New Lesson 2a | Measure of Central Tendency

 The Measures of Central Tendency

 is a statistic that can be obtained from a set of observations or sc

ores that represents the date set. It is often useful to find the single nu

merical value located at the center of the distribution of the data set. It i

s also defined as the tendency of the same observations or scores to cl

uster about a single point (Dionsay & et.al, 2018)

Take a look at the following illustration below on the 3 measure of Centr

al Tendency.

https://sites.google.com/site/chapter11quarter3project/home/chapter-11-1--find-measures-of-central-
tendency-and-dispersion
Example: Find the mean, median, and mode of the following exam scor
es   
                                 in Statistics below:
24, 45, 19, 26, 47, 29, 24, 16, 33, 16, 24, 45
 
Solution:
                                      mean  =  = 
 
in computing for the median score, we need to arrange the data s
et in either descending or ascending order and get the middle score.
 
16, 16, 19, 24, 24, 24, 26, 29, 33, 45, 45, 47
 
                                  median = .
 
(Notice that in this example, we have 2 middle scores, hence the median is sim
ply the mean of the two scores.)
 
mode = 24 (the frequently occurring score or score with the highe
st  
        frequency).
What about the measure of average called a weighted mean? What is the process inv
olved in solving for the weighted mean? Explore on this. 
 Something worth your time: 

         Study and explore on the given link below:
              
Math Antics - Mean, Median and Mode. Retrieved at:   https://www.youtube.com/watc
h?v=B1HEzNTGeZ4

 Measures of Dispersion
 
Range,  Variance, and Standard  Deviation are all measures of Dispers
ion or Variability.

 
What is the really meant by dispersion or spread of data? How will it be 
useful in describing a set of data?  
 
Let us start with the simplest type of variation and that is the range.
                                             Range = highest value - lowest value
Example:
What is the range of the given data set: 34, 87, 17, 67, 45, 88, 57, 40
 
Solution:
     highest score/value = 88;  lowest score/value = 17
 
Hence, 
Range = 88 – 17 = 71
 
Let us now proceed to the variance and standard deviation (both for population and 
sample). Take a look at the following illustration below:

Source: Elementary Statistics by Larson/Farber https://www.coursehero.com/file/39958937/1Statisticp
pt/
 
 
From the two different set of data set, notice that they have the same val
ues of the mean, median, and mode. But do the data set have exactly the sam
e values? Which among the two given data set has a greater range or widely s
pread out distribution?
 
Yes, it is data set B,
 
Solving for the range, we have : Range (A) = 67 – 56 = 11
Range (B) = 90 – 33 = 57
 
We therefore can say that data set B is more variable than data set A. or 
we can say that data set B is widely spread than data set A. 
                                   
    Hence, we can say that the measures of average, (the mean, median, and mode) i
s not enough to describe a certain data set. It is important to know how far, on the av
erage, each of the scores lies with reference to the center of the distribution. 
 
Now, look at the next illustrations about how variance and standard deviations 
are being computed.              
Consider again the data set: 
                      56, 56, 57, 58, 61. 63, 63, 67, 67, 67

        
Source: Elementary Statistics by Larson/Farber. https://www.coursehero.com/file/39958937/1Statisticppt/
 
 
The first column are the x values (the scores/values in the data set).
The second column is the deviation or the difference between the score and the mea
n.
 
Remember that the mean score was 61.5. Subtract 61.5 from each of the scor
es in column 1, and we will have the results in column 2.
 
For example,
56 – 61-5 = - 5.5
               57 – 61.5 =  4.5
 
And so on…

    Source: Elementary Statistics by Larson/Farber https://www.coursehero.com/file/39958937/1Statisticppt/
 

   Source: Elementary Statistics by Larson/Farber https://www.coursehero.com/file/39958937/1Statisticppt/

What do these numbers tell us? What is meant by having a sample variance of 20.94
? a sample standard deviation of 4.58? What about the population variance? the pop
ulation standard deviation?

Let us try to recall the given data set: 

56, 56, 57, 58, 61. 63, 63, 67, 67, 67

The mean value is 61.5.
Taking the given data set as samples, a variance of 20.94 means that the distance or 
average squared deviation of the scores from the center of the distribution which is th
e mean is around 20.94. The standard deviation (original units) is simply the average 
dispersion or distance from the center (mean). This tells us how far the scores are fro
m the center of the distribution or the data set Hence, a standard deviation of 4.58 me
ans that the given scores,  56, 56, 57, 58, 61. 63, 63, 67, 67, 67 is 4.58 units away (o
n the average) from the center of the distribution/scores which in this case, equal to 6
1.5.

                              Variance (s2) = average squared deviation of values from mean
while,
                             Standard deviation (s) = square root of the variance

For population, we use the greek letter sigma. 

