Lecture 2: Methods For Describing Data Through Numerical Measures

1/27/2015
Lecture 2: Methods for

Describing data through
Numerical Measures
Outline
Measures of central tendency and dispersion
Characteristics, uses, advantages, and disadvantages of
each measure of location and dispersion
Chebyshevs theorem and the Empirical Rule as they

relate to a set of observations
Quartiles, deciles, and percentiles

Box plots
Coefficient of skewness and coefficient of variation
Scatter diagram
Contingency table
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Slide 1 of 76
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Numerical Ways of Describing

Data
Slide 2 of 76
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Parameter and Statistic

A Parameter is a measurable characteristic of a
population
Measures of location
A statistic is a measurable characteristic of a

sample
Measures of dispersion
Slide 3 of 76
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Slide 4 of 76
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Measures of Location
Measures of Location and

Dispersion
Mean (Arithmetic, Weighted, Geometric)

Median
Mode
Measures for Population Data
Measures for Sample Data

Measures for Ungrouped data
Measures for grouped data
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Slide 5 of 76
Average
Joe
It is calculated by
summing the
values and
dividing by the
number of values
Slide 7 of 76
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Slide 6 of 76
Population Mean
Arithmetic Mean
The Arithmetic Mean
is the most widely used
measure of location and
shows the central value of
the data
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For ungrouped data, the

Population Mean is
the sum of all the
population values
divided by the total
number of population
values:
X
N
where
is the population mean
N is the total number of observations.
X is a particular value.
indicates the operation of adding.
Slide 8 of 76
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Example 1
The Kiers family
owns four cars.
The following is
the current
mileage on
each of the four
cars.
Sample Mean
For ungrouped data, the sample mean
is the sum of all the sample values
divided by the number of sample
values:
56,000
42,000
23,000
73,000
Find the mean mileage for the cars.
X
N
56 ,000 ... 73,000

48 ,500
4
Slide 9 of 76
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Example 2
A sample of
five
executives
received the
following
bonus last
year ($000):
where n is the total number of

values in the sample.
Slide 10 of 76
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Properties of the Arithmetic Mean

Every set of interval-level and ratio-level data has a
mean.
14.0,
15.0,
17.0,
16 0
16.0,
15.0
All the values are included in computing the mean.
A set of data has a unique mean.
The mean is affected by unusually large or small data

values.
The arithmetic mean is the only measure of location

where the sum of the deviations of each value from the
mean is zero.
X 14.0 ... 15.0 77
15.4
n
5
5
X
n
Slide 11 of 76
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Slide 12 of 76
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Example 3
Weighted Mean
Consider the set of values: 3, 8, and 4.

The mean is 5. Illustrating the fifth
property
(X X) (35) (85) (45) 0

Slide 13 of 76
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The Weighted Mean of a set

of numbers X1, X2, ..., Xn, with
corresponding weights w1, w2,
p
...,wn, is computed
from the
following formula:
Xw
(w1 X1 w2 X 2 ... wn X n )
(w1 w2 ...wn )
Example 4
5($0.50) 15($0.75) 15($0.90) 15($1.15)

5 151515
$44.50
$0.89
50
Xw
Slide 15 of 76
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The Median
During a one hour period on a hot

Saturday afternoon cabana boy
Chris served fifty drinks. He sold
five drinks for $0.50, fifteen for
$0.75, fifteen for $0.90, and fifteen
for $1
$1.10.
10 Compute the weighted
mean of the price of the drinks.
Slide 14 of 76
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The Median is the

midpoint of the values
after they have been
ordered from the smallest
to the largest.
There are as many

values above the
median as below it in
the data array.
For an even set of values, the median will be the

arithmetic average of the two middle numbers and is
found at the (n+1)/2 ranked observation.
Slide 16 of 76
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Example 5
The median (contd)

The ages for a sample of five college
students are:
21, 25, 19, 20, 22.
Slide 17 of 76
The heights of four basketball players, in

inches, are: 76, 73, 80, 75.
Arranging the data

g order
in ascending
gives:
Arranging the data in

ascending order
gives:
19, 20, 21, 22, 25.
73, 75, 76, 80
Thus the median is

21.
Thus the median is

75.5.
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Properties of the Median
There is a unique median for each data set.
It is not affected by extremely large or small

values and is therefore a valuable measure of
location when such values occur.
occur
Slide 18 of 76
The median is
found at the
(n+1)/2 = (4+1)/2
=2.5th data point.
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The Mode
The Mode is another measure of location and

represents the value of the observation that
appears most frequently.
It can be computed for ratio-level, intervallevel, and ordinal-level data.
Slide 19 of 76
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Slide 20 of 76
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The Relative Positions of the Mean,

