Lecture 2: Measures of Variability -measures how spread out the numbers are

Below are the ages for a sample of students taken from two different sets.
Mean Median Mode
Set A 27 27 27 29 30 Close together 28 27 27
Set B 18 27 27 30 38 Very spread out 28 27 27

Range = Largest number – Smallest number (a single number)

It is easy to find but takes into account only two of the numbers and ignores all the rest.
Below are three different sets of data. Calculate the range for each set of data.
Range
1 20 45 46 47 48 49 50 30
2 20 21 22 23 24 25 50 30
3 20 25 30 35 40 45 50 30

∑ ( Deviations )2
Standard Deviation: SD=
√ n−1(¿ N )
 takes into account all of the numbers
 Deviation = how far a value is above or below the mean

Sample Population
Mean x 
Standard Deviation (SD) s 
Divide by square root of n−1 N
 Take the square root to get back to the original units
 Tells us, typically how far the values are from the mean.
 If the standard deviation is (a) small  all values are close to the mean
(b) large  some of the values are far away
(a) Calculate the standard deviation of the ages for Set B. What is it for Set A?

xi x̄ xi − x̄ (xi − x̄ )2
Ages Mean Deviations Squared Deviations
18 28
27 28
27 28
30 28
38 28
Total

(b) What does it tell you about the ages of the students if the standard deviation is zero?
Solutions: (a) Set A: 1.4, B: 7.2 years (b) they are all the same age (there is no variation in their ages)
Variance = ( Standard Deviation )2 -not used much in business (used in engineering)
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Set B s2=( 7.176 )2=51.5 squared years

SD
Coefficient of Variation: CV = × 100
Mean

 Expresses the standard deviation as a percentage of the mean

 Used for comparing two groups that have either different means or are measured in different units

You have $5,000 to invest in the stock market. You have narrowed your choices to 2 different
stocks. Which stock is riskier?
TD Bank GoldSeek
Average weekly closing price (based on the past 52 weeks) $75 $0.80
Standard Deviation $7.50 $2.40
Coefficient of Variation (CV)

TD Bank = 10%, GoldSeek = 300% the price of GoldSeek is a very volatile so it is the riskier stock

What exactly does the standard deviation mean? See the example below
At just over five foot eleven, the average Canadian-born male from the 1970s stands nearly an
inch taller than his American counterpart. Below are two samples of the heights of 90 Canadian-
born males from the 1970’s. The first sample was randomly selected from a population with a
mean height of 71 inches and a standard deviation of 2.8 inches. The second sample was taken
from a population with a mean height of 71 inches but a standard deviation of 30 inches. The
data is rounded to the nearest inch.
65 67 67 67 67 67 67 67 67 67 68 68 68 68 68
68 68 68 69 69 69 69 69 69 69 69 70 70 70 70
70 70 70 70 70 71 71 71 71 71 71 71 71 71 71
71 71 71 71 72 72 72 72 72 72 72 72 72 72 72
72 72 72 73 73 73 73 73 73 73 73 73 73 74 74
74 74 74 74 75 75 75 75 75 75 76 76 76 76 77

4 7 13 15 22 28 28 32 32 32 33 35 35 39 40
40 42 42 43 45 45 46 47 48 48 48 51 52 52 52
53 58 60 61 62 62 62 63 63 63 65 65 65 65 68
68 68 70 71 72 74 74 74 74 75 79 79 80 83 83
84 85 87 87 87 89 92 92 93 94 96 97 98 100 100
10 10 10 10 11 11 12
102 2 103 3 105 6 108 9 110 7 7 123 9 148 150

Lab Exercises (there are NO extra questions for Lecture 2)

1. New Age Furniture averages $20,000 per month in sales and the standard deviation of the
monthly sales is $15,000/month. Rock Furniture averages $800,000 per month in sales with
a standard deviation of $24,000/month. Which company’s sales fluctuate more?

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2. A counterattack roadblock outside the Fraser Legs Hotel in Marpole checks patrons exiting
the parking lot. If the police suspect a patron has been drinking they are given a field
sobriety test. If the results warrant, they are asked to provide a breath sample. The blood
alcohol readings for 10 patrons are: 0.02 0.06 0.04 0.10 0.12 0.08 0.16 0.04 0.11 0.10
What is the mean and standard deviation of the blood alcohol readings?