Important points: 

 The variance and standard deviation are the most common and useful measures of va
riability.
 These two measures provide information about how the data vary about the mean.
 When the data are clustered about the mean, the variance and standard deviation will 
be somewhat small.
 When the data are widely scattered about the mean, the variance and standard deviat
ion will be somewhat large.
 Explore on the topic on Variability. Study further other measures of variability.

Something worth your time:
      Visit the link below: 
https://home.ubalt.edu/tmitch/631/PowerPoint_Lectures/chapter4/chapter4.ppt
Consider also the given you tube link giving the step-by-step explanation of the  
measures of dispersion by Khan Academy.
Range, variance and standard deviation as measures of dispersion |Khan Academy: 
https://www.youtube.com/watch?v=E4HAYd0QnRc
Let us now move forward to the study of Positions.
 
 Measures of Position
 
  A measure of location or position for a collection of data values is 
a number that is used to explain the idea of the relative position of a da
ta value in the data set.
 The most commonly used measures of location for sample data a
re the: z-score, and percentiles.
 A method by which the position that a particular data value has wi
thin a given data set can be identified. As with other types of measures
, there is more than one approach to defining such a measure. (Source: 
http://www.milefoot.com/math/stat/desc-positions.htm ).
 
There are various type of Measures of Position. It explains about the po
sition of a value, relative to other values in a set of data. 
The most common measures of position are percentiles, quartiles, and s
tandard scores.
 
 Let us discuss here some of them.
 
Quartiles for small data sets.
Suppose now we have a small data set of twelve observations which we can w
rite in ascending order as follows.
15 18 19 20 20 20 21 23 23 24 24 25
In this case, we want to divide the data into four equal sets, so that there are 2
5% of the observations in each.
First, we find the median. 
15 18 19 20 20 20 ↑ 21 23 23 24 24 25
 
The median is 20.5 (half way between the 6th and 7th observations), and divid
es the data into two equal sets with exactly 50% of the observations in each: the 1st t
o the 6th observations in the first set and the 7th to 12th observations in the other.
To find the first quartile we consider the observations less than the median.
15 18 19 20 20 20
The first  quartile is the median of these data. 
In this case, the first quartile is half way between the 3rd and 4th observations 
and is equal to 19.5.
Now, we consider the observations which are greater than the median.
21 23 23 24 24 25
The third  quartile is the median of these data and is equal to 23.5.
So, for our small data set of 12 observations, the quartiles divide the set into four sub
sets.
15 18 19 ↑ 20 20 20 ↑ 21 23 23 ↑ 24 24 25
 
 
Hence, to sum up we have
  Q1 = 19.5; 
            Q2 = median = 20.5
            Q3 = 23.5

(Source: Nicholas 1999, pp.10-11)
Something worth your time:
     The following PowerPoint presentation will discuss and give examples on what a 
measure of position is all about. Kindly visit the online link below:
The concept of Box Plots, Histogram, and the z scores are also being discussed. 
https://www.anderson5.net/cms/lib/SC01001931/Centricity/Domain/2137/Day
%201%20-%20Measures%20of%20Position%20-%20Quartiles%20-%20Percentiles
%20-%20ZScores-BoxPlots%202.6.ppt
REFERENCES:
 
Black, K. (2010). Business Statistics for Contemporary Decision Making. 6th Edition. J
ohn Wiley & Sons, Inc.
 
Berenson, M., Levine, D., & Krehbiel, T. (2012). Basic Business Statistics. Concepts 
and Application. 12th Edition. Retrieved at: https://drive.google.com/file/d/0B35hM19TI
0JvWFdqVW9mRC1JNTA/view
 
Bianca, A. (2019). .The Advantages of Statistics in Business. Retrieved at: https://sm
allbusiness.chron.com/advantages-statistics-business-18698.html
 
Holmes, A., Illowsky, B., & Dean, S. (2018). Introductory Business Statistics. Retrieve
d at: http://cnx.org/content/col11776/1.33 .
 
How to Mess Things Up Before You Start. Mathematics for the Liberal Arts. Retrieved 
at: https://courses.lumenlearning.com/math4libarts/chapter/how-to-mess-things-up-
before-you-start/
 
Lies, damned lies and statistics (about TEDTalks). Retrieved at: https://www.youtube.
com/watch?v=1Totz8aa2Gg&feature=youtu.be
 
Tiemann, T. (2010). Introductory Business Statistics. Retrieved at http://solr.bccampu
s.ca:8001/bcc/file/b98db368-2b3d-4f32-97d5-837719f2fcce/1/Introductory
%20Business%20Statistics.pdf
 
https://learn.saylor.org/course/view.php?id=109§ionid=1051
 
file:///D:/CAS%20online%20training/math%20D%20MODULES/mc-106.pdf
 
https://www.anderson5.net/cms/lib/SC01001931/Centricity/Domain/2137/Day
%201%20-%20Measures%20of%20Position%20-%20Quartiles%20-%20Percentiles
%20-%20ZScores-BoxPlots%202.6.ppt
Lesson 2b | Basics of Probabilities

Basic Probability Concepts

Meaning of Probability and its Basic Components

What is the meaning of the word ‘probability’?