Median, and Mode
Example 6
Symmetric distribution: A distribution having the same shape on either side

of the center
The exam scores for ten students are: 81, 93, 84,
75, 68, 87, 81, 75, 81, 87. Because the score of
81 occurs the most often, it is the mode.
Skewed distribution: One whose shapes on either side of
the center differ; a nonsymmetrical distribution.
Data can have more than one mode. If it has two

modes, it is referred to as bimodal, three modes,
trimodal, and so on.
Can be positively or negatively skewed, or bimodal
Slide 21 of 76
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The Relative Positions of the Mean, Median,

and Mode: Symmetric Distribution
Zero skewness
Mean
= Median
= Mode
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Slide 22 of 76

and Mode: Right Skewed Distribution
Positively skewed:
Mean and median are
to the right of the
mode.
Mean > Median > Mode
Mean
Median
Mode
Mode
Slide 23 of 76
Mean
Median
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Slide 24 of 76
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and Mode: Left Skewed Distribution
Geometric Mean
The Geometric Mean
(GM) of a set of n positive
numbers is defined as the nth
root of the product of the n
numbers. The formula is:
Negatively Skewed:
Mean and Median are to
the left of the Mode
GM
Mean < Median < Mode
Mode
Median
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Example 7
( 5 )( 21 )( 4 ) 7 . 49
The GM gives a more conservative

profit figure because it is not heavily
weighted by the rate of 21percent.
Slide 27 of 76
Slide 26 of 76
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Example 8
The interest rate on three bonds were 5, 21, and 4

percent.
The arithmetic mean is (5+21+4)/3 =10.0.
The geometric mean is
GM
( X 1)( X 2 )( X 3 )... ( X n )
The geometric mean is used
to average percents,
indexes, and relatives.
Mean
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The return on investment earned by Atkins Construction

Company for four successive years was: 30%, 20%, 40%, and 200%. What is the geometric mean rate of
return on investment?
GM n X1 X 2 ... X n 4 1.31.20.63.0 1.294
The average rate of return is 29.4%
Slide 28 of 76
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Geometric Mean (contd)

Another use of the
geometric mean is
to determine the
percent increase in
sales, production or
other business or
economic series
from one time
period to another.
GM
Example 9
Grow th in Sales 1999-2004
The total number of females enrolled in

American colleges increased from 755,000 in
1992 to 835,000 in 2000.
Sa
ales in Millions($)
50
40
30
20
10
0
1999
2000
2001
2002
2003
2004
Year
( Value at end of period)

1
(Value at beginning of period)
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Slide 29 of 76
GM 8
The value 0.0127 indicates that the average annual growth over
the last 8-year period was 1.27%.
25
20
15
10
5
0
0
10
12
Measures of dispersion include the following:
range, mean deviation, variance, and

standard deviation.
Range = Largest value Smallest value
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The following represents the current years Return on Equity

of the 25 companies in an investors portfolio.
30
refers to the
spread or
variability in
the data.
Slide 30 of 76
Example 10
Measures of Dispersion
Dispersion
835,000
1 .0127
755,000
Slide 31 of 76
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-8.1
-5.1
-3.1
-1.4
14
1.2
3.2
4.1
4.6
48
4.8
5.7
5.9
6.3
7.9
79
7.9
8.0
8.1
9.2
9.5
97
9.7
10.3
12.3
13.3
14.0
15 0
15.0
22.1
Highest value: 22.1 Lowest value: -8.1

Range = Highest value lowest value
= 22.1-(-8.1)
= 30.2
Slide 32 of 76
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Example 11
Mean Absolute Deviation (MAD)

