New Generation University College

Department of MIS

Module

Course: Business Statistics

AUGUST 2020

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 Business statistics

Chapter one
1. Introduction (4 lecture hours)
1.1 Definition and classification of Statistics
1.2 Stages in statistical investigation
1.3 Definition of some basic terms
1.4 Applications, uses and limitations of Statistics
1.5 Types of variables and measurement scales

1.1. Definitions and classification of Statistics

Definitions:
Statistics is defined differently by different authors over period of time. In the olden
days statistics was confined to only state affairs but in modern days it embraces almost
every sphere of human activity. Therefore, a number of old definitions, which were
confined to narrow field of enquiry, were replaced by more definitions, which are much
more comprehensive and exhaustive.
We can define it in two senses.
In the plural sense: statistics are the raw data themselves (Numerical facts) , like
statistics of births, statistics of deaths, statistics of students, statistics of imports and
exports, etc.
In the singular sense: statistics is concerned with scientific methods for collecting,
organizing, summarizing, presenting and analyzing data as well as deriving valid
conclusions and making reasonable decisions on the basis of this analysis.
Classifications:
Depending on how data can be used statistics is sometimes divided in to two main
areas or branches.
1. Descriptive Statistics:
is concerned with summary calculations, graphs, charts and tables.
Generally characterizes or describes a set of data elements by graphically
displaying the information or describing its central tendencies and how it is
distributed.
In descriptive statistics our objective is to describe a group of data that we have
‘in hand’ i.e. data that are accessible to us.
We are not interested in other data that we are not gathered.
Example: the following data refers to the number of malaria patients who have been
treated in Nekemte Hospital from 1986 to 1990 (Eth. Calendar).
3645; 4568; 5432; 6751; 7369

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 If we calculate the average malaria patients from 1986 to 1990 as
1
Average  (3645  4568  5432  6751  7369)  5553 then our work belongs to the
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domain of descriptive statistics.
If we say that there was an increase of 724 patients from 1986 to 1990, then again this
belongs to the domain of descriptive statistics.
2. Inferential Statistics: consists of generalizing from samples to populations,
performing estimations and hypothesis tests, determining relationships among
variables, and making predictions. Statistical techniques based on probability
theory are required. Example 1: In the above example if we predict the number of
malaria patients in the year 1995 to be 9917, then our work belongs to the domain
of inferential statistics. Example 2: Suppose we want to have an idea about the
percentage of illiterates in our country. We take a sample from the population and
find the proportion of illiterates in the sample. This sample proportion with the
help of probability enables us to make some inferences about the population
proportion. This study belongs to inferential statistics.

1.2. Stages in Statistical Investigation

Before we deal with statistical investigation, let us see what statistical data mean. Each
and every numerical data can’t be considered as statistical data unless it possesses the
following criteria. These are:
The data must be aggregate of facts
They must be affected to a marked extent by a multiplicity of causes
They must be estimated according to reasonable standards of accuracy
The data must be collected in a systematic manner for predefined purpose
The data should be placed in relation to each other
A statistician should be involved at all the different stages of statistical investigation.
This includes formulating the problem, and then collecting, organizing and classifying,
presenting, analyzing and interpreting of statistical data. Let’s see each stage in detail
II.. Formulating the problem: first research must emanate if there is a problem. At this
stage the investigator must be sure to understand the problem and then formulate it
in statistical term. Clarify the objectives very carefully. Ask as many questions as
necessary because “An approximate answer to the right question is worth a great deal
more than a precise answer to the wrong question.” -The first golden rule of applied
mathematics-
Therefore, the first stage in any statistical investigation should be to:
Get a clear understanding of the physical background to the situation under study;
Clarify the objectives;

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 Formulate the objective in statistical terms
IIII.. Proper collection of data: in order to draw valid conclusions, it is important ‘good’
data. Data are gathered with aim to meet predetermine objectives. In other words,
the data must provide answers to problems. The data itself form the foundation of
statistical analyses and hence the data must be carefully and accurately collected. In
section 1.6 we will see the methods of data collection.
IIIIII.. Organization and classification of data: in this stage the collected data organized in
a systematic manner. That means the data must be placed in relation to each other.
The classification or sorting out of data is, by itself, a kind of organization of data.
IIV
V.. Presentation of data: The purpose of putting the organized data in graphs, charts
and tables is two-fold. First, it is a visual way to look at the data and see what
happened and make interpretations. Second, it is usually the best way to show the
data to others. Reading lots of numbers in the text puts people to sleep and does
little to convey information.
V
V.. Analyses of data: is the process of looking at and summarizing data with the intent
to extract useful information and develop conclusions. Data analysis is closely
related to data mining, but data mining tends to focus on larger data sets, with less
emphasis on making inference, and often uses data that was originally collected for
a different purpose. In this stage different types of inferential statistical methods will
apply. For instance, hypothesis testing such as  2 test of association.
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VII.. Interpretation of data: interpretation means drawing valid conclusions from data
which form the basis of decision making. Correct interpretation requires a high
degree of skill and experience.
Note that: Analyses and interpretation of data are the two sides of the same coin.

1.3. Definition of Some Terms

In this section, we will define those terms which will be used most frequently. These
are:
Data: are the values (measurements or observations) that the variables can assume. OR
Facts or figures from which the conclusion can be drawn.
Data set: Facts or figures collected for a particular study. Each value in the data set is
called data value or datum.
Raw Data: Data sheets are where the data are originally recorded. Original data are
called raw data. Data sheets are often hand drawn, but they can also be printouts from
database programs like Microsoft Excel.
Population: The totality of all subjects with certain common characteristics that are
being studied in a specified time and place.

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Sample: Is a portion of a population which is selected using some technique of
sampling. Sample must be representative of the population so that it must be selected
by any of the developed technique.
Sampling: Is the process of selecting units (e.g., people, households, organizations)
from a population of interest so that by studying the sample we may fairly generalize
our results back to the population from which they were chosen. There are two types of
sampling techniques namely random sampling technique and non-random sampling
technique.
Random sampling technique or probability sampling technique gives a non- zero
chance for all elements to be included in the sample. In other words, there is no
personal bias regarding the selection. The five common random sampling techniques
are:
Simple Random sampling
Systematic Random sampling
Stratified Random sampling
Cluster Random sampling
Multi-stage sampling
Non-random sampling technique is mostly known as non-probability sampling
techniques and in this case not all elements of a population have a known chance of
inclusion or if some outcomes have a zero chance of being selected as a sample. The
most familiar examples of non-random sampling techniques are
Quota sampling
Convenience sampling
Volunteer sampling
Purposive sampling
Haphazard sampling
Snow ball sampling etc…
Sample size: The number of elements or observation to be included in the sample.
Parameter: Any measure computed from the data of a population.
Example: Populations mean   and population standard deviation  
Statistic: Any measure computed from the sample.

Example: sample mean x , sample standard deviation S 
Survey: A collection of quantitative information about members of a population when
no special control is exercised over any of the factors influencing the variable of interest.
Sample survey: A survey that include only a portion of the population.
Census: A collection of information about every member of a population
Sample survey has the following advantages over census
Sample survey saves time and cost
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 Has great accuracy
Avoid wastage of material
Variable: A variable is a characteristic or attribute that can assume different values.
Variables whose values are determined by chance are called random variables.
Variables are often specified according to their type and intended use and hence
variable can be classified in to two namely qualitative and quantitative variables.
A quantitative variable is naturally measured as a number for which meaningful
arithmetic operations make sense. Examples: Height, age, crop yield, GPA, salary,
temperature, area, air pollution index (measured in parts per million), etc.
Qualitative variable: Any variable that is not quantitative is qualitative. Qualitative
variables take a value that is one of several possible categories. As naturally
measured, qualitative variables have no numerical meaning. Examples: Hair color,
gender, field of study, marital status, political affiliation, status of disease infection.
Quantitative variables can be classified as discrete and continuous variable. Discrete
variables can assume certain numerical values. That is, there are gaps between the
possible values. Such as 0, 1, 2...It may be countable finite or countable infinite. For
example the number of students in a classroom, number of children a family.
Continuous variable can take any value within a specified interval with a finite enough
measuring device. No gaps between possible values. They are obtained by measuring.
For example, consider the heights of two people no matter how close it is we can find
another person whose height falls somewhere between the two heights is a continuous
variable.

