1

Business Statistics

Graphs, Charts, and Tables
Describing Your Data
Dr.M.Raghunadh Acharya
4/26/2012
2
Contents
Construct a frequency distribution both
manually and with a computer
Construct and interpret a histogram
Create and interpret bar charts, pie
charts, and stem-and-leaf diagrams
Present and interpret data in line charts
and scatter diagrams
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Frequency Distributions
What is a Frequency Distribution?
A frequency distribution is a list or a table
containing the values of a variable (or a set
of ranges within which the data falls) ...
and the corresponding frequencies with
which each value occurs (or frequencies with
which data falls within each range)
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Why Use Frequency Distributions?
A frequency distribution is a way
to summarize data
The distribution condenses the
raw data into a more useful
form...
and allows for a quick visual
interpretation of the data
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Frequency Distribution:
Discrete Data
Discrete data: possible values are
countable
Example: An
advertiser asks
200 customers
how many days
per week they
read the daily
newspaper.
Number of
days read
Frequency
0 44
1 24
2 18
3 16
4 20
5 22
6 26
7 30
Total 200
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Relative Frequency
Relative Frequency: What proportion is in each
category?
Number of
days read
Frequency
Relative
Frequency
0 44 .22
1 24 .12
2 18 .09
3 16 .08
4 20 .10
5 22 .11
6 26 .13
7 30 .15
Total 200 1.00
.22
200
44
=
22% of the
people in the
sample report
that they read
the newspaper
0 days per week
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Frequency Distribution: Continuous Data
Continuous Data: may take on any value in some
interval
Example: A manufacturer of insulation randomly selects 20 winter
days and records the daily high temperature

24, 35, 17, 21, 24, 37, 26, 46, 58, 30,
32, 13, 12, 38, 41, 43, 44, 27, 53, 27

(Temperature is a continuous variable because it could
be measured to any degree of precision desired)
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Grouping Data by Classes
Sort raw data in ascending order:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43,
44, 46, 53, 58
Find range: 58 - 12 = 46
Select number of classes: 5 (usually between 5 and 20)
Compute class width: 10 (46/5 then round off)
Determine class boundaries:10, 20, 30, 40, 50
Compute class midpoints: 15, 25, 35, 45, 55
Count observations & assign to classes
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Frequency Distribution Example
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
Class Frequency
10 but under 20 3 .15
20 but under 30 6 .30
30 but under 40 5 .25
40 but under 50 4 .20
50 but under 60 2 .10
Total 20 1.00
Relative
Frequency
Frequency Distribution
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Histograms
The classes or intervals are shown on the
horizontal axis
frequency is measured on the vertical axis

Bars of the appropriate heights can be
used to represent the number of
observations within each class

Such a graph is called a histogram
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Class Midpoints
Histogram Example
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
No gaps
between
bars, since
continuous
data
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Questions for Grouping Data
into Classes
1. How wide should each interval be?
(How many classes should be used?)

2. How should the endpoints of the
intervals be determined?
Often answered by trial and error, subject
to user judgment
The goal is to create a distribution that is
neither too "jagged" nor too "blocky
Goal is to appropriately show the pattern of
variation in the data
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How Many Class Intervals?
Many (Narrow class
intervals)
may yield a very jagged
distribution with gaps from
empty classes
Can give a poor indication of how
frequency varies across classes

Few (Wide class intervals)
may compress variation too much
and yield a blocky distribution
can obscure important patterns
of variation.
(X axis labels are upper class endpoints)
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General Guidelines
Number of Data Points Number of Classes
under 50 5 - 7
50 100 6 - 10
100 250 7 - 12
over 250 10 - 20

Class widths can typically be reduced as the number of
observations increases
Distributions with numerous observations are more likely
to be smooth and have gaps filled since data are plentiful
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Class Width
The class width is the distance
between the lowest possible value
and the highest possible value for a
frequency class
The minimum class
width is
Largest Value Smallest
Value
Number of Classes
W =
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Histograms in Excel
Select
Tools/Data
Analysis
1
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Choose Histogram
2
3
Input data and bin
ranges

Select Chart Output
Histograms in Excel
(continued)
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Stem and Leaf Diagram
A simple way to see distribution
details in a data set
METHOD: Separate the sorted
data series into leading digits
(the stem) and the trailing digits
(the leaves)
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Example:
Here, use the 10s digit for the
stem unit:
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
12 is shown as

