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Chapter 4

Here are the steps to perform the analyses requested: 1. Open the Sales Transactions database and select all data. 2. Go to Insert > PivotTable to create a PivotTable with the data. 3. Drag Region and Product fields to the Rows area to show transactions by region and product. 4. Drag Transaction ID to the Values area and change the summary to Count to show number of transactions. 5. Drag Amount to the Values area and change the summary to Sum to show total revenue by region. 6. Drag Region and Product to the Rows area and Amount to the Values area to show total revenue by region and product. 7. Filter the Source field to

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Nufrh Real
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57 views21 pages

Chapter 4

Here are the steps to perform the analyses requested: 1. Open the Sales Transactions database and select all data. 2. Go to Insert > PivotTable to create a PivotTable with the data. 3. Drag Region and Product fields to the Rows area to show transactions by region and product. 4. Drag Transaction ID to the Values area and change the summary to Count to show number of transactions. 5. Drag Amount to the Values area and change the summary to Sum to show total revenue by region. 6. Drag Region and Product to the Rows area and Amount to the Values area to show total revenue by region and product. 7. Filter the Source field to

Uploaded by

Nufrh Real
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter 4

Descriptive Statistical Measures


Measures of Central Tendency
• Mean
• Median
• Mode
Measures of Dispersion: Variance
• The variance is the “average” of the squared
deviations from the mean.
• For a population:

– In Excel: =VAR.P(data range)


• For a sample:

– In Excel: =VAR.S(data range)


• Note the difference in denominators!
Example 4.8 Computing the Variance
• Purchase Orders Cost per order data
Measures of Dispersion: Standard
Deviation
• The standard deviation is the square root of the variance.
– Note that the dimension of the variance is the square of the
dimension of the observations, whereas the dimension of the
standard deviation is the same as the data. This makes the standard
deviation more practical to use in applications.
• For a population:

– In Excel: =STDEV.P(data range)


• For a sample:

– In Excel: =STDEV.S(data range)


Example 4.9 Computing the Standard
Deviation
• Purchase Orders Cost per order data

• Using the results of Example 4.8, take the


square root of the variance:

• Alternatively, use the STDEV.S function for the


data range.
Standard Deviation as a Measure of Risk
Excel file: Closing Stock Prices
Intel (INTC):
Mean = $18.81
Standard deviation = $0.50
General Electric (GE):
Mean = $16.19
Standard deviation = $0.35

INTC is a higher risk


investment than GE.
Standardized Values
• A standardized value, commonly called a z-score, provides a
relative measure of the distance an observation is from the
mean, which is independent of the units of measurement.
• The z-score for the ith observation in a data set is calculated as
follows:

– Excel function: =STANDARDIZE(x, mean, standard_dev).


Properties of z-Scores
• The numerator represents the distance that xi is from the
sample mean; a negative value indicates that xi lies to the left
of the mean, and a positive value indicates that it lies to the
right of the mean. By dividing by the standard deviation, s, we
scale the distance from the mean to express it in units of
standard deviations. Thus,
– a z-score of 1.0 means that the observation is one standard deviation
to the right of the mean;
– a z-score of 2 1.5 means that the observation is 1.5 standard
deviations to the left of the mean.
Example 4.12 Computing z-Scores
• Purchase Orders Cost per order data

=(B2 - $B$97)/$B$98, or
=STANDARDIZE(B2,$B$97,$B$98).
Measures of Shape: Skewness
• Skewness describes the lack of symmetry of
data.
– Distributions that tail off to the right are called
positively skewed; those that tail off to the left are
said to be negatively skewed.

Positively skewed Symmetrical


Coefficient of Skewness
• Coefficient of Skewness (CS):

• Excel function: =SKEW(data range)


 CS is negative for left-skewed data.
 CS is positive for right-skewed data.
 |CS| > 1 suggests high degree of skewness.
 0.5 ≤ |CS| ≤ 1 suggests moderate skewness.
 |CS| < 0.5 suggests relative symmetry.
Example 4.14: Measuring Skewness
• Purchase Orders database
• Cost per order data: CS = 1.66 (high positive
skewness)
• A/P terms data: CS = 0.60 (moderate positive
skewness)
Measures of Shape: Kurtosis
• Kurtosis refers to the peakedness (i.e., high, narrow) or
flatness (i.e., short, flat-topped) of a histogram.
• The coefficient of kurtosis (CK) measures the degree of
kurtosis of a population

 CK < 3 indicates the data is somewhat flat with a wide degree of


dispersion.
 CK > 3 indicates the data is somewhat peaked with less dispersion.
 Excel function: =KURT(data range).
Shape and Measures of Location
• Comparing measures of location can sometimes reveal
information about the shape of the distribution of
observations.
– For example, if the distribution were perfectly symmetrical and
unimodal, the mean, median, and mode would all be the same.
– If it were negatively skewed, we would generally find that
mean < median < mode
– Positive skewness would suggest that mode < median < mean
Excel Descriptive Statistics Tool
This tool provides a summary of numerical statistical measures for
sample data.

Data >
Data Analysis >
Descriptive Statistics
 Enter Input Range
 Labels (optional)
 Check Summary Statistics box

• The data must be in a single row or column. If the data are in


multiple columns, the tool treats each row or column as a separate
data set
Example 4.15: Using the Descriptive
Statistics Tool
• Purchase Orders database
Note: Results of
the Analysis
Toolpak do not
change when
changes are made
to the data.
Identifying Outliers
 There is no standard definition of what
constitutes an outlier.
 Some typical rules of thumb:
 z-scores greater than +3 or less than -3
 Extreme outliers are more than 3*IQR to the left of
Q1 or right of Q3
 Mild outliers are between 1.5*IQR and 3*IQR to
the left of Q1 or right of Q3
Example 4.23: Investigating Outliers
• Home Market Value data

• None of the z-scores exceed 3. However, while individual


variables might not exhibit outliers, combinations of them
might.
– The last observation has a high market value ($120,700) but a
relatively small house size (1,581 square feet) and may be an outlier.
Practice: Closing Stock Prices

• Use the Descriptive Statistics tool to


summarize the mean, median, variance and
standard deviation of the closing price of
stock.
Practice: Sale Transactions dataset

• Use Pivot Table to find the number of sale


transactions by product and region, total amount
of revenue by region, and total revenue by region
and product in the Sales Transactions database.
• Using PivotTable, find the average and standard
deviation of sales by source (Web or e-mail).
• Do you think this information could be useful in
advertising?

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