1.4. Applications, uses and limitations of statistics

I. Applications of statistics
Apart from helping elicit an intelligent assessment from a body of figures and
facts, statistics is indispensable tool for any scientific enquiry-right from the stage
of planning enquiry to the stage of conclusion. It applies almost all sciences: pure
and applied, physical natural, biological, medical, agricultural and engineering. It
also finds applications in social and management sciences, in commerce, business
and industry.

In almost all fields of human endeavor.

Almost all human beings in their daily life are subjected to obtaining numerical
facts.
Applicable in some process e.g. invention of certain drugs, extent of
environmental pollution.
In industries especially in quality control area.

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 II. Uses of Statistics
Statistics presents fact in the form of numerical data.
It condenses and summarizes a mass of data in to a few presentable and precise
figures.
It facilitates comparison of data
It helps in formulating and testing hypothesis.
It helps in predicting future trend.
It helps in formulating polices.
III. Limitations of Statistics
Statistics with all its wide application in every sphere of human activity has its own
limitation. Some of them are given below
Statistics is not suitable to the study of qualitative phenomenon: Since statistics is
basically a science and deals with a set of numerical data, it is applicable to the study
of only these subjects of enquiry, which can be expressed in terms of quantitative
measurements. As a matter of fact, qualitative phenomenon like honesty, poverty,
beauty, intelligence etc, cannot be expressed numerically and any statistical analysis
cannot be directly applied on these qualitative phenomenons. Nevertheless,
statistical techniques may be applied indirectly by first reducing the qualitative
expressions to accurate quantitative terms. For example, the intelligence of a group
of students can be studied on the basis of their marks in a particular examination.
Statistics does not study individuals: Statistics does not give any specific
importance to the individual items; in fact it deals with an aggregate of objects.
Individual items, when they are taken individually do not constitute any statistical
data and do not serve any purpose for any statistical enquiry.
Statistical laws are not exact: It is well known that mathematical and physical
sciences are exact. But statistical laws are not exact and statistical laws are only
approximations. Statistical conclusions are not universally true. They are true only
on an average.
Statistics table may be misused: Statistics must be used only by experts; otherwise,
statistical methods are the most dangerous tools on the hands of the inexpert. The
use of statistical tools by the inexperienced and untraced persons might lead to
wrong conclusions. Statistics can be easily misused by quoting wrong figures of
data. As King says aptly ‘statistics are like clay of which one can make a God or
Devil as one pleases.’
Statistics is only, one of the methods of studying a problem: Statistical method
does not provide complete solution of the problems because problems are to be
studied taking the background of the countries culture, philosophy or religion into

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 consideration. Thus the statistical study should be supplemented by other
evidences.

1.5. Scales of measurement

Normally, when one hears the term measurement, they may think in terms of
measuring the length of something (i.e. the length of a piece of wood) or measuring a
quantity of something (i.e. a cup of flour). This represents a limited use of the term
measurement. In statistics, the term measurement is used more broadly and is more
appropriately termed scales of measurement. Scales of measurement refer to ways in
which variables or numbers are defined and categorized. Each scale of measurement
has certain properties which in turn determine the appropriateness for use of certain
statistical analyses. The four scales of measurement are nominal, ordinal, interval, and
ratio.
Nominal Scales
Nominal scales possess the following properties.
 Level of measurement which classifies data into mutually exclusive, all inclusive
categories in which no order or ranking can be imposed on the data.
 No arithmetic and relational operation can be applied.
 No quantitative information is conveyed
 Thus only gives names or labels to various categories.
Examples:
 Political party preference (Republican, Democrat, or Other,)
 Sex (Male or Female.)
 Marital status (married, single, widow, divorce)
 Country code
 Regional differentiation of Ethiopia.
2. Ordinal Scales
Ordinal Scales are measurement systems that possess the following properties:
 Level of measurement which classifies data into categories that can be ranked,
however Differences between the ranks do not exist.
 Arithmetic operations are not applicable but relational operations are applicable.
 Ordering is the sole property of ordinal scale.

Examples:
 Letter grades (A, B, C, D, F).
 Rating scales (Excellent, Very good, Good, Fair, poor).
 Military status.

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3. Interval Scales
Interval scales are measurement systems that possess the following properties:
 Level of measurement which classifies data that can be ranked and differences
are meaningful. However, there is no meaningful zero, so ratios are meaningless.
 All arithmetic operations except division are applicable.
 Relational operations are also possible.
Examples:
 IQ, Temperature in F0.
4. Ratio Scales
Ratio scales measurement possess the following properties: Level of measurement
which classifies data that can be ranked, differences are meaningful, and there is a true
zero. True ratios exist between the different units of measure.
 All arithmetic and relational operations are applicable.
Examples:
 Weight
 Height
 Number of students
 Age
Use of level of measurements
 Helps you decide how to interpret the data from the variable.
 Helps you decide what statistical analysis is appropriate on the values that were
assigned. For example if a measurement is nominal then you know that you
never average the data level.

Assignment: What is the application of statistics for your field of

study (15%)?

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 2. Methods of Data Collection and Presentation (6 lecture hours)
1.6 Methods of data collection
1.6.1 Sources of data
1.6.2 Types of data
1.6.3 Methods of collection
1.7 Methods of Data Presentation
1.7.1 Motivating examples
1.7.2 Frequency distributions: qualitative, quantitative:
absolute, relative, percentage, cumulative
1.7.3 Tabular presentation of data
1.7.4 Diagrammatic display of data: Bar charts, Pie-
chart, Cartograms
1.7.5 Graphical presentation of data: Histogram,
Frequency Polygon, Ogive Curves

2.1. Methods of data collection

Once it is decide what type of study is to be made, it becomes
necessary to collected information about the concerned study,
mostly in the form of data. In order to generate valid conclusion
from a data, information has to be collected in a systematic
manner. Whatever the quality of sampling and analysis method, a
haphazardly collected dataset is less likely to produce valuable
and generalizable information.
2.1.1 Types of Data:
There are two types (sources) for the collection of data.
(1) Primary Data (2) Secondary Data
(1). 1Primary data
The primary data are the first hand information collected,
compiled and published by organization for some purpose.
They are most original data in character and have not
undergone any sort of statistical treatment.

