Chapter 2A

Statistics for Business and Economics (13e)
Chapter 2, Part A -
Descriptive Statistics: Tabular and Graphical Displays
• Summarizing Data for a Categorical Variable
• Categorical data use labels or names to identify categories of like items.
• Summarizing Data for a Quantitative Variable
• Quantitative data are numerical values that indicate how much or how many.
1
Summarizing Categorical Data

• Frequency Distribution
• Relative Frequency Distribution
• Percent Frequency Distribution
• Bar Chart
• Pie Chart
2
Frequency Distribution
• A frequency distribution is a tabular summary of data showing the number
(frequency) of observations in each of several non-overlapping categories or
classes.
• The objective is to provide insights about the data that cannot be quickly
obtained by looking only at the original data.
3
Example: Marada Inn
• Guests staying at Marada Inn were asked to rate the quality of their
accommodations as being excellent, above average, average, below average, or
poor.
• The ratings provided by a sample of 20 guests are:
Below Average Average Above Average
Above Average Above Average Above Average
Above Average Below Average Below Average
Average Poor Poor
Above Average Excellent Above Average
Average Above Average Average
Above Average Average
4
• Example: Marada Inn
Rating Frequency
Poor 2
Below Average 3
Average 5
Above Average 9
Excellent 1
Total 20
5
Relative Frequency Distribution

• The relative frequency of a class is the fraction or proportion of the total
number of data items belonging to the class.
Frequency of the class
Relative frequency of a class =
𝑛
• A relative frequency distribution is a tabular summary of a set of data

showing the relative frequency for each class.
6
Percent Frequency Distribution

• The percent frequency of a class is the relative frequency multiplied by
100.
• A percent frequency distribution is a tabular summary of a set of data
showing the percent frequency for each class.
7
Relative Frequency and Percent Frequency Distributions

• Example: Marada Inn
Rating Relative Frequency Percent Frequency

Poor .10 10
Below Average .15 15
Average .25 25
Above Average .45 45
Excellent .05 5
Total 1.00 100
8
Bar Chart
• A bar chart is a graphical display for depicting qualitative data.
• On one axis (usually the horizontal axis), we specify the labels that are used
for each of the classes.
• A frequency, relative frequency, or percent frequency scale can be used for
the other axis (usually the vertical axis).
• Using a bar of fixed width drawn above each class label, we extend the height
appropriately.
• The bars are separated to emphasize the fact that each class is a separate
category.
9
Bar Chart
10 Marada Inn Quality Ratings
9
8
7
Frequency
6
5
4
3
2
1
Quality
Poor Below Average Above Excellent Rating
Average Average
10
Pareto Diagram
• In quality control, bar charts are used to identify the most important causes
of problems.
• When the bars are arranged in descending order of height from left to right
(with the most frequently occurring cause appearing first) the bar chart is
called a Pareto diagram.
• This diagram is named for its founder, Vilfredo Pareto, an Italian economist.
11
Pie Chart
• The pie chart is a commonly used graphical display for presenting relative
frequency and percent frequency distributions for categorical data.
• First draw a circle; then use the relative frequencies to subdivide the circle into
sectors that correspond to the relative frequency for each class.
• Since there are 360 degrees in a circle, a class with a relative frequency of .25
would consume .25(360) = 90 degrees of the circle.
12
Pie Chart
Marada Inn Quality Ratings
Excellent
5%
Poor
10%
Below
Average
Above 15%
Average
45%
Average
25%
13
Example: Marada Inn

• Insights
One-half Gained from thesurveyed
of the customers Preceding Pie
gave Chart a quality rating of “above
Marada
average” or “excellent” (looking at the left side of the pie). This might
please the manager.
• For each customer who gave an “excellent” rating, there were two customers
who gave a “poor” rating (looking at the top of the pie). This should
displease the manager.
14
Summarizing Quantitative Data

