Basic Statistics

What is Mean??

Mean is the average of a series of data

points.
In other words
Sum (All Data Points)/Number of Data
Points=Mean

Mean is a measure of Central Tendency.

Which means in most cases 50% of data
values will be above the average and 50%
of data values will be below the average.

There will be a few exceptions to this

rule.
We will learn more about this as we
progress during the course. 2

We are at a service department of a large

Consumer Goods Manufacturing company. You
have been asked by your Superior to make a
presentation on Time taken to Resolve
Complaints. You are going to be appraised. Your
target is 12 hours. You have decided that, you are
going to give the Mean value of the time taken to
resolve all complaints as a measure of your
achievement. The mean of all complaints is 12
hours.
Do you think you have earned your Bonus?

You have got it wrong, As we have

discussed 50% of the data points are
Yes
above your target value. You are in
deep trouble

Right, As we have discussed 50% of

No the data points are above your target
value. 3

1
 Lets see if you have understood the concept. Lets play a game and lets see
how soon you win

What is Median??

The median is the middle value of the data:

Half the number of observations are less than
Median and half the number of observations
are above the median.

The difference between Mean and median is

that Mean is affected by extreme values but
that is not the case with median
To calculate the median
Arrange the Data points in Ascending or Descending Order
If the Number of Data Points are ODD, the median is the value in the
middle.
If Number of DATA points is even, the median is the average of the two
middle values.

You are the HR Manager of a large

Multinational company. You have been
asked by your CEO to prepare a
presentation of Manpower costs.. You
have collected the Cost to Company of
all the employees in the organization.

What statistic have you taken to present that manpower Cost

You have got it wrong, The Salary of the

top management will push the Mean to
Mean
the higher side. This will be a wrong way
of presenting manpower costs

You have got it right. Median is the

Median right measure of Central Tendency in
this Case
6

2
 Lets see if you have understood the concept. Lets play a game and lets see
how soon you win

What is Variation??

Variation:
It is a measure of spread of the data points around the mean.

Technically variation is the Average of square of distance of every point from the
mean

What is Variation??

Lets say you are looking at Time taken to repair complaints. You have a set of
Data Points and you have identified that the mean time to repair is 12 hours. You
have plotted all data points in the graph

12 Hrs

Variation is average of all the x^2 [(Dist of Data Point from the centre
line)/Number of Data Points)]
Standard Deviation is square root of variation
9

3
 You are the Country Service Manager of a large consumer goods
manufacturing company. You are comparing the Time Taken to Repair for
the two cities of Bangalore and Mumbai. You find that the Average time
taken is the same for both cities. However the Standard Deviation for
Bangalore was 10 and for Mumbai was 3. What will you do
‰ Send a Congratulatory mail to both City Managers

Wrong: This shows that

you need to study this
course

‰ Send a Congratulatory mail to Bangalore

Wrong: This shows that

you need to get your
facts right

‰ Send a Congratulatory mail to Mumbai

Right: You have

understood the gist of
variation
10

Lets see if you have understood the concept. Lets play a game and lets see
how soon you win

11

What is Range??

Range:
Is the difference between the minimum and maximum value in a data set. It is
another indicator of the spread.

Range is looked at instead of

spread when the number of data
points is less.

12

4
 You are the Country Service Manager of a large consumer goods
manufacturing company. You are comparing the Time Taken to Repair for
the two cities of Bangalore and Mumbai. You have collected five cases of
complaints both in Bangalore and Mumbai. You want to see which city has
the maximum spread. Which Statistics will you use?
Wrong: Mean is a
measure of Central
Tendency and not spread
Mean

Wrong: Mean is a
measure of Central
Tendency and not spread
Median

Partially Wrong: Standard

Deviation is a measure of
Standard spread, but since the number of
data points are low, this is not
Deviation the right statistic

Right: Range is the right

statistic to be used when
Range the number of data
points are small 13

Lets take a practical example to summarize our understanding of the concepts learnt. You are
the Service Manager of a large Consumer Goods Manufacturing company. Your are in charge
of South Zone which includes the cities of Chennai and Bangalore. You have been given the
time taken for complaints in the month of August. You want to analyze data to come to some
meaningful conclusion