35 is shown as
Stem Leaf
1 2

3 5
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Example:
Completed Stem-and-leaf diagram:
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
Stem Leaves
1 2 3 7
2 1 4 4 6 7
8
3 0 2 5 7 8
4 1 3 4 6
5 3 8
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Using other stem units
Using the 100s digit as the stem:
Round off the 10s digit to form the
leaves
613 would become 6 1
776 would become 7 8
. . .
1224 becomes 12 2

Stem Leaf
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Graphing Categorical Data
Categorical
Data
Pie
Charts
Pareto
Diagram
Bar
Charts
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Bar and Pie Charts
Bar charts and Pie charts are
often used for qualitative
(category) data

Height of bar or size of pie slice
shows the frequency or
percentage for each category
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Pie Chart Example
Percentages
are rounded to
the nearest
percent
Current Investment Portfolio
Savings
15%
CD
14%
Bonds
29%
Stocks
42%
Investment Amount Percentage
Type (in thousands $)


Stocks 46.5 42.27

Bonds 32.0 29.09

CD 15.5 14.09

Savings 16.0 14.55

Total 110 100
(Variables are Qualitative)
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Bar Chart Example
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Pareto Diagram Example
c
u
m
u
l
a
t
i
v
e

%

i
n
v
e
s
t
e
d

(
l
i
n
e

g
r
a
p
h
)

%

i
n
v
e
s
t
e
d

i
n

e
a
c
h

c
a
t
e
g
o
r
y

(
b
a
r

g
r
a
p
h
)

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Bar Chart Example
Number
of days
read
Frequency
0 44
1 24
2 18
3 16
4 20
5 22
6 26
7 30
Total 200
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Tabulating and Graphing
Multivariate Categorical Data
Investment in thousands of dollars
Investment Investor A Investor B Investor C Total
Category

Stocks 46.5 55 27.5 129

Bonds 32.0 44 19.0 95

CD 15.5 20 13.5 49

Savings 16.0 28 7.0 51


Total 110.0 147 67.0 324

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Tabulating and Graphing
Multivariate Categorical Data
Side by side charts
(continued)
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Side-by-Side Chart Example
Sales by quarter for three sales territories:

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
East 20.4 27.4 59 20.4
West 30.6 38.6 34.6 31.6
North 45.9 46.9 45 43.9
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Line charts show values of one
variable vs. time
Time is traditionally shown on the
horizontal axis
Scatter Diagrams show points for
bivariate data
one variable is measured on the
vertical axis and the other variable is
measured on the horizontal axis
Line Charts and Scatter Diagrams
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Line Chart Example
Year
Inflati
on
Rate
1985 3.56
1986 1.86
1987 3.65
1988 4.14
1989 4.82
1990 5.40
1991 4.21
1992 3.01
1993 2.99
1994 2.56
1995 2.83
1996 2.95
1997 2.29
1998 1.56
1999 2.21
2000 3.36
2001 2.85
2002 1.58
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Scatter Diagram Example
Volume
per
day
Cost
per
day
23 125
26 140
29 146
33 160
38 167
42 170
50 188
55 195
60 200
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Types of Relationships
Linear Relationships
X X
Y Y
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Curvilinear Relationships
X X
Y Y
Types of Relationships
(continued)
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No Relationship
X X
Y Y
Types of Relationships
(continued)
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Chapter Summary
Data in raw form are usually not easy
to use for decision making -- Some
type of organization is needed:
+ Table + Graph
Techniques reviewed in this chapter:
Frequency Distributions and
Histograms
Bar Charts and Pie Charts
Stem and Leaf Diagrams
Line Charts and Scatter Diagrams

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Summarization measures are single or few number representations of the
data which are helpful in representing data and also to compare between
data. Based on the summary measures of the sample ,population measures
can be forecasted.

The following will illustrate the above, different measures to represent the
data are as follows :

1. Measures of Center and Location
2. Mean, median, mode, geometric mean, midrange
3. Other measures of Location
4. Weighted mean, percentiles, quartiles
5. Measures of Variation
6. Range, Inter quartile range, variance and standard deviation,
coefficient of variation

Summarization measures ..
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Center and Location
Mean
Median
Mode
Other Measures of
Location
Weighted Mean
Describing Data Numerically
Variation
Variance
Standard Deviation
Coefficient of Variation
Range
Percentiles
Inter quartile Range
Quartiles
Summary Measures
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Center and Location
Mean Median Mode Weighted Mean
N
x
n
x
x
N
i
i
n
i
i