• Frequency Distribution
• Relative Frequency and Percent Frequency Distributions
• Dot Plot
• Histogram
• Cumulative Distributions
• Stem-and-Leaf Display
15
• Example: Hudson Auto Repair
The manager of Hudson Auto would like to gain a better understanding of
the cost of parts used in the engine tune-ups performed in the shop. She
examines 50 customer invoices for tune-ups. The costs of parts, rounded to
the nearest dollar, are listed on the next slide.
16
Sample of Parts Cost($) for 50 Tune-ups
91 78 93 57 75 52 99 80 97 62
71 69 72 89 66 75 79 75 72 76
104 74 62 68 97 105 77 65 80 109
85 97 88 68 83 68 71 69 67 74
62 82 98 101 79 105 79 69 62 73
17
The three steps necessary to define the classes for a frequency distribution
with quantitative data are:
1. Determine the number of non-overlapping classes.
2. Determine the width of each class.
3. Determine the class limits.
18
• Guidelines for Determining the Number of Classes
• Use between 5 and 20 classes.
• Data sets with a larger number of elements usually require a larger
number of classes.
• Smaller data sets usually require fewer classes.
• The goal is to use enough classes to show the variation in the data, but
not so many classes that some contain only a few data items.
19
• Guidelines for Determining the Width of Each Class
• Use classes of equal width.
• Approximate Class Width =
Largest data value − Smallest data value
Number of classes
• Making the classes the same width reduces the chance of inappropriate
interpretations.
20
• Note on Number of Classes and Class Width
• In practice, the number of classes and the appropriate class width are
determined by trial and error.
• Once a possible number of classes is chosen, the appropriate class width
is found.
• The process can be repeated for a different number of classes.
• Ultimately, the analyst uses judgment to determine the combination of
the number of classes and class width that provides the best frequency
distribution for summarizing the data.
21
• Guidelines for Determining the Class Limits
• Class limits must be chosen so that each data item belongs to one and
only one class.
• The lower class limit identifies the smallest possible data value assigned
to the class.
• The upper class limit identifies the largest possible data value assigned to
the class.
• The appropriate values for the class limits depend on the level of
accuracy of the data.
22
• Class Midpoint
• In some cases, we want to know the midpoints of the classes in a frequency
distribution for quantitative data.
• The class midpoint is the value halfway between the lower and upper
class limits.
23
If we choose six classes:
Approximate Class Width = (109 - 52)/6 = 9.5  10
Parts Cost ($) Frequency

50-59 2
60-69 13
70-79 16
80-89 7
90-99 7
100-109 5
Total 50
24

Parts Relative Percent
Cost ($) Frequency Frequency
50-59 .04 = 2/50 4 = .04(100)
60-69 .26 26
70-79 .32 32
80-89 .14 14
90-99 .14 14
100-109 .10 10
Total 1.00 100
25

Insights Gained from the % Frequency Distribution:
• Only 4% of the parts costs are in the $50-59 class.
• 30% of the parts costs are under $70.
• The greatest percentage (32% or almost one-third) of the parts costs are
in the $70-79 class.
• 10% of the parts costs are $100 or more.
26
Dot Plot
• One of the simplest graphical summaries of data is a dot plot.
• A horizontal axis shows the range of data values.
• Then each data value is represented by a dot placed above the axis.
27
Dot Plot
50 60 70 80 90 100 110
Tune-up Parts Cost ($)
28
Histogram
• Another common graphical display of quantitative data is a histogram.
• The variable of interest is placed on the horizontal axis.
• A rectangle is drawn above each class interval with its height corresponding
to the interval’s frequency, relative frequency, or percent frequency.
• Unlike a bar graph, a histogram has no natural separation between rectangles
of adjacent classes.
29
Histogram
18
Tune-up Parts Cost
16
14
Frequency
12
10
8
6
4
2
Parts
50-59 60-69 70-79 80-89 90-99 100-110 Cost ($)
30
Histograms Showing Skewness

• Symmetric
• Left tail is the mirror image of the right tail
• Example: Heights of People
.35
Relative Frequency
.30
.25
.20
.15
.10
.05
0
31

• Moderately Skewed Left
• A longer tail to the left
• Example: Exam Scores
.35
Relative Frequency
.30
.25
.20
.15
.10
.05
0
32

• Moderately Right Skewed
• A Longer tail to the right
• Example: Housing Values
.35
Relative Frequency
.30
.25
.20
.15
.10
.05
0
33

