CHAPTER 3:

Statistical Description of
Data
to accompany

Introduction to Business Statistics

fourth edition, by Ronald M. Weiers

Presentation by Priscilla Chaffe-Stengel

Donald N. Stengel

2002 The Wadsworth Group

 Chapter 3 - Learning
Objectives
Describe data using measures of
central tendency and dispersion:
for a set of individual data values, and
for a set of grouped data.
Convert data to standardized values.
Use the computer to visually
represent data.
Use the coefficient of correlation to
measure association between two
quantitative variables.
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 Chapter 3 - Key Terms
Measures of Mean
Central , population;x , sample
Tendency, Weighted Mean
Median
The
Center
Mode
(Note comparison of mean,
median, and mode)

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 Chapter 3 - Key Terms
Measures Range
of Mean absolute deviation
Dispersion, Variance
The (Note the computational
difference between 2 and s2.)
Spread
Standard deviation
Interquartile range
Interquartile deviation
Coefficient of variation
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Chapter 3 - Key Terms

Measures Quantiles
of Relative Quartiles
Position Deciles
Percentiles
Residuals
Standardized values

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 Chapter 3 - Key Terms
Measures Coefficient of correlation, r
of Direction of the relationship:
direct (r > 0) or inverse (r < 0)
Associatio Strength of the relationship:
n When r is close to 1 or 1, the linear
relationship between x and y is
strong. When r is close to 0, the
linear relationship between x and y
is weak. When r = 0, there is no
linear relationship between x and y.
Coefficient of determination,
r2
The percent of total variation in y
that is explained by variation in x.
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 The Center: Mean
Mean
Arithmetic average = (sum all values)/# of
values
Population: = (xi)/N
x
Sample: = (xi)/n
Be sure you know how to get the value easily
from your calculator and computer softwares.
Problem: Calculate the average number of truck
shipments from the United States to five Canadian cities
for the following data given in thousands of bags:
Montreal, 64.0; Ottawa, 15.0; Toronto, 285.0;
Vancouver, 228.0; Winnipeg, 45.0 (Ans: 127.4)
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 The Center: Weighted
Mean
When what you have is grouped data,
compute the mean using = (wixi)/wi
Problem: Calculate the average profit from truck
shipments, United States to Canada, for the following
data given in thousands of bags and profits per
thousand bags:
Montreal 64.0 Ottawa 15.0 Toronto 285.0
$15.00 $13.50 $15.50
Vancouver 228.0 Winnipeg 45.0
$12.00 $14.00

(Ans: $14.04 per thous. bags)

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 The Center: Median
To find the median:
1. Put the data in an array.
2A. If the data set has an ODD number of numbers, the
median is the middle value.
2B. If the data set has an EVEN number of numbers,
the median is the AVERAGE of the middle two values.
(Note that the median of an even set of data values
is not necessarily a member of the set of values.)
The median is particularly useful if there are
outliers in the data set, which otherwise tend
to sway the value of an arithmetic mean.
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The Center: Mode

The mode is the most frequent value.

While there is just one value for the
mean and one value for the median,
there may be more than one value for
the mode of a data set.
The mode tends to be less frequently
used than the mean or the median.

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 Comparing Measures of
Central Tendency
If mean = median = mode, the shape of the distribution
is symmetric.
If mode < median < mean or if mean > median >
mode,
the shape of the distribution trails to the right,
is positively skewed.
If mean < median < mode or if mode > median >
mean,
the shape of the distribution trails to the left,
is negatively skewed. 2002 The Wadsworth Group
 The Spread: Range
The range is the distance between
the smallest and the largest data
value in the set.
Range = largest value smallest value
Sometimes range is reported as an
interval, anchored between the
smallest and largest data value, rather
than the actual width of that interval.
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Key Concept - Residuals

Residuals are the differences

between each data value in the set
and the group mean:
for a population, xi
for a sample, xi x

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The Spread: MAD

The mean absolute deviation is

found by summing the absolute
values of all residuals and dividing
by the number of values in the set:
for a population, MAD = (|xi
|)/N x
for a sample, MAD = (|xi |)/n

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 The Spread: Variance
Variance is one of the most frequently
used measures of spread,
(x )2 (x )2 N2
for population, 2 i i
N N

for sample, 2 (xi x)2 (xi )2 nx 2

s
n 1 n1
The right side of each equation is often
used as a computational shortcut.