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 refer to those that are collected by conducting survey to meet
the specific problem needs at hand.
Example: Population census reports are primary data because
these are collected, complied and published by the population
census organization.
(2). Secondary data -
The secondary data are the second hand information which are
already collected by some one (organization) for some purpose
and are available for the present study. The secondary data are
not pure in character and have undergone some treatment at
least once.
data taken from already available published or unpublished
source.
Exercise-2: Write the merits and demerits of secondary data.
2.1.3. Methods of collection
There are three major methods of data collection
1. self-administered questionnaire
2. direct investigation-measurement (observation) of the
subject and interviewing(face-to-face, telephone, --- )
3. the use of documentary source
1. Self-administered questionnaire.
Questionnaire is the main data collection instrument in formal
sample survey. Before examining the steps in designing a
questionnaire we need to review the types of questions used in
questionnaires. Depending on the amount of freedom given to
respondent in offering responses, there are two basic types of
questions that can be used in questionnaires: open-ended
questions and closed ended questions.
The type of questions for use will be determined by the form of
responses wanted, the nature of the respondents and their
ability to answer the questions.
Open-ended questions: - allows the respondent to answer it
freely in his or her own words.
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 Example: what do you think are the reasons for a high drop-out
rate of village health committee members?
Closed – ended questions:-
Predetermined list of alternate responses is presented to the
respondent for checking the appropriate one(s). It implies that
the respondent’s answers are restricted in some way to a limited
range of alternatives.
Advantage
It is the cheapest and can be conducted by a single
researcher.
Questionnaires can be sending to a wide geographical area.
There is no interviewer variability
Disadvantage
Low response rate
No assurance that the questioners was answered by the right
person.
Mail questionnaire is not suitable for illiterate community
2. direct investigation
I. measurement or/and observation
data can be obtained through direct observation or
measurement
provides accurate information but it is expensive and
inconvenient
eg: Land area measurement, Animal weight gain, Physical
examination, direct observation of work.
II. Interview
a) Face-to-Face interview
Advantage:-
Interviewers can observe the surroundings and can use
nonverbal communication and visual aids.
The interviewer can help the respondent if he/she has
difficulty in understanding the questions.
Respondent is likely to answer all the questions alone
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 Disadvantage:-
Cost is high
Interviewer bias is also high
Untrained interviewer may distort the meaning of the
questions
b) Telephone Interview
Advantage:-
It is less expensive in time and money compared to face to
face interviews
Relatively high response rate
Reach people who would not open their doors to an
interviewer, but might willing to talk on the telephone
Disadvantage:-
Unrepresentative of the groups which do not have
telephones
Unlisted telephone numbers are excluded from the study.
Respondent may be substitute by another
3. The use of documentary source
Extracting information from existing resources.
Is much less expensive than any other two sources
It is difficult to get the information needed when records are
compiled in unstandardized manner.
Example: - Hospital records, professional institutes, Official
statistics, - - -
Editing of Data:
After collecting the data either from primary or secondary
source, the next step is its editing. Editing means the examination
of collected data to discover any error and mistake before
presenting it. It has to be decided before hand what degree of
accuracy is wanted and what extent of errors can be tolerated in
the inquiry. The editing of secondary data is simpler than that of
primary data.
2.2. Methods of Data Presentation
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This topic introduces tabular and graphical methods commonly
used to summarize both qualitative and quantitative data.
Tabular and graphical summaries of data can be obtained in
annual reports, newspaper articles and research studies.
Everyone is exposed to these types of presentations, so it is
important to understand how they are prepared and how they
will be interpreted.
Modern statistical software packages provide extensive
capabilities for summarizing data and preparing graphical
presentations. MINITAB, SPSS and STATA are three packages
that are widely available.
2.2.1. Classification of Data
The process of arranging data into homogenous group or classes
according to some common characteristics present in the data is
called classification.
For Example: The process of sorting letters in a post office, the
letters are classified according to the regions and further arranged
according to zones, cities, etc.
Bases of Classification:
There are four important bases of classification:
(1) Qualitative Base (2) Quantitative Base (3) Geographical
Base (4) Chronological or Temporal Base
(1) Qualitative Base:
When the data are classified according to some quality or
attributes such as sex, religion, literacy, intelligence etc…
(2) Quantitative Base:
When the data are classified by quantitative characteristics like
heights, weights, ages, income etc…
(3) Geographical Base:
When the data are classified by geographical regions or location,
like states, provinces, cities, countries etc…
(4) Chronological or Temporal Base:

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When the data are classified or arranged by their time of
occurrence, such as years, months, weeks, days etc… For
Example: Time series data.
Tabulation of Data
The process of placing classified data into tabular form is known
as tabulation. A table is a symmetric arrangement of statistical
data in rows and columns. Rows are horizontal arrangements
whereas columns are vertical arrangements.
2.2.2. Frequency distribution
A frequency distribution is the organization of row data in table
form, using classes and frequencies. There are three basic types of
frequency distributions, and there are specific procedures for
constructing each type. The three types are categorical,
ungrouped and grouped frequency distributions.
The reasons for constructing a frequency distribution are as
follows.
To organize the data in a meaningful, intelligible way.
To enable the reader to determine the nature or shape of the
distribution
To facilitate computational procedures for measures of
average and spread
To enable the researcher to draw charts and graphs for the
presentation of data
To enable the reader to make comparisons between different
data set.
Some of basic terms that are most frequently used while we deal
with frequency distribution are the following:
Lower Class Limits are the smallest number that can belong
to the different class.
Upper Class Limits are the largest number that can belong to
the different classes.
Class Boundaries are the number used to separate classes,
but without the gaps created by class limits.
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 Class midpoints are the midpoints of the classes. Each class
midpoint can be found by adding the lower class limit to the
upper class limit and dividing the sum by 2.
Class width is the difference between two consecutive lower
class limits or two consecutive lower class boundaries.
2.2.2.1. Categorical Frequency Distribution
The categorical frequency distribution is used for data which can be
placed in specific categories such as nominal or ordinal level data. For
example, data such as data such as political affiliation, religious
affiliation, or major field of study would use categorical frequency
distribution.
The major components of categorical frequency distribution are class,
tally and frequency. Moreover, even if percentage is not normally a part
of a frequency distribution, it will be added since it is used in certain
types of graphical presentations, such as pie graph.
Steps of constructing categorical frequency distribution
1. You have to identify that the data is in nominal or ordinal scale of
measurement.
2. Make a table as show below
A B C D
class Tally Frequency Percent

3. Put distinct values of a data set in column A.

4. Tally the data and place the result in column B
5. Count the tallies and place the results in column C
6. Find the percentage of values in each class by using the formula
% = 100%
Where is frequency and is total number of values.
Example 2.1: Twenty-five army inductees were given a blood test to
determine their blood type. The data set is given as follows:
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 A B B AB O
O O B AB B
B B O A O
A O O O AB
AB A O B A
Construct a frequency distribution for the data.
Solution:
A B C D
class Tally Frequency Percent
A //// 5 20
B //// // 7 28
O //// //// 9 36
AB //// 4 16

2.2.2.2 Ungrouped Frequency Distribution.

When the data are numerical interested of categorical, the range of data
is small and each class is only one unit, this distribution is called an
ungrouped frequency distribution.
The major components of this type of frequency distributions are class,
tally, frequency and cumulative frequency. The steps are almost similar
with that of categorical frequency distribution.
Cumulative frequencies are used to show how many values are
accumulated up to and including a specific class.
Example 2.2: The following data represent the number of days of sick
leave taken by each of 50 workers of a company over the last 6 weeks.
2 0 0 5 8 3 4 1 0 0 7 1
7 1 5 4 0 4 0 1 8 9 7 0
1 7 2 5 5 4 3 3 0 0 2 5
1 3 0 2 4 5 0 5 7 5 1 1
0 2
A. Construct ungrouped frequency distribution
B. How many workers had at least 1 day of sick leave?

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 C. How many workers had between 3 and 5 days of sick leave?
Solution:
A. Since this data set contains only a relatively small number of
distinct or different values, it is convenient to represent it in a
frequency table which presents each distinct value along with its
frequency of occurrence.

B. Since 12 of the 50workers had no days of sick leave, the answer is

50-12=38
C. The answer is the sum of the frequencies for values 3, 4 and 5 that
is 4+5+8=17
2.2.2.3. Grouped Frequency Distribution
When the range of the data is large, the data must be grouped in which
each class has more than one unit in width. While we construct this
frequency distribution, we have to follow the following steps.
1. Find the highest and the lowest values
2. Find the range; = − or = −
3. Select the number of classes desired. Here, we have two choices to
get the desired number of classes:
I. Use Struge’s rule. That is, = 1 + 3.32 where is the
number of class and is the number of observations.
II. Select the number of classes arbitrarily between 5 and 20. This
is a conventional way. If you fail to calculate by Struge’s
rule, this method is more appropriate.