3. The RCMP is considering buying a new breathalyser unit and have narrowed their choice to
two units. The BoozeBreath 500 (BB) and the Taste of Tequilla (TT). A subject was asked to
provide a blood sample and then 5 breath samples from each unit. The blood sample revealed
an actual blood alcohol content of 0.10. The machines returned the following readings:
BB: 0.10 0.11 0.10 0.09 0.09 TT: 0.10 0.12 0.10 0.08 0.10
Find the mean reading and std deviation for each machine. Which machine would you pick?

4. These data are a sample of the daily production rate of fiberglass boats from Hydrosport Ltd.
17 21 18 27 17 21 20 22 18 23
The production manager feels that a standard deviation of more than 3 boats a day indicates
unacceptable production-rate variations. Should she be concerned about production rates?

5. You have $3,000 to invest in the stock market. You are considering investing in one of two
stocks. The last seven (and eight) weekly closing prices are provided below:
New Age Technology: $ 12 8.5 19 14 16 10 13.5
Ma Bell: $75.5 82 72 69 83.5 77.5 78.5 72
Find the mean, median, mode, range, std deviation and coefficient of variation for each stock.
Choose the most appropriate of the 6 measures to determine which stock is riskier. Explain.

6. The following times (in minutes) were recorded by the 400 and 1600 metre runners of a
college track team: 400 m: 0.92 0.98 1.04 0.90 0.99 1600 m: 4.52 4.35 4.60 4.70 4.50
The coach commented that the 400-metre runners turn in more consistent times. Using
appropriate statistics explain whether they support the coach’s comments.
Solutions
1. 75%, 3% New Age sales fluctuates more 2. 0.083, 0.043
3. BB: 0.098, 0.008 TT: 0.10, 0.014
TT’s average is closer to the value found by the blood sample (0.10) but the readings vary
more (larger standard deviation). BB is preferred because of the smaller standard deviation.
(Their average is off but you can always make an adjustment to compensate for it).
4. x̄ = 20.4 boats/day, s = 3.13 boats/day. Yes the manager should be concerned since the
standard deviation is 3.13 boats/day, which is above the acceptable 3 boats/day

Media
5. Mean Mode Std Dev Range CV
n
$10.5 26.8%
New Age $13.29 $13.50 No mode $3.56
0
$14.5
Ma Bell $76.25 $76.50 $72.00 $5.09 6.7%
0

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New Age is riskier. As a percentage of the mean the price of the stock fluctuates more.
6. 400 metre: s = 0.0564 min., CV = 5.8% 1600 metre: s = 0.1295 min. CV = 2.9%
The coach is wrong. As a percentage of the mean (CV) the 400 metre times fluctuate more.

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Calculator Instructions Set B: 27, 18, 30, 38, 27
1. 2ND .DATA (above the 7 key).

2. 2ND CLR WORK (above CE|C).

3. X01 appears. Enter the first number 27 ENTER.

4. Y01 appears, Y = number of X’s. By default, Y = 1 so just press the down arrow again.

5. X02 appears. Enter the second number 18 ENTER   .

6. X03 30 ENTER  .

7. X04 38 ENTER  .

8. X05 27 ENTER   (you don’t need to use the down arrows for the last number)

9. 2ND STAT (above the 8 key).

10. Change to 1−V. Press 2ND STAT (above the ENTER key).

11. Keep doing this until 1−V appears. (1−V stands for one-variable statistics)

12. Press .
 You should get n = 5 Keep pressing .
 You should get x̄ = 28 and Sx = s = sample standard deviation = 7.176
 To get the sample variance just square s 7.176 X2 gives 51.5

Weighted Mean: I invest $30,000 at 7%, $6,000 at 6% and $4,000 at 5%. What average rate
of return do I earn on my investments? X’s = rates, Y’s = weights = amount of money
Rate Amount invested
7% $30,000
6% $6,000
5% $4,000

2ND .DATA. 2ND CLR WORK.

X01 7 ENTER  Y01 30000 ENTER .

X02 6 ENTER  Y02 6000 ENTER .

X03 5 ENTER  Y03 4000 ENTER.

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2ND STAT Press . until you see the mean = 6.65% (n should = 40,000)

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