The main features :
MAD:
All
values are used in the

calculation.
It is not unduly influenced
by large or small values.
values
The absolute values are
difficult to manipulate.
The arithmetic
mean of the
absolute
values
l
off the
th
deviations
from the
arithmetic
mean.
MAD
Slide 33 of 76
The weights of a sample of crates containing

books for the bookstore (in pounds ) are:
103, 97, 101, 106, 103
Find the mean deviation.
X = 102
The mean deviation is:
MD
X X
103 102 ... 103 102
n
1 5 1 4 5
2.4
5
n
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X X
Variance and standard

Deviation
Slide 34 of 76
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Population Variance
The major characteristics:
Variance:
the arithmetic
mean of the
squared
deviations from
the mean.
Not
influenced by extreme values.

units are awkward,, the square
q
of the
original units.
All values are used in the calculation.
The
Standard deviation:
The
square root of the variance.
Slide 35 of 76
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Slide 36 of 76
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Variance and standard deviation

Population Variance formula:
Example 10 (revisited)
In Example 10, the variance and standard
deviation are:
(X - )2
N
X is the value of an observation in the population

is the arithmetic mean of the population
(-8.1-6.62)2 + (-5.1-6.62)2 + ... + (22.1-6.62)2

25
N is the number of observations in the population
= 42.227
Population Standard Deviation formula:
= 6.498
2
Slide 37 of 76
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Sample variance and standard

deviation
Sample variance (s2):
s2
(X - X)2
n-11
Sample standard deviation (s):
s s2
Slide 39 of 76
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Slide 38 of 76
Example 12
The hourly wages earned by a sample of five
students are:
$7, $5, $11, $8, $6.
Find the sample variance and standard deviation.
X
X 37
X
7.40
n
5
7 7.4 ... 6 7.4 21 .2 5.30

X X
n 1
5 1
5 1
2
s2
s
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6.62
s2
5 . 30 2 . 30
Slide 40 of 76
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Chebyshevs theorem
Chebyshevs theorem: For any set of
observations (sample or population), the proportion
of the values that lie within k standard deviations of
the mean is at least:
1
where
1
k2
Chebyshevs theorem (contd)

The arithmetic mean biweekly amount by the
Dupree Paint employees to the companys profitsharing plan was $51.54, and the standard
deviation is $7.51. At least what percent of the
contributions lie within plus 3.5 standard deviations
and minus 3.5
3 5 standard deviations of the mean?
1
1
1
1
1
1
0 . 92
k2
12 . 25
3 . 5 2
k is any constant greater than 1.

About 92%.
Slide 41 of 76
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Interpretation and Uses of the

Standard Deviation
Empirical Rule: For any symmetrical, bell-shaped
distribution:
About
About
Slide 42 of 76
Interpretation and Uses of the

Standard Deviation
Bell-shaped Curve showing the relationship between
and
68% of the observations will lie within 1s

off the
th mean
68%
95% of the observations will lie within 2s

of the mean
Virtually
all (99.7%) the observations will be within

3s of the mean
Slide 43 of 76
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95%
99.7%
Slide 44 of 76
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The Mean of Grouped Data

The
Mean of a sample of data
organized in a frequency
distribution is computed by the
following formula:
Mf
n
Slide 45 of 76
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The Median of Grouped Data

The Median of a sample of data organized in a
frequency distribution is computed by:
Example 13
A sample of ten
movie theaters
in a large
metropolitan
area tallied the
total number of
movies showing
last week.
Compute the
mean number of
movies
showing.
Movies
showing
1 up to 3
frequency class
f
midpoi
nt M
1
2
(f)(M)
3 up to 5
5 up to 7
18
7 up to 9
9 up to 11
10
30
Total
10
66
Mf
66
6 .6
n
10
Slide 46 of 76
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Finding the Median Class

Construct a cumulative frequency distribution.
Decide the class that contains the median. Median
Class is the first class with the value of cumulative
frequency at least n/2.
n/2
n
CF
Median L 2
(i )
f
where L is the lower limit of the median class, CF is the
cumulative frequency preceding the median class, f is the
frequency of the median class, and i is the median class
interval.
Slide 47 of 76
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Slide 48 of 76
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Example 13 (contd)
Movies
showing
1 up to 3
Frequency
1
Cumulative
Frequency
1
3 up to 5
5 up to 7
7 up to 9
9 up to 11
10
Slide 49 of 76
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The Mode of Grouped Data