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When we choose the number of classes, we have to think about the
following criteria
The classes must be mutually exclusive. Mutually exclusive
classes have non overlapping class limits so that values can’t be
placed in to two classes.
The classes must be continuous. Even if there are no values in a
class, the class must be included in the frequency distribution.
There should be no gaps in a frequency distribution. The only
exception occurs when the class with a zero frequency is the first
or last. A class width with a zero frequency at either end can be
omitted with out affecting the distribution.
The classes must be equal in width. The reason for having classes
with equal width is so that there is not a distorted view of the
data. One exception occurs when a distribution is open-ended.
i.e., it has no specific beginning or end values.
4. Find the class width by dividing the range by the number of classes
= =

Note that: Round the answer up to the nearest whole number if
there is a reminder. For instance, 4.7 ≈ 5 and 4.12 ≈ 5
5. Select the starting point as the lowest class limit. This is usually
the lowest score (observation). Add the width to that score to get
the lower class limit of the next class. Keep adding until you
achieve the number of desired class( ) calculated in step 3.
6. Find the upper class limit; subtract unit of measurement( ) from
the lower class limit of the second class in order to get the upper
limit of the first class. Then add the width to each upper class limit
to get all upper class limits.
Unit of measurement: Is the next expected upcoming value. For
instance, 28, 23, 52, and then the unit of measurement is one.
Because take one datum arbitrarily, say 23, then the next
upcoming value will be 24. Therefore, = 24 − 23 = 1. If the data
is 24.12, 30, 21.2 then give priority to the datum with more

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 decimal place. Take 24.12 and guess the next possible value. It is
24.13. Therefore, = 24.12 − 24.13 = 0.01.
Note that: = 1 is the maximum value of unit of measurement
and is the value when we don’t have a clue about the data.
7. Find the class boundaries. =
− and =
− . In short, = − and =
− .
8. Tally the data and write the numerical values for tallies in the
frequency column
9. Find cumulative frequency. We have two type of cumulative
frequency namely less than cumulative frequency and more
than cumulative frequency. Less than cumulative frequency
is obtained by adding successively the frequencies of all the
previous classes including the class against which it is
written. The cumulate is started from the lowest to the
highest size. More than cumulative frequency is obtained by
finding the cumulate total of frequencies starting from the
highest to the lowest class.
For example, the following frequency distribution table
gives the marks obtained by 40 students:

The above table shows how to find less than cumulative frequency and the table shown
below shows how to find more than cumulative frequency.

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Example 2.3: Consider the following set of data and construct the frequency distribution.
11 29 6 33 14 21 18 17 22 38
31 22 27 19 22 23 26 39 34 27
Steps
1. Highest value = 39, Lowest value = 6
2. R = 39 − 6 = 33
3. K = 1 + 3.32 log 20 = 5.32 ≈ 6
4. W = = = 5.5 ≈ 6
5. Select starting point. Take the minimum which is 6 then add width 6 on it to get the next
class LCL.
6 12 18 24 30 36
6. Upper class limit. Since unit of measurement is one. 12 − 1 = 11. So 11 is the UCL of the
first class. Therefore, 6 − 11 is the first class
Class limit 6-11 12-17 18-23 24-29 30-35 36-41

7. Find the class boundaries. Take the formula in step 7. LCB = LCL − 0.5 and UCB =
UCL − 0.5
Class Boundaries 5.5-11.5 11.5-17.5 17.5-23.5 23.5-29.5 29.5-35.5 35.5-41.5
8. 9 and 10

2.2.2.4. Relative Frequency Distribution

An important variation of the basic frequency distribution uses relative frequencies, which are easily
found by dividing each class frequency by the total of all frequencies. A relative frequency distribution
includes the same class limits as a frequency distribution, but relative frequencies are used instead of
actual frequencies. The relative frequencies are sometimes expressed as percents.

=

21 | P a g e
Relative frequency distribution enables us to understand the distribution of the data and to compare
different sets of data.
2.2.3. Graphical Presentation of Data
We have discussed the techniques of classification and tabulation that help us in organizing the
collected data in a meaningful fashion. However, this way of presentation of statistical data
does not always prove to be interesting to a layman. Too many figures are often confusing and
fail to convey the massage effectively.
One of the most effective and interesting alternative way in which a statistical data may be
presented is through diagrams and graphs. There are several ways in which statistical data may
be displayed pictorially such as different types of graphs and diagrams.
General steps in constructing graphs
1. Draw and label the x and y axes
2. Choose a suitable scale for the frequencies or cumulative frequencies and label it on the
y axis.
3. Represent the class boundaries for the histogram or Ogive or the mid point for the
frequency polygon on the x axis.
4. Plot the points
5. Draw the bars or lines
2.2.3.1. Diagrammatic display of data: Bar charts, Pie-chart, Cartograms
I. Pie chart
Pie chart can used to compare the relation between the whole and its components. Pie chart is a
circular diagram and the area of the sector of a circle is used in pie chart. Circles are drawn with
radii proportional to the square root of the quantities because the area of a circle isπr .
To construct a pie chart (sector diagram), we draw a circle with radius (square root of the total).
The total angle of the circle is360 . The angles of each component are calculated by the formula.
Component Part
Angle of Sector = x360
Total
These angles are made in the circle by mean of a protractor to show different components. The
arrangement of the sectors is usually anti-clock wise.
Example2.4: The following table gives the details of monthly budget of a family. Represent
these figures by a suitable diagram.

Solution: The necessary computations are given below:

22 | P a g e
 Chart Title
misclaneous
20%
food
Fuel and Light 40%
7%

House Rent
27%

clothing
6%

II. Bar Charts

The bar graph (simple bar chart, multiple bar chart and stratified or stacked bar chart) uses vertical or
horizontal bars to represent the frequencies of a distribution. While we draw bar chart, we have to
consider the following two points. These are
Make the bars the same width
Make the units on the axis that are used for the frequency equal in size
A. A simple bar chart is used to represents data involving only one variable classified on spatial,
quantitative or temporal basis. In simple bar chart, we make bars of equal width but variable
length, i.e. the magnitude of a quantity is represented by the height or length of the bars.
Following steps are undertaken in drawing a simple bar diagram:
Draw two perpendicular lines one horizontally and the other vertically at an appropriate
place of the paper.
Take the basis of classification along horizontal line (X-axis) and the observed variable
along vertical line (Y-axis) or vice versa.
Marks signs of equal breath for each class and leave equal or not less than half breath in
between two classes.
Finally marks the values of the given variable to prepare required bars.
Example 2.5: Draw simple bar diagram to represent the profits of a bank for 5 years.

23 | P a g e
B. Multiple bar charts are used two or more sets of inter-related data are represented (multiple
bar diagram facilities comparison between more than one phenomenon). The technique of
simple bar chart is used to draw this diagram but the difference is that we use different
shades, colors, or dots to distinguish between different phenomena.
Example 2.6: Draw a multiple bar chart to represent the import and export of Canada (values in
$) for the years 1991 to 1995.

C. Stratified (Stacked or component) Bar Chart is used to represent data in which the total
magnitude is divided into different or components. In this diagram, first we make simple bars for
each class taking total magnitude in that class and then divide these simple bars into parts
in the ratio of various components. This type of diagram shows the variation in different
components within each class as well as between different classes. Sub-divided bar diagram
is also known as component bar chart or staked chart.
Example 2.7: The table below shows the quantity in hundred kgs of Wheat, Barley and Oats
produced on a certain form during the years 1991 to 1994. Draw stratified bar chart.
24 | P a g e
Solution: To make the component bar chart, first of all we have to take year wise total
production.

The required diagram is given below:

2.2.3.2. Graphical presentation of data: Histogram, Frequency Polygon, Ogive Curves

Statistical graphs can be used to describe the data set or to analyze it. Graphs are also useful in
getting the audience’s attention in a publication or a speaking presentation.
They can be used to discuss an issue, reinforce a critical point, or summarize a data set. They
can also be used to discover a trend or pattern in a situation over a period of time.
The three most commonly used graphs in research are
1. The histogram.
2. The frequency polygon.
3. The cumulative frequency graph, or ogive (pronounced o-jive).
(1). Histogram
Histogram is a special type of bar graph in which the horizontal scale represents classes of data values and
the vertical scale represents frequencies. The height of the bars correspond to the frequency values, and the
drawn adjacent to each other (without gaps).
We can construct a histogram after we have first completed a frequency distribution table for a data set.
The axis is reserved for the class boundaries.
Example2.8: Take the data in example 2.3.

