Unit 1

Statistics in Business: - In an organized business, there are three levels, namely – Strategic, Managerial
and Operational. Statistics plays very important role at all three levels.

Decisions at strategic level should be based on facts supported by appropriate data.

Managerial level, the middle level, should focus on best product, process design, process control, process
improvement, training etc. In this level also, the system designer should have good understanding of
appropriate statistical tool and statistical thinking.

The system built in managerial level are implemented in operational level. It is essential to have good
understanding of statistical tools for those who are working in different capacity of the operational level.

Terminology

- Frequency distribution: - A table consisting of variable values and their corresponding frequencies
is known as frequency distribution.
- Class size/width/magnitude: - Difference between upper limit and lower limit of a class.
- Mid-point or class marks: - It is the average between lower limit and upper limit of a class.
- Less than cumulative frequency: - The sum of frequencies up to the class when data are arranged
in ascending order of their magnitude.
- More than cumulative frequency: - The sum of frequencies up to the class when data are
arranged in descending order of their magnitude.

General guidelines for classification of data

The following points should be kept in mind.

1. Classes should be non-overlapping.

2. As much as possible, open-ended classes should be avoided.
3. Number of classes should lie between 5 and 15. For this, an approximate formula known as,
Sturges’ rule can be used. Sturges’ rule is:
Number of classes 𝑛 = 1 + 3.322 𝑙𝑜𝑔𝑁 Were, 𝑁 = 𝑡𝑜𝑡𝑎𝑙 𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦
𝐿−𝑆
4. Class size/magnitude/interval should be multiple of 5, as far as possible. Class size (ℎ) =
𝑛
Where, L =largest value/item/observation
S = smallest value/item/observation
5. Lower limit of the first class should be zero, five or multiple of five.
6. Class size should be equal.
7. Classes should be of exclusive type.
8. Tally bars should be used to count frequencies.

Q. 1. Classify the given data using Sturges' rule (page no 96)

110 175 161 157 155 108 164 128 114 178
165 133 195 151 71 94 97 42 30 62
138 156 167 124 164 146 116 149 104 141
 103 150 162 149 79 113 69 121 93 143
140 144 187 184 197 87 40 122 203 148

Solution: - Here,

Smallest item (S) = 30, Largest item (L) = 203, Total items (N)=50,

Now, according to Sturges' rule,

Number of classes (𝑛) = 1 + 3.322 log 𝑁 = 1 + 3.322 𝑙𝑜𝑔50 = 6.64 ≈ 7

L−S 203−30
Class width (ℎ) = = = 24.71 ≈ 25
n 7

Since, the smallest item is (S) =30, it is quite convenient for being taken as the lower limit of the
first class. So, the classes will be 30 – 55, 55 – 80 …………… and so on up to 180 – 205.

110 175 161 157 155 108 164 128 114 178
165 133 195 151 71 94 97 42 30 62
138 156 167 124 164 146 116 149 104 141
103 150 162 149 79 113 69 121 93 143
140 144 187 184 197 87 40 122 203 148

Frequency distribution table

Class Tally bars Frequency

30 – 55
55 – 80
80 – 105
105 – 130 |
130 – 155
155 – 180 |||| |
180 – 205
Total=

Stem-and-leaf display

- It is used to organize data.

- First of all, data is arranged in ascending order of their magnitude.
- The greatest common place value is used to form stem. The next greatest common pace value is
used to form the leaves.
- From stem-and-leaf plot one can get the following information:
o The lowest value.
o The highest value.
o The most repeated value or class with highest frequency.
 o The shape of the distribution
o It also represents a Histogram.

Q. 12 the weights of a fruit were recorded for a sample of 25. The data to be the nearest grams are given
(page no. 98)

66 65 96 80 71 93 66 96 75
84 58 73 77 89 69 61 69 92
57 56 55 78 61 96 51

a. Present the data in stem-and-leaf display.

b. Construct the histogram.

Solution: - Arranging given data in ascending order of their magnitude, we have:

51 55 56 57 58 61 61 65 66
66 69 69 71 73 75 77 78 80
84 89 92 93 96 96 96

Stem-and-leaf plot of the above data is shown below:

Stem Leaf (unit)

5 1 5 6 7 8
6 1 1 5 6 6 9 9
7 1 3 5 7 8
8 0 4 9
9 2 3 6 6 6

For histogram, we need frequency distribution as shown below.