• Highly Skewed Right
• A very long tail to the right
• Example: Executive Salaries
.35
Relative Frequency
.30
.25
.20
.15
.10
.05
0
34
Cumulative Distributions
• Cumulative frequency distribution - shows the number of items with values
less than or equal to the upper limit of each class.
• Cumulative relative frequency distribution – shows the proportion of items
with values less than or equal to the upper limit of each class.
• Cumulative percent frequency distribution – shows the percentage of items
with values less than or equal to the upper limit of each class.
35
• The last entry in a cumulative frequency distribution always equals the total
number of observations.
• The last entry in a cumulative relative frequency distribution always equals
1.00.
• The last entry in a cumulative percent frequency distribution always equals
100.
36
• Hudson Auto Repair
Cumulative Cumulative
Cumulative Relative Percent
Cost ($) Frequency Frequency Frequency
< 59 2 .04 4
< 69 15 = 2+13 .30 = 15/50 30 = .30(100)
< 79 31 .62 62
< 89 38 .76 76
< 99 45 .90 90
< 109 50 1.00 100
37
Stem-and-Leaf Display
• A stem-and-leaf display shows both the rank order and shape of the distribution
of the data.
• It is similar to a histogram on its side, but it has the advantage of showing the
actual data values.
• The first digits of each data item are arranged to the left of a vertical line.
• To the right of the vertical line we record the last digit for each item in rank
order.
• Each line (row) in the display is referred to as a stem.
• Each digit on a stem is a leaf.
38
Example: Hudson Auto Repair

The manager of Hudson Auto would like to gain a better understanding of the
cost of parts used in the engine tune-ups performed in the shop. She examines
50 customer invoices for tune-ups. The costs of parts, rounded to the nearest
dollar, are listed on the next slide.
39
Sample of Parts Cost ($) for 50 Tune-ups
91 78 93 57 75 52 99 80 97 62
71 69 72 89 66 75 79 75 72 76
104 74 62 68 97 105 77 65 80 109
85 97 88 68 83 68 71 69 67 74
62 82 98 101 79 105 79 69 62 73
40
5 2 7
6 2 2 2 2 5 6 7 8 8 8 9 9 9
7 1 1 2 2 3 4 4 5 5 5 6 7 8 9 9 9
8 0 0 2 3 5 8 9
9 1 3 7 7 7 8 9
10 1 4 5 5 9
Stems Leaves
41
Stretched Stem-and-Leaf Display

• If we believe the original stem-and-leaf display has condensed the data too
much, we can stretch the display vertically by using two stems for each
leading digit(s).
• Whenever a stem value is stated twice, the first value corresponds to leaf
values of 0 - 4, and the second value corresponds to leaf values of 5 - 9.
42
5 2
5 7
6 2 2 2 2
6 5 6 7 8 8 8 9 9 9
7 1 1 2 2 3 4 4
7 5 5 5 6 7 8 9 9 9
8 0 0 2 3
8 5 8 9
9 1 3
9 7 7 7 8 9
10 1 4
10 5 5 9
43
• Leaf Units
• A single digit is used to define each leaf.
• In the preceding example, the leaf unit was 1.
• Leaf units may be 100, 10, 1, 0.1, and so on.
• Where the leaf unit is not shown, it is assumed to equal 1.
• The leaf unit indicates how to multiply the stem-and-leaf numbers in order
to approximate the original data.
44
• Example: Leaf Unit = 0.1
If we have data with values such as
8.6 11.7 9.4 9.1 10.2 11.0 8.8
Leaf Unit = 0.1

8 6 8
9 1 4
10 2
11 0 7
45
• Example: Leaf Unit = 10
If we have data with values such as
1806 1717 1974 1791 1682 1910 1838
Leaf Unit = 10
16 8
17 1 9
18 0 3
19 1 7
The 82 in 1682 is rounded down to 80 and is represented as an 8.
46
End of Chapter 2, Part A
47
Chapter 2, Part B
Descriptive Statistics: Tabular and Graphical Displays
• Summarizing Data for Two Variables Using Tables
• Summarizing Data for Two Variables Using Graphical Displays
• Data Visualization: Best Practices in Creating Effective Graphical Displays
48
Summarizing Data for Two Variables using Tables

• Thus far we have focused on methods that are used to summarize the data for
one variable at a time.
• Often a manager is interested in tabular and graphical methods that will help
understand the relationship between two variables.
• Crosstabulation is a method for summarizing the data for two variables.
49
Crosstabulation
• A crosstabulation is a tabular summary of data for two variables.
• Crosstabulation can be used when:

• one variable is categorical and the other is quantitative,
• both variables are categorical, or
• both variables are quantitative.
• The left and top margin labels define the classes for the two variables.
50
Crosstabulation
• Example: Finger Lakes Homes
The number of Finger Lakes homes sold for each style and price for the
past two years is shown below.
Price Home Style

