DATA SCIENCE

INTERVIEW
PREPARATION SERIES
Aman Namita
Harsh Ashneer

Nandu

BASICS OF
STATISTICS
Harsh, the CEO of HungerKids (A
quick bites startup, producing quick
bite items like chips, sandwiches,
cakes, and other desi beverages)
recently got an opportunity to pitch his
business on Shark Tank’s platform.

1
After the pitch was over, Harsh got back
home and his 12 years old kid(Nandu) who
watched the complete show, got curious
to understand how he could answer all the
questions so easily?

How did you

calculate the
numbers??

2
Harsh replied that he used basic
Statistics. Now Nandu wanted to
know about what statistics is. Harsh
takes Nandu through his pitch again.
Let’s look at his pitch and the
questions asked by the sharks
Welcome
Harsh, what
Hello sharks I am have been your
Harsh. Today I will yearly sales till
present 5 products that now?
I am manufacturing in
my company - HungerKid
Pvt. Ltd. established 5
years ago.

On average
my sales have
been 35 lakhs
per year.
3
 See, my
yearly sale
have been
But what is 10,20,25,45,
Average? 75

Then why
did you say
35 lakhs per
year?

This is to present my company

sales in one value or number!
Let's see how to calculate:
No. of years since the company
was established = 5.
Total sales =>10+20+25+45+75
=>175
Now divide= 175/5=35 lakhs

4
 This number is called Average.

MEAN

Sales

Year
As it defines all other points in
graph. So, mean or average is that
central value that defines data.

Oh,
got it!

Let's revisit the pitch again..

5
 What is your
highest selling
product??

How did Very simple.

you answer Look at the chart
below showing the
this? total sales per
product.

See, category 6 has the highest sales in terms of

quantity. Now, in statistics, we refer to this as
the mode.
6

6
Product 1 Product 2 Product 3 Product 4 Product 5 Product 6 Product 7

Let's revisit the pitch again..

 You told me your
average sale is 35
lakh but what is
your middle
value?

You said mean is

the central point
so, why did he
ask for the
middle value? Are Yes
they different?

The central value is the mean which considers all points in the data.
Let me explain it.
Yearly Sales are 10,20,25,45,75 respectively
Now, If my sales increase, the mean will also increase.
For eg-> if my sales have been 5,15,10,20,150
Then my mean will be 40 (5+15+10+20+150/5)
which is due to the extreme value.
Right? So my mean will shift if I have extremely high or
extremely low values in data. It does not depict the exact
middle value as it represents all data points.
For this reason, we use "median" in statistics to determine the
middle value. Here,
▪︎My median is 10,20,25,45,75 lakhs
▪︎"Outliers" refers to values that are either extremely small or
extremely high. As a result of the presence of such values, the
mean will shift to the left or right.
7
Let's summarize-
Statistics is a way of collecting, analyzing, and interpreting
data. In simpler terms, it's a way to make sense of
numbers and use them to solve problems.
We have also summarized and described our data. This is
“Descriptive Statistics” - a part of statistics.
Descriptive statistics is a branch of statistics that involves
summarizing and describing a set of data. It provides a way
to analyze and understand the characteristics of a dataset,
such as its central tendency, variability, and shape.
As you saw,we summarized and described everything in just one
value, right ???
So, when we describe the data based on a single value around
which the entire data revolves, this point is known as the
"central value" or the "measure of central tendency".
These measures are:

Mean
Median
Mode
8
Measures of central tendency:

Measures of central tendency are statistical measures that

describe the typical or central value of a dataset. They provide a
way to summarize a large amount of data with a single value that
represents the "center" of the dataset.
Mean: The mean is the arithmetic average of a dataset. It is
calculated by adding up all of the values in the dataset and then
dividing by the number of values. The mean can be sensitive to
outliers, which are extreme values, and a few unusually high or
low values can skew it.
Median: It represents the central value in a dataset when the
values are sorted in numerical order. It remains unaffected by
outliers and is frequently utilized when the dataset is non-
normally distributed or comprises extreme values.
Mode: Mode represents the most frequently occurring value within
a dataset. This statistic is ideally suited for categorical or
discrete datasets, where values are non-continuous and cannot be
averaged.
Measures of central tendency are useful in summarizing data and
providing a solitary value that represents the typical or central
value in a dataset.

9
 You asked about the
central value but
what about the
values which are not
Oh, I didn’t lying in the center?
think about And those that are
it. extreme?

Did you see the

scattered values?
These values also
imply something about
the data and give us
meaningful insights.

To study them, we have one more branch of Descriptive

statistics- “Measures Of Dispersion”
Now, let's look at the dispersed values around the Mean.

10
 Measures of dispersion are statistical measures that
describe the spread or variability of a dataset. They
provide information on how spread out the data points
are from the central tendency of the dataset.

MEAN

Sales

Year
Let's revisit this.
Here’s the sales of the product-
Product Period 1 Period 2 Period 3 Period 4 Period 5
A 100 150 200 250 300
B 200 250 300 350 400
C 300 350 400 450 500
D 400 450 500 550 600
E 500 550 600 650 700

11
 Okay, tell me Product A: 30
about the MRP Product B: 130
of 5 products Product C: 200
you have Product D: 300
Product E: 230

Do you know
why they No
asked ??