Data points
3
5
4
7
8
1
2
4
3
6
7
8
5
4
7
6
14

You have calculated the Mean of the data points. To calculate variation and Standard Deviation the
following steps have to be taken
1. Calculate X-X bar. Each data point is subtracted from the Mean SST=Sum of
Squared Totals
2. Square each (X-X bar)
3. Sum all the squared values of X-Xbar. This value is 68 as shown. This is SST
4. The average of the squared values of X-Xbar is the variation. This is 68/16=4.25
5. The Square root of variation is the standard Deviation. The Sq root of 4.25 is 2.06

D ata points X bar X - X b a r X - Xbar squared

3 5 -2 4
5 5 0 0
4 5 -1 1
7 5 2 4
8 5 3 9
1 5 -4 16
2 5 -3 9
4 5 -1 1
3 5 -2 4
6 5 1 1
7 5 2 4
8 5 3 9
5 5 0 0
4 5 -1 1
7 5 2 4
6 5 1 1
Sum of Data Points 80 68
Mean 5 15

5
 You are not satisfied and want to do further analysis. You have now
classified the data points from the city which they have come. As discussed
earlier, the data points have been collected from Chennai and Bangalore
C ity D a ta p o in ts X bar X - Xbar X - X b a r s q u a re d
C hennai 3 4 .2 5 -1 .2 5 1 .5 6
C hennai 5 4 .2 5 0 .7 5 0 .5 6
C hennai 4 4 .2 5 -0 .2 5 0 .0 6
C hennai 7 4 .2 5 2 .7 5 7 .5 6
C hennai 8 4 .2 5 3 .7 5 1 4 .0 6
C hennai 1 4 .2 5 -3 .2 5 1 0 .5 6
C hennai 2 4 .2 5 -2 .2 5 5 .0 6
C hennai 4 4 .2 5 -0 .2 5 0 .0 6
S u m o f D a t a P o in t s 34 3 9 .5
C ity D a ta p o in ts X bar X - Xbar X - X b a r s q u a re d
B a n g a lo r e 3 5 .7 5 -2 .7 5 7 .5 6
B a n g a lo r e 6 5 .7 5 0 .2 5 0 .0 6
B a n g a lo r e 7 5 .7 5 1 .2 5 1 .5 6
B a n g a lo r e 8 5 .7 5 2 .2 5 5 .0 6
B a n g a lo r e 5 5 .7 5 -0 .7 5 0 .5 6
B a n g a lo r e 4 5 .7 5 -1 .7 5 3 .0 6
B a n g a lo r e 7 5 .7 5 1 .2 5 1 .5 6
B a n g a lo r e 6 5 .7 5 0 .2 5 0 .0 6
S u m o f D a t a P o in t s 46 1 9 .5

SST of Chennai 39.5 You would find that SST for

Chennai and Bangalore is
SST of Bangalore 19.5
59 whereas the SST for
SST of Total 68 Total is 68. Why this 16
Difference??????

Components of variation

Every data set has three components of variation

SST= Sum of Squared totals of all data points together
SSW= Sum of Squared of each variable added together
SSB= Difference between SST and SSW
They relationship between them is governed by the equation

SST=SSW+SSB
SST for Chennai = 39.5 and SST for Bangalore = 19.5.

SSW = 59 (Which is 39.5+19.5)

SST=68 (As Calculated Earlier)

SSB=9 (Which is 68-59)

17

Conclusions

In the example we find that SSW is a major component of the total

variation. Here we will search for another underlying variable which is causing the
high variation within the region for both the regions. We will also conclude that the
processes in both the region for invoice generation are the same

If we had found that SSB is the major component of variation. Here the
variation is more between the regions as compared to within the region.

What is the conclusion?

We will concentrate on the differences in processes in the two regions in our

improvement project……….. 18

6
 SSW

Mean is

SSB

Standard deviation is

Sum of Measure of Sum of Squared

Squared variation Measure of
Central Tendency Spread
variation between
within variables
variables

Sum of Squared Measure of Same as Range

variation of total Variation
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