Range Colonial Log Split A-Frame Total
< $250,000 18 6 19 12 55
> $250,000 12 14 16 3 45
Total 30 20 35 15 100
51
Crosstabulation
Insights Gained from Preceding Crosstabulation
• The greatest number of homes (19) in the sample are a split-level style
and priced at less than $250,000.
• Only three homes in the sample are an A-Frame style and priced at
$250,000 or more.
52
Crosstabulation
Price Home Style

< $250,000 18 6 19 12 55
> $250,000 12 14 16 3 45
Total 30 20 35 15 100
53
Crosstabulation: Row or Column Percentages

• Converting the entries in the table into row percentages or column
percentages can provide additional insight about the relationship between
the two variables.
54
Crosstabulation: Row Percentages

Price Home Style

< $250,000 32.73 10.91 34.55 21.82 100
> $250,000 26.67 31.11 35.56 6.67 100
Note: row totals are actually 100.01 due to rounding.
(Colonial and > $250K)/(All > $250K) x 100 = (12/45) x 100
55
Crosstabulation: Column Percentages

Price Home Style

Range Colonial Log Split A-Frame
< $250,000 60.00 30.00 54.29 80.00
> $250,000 40.00 70.00 45.71 20.00
Total 100 100 100 100
(Colonial and > $250K)/(All Colonial) x 100 = (12/30) x 100
56
Crosstabulation: Simpson’s Paradox

• Data in two or more crosstabulations are often aggregated to produce a
summary crosstabulation.
• We must be careful in drawing conclusions about the relationship between the
two variables in the aggregated crosstabulation.
• In some cases the conclusions based upon an aggregated crosstabulation can
be completely reversed if we look at the unaggregated data. The reversal of
conclusions based on aggregate and unaggregated data is called Simpson’s
paradox.
57
Summarizing Data for Two Variables

Using Graphical Displays
• In most cases, a graphical display is more useful than a table for recognizing
patterns and trends.
• Displaying data in creative ways can lead to powerful insights.
• Scatter diagrams and trendlines are useful in exploring the relationship between
two variables.
58
Scatter Diagram and Trendline

• A scatter diagram is a graphical presentation of the relationship between two
quantitative variables.
• One variable is shown on the horizontal axis and the other variable is shown on
the vertical axis.
• The general pattern of the plotted points suggests the overall relationship
between the variables.
• A trendline provides an approximation of the relationship.
59
Scatter Diagram
• A Positive Relationship
60
Scatter Diagram
• A Negative Relationship
61
Scatter Diagram
• No Apparent Relationship
62
Scatter Diagram
• Example: Panthers Football Team
The Panthers football team is interested in investigating the relationship,
if any, between interceptions made and points scored.
x = Number of y = Number of
Interceptions Points Scored
1 14
3 24
2 18
1 17
3 30
63
Scatter Diagram and Trendline

y
35
Number of Points Scored
30
25
20
15
10
5
0 x
0 1 2 3 4
Number of Interceptions
64
Example: Panthers Football Team

• Insights Gained from the Preceding Scatter Diagram
• The scatter diagram indicates a positive relationship between the number of
interceptions and the number of points scored.
• Higher points scored are associated with a higher number of interceptions.
• The relationship is not perfect; all plotted points in the scatter diagram are
not on a straight line.
65
Side-by-Side Bar Chart

• A side-by-side bar chart is a graphical display for depicting multiple bar charts
on the same display.
• Each cluster of bars represents one value of the first variable.
• Each bar within a cluster represents one value of the second variable.
66
Side-by-Side Bar Chart

Finger Lake Homes
20
18
16 < $250,000
> $250,000
14
Frequency
12
10
8
6
4
2
Home Style
Colonial Log Split-Level A-Frame
67
Stacked Bar Chart

• A stacked bar chart is another way to display and compare two variables on the
same display.
• It is a bar chart in which each bar is broken into rectangular segments of a
different color.
• If percentage frequencies are displayed, all bars will be of the same height (or
length), extending to the 100% mark.
68
Stacked Bar Chart

40 Finger Lake Homes
36
32
28
Frequency
< $250,000
24 > $250,000
20
16
12
8
4
Home Style
Colonial Log Split A-Frame
69
Stacked Bar Chart

Finger Lake Homes
100
90
Percentage Frequency
80
70
60 < $250,000
> $250,000
50
40
30
20
10
Home Style
Colonial Log Split A-Frame
70
Data Visualization: Best Practices

in Creating Effective Graphical Displays
• Data visualization describes the use of graphical displays to summarize and
present information about a data set.
• The goal is to communicate as effectively and clearly as possible the key
information about the data.
71
Creating Effective Graphical Displays