=
=
=
=
1
1

=
=
i
i i
W
i
i i
W
w
x w
w
x w
X

Overview: Measures of Center and Location

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The Mean is the arithmetic average of data values
Sample mean



Population mean
n = Sample Size
N = Population Size
N
x x x
N
x
N
N
i
i
+ + +
= =

=

2 1 1
Mean (Arithmetic Average)
n
x x x
n
x
x
n
n
i
i
+ + +
= =

=

2 1 1
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The most common measure of central tendency
Mean = sum of values divided by the number of values
Affected by extreme values (outliers)

0 1 2 3 4 5 6 7 8 9 10
Mean = 3
0 1 2 3 4 5 6 7 8 9 10
Mean = 4
3
5
15
5
5 4 3 2 1
= =
+ + + +
4
5
20
5
10 4 3 2 1
= =
+ + + +
Mean (Arithmetic Average)
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Not affected by extreme values




In an ordered array, the median is the middle number
If n or N is odd, the median is the middle number
If n or N is even, the median is the average of the two middle numbers
0 1 2 3 4 5 6 7 8 9 10
Median = 3
0 1 2 3 4 5 6 7 8 9 10
Median = 3
Median
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A measure of central tendency
Value that occurs most often
Not affected by extreme values
Used for either numerical or categorical data
There may be no mode
There may be several modes

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Mode = 5
0 1 2 3 4 5 6
No Mode
Mode
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Used when values are grouped by frequency or relative
importance

Days to
Complete
Frequency
5 4
6 12
7 8
8 2
Example: Sample of
26 Repair Projects
Weighted Mean Days to Complete:
days 6.31
26
164

2 8 12 4
8) (2 7) (8 6) (12 5) (4
w
x w
X
i
i i
W
= =
+ + +
+ + +
= =

Weighted Mean
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Five houses on a hill by the
beach
$2,000 K
$500 K
$300 K
$100 K
$100 K
House Prices:

$2,000,000
500,000
300,000
100,000
100,000

Review Example
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Mean: ($3,000,000/5)
= $600,000

Median: middle value of ranked
data
= $300,000

Mode: most frequent value
= $100,000
House Prices:

$2,000,000
500,000
300,000
100,000
100,000
Sum 3,000,000
Summary Statistics
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Mean is generally used, unless extreme values
(outliers) exist
Then median is often used, since the median is
not sensitive to extreme values.
Example: Median home prices may be reported
for a region less sensitive to outliers
Which measure of location is the best?
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Describes how data is distributed
Symmetric or skewed
Mean = Median = Mode

Mean < Median < Mode
Mode < Median < Mean
Right-Skewed
Left-Skewed
Symmetric
(Longer tail extends to left)
(Longer tail extends to right)
Shape of a Distribution
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Other Measures of
Location
Percentiles Quartiles
1
st
quartile = 25
th
percentile

2
nd
quartile = 50
th
percentile
= median

3
rd
quartile = 75
th
percentile


The p
th
percentile in a data array:
p% are less than or equal to this
value
(100 p)% are greater than or
equal to this value
(where 0 p 100)
Other Location Measures
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The p
th
percentile in an ordered array of n values is the value in
i
th
position, where
Example: The 60
th
percentile in an ordered array of 19 values is the
value in 12
th
position:
1) (n
100
p
i + =
12 1) (19
100
60
1) (n
100
p
i = + = + =
Percentiles
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Quartiles split the ranked data into 4 equal groups
25% 25% 25%
25%
Sample Data in Ordered Array: 11 12 13 16 16 17 18 21 22
Example: Find the first quartile
Q1
Q2 Q3
Quartiles
(n = 9)
Q1 = 25
th
percentile, so find the

so use the value half way between the 2
nd
and 3
rd
values,
so
25
100
(9+1) = 2.5 position
25
100
Q1=12.5
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A Graphical display of data using 5-number summary:

Minimum -- Q1 -- Median -- Q3 -- Maximum
Example:
Minimum 1st Median 3rd Maximum
Quartile Quartile
25% 25% 25% 25%
Box and Whisker Plot
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The Box and central line are centered between the
endpoints if data is symmetric around the median




A Box and Whisker plot can be shown in either vertical or
horizontal format
Shape of Box and Whisker Plots
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Right-Skewed Left-Skewed Symmetric
Q1 Q2 Q3 Q1 Q2 Q3
Q1 Q2 Q3
Distribution Shape and Box and Whisker Plot
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Below is a Box-and-Whisker plot for the following data:

0 2 2 2 3 3 4 5 5 10 27





This data is very right skewed, as the plot depicts
0 2 3 5 27
0 2 3 5 27
Min Q1 Q2 Q3 Max
Box-and-Whisker Plot Example
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Variation
Variance Standard Deviation Coefficient of
Variation
Population
Variance
Sample
Variance
Population
Standard
Deviation
Sample
Standard
Deviation
Range
Interquartile
Range
Measures of Variation
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Measures of variation give information on the spread or
variability of the data values.