Class Frequency
50 – 60 5
60 – 70 7
70 – 80 5
80 – 90 3
90 – 100 5
 Histogram
8
7
7
6
5 5 5
Frequency

5
4
3
3
2
1
0
50 – 60 60 – 70 70 – 80 80 – 90 90 – 100
Mo Class

Q 14. The following data represent the annual expenses (in thousand rupees) on food items in a city.

13.8 14.1 14.7 15.2 12.8 15.6 14.9 16.7 19.2 14.9 14.9 14.9
15.2 15.9 15.2 14.8 14.8 19.1 14.6 18.0 14.9 14.2 14.1 15.3
15.5 18.0 17.2 17.2 14.1 14.5 18.0 14.4 14.2 14.6 14.2 14.8

a. Construct the stem-and-leaf display.

b. Place the data into an ordered array.
c. Which of these two displays seems to provide more information? Discuss.

Solution: - Ordered array (in ascending order) of given data:

12.8 13.8 14.1 14.1 14.1 14.2 14.2 14.2 14.4 14.5 14.6 14.6
14.7 14.8 14.8 14.8 14.9 14.9 14.9 14.9 14.9 15.2 15.2 15.2
15.3 15.5 15.6 15.9 16.7 17.2 17.2 18.0 18.0 18.0 19.1 19.2

Stem-and-leaf plot of the above data (in thousand rupees) is shown below:

Stem Leaf (0.1 unit)

12 8
13 8
14 1 1 1 2 2 2 4 5 6 6 7 8 8 8 9 9 9 9 9
15 2 2 2 3 5 6 9
16 7
17 2 2
18 0 0 0
19 1 2
Histogram: - It is a graphical representation of data (grouped frequency distribution). It is a set of adjacent
rectangles drawn from given grouped data, each of whose base is the class interval and height
proportional to corresponding frequency.

Q 5. (page no. 97) Following is the IQ scores in the IQ test. Draw a histogram and locate mode.

IQ scores 10 – 20 20 – 30 30 – 40 40 – 50 50 – 60
No. of students 20 25 30 7 3

Solution: -

Mo

Ogive (Cumulative frequency curve): - There are two types of ogives

Less than Ogive: - It is a free hand curve obtained by joining consecutive points (UCL, less than cf) whose
abscissa (X-coordinate) are upper limits of the class and ordinates (Y-coordinate) are less than cumulative
frequencies. It is an elongated “S”-shaped curve. It is used to find median or answer the questions of “less
than” type.

More than Ogive: - It is a free hand curve obtained by joining consecutive points (LCL, more than cf) whose
abscissa (X-coordinate) are lower limits of the class and ordinates (Y-coordinate) are more than
cumulative frequencies. It is a reversed “S”-shaped curve (or laterally inverted mirror image of less than
ogive). It is used to find median or answer the questions of “more than” type.

Note: - when both the ogives are drawn in a same graph, median is the abscissa of their point of
intersection.

Q 8. Draw less than ogive and more than ogive for the following frequency distribution.
 Marks 20 – 30 30 – 40 40 – 50 50 – 60 60 – 70 70 – 80 80 – 90 90 – 100
No. of students 7 11 24 32 9 14 2 1

Solution: - Table for points of ogives

Points for Points for

less than more than
Marks No. of students(f) LCL UCL Less than cf More than cf ogive ogive
20 – 30 7 20 30 7 100 (30, 7) (20, 100)
30 – 40 11 30 40 7+11=18 93 (40, 18) (30, 93)
40 – 50 24 40 50 18+24=42 82 (50, 42) (40, 82)
50 – 60 32 50 60 42+32=74 58 (60, 74) (50, 58)
60 – 70 9 60 70 83 17+9=26 (70, 83) (60, 26)
70 – 80 14 70 80 97 3+14=17 (80, 97) (70, 17)
80 – 90 2 80 90 99 1+2=3 (90, 99) (80, 3)
90 – 100 1 90 100 100 1 (100, 100) (90, 1)

Md