• Creating effective graphical displays is as much art as it is science.
• Here are some guidelines . . .
• Give the display a clear and concise title.
• Keep the display simple.
• Clearly label each axis and provide the units of measure.
• If colors are used, make sure they are distinct.
• If multiple colors or lines are used, provide a legend.
72
Choosing the Type of Graphical Display

• Displays used to show the distribution of data:
Bar Chart to show the frequency distribution or relative frequency
distribution for categorical data
Pie Chart to show the relative frequency or percent frequency for
categorical data
Dot Plot to show the distribution for quantitative data over the entire range
of the data
Histogram to show the frequency distribution for quantitative data over a
set of class intervals
Stem-and-Leaf Display to show both the rank order and shape of the
distribution for quantitative data
73

• Displays used to make comparisons:
Side-by-Side Bar Chart to compare two variables
Stacked Bar Chart to compare the relative frequency or Percent frequency of

two categorical variables
74

• Displays used to show relationships:
Scatter Diagram to show the relationship between two quantitative variables
Trendline to approximate the relationship of data in a scatter diagram
75
Data Dashboards
• A data dashboard is a widely used data visualization tool.
• It organizes and presents key performance indicators (KPIs) used to monitor an
organization or process.
• It provides timely, summary information that is easy to read, understand, and
interpret.
• Some additional guidelines include . . .
• Minimize the need for screen scrolling.
• Avoid unnecessary use of color or 3D.
• Use borders between charts to improve readability.
76
Data Dashboard Example
77
Tabular and Graphical Displays
Data
Categorical Data Quantitative Data
Tabular Graphical Tabular Graphical

Displays Displays Displays Displays
• Frequency • Bar Chart • Frequency Dist. • Dot Plot

Distribution • Pie Chart • Rel. Freq. Dist. • Histogram
• Rel. Freq. Dist. • Side-by-Side • % Freq. Dist. • Stem-and-
• Percent Freq. Bar Chart • Cum. Freq. Dist. Leaf Display
Distribution • Stacked • Cum. Rel. Freq. Dist. • Scatter
• Crosstabulation Bar Chart • Cum. % Freq. Dist. Diagram
• Crosstabulation
78
End of Chapter 2, Part B
79

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Statistics for Business and Economics (13e)

Summarizing Categorical Data

Relative Frequency Distribution

• A relative frequency distribution is a tabular summary of a set of data

Percent Frequency Distribution

Relative Frequency and Percent Frequency Distributions

Rating Relative Frequency Percent Frequency

Example: Marada Inn

Summarizing Quantitative Data

Parts Cost ($) Frequency

Relative Frequency and Percent Frequency Distributions

Relative Frequency and Percent Frequency Distributions

Histograms Showing Skewness

Histograms Showing Skewness

Histograms Showing Skewness

Histograms Showing Skewness

Example: Hudson Auto Repair

Stretched Stem-and-Leaf Display

Leaf Unit = 0.1

The 82 in 1682 is rounded down to 80 and is represented as an 8.

End of Chapter 2, Part A

Summarizing Data for Two Variables using Tables

• Crosstabulation can be used when:

Price Home Style

Price Home Style

Crosstabulation: Row or Column Percentages

Crosstabulation: Row Percentages

Price Home Style

Note: row totals are actually 100.01 due to rounding.

(Colonial and > $250K)/(All > $250K) x 100 = (12/45) x 100

Crosstabulation: Column Percentages

Price Home Style

Total 100 100 100 100

(Colonial and > $250K)/(All Colonial) x 100 = (12/30) x 100

Crosstabulation: Simpson’s Paradox

Summarizing Data for Two Variables

Scatter Diagram and Trendline

Scatter Diagram and Trendline

Example: Panthers Football Team

Side-by-Side Bar Chart

Side-by-Side Bar Chart

Stacked Bar Chart

Stacked Bar Chart

Stacked Bar Chart

Data Visualization: Best Practices

Creating Effective Graphical Displays

Choosing the Type of Graphical Display

Choosing the Type of Graphical Display

Stacked Bar Chart to compare the relative frequency or Percent frequency of

Choosing the Type of Graphical Display

Data Dashboard Example

Tabular and Graphical Displays

Tabular Graphical Tabular Graphical

• Frequency • Bar Chart • Frequency Dist. • Dot Plot

End of Chapter 2, Part B

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