25 | P a g e
 7.0

6.0

5.0

Frequency 4. 0

3.0

2.0

1.0

0.0 5.5 11.5 17.5 23.5 29.5 35.5 41.5

Class boundaries
Relative frequency histogram has the same shape and horizontal ( ) scale as a histogram, but the
vertical ( ) scale is marked with relative frequencies instead of actual frequencies.
(2). Frequency Polygon
A frequency polygon uses line segment connected to points located directly above class midpoint values.
The heights of the points correspond to the class frequencies, and the line segments are extended to the left
and right so that the graph begins and ends on the horizontal axis with the same distance that the
previous and next midpoint would be located.
Example 2.9: Take the data in example 2.3.
7.0

6.0

5.0

4.0

3.0

2.0
2.5 8.5 14.5 20.5 26.5 32.5 38.5 44.5
Midpoints

(3). Ogive Graph

An Ogive (pronounced as “oh-jive”) is a line that depicts cumulative frequencies, just as the cumulative
frequency distribution lists cumulative frequencies. Note that the Ogive uses class boundaries along the
horizontal scale, and graph begins with the lower boundary of the first class and ends with the upper
boundary of the last class. Ogive is useful for determining the number of values below some particular
value. There are two type of Ogive namely less than Ogive and more than Ogive. The difference is that
less than Ogive uses less than cumulative frequency and more than Ogive uses more than cumulative
frequency on axis.
Example 2.10: Take the data in example 2.3 and draw less than and more than Ogive

26 | P a g e
 20 Less than Ogive

15

10

More than Ogive

0
5.5 11.5 17.5 23.5 29.5 35.5 41.5
Class Boundaries

27 | P a g e
 CHAPTER 3
3. Measures of Central Tendency (12 lecture hours) Lecture Note
a. Motivating examples
b. Objectives of measures of central tendency
c. Important characteristics of a good average
d. Summation notation
e. Mean
f. Median
g. Mode

3.1 Introduction and objectives of measure of central tendency

Measures of central tendency are measures of the location of the middle or the center of a
distribution.
The tendency statistical data to get concentrated at certain value is called central tendency.
And various methods that determine the actual value at which the data tend to
concentrate are called measure of central tendency. One of the most important objectives
of statistical analysis is to get one single value that describes the characteristics of the
entire data. Such a value is called the central value or average.
 When we want to make comparison between groups of numbers it is good to have a
single value that is considered to be a good representative of each group. This single
value is called the average of the group.
3.2 Objectives:
1. To comprehend the data easily i.e. to condensed the mass of data in to one single
value.
2. To facilitate comparison.
3. To make further statistical analysis.
3.3 Characteristic of a good measure of central tendency (A typical average should
posses the following):
It should be defined rigidly which means that it should have a definite value.
It should be based on all observation under investigation.
It should be not be affected by extreme observations.
It should be capable of further algebraic treatment.
It should be as little as affected by fluctuations of sampling or should be stable with
sampling.
It should be ease to calculate and simple to understand.
It should be unique and always exist.
Note:-There is no measure satisfied all the above condition!
3.4. The Summation Notation:
Let X1, X2 ,X3 …XN be a number of measurements where N is the total number of
observation and Xi is ith observation.
Very often in statistics an algebraic expression of the form X1+X2+X3+...+XN is used in a
formula to compute a statistic. It is tedious to write an expression like this very often,
so mathematicians have developed a shorthand notation to represent a sum of scores,
called the summation notation.

28 | P a g e
 N
The symbol X
i=1
i is mathematical shorthand for X11+X2+X3+...+XN
N

X
i=1
i = X 1 + X 2 + + X N

The expression is read, "the sum of X sub i from i equals 1 to N." It means "add up all the
numbers."

Example: Suppose the following were scores made on the first homework assignment for
five students in the class: 5, 7, 7, 6, and 8. In this example set of five numbers, where N=5,
the summation could be written:

X
i=1
i = X 1 + X 2 + X 3 + X 4 + X 5 = 5 + 7 + 7 + 6 + 8 = 33

The "i=1" in the bottom of the summation notation tells where to begin the sequence of
summation. If the expression were written with "i=2", the summation would start with the
second number in the set.

5
For example: X
i=2
i = X 2 + X 3 + X 4 + X 5 = 7 + 7 + 6 + 8 = 28

The "N" in the upper part of the summation notation tells where to end the sequence of
summation. If there were only three scores then the summation and example would be:

X
i=1
i = X 1 + X 2 + X 3 = 5 + 7 + 7 = 19

Sometimes if the summation notation is used in an expression and the expression must be
written a number of times, as in a proof, then a shorthand notation for the shorthand
notation is employed. When the summation sign " ∑ " is used without additional
notation, then "i=1" and "N" are assumed

PROPERTIES OF SUMMATION
n
1. ∑ K = nK , Where k is any constant
i= 1
n n
2. ∑ KX i = K ∑ X i , Where k is any constant
i= 1 i= 1
n n
3. , where a and b are any constant
i
(a + bX i ) = na + b  X
i= 1
i

4. n n n


i= 1
(X i + Yi ) = 
i= 1
X i + i= 1
Yi

N
5.  (X i  Y i ) = X 1  Y1 + X 2  Y 2 +    + X N  YN
i =1

29 | P a g e
 Example 3.1: considering the following data determine
X Y
5 6
7 7
7 8
6 7
8 8

5 5 5
5 5
a) ∑ Xi b) ∑ Yi c) ∑ 11 d) (X i + Yi ) e) (X i  Yi )
i= 1 i= 1 i= 1
i=1 i=1

5 2 5 5 5
i 5 5
f) ∑X g) ∑ X iYi h)  X + Y i i g) ∑ X i ∑ Y i
i= 1 i= 1 i= 1 i= 1
i=1 i=1

Types of measures of central tendency

There are several different measures of central tendency; each has its own advantage and
disadvantage.
The Mean
The Mode
The Median

The choice of these averages depends up on which best fit the property under discussion.

3.5. The Mean

3.5.1. The Arithmetic Mean:

- Divided in to two i.e. simple arithmetic mean and the weighted arithmetic mean
1) Simple Arithmetic Mean:
Different methods exist for grouped and ungrouped data. These are direct method and
indirect method.
a) Direct method
- The mean is defined as the sum of the magnitude of the items divided by the number of
items

30 | P a g e
 The mean of X1, X2 ,X3 …Xn is denoted by A.M, or X and is given by:
n
X1 + X 2 +   + X n
X= =  Xi / n
n i=1
When the data are arranged or given in the form of frequency distribution i.e. there
are k variate values such that a value X i has a frequency f i ( i=1,2,---,k) ,then the
Arithmetic mean will be

k
k
 fi X i
∑ f i= n
X = i=1 Where k is the number of classes and
k i= 1
 i=1
fi

 Arithmetic Mean for Grouped Data

If data are given in the shape of a continuous frequency distribution, then the arithmetic
mean is obtained as follows:
n

fY i i
X= i=1
n
Where Y i = the class mark of the ith class and fi = the frequency of the ith
f
i=1
i

class

Example 3.2:

1) Daily cash earnings of 15 workers working in different industries are as follows:

11.63,8.22,12.56,12.14,29.23,18.23,11.49,11.30,17.00,9.16,8.64,27.56,8.23,19.77,12.81.Find
the average daily earning of a worker?

2) The distribution of age at first marriage of 130 males was as given below

Age in years(X): 18 19 20 21 22 23 24 25 26 27 28 29
No. of males (f): 2 1 4 8 10 12 17 19 18 14 13 12

Compute the average age of males at first marriage?

3) Calculate the mean for the following age distribution.