Same center,
different variation
Variation
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Difference between the largest and the smallest observations.



Range = x
maximum
x
minimum

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Range = 14 - 1 = 13
Example:
Range
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7 8 9 10 11 12
Range = 12 - 7 = 5
7 8 9 10 11 12
Range = 12 - 7 = 5
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,5
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,120
Range = 5 - 1 = 4
Range = 120 - 1 = 119
Disadvantages of the Range
Sensitive to outliers

Ignores the way in which data are distributed




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Can eliminate some outlier problems by using the Interquartile
range

Eliminate some high-and low-valued observations and calculate the
range from the remaining values.

Interquartile range = 3
rd
quartile 1
st
quartile

Interquartile Range
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Median
(Q2)
X
maximum
X
minimum
Q1 Q3
Example:
25% 25% 25% 25%
12 30 45 57 70
Interquartile range
= 57 30 = 27
Interquartile Range
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Average of squared deviations of values from the mean

Sample variance:


Population variance:
N
) (x

N
1 i
2
i
2

=

=
1 - n
) x (x
s
n
1 i
2
i
2

=

=
Variance
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Most commonly used measure of variation
Shows variation about the mean
Has the same units as the original data

Sample standard deviation:



Population standard deviation:
N
) (x

N
1 i
2
i
=

=
1 - n
) x (x
s
n
1 i
2
i
=

=
Standard Deviation
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Sample
Data (X
i
) : 10 12 14 15 17 18 18 24
n = 8 Mean = x = 16
4.2426
7
126
1 8
16) (24 16) (14 16) (12 16) (10
1 n
) x (24 ) x (14 ) x (12 ) x (10
s
2 2 2 2
2 2 2 2
= =

+ + + +
=

+ + + +
=

Calculation Example: Sample Standard Deviation

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Mean = 15.5
s = 3.338
11 12 13 14 15 16 17 18 19 20 21
11 12 13 14 15 16 17 18 19 20 21
Data B
Data A
Mean = 15.5
s = .9258
11 12 13 14 15 16 17 18 19 20 21
Mean = 15.5
s = 4.57
Data C
Comparing Standard Deviations
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Measures relative variation
Always in percentage (%)
Shows variation relative to mean
Is used to compare two or more sets of data measured in different
units
100%
x
s
CV
|
|
.
|

\
|
= 100%

CV
|
|
.
|

\
|
=
Population Sample
Coefficient of Variation
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Stock A:
Average price last year = $50
Standard deviation = $5


Both stocks
have the same
standard
deviation, but
stock B is less
variable
relative to its
price
10% 100%
$50
$5
100%
x
s
CV
A
= =
|
|
.
|

\
|
=
5% 100%
$100
$5
100%
x
s
CV
B
= =
|
|
.
|

\
|
=
Comparing Coefficient of Variation
Stock B:
Average price last year = $100
Standard deviation = $5
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If the data distribution is bell-shaped, then the interval:
contains about 68% of the values in the population or the sample
The Empirical Rule
1
X

68%
1
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contains about 95% of the values in the population or the sample
contains about 99.7% of the values in the population or the sample
The Empirical Rule
2
3
3
99.7%
95%
2
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Regardless of how the data are distributed, at least (1 - 1/k
2
) of
the values will fall within k standard deviations of the mean
Examples:
(1 - 1/1
2
) = 0% ..... k=1 ( 1)
(1 - 1/2
2
) = 75% ........ k=2 ( 2)
(1 - 1/3
2
) = 89% ........ k=3 ( 3)
within At least
Tchebysheffs Theorem
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A standardized data value refers to the number of standard
deviations a value is from the mean

Standardized data values are sometimes referred to as z-
scores
Standardized Data Values
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where:
x = original data value
= population mean
= population standard deviation
z

= standard score
(number of standard deviations x is from )

x
z

=
Standardized Population Values
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where:
x = original data value
x = sample mean
s = sample standard deviation
z

= standard score
(number of standard deviations x is from )
Remark: The standardized sample values are used for
constructing the confidence limits for the
population parameters.

s
x x
z

=
Standardized Sample Values
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