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 The Spread: Standard
Deviation
Since variance is given in squared units,
we often find uses for the standard
deviation, which is the square root of
variance:
for a population, 2
for a sample,
s s2
Be sure you know how to get the values
easily from your calculator and computer
softwares.
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Coefficient of Variation

The coefficient of variation (CV)

expresses the standard deviation
as a percent of the mean,
indicating the relative amount of
dispersion
CVin
the data.
100%

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 Relative Position -
OneQuartiles
of the most frequently used quantiles is the
quartile.
Quartiles divide the values of a data set into four
subsets of equal size, each comprising 25% of
the observations.
To find the first, second, and third quartiles:
1. Arrange the N data values into an array.
2. First quartile, Q1 = data value at position (N + 1)/4
3. Second quartile, Q2 = data value at position 2(N +
1)/4
4. Third quartile, Q3 = data value at position 3(N + 1)/4
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 What is a Standardized
Value?
How far above or below the individual
value is compared to the population mean
in units of standard deviation
How far above or below= (data value
mean)
which is the residual...
x = divided by
In units of standard deviation
z
Standardized data value
A negative z means the data value falls below
the mean.
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 Why is a Standardized
Value Important?
Chebyshevs Theorem: For
either a sample or a population,
the percentage of observations
that fall within k (for k > 1)
standard deviations of the mean
1
will be at least2 )100%
(1
k

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 Why is a Standardized
Value Important?
The Empirical Rule:
For bell-shaped, symmetric
distributions,
about 68% of the observations will fall
within 1 standard deviation of the mean,
about 95% of the observations will fall
within 2 standard deviations of the mean,
practically all of the observations will fall
within 3 standard deviations ofThe
2002 the mean.Group
Wadsworth
 An Example: Problem 3.54
A law enforcement agency administering
breathalyzer tests to a sample of drivers
stopped at a New Years Eve roadblock
measured the following blood alcohol
levels for the 25 drivers who were
stopped:
0.00% 0.08% 0.15% 0.18% 0.02%
0.04% 0.00 % 0.03 % 0.11 % 0.17%
0.05 % 0.21 % 0.01 % 0.10 % 0.19 %
0.00 % 0.09 % 0.05 % 0.03 % 0.00 %
0.03 % 0.00 % 0.16 % 0.04
% 2002
0.10 %
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Problem 3.54, continued

Calculate the mean and standard

deviation from this sample.

Ans: Mean = 0.0736%

Standard Deviation =
0.0684%

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 Problem 3.54, continued
Use Chebyshevs Theorem to determine the
minimum percentage of observations that
should fall within k = 1.50 units of standard
deviation from the mean.
1 1
Ans: (1 k2 )100%(1 2
)100%
1.50

(10.4444)100%55.55%
At least 55.55% of the data values should fall
within k = 1.50 units of standard deviation
from the mean.
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 Problem 3.54, continued
Do the sample results support
Chebyshevs Theorem?
Ans: 1.50 (s) = 0.1026%
mean + 1.50 (s) = 0.0736% + 0.1026%
= 0.1762%
mean 1.50 (s) = 0.0736% 0.1026%
= 0.0290%

A total of 22/25 data values fall in this interval,

or 88% of the sample. Yes, the data support
Chebyshevs Theorem.
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Problem 3.54, continued

Calculate the coefficient of

variation for these data.
Ans:

CV 100% 0.0684%100%92.9%
0.0736%

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