31 | P a g e
 Class frequency
6- 10 35
11- 15 23
16- 20 15
21- 25 12
26- 30 9
31- 35 6

1) Find the mean of the marks obtained by 51 students with A=48.5 and w=10 of

xi 28.5 38.5 48.5 58.5 68.5

fi 4 12 15 13 7

Merits and Demerits of Arithmetic Mean

Merits:

• It is rigidly defined.
• It is based on all observation.
• It is suitable for further mathematical treatment.
• It is stable average, i.e. it is not affected by fluctuations of sampling to some extent.
• It is easy to calculate and simple to understand.
Demerits:
• It is affected by extreme observations.
• It can not be used in the case of open end classes.
• It can not be determined by the method of inspection.
• It can not be used when dealing with qualitative characteristics, such as intelligence,
honesty, beauty.
• It can be a number which does not exist in a serious.
• Some times it leads to wrong conclusion if the details of the data from which it is
obtained are not available.
• It gives high weight to high extreme values and less weight to low extreme values.

3.6.The Mode
Mode is a value which occurs most frequently in a set of values
The mode may not exist and even if it does exist, it may not be unique.
In case of discrete distribution the value having the maximum frequency is the
model value.
If in a set of observed values, all values occur once or equal number of times, there
is no mode
Examples:
1. Find the mode of 5, 3, 5, 8, and 9
32 | P a g e
 Mode =5
2. Find the mode of 8, 9, 9, 7, 8, 2, and 5.
It is a bimodal Data: 8 and 9
3. Find the mode of 4, 12, 3, 6, and 7.
No mode for this data.
- The mode of a set of numbers X1, X2, …Xn is usually denoted by X̂ .

Mode for Grouped data.

If data are given in the shape of continuous frequency distribution, the mode is defined as:

Δ1
Xˆ = Lmod + ( )W
Δ1 + Δ2

Where: X̂ = the mode of the distribution

L mod= the lower class boundary of the modal class
Δ1 = f mo  f1
Δ2 = f mo  f 2

F mod= frequency of the modal class

f1= frequency of the class preceding the modal class

f2= frequency of the class succeeding the modal class

W=the size of the modal class

Note: The modal class is a class with the highest frequency.

Example 3.7: The following is the distribution of the size of certain farms selected at
random from a district. Calculate the mode of the distribution.
Size of farms No. of farms
5- 15 _____________________________8
15- 25____________________________12
25- 35____________________________17
35- 45____________________________29
45- 55____________________________31
55- 65____________________________5

65- 75____________________________3

Merits and Demerits of Mode

33 | P a g e
 Merits:
It is not affected by extreme observations.
Easy to calculate and simple to understand.
It can be calculated for distribution with open end class.
Can be used for qualitative data as well.
Demerits:
It is not rigidly defined.
It is not based on all observations
It is not suitable for further mathematical treatment.
It is not stable average, i.e. it is affected by fluctuations of sampling to some extent.
Often its value is not unique.

3.7. The Median

- In a distribution, median is the value of the variable which divides it in to two equal
halves.
- In an ordered series of data median is an observation lying exactly in the middle of the
series. It is the middle most value in the sense that the number of values less than the
median is equal to the number of values greater than it.
-If X1, X2, …Xn be the observations, then the numbers arranged in ascending order will be
X[1], X[2], …X[n], where X[i] is ith smallest value.
X[1]< X[2]< …<X[n]
 
-Median is denoted by. X

Median for ungrouped data.

X n+1 , if n is odd
2
1
(X n + X n ) , if n is even
2 +1
2 2
Example 3.8: 1) Actual waiting time for the first job on the selected sample of nine people
having different field of specializations was given below.
Waiting time ( in month ):11.6, 11.3, 10.7, 18.0, 3.3, 9.2, 8.3, 3.8, 6.8
Calculate the median of the waiting time?
2) The export of agricultural products in million dollars from a country during eight
quarters in 1974 and 1975 was, 29.7, 16.6, 2.3, 14.1, 36.6, 18.7, 3.5, 21.3.
Find the median of the given set of values?
Median for grouped data.
-If data are given in the shape of continuous frequency distribution, the median is defined
as:
~ W n
X = Lmed + (  fc )
f med 2
Where: L med =lower class boundary of the median class.
f med = The frequency of the median class
f c= The comulative frequency less than type preceding the median class .
W=the size of the median class.
n=total number of observation.

34 | P a g e
 Note: The median class is the class with the smallest cumulative frequency (less than type)
greater than or equal to n/2.
Example 3.9: Find the median of the following distribution.
Class Frequency
40-44 7
45-49 10
50-54 22
55-59 15
60-64 12
65-69 6
70-74 3
Merits and Demerits of Median
Merits:
• Median is a positional average and hence not influenced by extreme observations.
• Can be calculated in the case of open end intervals.
• Median can be located even if the data are incomplete.
Demerits:
• It is not a good representative of data if the number of items is small.
• It is not amenable to further algebraic treatment.
• It is susceptible to sampling fluctuations.

~
Empirical relationship between X, Xˆ , and X

~
 X = Xˆ = X , for symmetrical distribution
~
 
 X  Xˆ = 3 X  X , for unimodal skewed or asymmetrical frequency distribution.

4. Measures of Variation (Dispersion), Skewness and Kurtosis (4 lecture hours) Lecture note
a. Motivating examples
b. Objectives of measures of variation
c. Measures of Dispersion (Variation)
i. Range and Relative Range
ii. Variance, Standard Deviation and Coefficient of Variation
iii. Standard Scores
4.1 Introduction
Consider the following two sets of scores:

Set 1: 40, 50, 60, 60, 40, 50

Set 2: 0, 100, 25, 75, 80, 20

Both these sets have the same mean (50), but the second set is a lot more widely dispersed
("scattered") than the first.

35 | P a g e
 Set 1 Set 2

Measure of central tendency alone does not adequately describe a set of observation unless all
observations are the same. So we need some additional information like

1) The extent to which the items in a particular distribution are scatters around the
central tendency i.e. measure of dispersion.
2) The direction of scattered ness whether more items are attached towards higher or
lower values i.e. measure of skew ness.
3) The extent to which the distribution is more peaked or more flat toped than the
normal distribution i.e. measure of kurtosis.
Definition:
 The scatter or spread of items of a distribution is known as dispersion or variation.
In other words the degree to which numerical data tend to spread about an average
value is called dispersion or variation of the data.
 Measures of dispersions are statistical measures which provide ways of measuring
the extent in which data are dispersed or spread out.

4.2 Objectives of measuring variation

To determine the reliability of an average by pointing out as how far an average
is representative of the entire data.
To determine the nature and cause of variation in order to control the variation
itself.
Enable comparison of two or more distribution with regard to their variability.
Measuring variability is of great importance to other statistical analysis. E.g., it is
the basis of statistical quality control.

A good measure of variation posses:

It should be easy to compute and understand.

It should be based on all observations.
It should be Uniquely defined
It should be capable of further algebraic treatment.
It should be as little as affected by extreme values.

Absolute and relative measures

36 | P a g e
 Measures of dispersion may be either absolute or relative

1. Absolute measures of dispersion (AMD): Absolute measure is expressed in the SI unit in

which the original data are given such as kilograms, tones etc. These measures are
suitable for comparing the variability in two distributions having variables expressed in
the same units and of the same averaging size. These measures are not suitable for
comparing the variability in two distributions having variables expressed in different
units.
2. Relative measures of dispersion (RMD): when one desires to compare the dispersion in
two sets of data, however comparing the two AMDs may lead to fallacious results. It
may be that the two variables involved are measured in different units. For example, we
may wish to know, for a certain population, whether serum cholesterol levels, measured
in milligrams per 100 ml, are more variable than body weight, measure in kilograms.

Furthermore, although the same unit of measurement is used, the two MCT (means)
may be quite different. If we compare the AMD of weights of first grade children with
the AMD of the weights of high school freshmen, we may find that the latter AMD is
numerically larger than the former, because the weights themselves are larger, not
because the AMD is larger.

