canada.
Cross Sectional Data
Cross Tabulation
Meal Price

Quality 10-20 20-30 30-40 40-50 Total

Rating
Good 42 40 2 0 84

Very Good 34 64 46 6 150

Excellent 2 14 28 22 66

Total 78 118 76 28 300

Quantitative Data Charts

Bar Charts/ Bar Graphs

Pie Charts
Bar Charts or Bar Graphs
A widely used qualitative data graphing technique is
bar graph or bar chart. It is a graph contains two or
more categories along one axis and a series of bars,
one for each category along the other axis.
 Typically
the length of the bar represents the
magnitude of the measure(amount, frequency,
money, percentage etc.)for each category.
 These categories are non-numerical and it may be
either horizontal or vertical.
Pie Charts
 A pie chart is a circular representation of data where the area of
whole pie represents a 100% of the data and slices of the pie
represent a percentage breakdown of the sub levels. It shows the
relative magnitudes of the parts to the whole.
 They are widely used in business particularly to represent budget
categories, market share etc.
 Construction of a pie chart begins by determining the proportion of
the subunit to the whole. Because a circle contains 360o, each
proportion is then multiplied by 360 to obtain the correct number of
degrees to represent each item.
Quantitative Data Graphs
 Quantitative data graphs are plotted along a numerical scale.
 There different types of quantitative data graphs are as follows:
Visualizing numerical variables:
➢ Histograms
➢ Frequency Polygon/Percentage Polygon
➢ Ogives/Cumulative Percentage Polygon
Visualizing two numerical variables:
➢ Scatter Plot
➢ Time-Series Plot
Histograms
 One of the most widely used types of graph for quantitative data is
Histogram. It is a series of continuous rectangles that represent the
frequency of the data in a given class interval.
 If the class intervals used along the horizontal axis are equal, then
the heights of the rectangles represents the frequency of the values
in a given class interval.
 If the class intervals are unequal, then the areas of the rectangles
can be used for relative comparisons of class frequencies.
 Histogram is an important plot giving information about the shape
of the distribution of a large database, the variability of the data,
the central location of the data and the outlier data.
Frequency Polygon/Percentage
Polygon
A frequency polygon like histogram is a
graphical display of class intervals. However
instead of using rectangles like a histogram,
in a frequency polygon each class
frequency is plotted as a dot point at the
class midpoint, and the dots are connected
by a series of line segments.
 The information obtained from Histogram
and frequency polygon are same.
Ogives/Cumulative Percentage
Polygon
 An ogive is a cumulative frequency polygon. Construction begins
by labeling the x axis with the class end points and the y axis with
frequencies. A dot or zero frequency is plotted at the beginning of
the first class, and construction proceeds by making a dot at the
end of each class interval for the cumulative value. Connecting
the dots then completes the ogive.
 Ogives are most useful when the decision maker wants to see the
running totals.
 For example, if a researcher is interested in controlling costs, an
ogive could depicts cumulative costs over a year
Scatter Plot
A scatter plot explores the possible relationship
between two numerical variables by plotting the
values of one numerical value on the horizontal or X-
axis and the values of a second numerical variable on
the vertical or Y-axis.
 For example, a marketing analyst could study the
effectiveness of advertising by comparing advertising
expenses and sales revenues of 50 stores by using the
X axis to represent advertising expenses and the Y axis
to represent sales revenue.
Time-Series Plot

A time-series plot, plots the values of

a numerical variables on the Y-axis
and plots the time period associated
with each numerical value on the X-
axis.
 A time-series plot helps in visualizing
trends in data that occur over time.