Range?
To get an idea
The range is the about the MRP
difference range of my
between the products..
largest and
smallest values in
a dataset.
It is important to measure dispersion as it provides a quick and
simple way to understand the spread of a dataset.
A larger range indicates a spread out data while a smaller range
indicates that the data is more tightly clustered around a central
value. This info is crucial to compare different datasets or to draw
conclusions about the variability of a particular variable.
So the range of my products is 300-30=270.
Ohhkay
12
 What’s the
variation of
Sales for
various
products??

Oh, now This is

what’s another
measure of
that?? dispersion.

Here we have few measures of dispersion, i.e., standard

deviation and coefficient of variation.

Let’s first revisit variance:-

As the name says variance is the measure of variability.

It is an important measure of dispersion in statistics as it
provides info of how data points are spread out from the
mean of the dataset. Basically, it measures the average
of the squared differences between each data point and
the mean of the dataset.
13
 In short, how deviated my product sales are from mean.
So, let,s visit the formula first:
2
V=∑(x-x)
N

Mean of Product A = (100 + 150 + 200 + 250 + 300) / 5 = 200

Variance of Product A = ((100 - 200)² + (150 - 200)² + (200 - 200)²
+ (250 - 200)² + (300 - 200)²) / 5
= (10000 + 2500 + 0 + 2500 + 10000) / 5
= 5100

Mean of Product B= (150 + 250 + 350 + 450 + 550) / 5 = 1750/5=350

Variance of Product B= ((150 - 350)² + (250 - 350)² + (350 - 350)² +
(450 - 350)² + (550 - 350)²) / 5
= 40000+10000+0+10000+40000
=100000/5=20000

We can now say that variance of Product A < Product B

So, we can say Sales of product B is varying more than the sales of
product A. For some periods, the sales of product B are very high
while sometimes it’s very low. Hence, product A sales are fluctuating
much above and below the mean value but in the case of product A,
they’re more stable.
Hence, product A is more stable in the market when compared with
product B.
A

14
 While calculating
variance, we squared
the difference
between the value and
the mean. Why did
we square each
difference?

Good
Question!!!

When calculating the difference between a

particular data point and the mean, the
difference can be either positive or
negative. When summing these differences,
the positive ones can cancel out the negative
ones, leading to inaccurate results. To avoid
this issue, we square the values to remove
the negative term.

15
 Then what is
the standard
variation?

Let’s visit the definition:-

Standard deviation is a statistical measure that describes
the amount of variation or dispersion of a dataset around
its mean or average.
It is calculated by taking the square root of the variance,
which is the average of the squared differences between
each data point and the mean of the dataset.

16
 Why do we square root the value of variance?
So that we get the value in absolute terms.
Understanding variance is difficult. If we look at variance
of product A, it’s 5100. Now, it’s difficult to know what
this value represents. But if we take the square root of
the variance, we get 10.51 which means that the sales of
product A are 10 units above and below the average sale
value of product A.
SD Of PRODUCT A, sqrt(variance)=sqrt(5100)= 10.51
Let’s conclude - lesser deviation means data is clustered
more towards the mean, and if the deviation is more, the
data is more away from the mean and is spread widely.

17
 Which
product has
more stable
sales?

Very simple!
Using one of the
How did most crucial
you answer concepts -
this? Coefficient of
Variation

Let's understand with an example:

X = [ 1, 2, 3 ] X = 2 Sx = 1
Y = [ 101, 102, 103 ] Y = 102 Sy = 1
Here series X and Y both have the same standard deviation.
Now how can we compare these two series?
Which series is having more variations while which one is
having fewer variations?
Simply, we will be using CV
The coefficient of variation (CV) is a statistical measure
that is the ratio between the standard deviation to the
mean of the data.
CV (X) = Sx = 1
= 0.5
X 2
Sy 1
CV (Y) =
Y
=
102
= 0.0098 18
How to interpret CV?
Again, very simple!

COV is lower, the series is

stable with less fluctuations.
COV is higher, the series is
having more variations and
fluctuations.

Let's take another example, consider two products, A and B.

Product A | standard deviation of Sales = 5 | Average Sales : 10
Product B | standard deviation of Sales = 10 | Average Sales: 10
The coefficient of variation for Product A is 0.5 (5/10), while
the coefficient of variation for Product B is 1.0 (10/10).
In this case, the higher coefficient of variation for
Product B indicates that it has a higher degree of risk or
variability compared to Product A.
So, we can say higher variation in sales means higher risk
in investing.
That's why product A is better.
19
 STATISTICS

DESCRIPTIVE
STATISTICS

MEASURES OF MEASURES OF
CENTRAL TENDENCY DISPERSION

This is all about

Descriptive
Statistics where we
describe and
summarize the data
about certain
points.

20
 If you’d like us to keep
posting, support us by
sharing this post.
Give it a big thumbs up
and tag people who will
find this helpful.
Content Designer : Hanit Kaur
Graphic Designer : Adithya Prasad
Content Lead : Sumit Shukla
With Love

21