The Mode for grouped data is
approximated by the midpoint of the class
with the largest class frequency.
Movies
showing
h i
1 up to 3
frequency
class
f
midpoint
id i t
M
1
2
3 up to 5
5 up to 7
7 up to 9
9 up to 11
10
Slide 51 of 76
The modes in
example 13 are 6
and 10 and so is
bimodal.
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From the table, L= 5, n =10, f = 3, i = 2, CF = 3
n
10
CF
3
Median L 2
(i ) 5 2
(2) 6.33
f
3
Slide 50 of 76
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The Standard Deviation of

Grouped Data
The
Standard Deviation
of a sample of data organized in

a frequency distribution is
computed by the following
formula:
s
f M X
n 1
Slide 52 of 76
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A sample of ten
movie theaters in a
large metropolitan
area tallied the total
number of movies
showing last week.
Compute the
standard deviation of
movies showing.
Movies
showing
1 up to 3
frequency f
class
midpoint M
2
(M-X)
f*(M-X)
-4.6
21.16
3 up to 5
-2.6
13.52
5 up to 7
-0.6
1.08
7 upp to 9
1.4
1.96
9 up to 11
10
3.4
34.68
Total
X
n 1
Other Measures of Dispersion
10
Quartiles divide a set of observations into four equal

parts
Deciles divide a set of observations into 10 equal

parts
Percentiles divide a set of observations into 100

equal parts
72.40
72 . 40
10 1
Slide 53 of 76
2 . 8363
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Slide 54 of 76
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Location of a Percentile
Quartiles
Locate the median,
Lp = (n+1)
(50th percentile)
first quartile (25th percentile)
P
100
where
and the 3rd quartile
P is the desired percentile
(75th percentile)
Slide 55 of 76
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Slide 56 of 76
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Example 14
Stock prices on twelve
consecutive days for a
major
publicly traded company
Example 14 (contd)
Using the twelve stock prices, we can find the
median, 25th, and 75th percentiles as follows:
Quartile 3
100
L75 = (12 + 1) 75 = 9.75th observation

100
90
80
70
86, 79, 92, 84, 69, 88, 91
60
Median
L50 = (12 + 1)
50
th
100 = 6.50 observation
Quartile 1
L25 = (12+1)
25 = 3.25th observation
100
50
1
10
11 12
83, 96, 78, 82, 85.
Slide 57 of 76
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Example 14 (contd)
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Slide 58 of 76
Interquartile Range
To locate the values, the first step is to organize the data in increasing order
12
Q4 11
10
9
Q3 8
7
6
Q2 5
4
3
Q1 2
1
96
92
91
88
86
85
84
83
82
79
78
69
75th percentile
Price at 9.75 observation = 88 + .75(91-88)
= 90.25
50th percentile: Median
= 84.50
25th percentile
= 79.75
Slide 59 of 76
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The Interquartile
range is the distance
between the third
quartile Q3 and the
first quartile Q1.
This distance will

include the middle
50 p
percent of the
observations.
Interquartile range = Q3 - Q1
Slide 60 of 76
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Box Plots
Example 15
A box plot is a graphical

display, based on quartiles,
that helps to picture a set of
data.
For a set of
observations the third
quartile is 24 and the
first quartile is 10.
What is the quartile
deviation?
Five pieces of
data are needed
to construct a box
plot: the Minimum
Value, the First
Quartile, the
Median, the Third
Quartile, and the
Maximum Value.
The interquartile range

is 24 - 10 = 14. Fifty
percent of the
observations will occur
between 10 and 24.
Slide 61 of 76
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Example 16
Slide 62 of 76
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Example 16 (contd)
Based on a sample of 20 deliveries,

Buddys Pizza determined the following
information. The minimum delivery
time was 13 minutes and the maximum
30 minutes. The first quartile was 15
minutes the median 18 minutes
minutes,
minutes, and the
third quartile 22 minutes. Develop a box
plot for the delivery times.
Slide 63 of 76
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Slide 64 of 76
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Example 16 (contd)
Min Q
1
Median
Coefficient of Variation
Max
Q3
Relative dispersion
The coefficient of variation
is the ratio of the standard
deviation to the arithmetic
mean expressed as a
mean,
percentage:
12
14
16
18
20
22
24
26
28
30
32
CV
s
(100 %)
X
Mean
Slide 65 of 76
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Skewness
symmetry of the distribution.
sk
Using the twelve stock prices, we find the mean to be 84.42,

