University of Central Punjab

UCP Business School

Business Statistics- Lecture Notes

Lecture#1

Instructor: Dr. Muhammad Naeem

Basic Definitions

Statistics
In generally one can say that statistics is the methodology for collecting, analyzing, interpreting
and drawing conclusions from information. Putting it in other words, statistics is the
methodology which scientists and mathematicians have developed for interpreting and drawing
conclusions from collected data.
Example (Statistics in practice). Consider the following problems:

agricultural problem: Is new grain seed or fertilizer more productive?

medical problem: What is the right amount of dosage of drug to treatment?
political science: How accurate are the gallups and opinion polls?
economics: What will be the unemployment rate next year?
technical problem: How to improve quality of product?

Variable
Characteristic or attribute that can assume different values
Random Variable
A variable whose values are determined by conducting some experiment.
For example in coin toss if the Head comes we assign 1 and If Tail comes then we assign 0.
Population
Population is the collection of all individuals or items under consideration in a statistical study.
Sample
Sample is that part of the population from which information is collected.
Data
Collection of facts and figures is called as data. Data in processes forms is called information.
There are two types of data, Quantitative and qualitative.
Quantitative Data
Variables which assume numerical values.

Deals with numbers.

Data which can be measured.
Length, height, area, volume, weight, speed, time, temperature, humidity, sound levels,
cost, members, ages, etc.
Quantitative Quantity
The age of your car

Qualitative Data
Variables which assume non-numerical values

Deals with descriptions.

Data can be observed but not measured.
Colors, textures, smells, tastes, appearance, beauty, etc.
Qualitative Quality
The softness of a cat
The color of the sky

Time series
Time series consist of a sequence of observations collected from the same object (firm, human
being, country, etc.) at adjacent time points.
Daily returns for some time period (2014-2015) of Karachi Stock Exchange (KSE) is an example
of time series.
Cross sectional data
Consist of data collected from several object at certain time point.

Year

Advert

Sales

1907

608

1016

1908

451

921

644

1387

1959

Discrete variables
Some variables, such as the numbers of children in family, the numbers of car accident on the
certain road on different days, or the numbers of students taking basics of statistics course are the
results of counting and thus these are discrete variables.
Continuous variables
Quantities such as length, weight, or temperature can in principle be measured arbitrarily
accurately. Weight may be measured to the nearest gram, but it could be measured more
accurately, say to the tenth of a gram. Such a variable, called continuous, is intrinsically different
from a discrete variable
Scales
Variables can be described according to the scale on which they are defined. The scale of the
variable gives certain structure to the variable and also defines the meaning of the variable.
If the categories of a qualitative variable are unordered, then the qualitative variable is said to be
defined on a nominal scale, the word nominal referring to the fact that the categories are merely
names.
If the categories can be put in order, the scale is called an ordinal scale.
. Examples of ordinal variables are education (classified e.g. as low, high) and "strength of
opinion" on some proposal (classified according to whether the individual favors the proposal, is
indifferent towards it, or opposites it), and position at the end of race (first, second, etc.).
Scales for Quantitative Variables.
Quantitative variables, whether discrete or continuous, are defined either on an interval scale or
on a ratio scale.
Interval scale
If one can compare the differences between measurements of the variable meaningfully, but not
the ratio of the measurements, then the quantitative variable is defined on interval scale.
Ratio scale
If, on the other hand, one can compare both the differences between measurements of the
variable and the ratio of the measurements meaningfully, then the quantitative variable is defined
on ratio scale.
In order to the ratio of the measurements being meaningful, the variable must have natural
meaningful absolute zero point, i.e, a ratio scale is an interval scale with a meaningful absolute
zero point. For example, temperature measured on the Certigrade system is a interval variable
and the height of person is a ratio variable.

Descriptive Statistics
Descriptive statistics consist of methods for organizing and summarizing information.
Descriptive statistics includes the construction of graphs, charts, and tables, and the calculation
of various descriptive measures such as averages, measures of variation, and percentiles

Inferential statistics
Inferential statistics consist of methods for drawing and measuring the reliability of conclusions
about population based on information obtained from a sample of the population. It includes
methods like point estimation, interval estimation and hypothesis testing.

Lectutre#2

Data Handling and Representation

Frequency Distribution (Frequency Table)

Consider a data set of 26 children of ages 1-6 years. Then the frequency distribution of variable
age can be tabulated as follows:

Age(year)

Frequency(children)

Grouped Frequency Distribution of Age:

Age Group

1-2

3-4

5-6

Frequency

12

Cumulative frequency of data in previous page

Age

Frequency

Cumulative Frequency

15

20

24

26

Age Group

1-2

3-4

5-6

Frequency

12

Cumulative Frequency

20

26

Bar Diagram: Now consider data of treatment of Group. Lists the categories and presents the
percent or count of individuals who fall in each category.

groups

Frequency

Proportion

Percent
(%)

15

(15/60)=0.25

25.0

25

(25/60)=0.333

41.7

20

(20/60)=0.417

33.3

Total

60

1.00

100

Number of Subjects

Figure 1: Bar Chart of Subjects in

Tre atm e nt Groups
30
25
20
15
10
5
0
1

2
Treatm ent Group

Pie Chart: Lists the categories and presents the percent or count of individuals who fall in each
category
.

Figure 2: Pie Chart of

Subjects in Treatment Groups

33%

25%

1
2

42%

Lecture#3

Methods of Center Measurement

Commonly used methods are mean, median, mode etc.

Mean: Summing up all the observation and dividing by number of observations. Mean of 20, 30,
40 is (20+30+40)/3 = 30.

Notation : Let x1 , x 2 , ... x n are n observatio ns of a variable

x. Then the mean of this variable,
n

x x 2 ... x n
x 1

i 1

Median: The middle value in an ordered sequence of observations. That is, to find the median
we need to order the data set and then find the middle value. In case of an even number of
observations the average of the two middle most values is the median. For example, to find the
median of {9, 3, 6, 7, 5}, we first sort the data giving {3, 5, 6, 7, 9}, then choose the middle

value 6. If the number of observations is even, e.g., {9, 3, 6, 7, 5, 2}, then the median is the
average of the two middle values from the sorted sequence, in this case, (5 + 6) / 2 = 5.5.
Mode: The value that is observed most frequently. The mode is undefined for sequences in
which no observation is repeated.

5. Quartiles these divide our data in 4 equal parts.

Q1 = first quartile; or the 25th percentile
Q2 = second quartile; or the 50th percentile
Q3 = third quartile; or the 75th percentile

6. Five-number summary this is a way to show the data with 5 important values. It gives us the max,
min, and the 3 quartiles above.

Test Scores

Test Scores in Percent

100

90

80

70

60

Exercise 1: Cory has received the following grades this term: 75, 87, 90, 88, 79. If he wishes to earn an
85 average, what must he score on his final test?
Set up the problem like this:

75 + 87 + 90 + 88 + 79 + s = 85
6

Exercise 2: Find the median of 19, 29, 36, 15, and 20

Exercise 3: Find the median of 67, 28, 92, 37, 81, 75