What is needed in situation like these is a measure of relative variation rather than
absolute variation. It is the ratios of absolute dispersion to an appropriate average such
as co- efficient of Standard Deviation or Co-efficient of Mean Deviation.

4.3 Types of Measures of Dispersion

Various measures of dispersions are in use. The most commonly used measures of dispersions
are:

Absolute measure Relative measures

Range Relative range

Variance Coefficient of variation

Standard deviation Standard scores

4.3.1 The Range (R)

The range is the largest score minus the smallest score. It is a quick and dirty measure of
variability, although when a test is given back to students they very often wish to know
the range of scores. Because the range is greatly affected by extreme scores, it may give
a distorted picture of the scores. The following two distributions have the same range,
13, yet appear to differ greatly in the amount of variability.

Distribution 1: 32 35 36 36 37 38 40 42 42 43 43 45

37 | P a g e
 Distribution 2: 32 32 33 33 33 34 34 34 34 34 35 45

For this reason, among others, the range is not the most important measure of variability.

For ungrouped data:

Rx x , where x  max imum value

max min max
X  min imum value
min

R  x  x , where x  UCB for the last class

For grouped data: max min max
X  LCB for the first class
min

Relative Range (RR)

It is also some times called coefficient of range and given by:

X max  X min
For ungrouped data: RR =
X max + X min

UCBlast  LCB first

For grouped data: RR =
UCBlast + LCB first
Merits and Demerits of range
Merits:
It is rigidly defined.
It is easy to calculate and simple to understand.
Demerits:
It is not based on all observation.
It is highly affected by extreme observations.
It is affected by fluctuation in sampling.
It is not liable to further algebraic treatment.
It can not be computed in the case of open end distribution.
It is very sensitive to the size of the sample.
Example 1
For raw data, 5, 6,8,4,5, 3,9,8,7,3,5,6,8,11
R=11-3=8
11  3 8
coefficien t of range    0 . 57
11  3 14

38 | P a g e
 Example 2:
Height Number of

(in) Students
Less than 59.5 0
Less than 62.5 5
Less than 65.5 23
Less than 68.5 65
Less than 71.5 92
Less than 74.5 100
R=74.5-56.5=18
x max  x min 74 . 5  56 . 5
coefficien t range    0 . 135
x max  x min 74 . 5  56 .5

Example 4.1:1) Find the R, and RR and then identify which data is more dispersed?

a) For the month income of 10 workers Xi: 347, 420, 500,600,696,710, 835, 850, and
900.
b) For the following age distribution.
Class frequenc
y
6- 10 35
11- 15 23
16- 20 15
21- 25 12
26- 30 9
31- 35 6

2. If the range and relative range of a series are 4 and 0.25 respectively. Then what is the
value of:
a) Smallest observation
b) Largest observation
4.3.2 The Variance
Population Variance
If we divide the variation by the number of values in the population, we get something
called the population variance. This variance is the "average squared deviation from the
mean".
N
2  i 1
( xi  u ) 2
Population Variance    , i  1,2,3,..., N
N
Sample Variance

39 | P a g e
 One would expect the sample variance to simply be the population variance with the
population mean replaced by the sample mean. However, one of the major uses of
statistics is to estimate the corresponding parameter. This formula has the problem that
the estimated value isn't the same as the parameter. To counteract this, the sum of the
squares of the deviations is divided by one less than the sample size.
n
 i 1
( xi  x )2
Sample Variance 
n 1

2
I.e. The sample variance, denoted by s , of a set of n observed values having a mean x is the
sum of the squared deviations divided by n  1 .

The following steps are used to calculate the sample variance:

1. Find the arithmetic mean.
2. Find the difference between each observation and the mean.
3. Square these differences.
4. Sum the squared differences.
5. Since the data is a sample, divide the number (from step 4 above) by the number of
observations minus one, i.e., n-1 (where n is equal to the number of observations in
the data set).
For the case of frequency distribution it is expressed as:
n
2

2
i 1
fi(xi  x)
s 
n  1
We usually use the following short cut formula.
n 2
2

2
 i1
x  n x
i
s 
n  1
, for raw data
n 2
2

2
 i 1
fi x  n x
s 
n 1
i
, for frequency distribiti on , where  fi  n

Standard Deviation
There is a problem with variances. Recall that the deviations were squared. That means
that the units were also squared. To get the units back the same as the original data
values, the square root must be taken.
2
population s tan dard deviation    
2
sample s tan dard deviation  s  s
Examples: Find the variance and standard deviation of the following sample data
1. 5, 17, 12, 10,8
2. The data is given in the form of frequency distribution.
Class Frequency
40-44 7

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 45-49 10
50-54 22
55-59 15
60-64 12
65-69 6
70-74 3
Coefficient of Variation (C.V)
• Is defined as the ratio of standard deviation to the mean usually expressed as
percents.
S 0
C .V   100 0
X
• The distribution having less C.V is said to be less variable or more consistent.
Examples:
1. An analysis of the monthly wages paid (in Birr) to workers in two firms A and B belonging
to the same industry gives the following results
Value Firm A Firm B
Mean wage 52.5 47.5
Median wage 50.5 45.5
Variance 100 121
In which firm A or B is there greater variability in individual wages?

Solutions:

Calculate coefficient of variation for both

SA 10 firms.
C .VA  100 0 0  100 0 0  19.05 0 0
XA 52.5

SB 11
C .V B   100 0 0   100 0 0  23 .16
XB 47 .5

Since C.VA < C.VB, in firm B there is greater variability in individual wages.

4.3.3 Standard Scores (Z-scores)

If X is a measurement from a distribution with mean X and standard deviation

S, then its value in standard units is

Xi u
Zi  , for the population


41 | P a g e
 X i  x
Z i  , for the sample
s
Z gives the deviations from the mean in units of standard deviation.
Z gives the number of standard deviation a particular observation lie above or
below the mean.
It is used to compare two observations coming from different groups.
Examples:
1. Two sections were given introduction to statistics examinations. The following
information was given.
Value Section 1 Section 2
Mean 78 90
Stand. deviation 6 5

Student A from section 1 scored 90 and student B from section 2 scored 95. Relatively
speaking who performed better?
Solutions:
Calculate the standard score of both students.
X  X 1 90  78
Z1  1  2
S1 6
X 2  X 2 95  90
Z2   1
S2 5
 Student A performed better relative to his section because the score of student A is
two standard deviation above the mean score of his section while, the score of
student B is only one standard deviation above the mean score of his section.

2. Two groups of people were trained to perform a certain task and tested to find out
which group is faster to learn the task. For the two groups the following information
was given:
Value Group one Group two
Mean 10.4 min 11.9 min
Stand.dev. 1.2 min 1.3 min
Relatively speaking:
a) Which group is more consistent in its performance
b) Suppose a person A from group one take 9.2 minutes while person B from
Group two take 9.3 minutes, who was faster in performing the task? Why?

Solutions:
a) Use coefficient of variation.
S 1.2
C.V1  1  100 0 0  100 0 0  11.54 0 0
X1 10.4

42 | P a g e
 S2 1.3
C.V2   100 0 0 
 100 0 0  10.92 0 0
X2 11 .9
Since C.V < C.V , group 2 is more consistent.
2 1

b) Calculate the standard score of A and B

X  X 1 9.2  10.4
ZA  A   1
S1 1.2

X B  X 2 9.3  11.9
ZB    2
S2 1.3
 Child B is faster because the time taken by child B is two standard deviation shorter
than the average time taken by group 2 while, the time taken by child A is only one
standard deviation shorter than the average time taken by group 1.