standard deviation, 7.18, median, 84.5.
86 79 92 84 69 88
91 83 96 78 82 85
The coefficient of
skewness can range
from -3
3.00
00 up to 3
3.00
00
when using the
following formula:
3 X Median
s
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Slide 66 of 76
Example 14 revisited
Skewness is the measurement of the lack of
Coefficient of variation:
CV
A value of 0 indicates a
symmetric distribution.
s
(100 %)
X
= 8.5%
Coefficient of skewness:
Some software packages use a
different formula which results in a
wider range for the coefficient.
Slide 67 of 76
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sk
3 X Median
s
Slide 68 of 76
= -.035
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Scatter diagram
Relationship Between Two

Variables
Scatter
diagram :
A technique
used to
show the
relationship
between
variables.
Univariate Data (Single Variable)

Bivariate Data (Two Variables)
Scatter diagram
Contingency table
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Slide 69 of 76
8.0
7.5
7.5
7.3
7.2
7.2
7.1
7.1
7.0
6.2
6.2
5.1
96
92
91
88
86
85
84
83
82
79
78
69
Slide 70 of 76
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Contingency table
The twelve days of stock prices and

the overall market index on each day
are given as follows:
A contingency table is used

to classify observations
according to two identifiable
characteristics.
Relationship between Market Index

and Stock Price
Contingency
g
y tables are used
when one or both variables are
nominally scaled.
100
90
Price
Price
Relationship can be positive (direct) or

negative (inverse)
Example 14 revisited
Index
(000s)
Variables must be at least interval scaled
80
70
60
A contingency table is a
cross tabulation that
simultaneously summarizes
two variables of interest.
50
5
10
Index
Slide 71 of 76
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Slide 72 of 76
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Example 17 (contd)
Example 17
Weight Loss
45 adults, all 60 pounds
overweight, are randomly
assigned to three weight loss
programs. Twenty weeks into
the program,
program a researcher
gathers data on weight loss
and divides the loss into three
categories: less than 20
pounds, 20 up to 40 pounds,
40 or more pounds. Here are
the results.
Weight
Loss
Plan
Less 20 up to
40
than 20
40
pounds
pounds pounds or more
Plan 1
Plan 2
12
Plan 3
12
Compare the weight loss under the three plans.

Slide 73 of 76
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Practice Problems
Slide 74 of 76
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Assignment-2
Problem 11 (Page 62)

(Problem 13)
(Problem 59 (Page 88))
Problems 11, 13 (Page 108)
(Problems 11, 13 (Page 110))

Slide 75 of 76
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Lecture 2: Methods For Describing Data Through Numerical Measures

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1/27/2015

Lecture 2: Methods for

Chebyshevs theorem and the Empirical Rule as they

Quartiles, deciles, and percentiles

Numerical Ways of Describing

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Parameter and Statistic

A statistic is a measurable characteristic of a

North South University

North South University

Measures of Location and

Mean (Arithmetic, Weighted, Geometric)

Measures for Population Data

Measures for Sample Data

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North South University

For ungrouped data, the

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56 ,000 ... 73,000

where n is the total number of

Properties of the Arithmetic Mean

All the values are included in computing the mean.

A set of data has a unique mean.

The mean is affected by unusually large or small data

The arithmetic mean is the only measure of location

X 14.0 ... 15.0 77

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North South University

Consider the set of values: 3, 8, and 4.

(X X) (35) (85) (45) 0

The Weighted Mean of a set

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5($0.50) 15($0.75) 15($0.90) 15($1.15)

During a one hour period on a hot

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The Median is the

There are as many

For an even set of values, the median will be the

The median (contd)

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The heights of four basketball players, in

Arranging the data

Arranging the data in

19, 20, 21, 22, 25.

73, 75, 76, 80

Thus the median is

Thus the median is

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Properties of the Median

There is a unique median for each data set.

It is not affected by extremely large or small

The Mode is another measure of location and

It can be computed for ratio-level, intervallevel, and ordinal-level data.

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North South University

The Relative Positions of the Mean,

Symmetric distribution: A distribution having the same shape on either side

Data can have more than one mode. If it has two

The Relative Positions of the Mean, Median,

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The Relative Positions of the Mean, Median,

Mean > Median > Mode

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