Chapter 5.
1. Elementary probability (4 lecture hours) Lecture note
5.1.Introduction
• Probability theory is the foundation upon which the logic of inference is built.
• It helps us to cope up with uncertainty.
• In general, probability is the chance of an outcome of an experiment. It is the measure of
how likely an outcome is to occur.
5.2. Definitions of some probability terms
1. Experiment: Any process of observation or measurement or any process which
generates well defined outcome.
2. Probability Experiment (Random Experiment): It is an experiment that can be
repeated any number of times under similar conditions and it is possible to enumerate
the total number of outcomes without predicting an individual out come.
Example: If a fair coin is tossed three times, it is possible to enumerate all possible
eight sequences of head (H) and tail (T). But it is not possible to predict which
sequence will occur at any occasion.
3. Outcome: The result of a single trial of a random experiment
4. Sample Space(S): Set of all possible outcomes of a probability experiment.
Example 1: Sample space of a trial conducted by three tossing of a coin is
S= {HHH, HHT, HTH, HTT, THH, THT, TTH, TTT}
Example 2: Recording the gender of children of two-child families.
S= {bb, bg, gb, gg}. An event B may be:B=“children of both genders.” Then B={bg,
gb}.
Sample space can be
Countable (finite or infinite)
Uncountable

43 | P a g e
 5. Event (Sample Point): It is a subset of sample space. It is a statement about one or
more outcomes of a random experiment. It is denoted by capital letter A, B, C - - -.
For example, in the event, that there are exactly two heads in three tossing of a coin, it
would consist of three points HTH, HHT and THH.
Remark: If S (sample space) has n members with two possible outcomes in each trial then
there are exactly 2n subsets or events.
6. Equally Likely Events: Events which have the same chance of occurring.
7. Complement of an Event: the complement of an event A means non- occurrence of A
and is denoted by A' orAc or {A , contains those points of the sample space which
don’t belong to A.
8. Elementary (simple) Event: an event having only a single element or sample point.
9. Mutually Exclusive (Disjoint) Events: Two events which cannot happen at the same
time.
10. Independent Events: Two events are said to be independent if the occurrence of one
does not affect the probability of the other occurring.
11. Dependent Events: Two events are dependent if the first event affects the outcome or
occurrence of the second event in a way the probability is changed.
5.3 Counting Techniques

The number of outcomes of the random experiment or number of cases favorable to an event can be
determined by using mathematical methods (multiplication rule, addition rule, permutation and
combinations) without direct enumeration.

Addition rule

If there are k procedures and the ith procedure may be performed in ways = 1,2, … , then the
number of ways in which we may perform procedure1 or procedure 2 or …procedure k is given by
+ +. . . + assuming that no two procedures may be performed together.

Example:

1. Suppose that we are planning a trip and are deciding between bus or train transportation. If
there are 3 bus routes and 2 train routes, how many different routes are available for the trip?
Solution: There are 3 bus and 2 train routes. Thus there 3 + 2 = 5 routes are available for trip.

Multiplication rule

In a sequence of n events in which the first one has possibilities, the second one has , the 3rd one
has and etc, the total possibility of the sequence will be + + . . . +

Example:

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 1. An instructor gives a six question multiple choice examinations. There are four possible
responses for each question. How many answer keys can be made?
2. A product is assembled in three stages. At the first stage there are five assembly lines, at the
second stage there are there are 6 assembly lines and at the third stage there are 10 assembly
lines. In how many different ways may the product be routed through the assembly process?
Solution:
1. = 6 = 4 = 4 = 4 = 4 = 4 = 4
Totally 4 4 4 4 4 4 = 4096
2. = 5 = 6 = 10 the product can be routed in an assembly process by
5 6 10 = 300

Permutations

A permutation is an arrangement of n objects in a specific order. The number of arrangement of n

different objects taking all together is given by ! = ( − 1)( − 2) . . . (1)

The number of arrangement of n different objects in a circle is given by ( − 1)!

Example:

1. Suppose that the photographer want to arrange 4 people in a raw for photographing. By how
many different ways can the arrangement be done?
2. How many different 5 letter permutation can be performed from the letters in the word
DISCOVER?
Solution:

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1. The number of arrangement of 4 people in a raw is given by 4! = 4 3 2 1 = 24
2. = ℎ = 8, =5
8!
8 p5   6720
(8  5)!

Combination

A selection of distinct objects without regard to order is called a combination. The difference between a
permutation and a combination is that in a combination, the order or arrangement of the objects is not
important; by contrast, order is important in a permutation.

Example: 1 how many different committees of 3 people can be chosen to work on a special project

from a group of 9 people? 9C3 = 84

46 | P a g e
I n a club there is 7 women and 5 men. A committee of 3 women and 2 men is to be chosen. How many
different possibilities are there?

Solution:

Example:

Exercise

A committee of 5 people must be selected from 5 men and 8 women. By how many ways can the
selection be done if there are at least 3 women in the committee?

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Axiomatic Approach:
Let E be a random experiment and S be a sample space associated with E. With each event A a
real number called the probability of A satisfies the following properties called axioms of
probability or postulates of probability.
a) 0  P  A   1
b) P(s) =1
c) If A and B are mutually exclusive events, the probability that one or the other occur
equals the sum of the two probabilities. i. e. P (AuB) =P (A) +P (B)
d) For any event A , P  A  0
e) P φ  = 0
f) For any event A and B ,P(AuB)=P(A)+P(B)-P(AnB)
 
g) P A  = 1  P(A)

5.5. Conditional Probability and Independence

Conditional Events: If the occurrence of one event has an effect on the next occurrence of the other
event then the two events conditional or dependant events.

Conditional Probability
Let A and B be two events such that P(A) 0. Denote by P(B|A) the probability of B given that A has

occurred. Since A is known to have occurred, it becomes the new sample space replacing the original S
.From this we are led to the definition

p(A  B
Or PA B  = , P (B)  0 or P (A  B) = P (A|B).P(B)
P B 

The above definition implies that the probability that both A and B occur is equal to the probability that
A occurs times the probability that B occurs given that A has occurred. We call P the conditional

48 | P a g e
probability of B given A, i.e., the probability that B will occur given that A has occurred. It is easy to show
that conditional probability satisfies the axioms of probability.

Remark:
1) 0 ≤ ( | ) ≤ 1 2) ( | ) = 1 and ( | ) = ( )
 
3) P A  / B  1  P A / B   
4) P B  / A  1  PB / A
5) ( ∪ | )= ( | )+ ( | ) if and are mutually exclusive
6) For three events
( ∩ ∩ )= ( ) ( | ) ( | ∩ )

Examples

1. The probability that it is Friday and that a student is absent is 0.03. Since there are 5 school days in
a week, the probability that it is Friday is 0.2. What is the probability that a student is absent given
that today is Friday?

Solution:

P ( Friday and Absent ) 0.03

P  Absent | Friday     0.15
P ( Firday ) 0.2

2. A jar contains black and white marbles. Two marbles are chosen without replacement. The
probability of selecting a black marble and then a white marble is 0.34, and the probability of
selecting a black marble on the first draw is 0.47. What is the probability of selecting white
marble on the second draw, given that the first marble drawn was black?

Solution:

49 | P a g e
 P ( Black and White ) 0.34
P White | Black     0.72
P ( Black ) 0.47

Assignment:

1. What is the application of statistics for your field of study ?

2. Proof that the sum of the deviation of each observation from the mean is equal to zero?
3. The median of the distribution given below is 14.4. Find the values of x and y if the total
frequency is 20.
Class 0-6 6-12 12-18 18-24 24-30
interval
Frequency 4 x 5 y 1

4. Suppose a study conducted at Wollega University reveals that students who attended class
95 % to 100% of the time usually scored an A in the class. Students who attended class
80% to 90% of the time usually scored B or C in the class. Students who attended class less
than 80% of the time usually received D or F or eventually withdrew from the class.
i) Are descriptive, inferential, or both types of statistics used? Why?
ii) What is the population under study?
iii) What are the data in the study?
iv) What are the variables under study?
v) Identify the types of variables?
vi) Which type of scale of measurement is used for those variables?

5. A meteorologist interested in the consistency of temperatures in three cities during

a given week collected the following data. The temperatures for the five days of
the week in the three cities were

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 City 1 25 24 23 26 17
City2 22 21 24 22 20
City3 32 27 35 24 28
Which city have the most consistent temperature, based on these data?
(Exercise)
6.

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