Let us read and study the definition of probability from various authors and sources. A
probability is the numerical value representing the chance, likelihood, or possibility
that an event will occur, such as the price of a stock increasing, a rainy day, a
defective product, or obtaining an outcome five dots in a single toss of a die.
(Berenson et al , 2012) “Probability is simply how likely something is to happen.”
(Probability: the basics by Khan Academy). “Probability is a branch of mathematics
that deals with calculating the likelihood of a given event's occurrence, which is
expressed as a number between 1 and 0”.
(probability. https://whatis.techtarget.com/definition/probability).

Next question is, what are the uses of probability in Business? Black, (2010), p.94
made a list of some uses of Probability in Business.

 The insurance industry uses probabilities in actuarial tables to determine the

likelihood of certain outcomes in order to set specific rates and coverages.

 The gaming industry uses probability values to establish charges and payoffs.

 One way to determine whether a company’s hiring practices meet the government’s
guidelines
 In other industries, such as manufacturing and aerospace, it is important to know
the life of a mechanized part and the probability that it will malfunction at any given
length of time in order to protect the firm from major breakdowns.

“One practical use for probability distributions and scenario analysis in business is to
predict future levels of sales. It is essentially impossible to predict the precise value of
a future sales level; however, businesses still need to be able to plan for future
events.” (Richards, n.d.) Now, time to explore on this concept. Kindly visit the online
link below.

Something worth your time: Lehr, M. (2017). IMPORTANCE OF PROBABILITY IN

BUSINESS DECISION MAKING PROCESS. Retrieved
at: https://omegazadvisors.com/2017/11/20/importance-of-probability-in-
businessdecision-making/

Before we will start exploring the basic concept of probability, please pay attention to
some important terms we need to learn and understand.

Key Terms:

Experiment- a process that produces an outcome.

Outcome – result of an experiment.

Sample Space – set of all possible outcomes.

Event – subset of a sample space

Probability – the chance that an uncertain event will occur.

Let P(A) – probability of an event A, then 0 ≤ P(A) ≤ 1

Impossible Event – an event that has no chance of occurring P(A) = 0

Certain Event – an event that is sure to occur P(A) = 1

Let us consider the three methods of assigning probability:

 Classical (or a priori)

– based on prior knowledge of the processes involved.

- probabilities are assigned based on laws and rules.

- involves an experiment

Empirical (relative frequency of occurrence) - based on cumulated historical data. -

probability of an event occurring is equal to the number of times the event has
occurred in the past divided by the total number of opportunities for the event to have
occurred. In short, we can write

 Subjective (or Intuition)

- based on the feelings or insights of the person determining the probability.

- based on the accumulation of knowledge, understanding, and experience.

- merely a guess.

Example 1: Consider the experiment of tossing a coin. There are only two possible
outcomes: Head (H) and Tail (T). The sample space, S, can be written S = {H, T}.
Notice that we only have two possible outcomes, hence number of elements in the
set is 2. n (S) = 2

The outcome of tossing a coin once can be H or T. so suppose, the coin is being
tossed and it landed head, then the event, A can be written, A = {H}; and n (A) = 1.
Now, suppose we are to compute the probability or chance that in a toss of a coin, it
will land head. Applying classical probability, we have

Example 2: Consider now a cube or commonly known as a die. A standard six-sided

die has six faces represented by dots. Changing dots into its numeral value, the
sample space can be written S = {1, 2, 3, 4, 5, 6} and n (S) = 6 Tossing a die once,
find the following probability.

a. P (1) ; b. P (more than 4) ; c. P (even number) ; d. P (7) ; e. P (number less than 7)

Solution:

a. P (1) = 1 6 ; b. P (more than 4) = 2 6 = 1 3  ; c. P (even number) = 3 6 = 1 2 ; d. P

(7) = 0 ; e. P (number less than 7) = 6 6 = 1

 What will happen to the sample space if it involves rolling of two dice at a time?

 What about tossing a coin three times? Is the sample space the same in tossing
three coins simultaneously?

Example 5: on Subjective Probability

 There is a big chance of raining today because it has been raining for the past 3
days.

 The probability of having students failed in a Statistics course this school year is
around 20% based on the past 5 years’ rate of failure.

 I think I will have an 80% chance of passing the board exam this year. Observe that
this method of assigning probability is based on one’s personal opinion, insight,
views, or experience. For more examples and discussion about this topic, kindly
explore on the given online links below:

1. Lehr, M. (2017). IMPORTANCE OF PROBABILITY IN BUSINESS DECISION

MAKING PROCESS. Retrieved
at: https://omegazadvisors.com/2017/11/20/importance-of-probability-in-business-
decision-making/
2. Probability. Retrieved
at: http://web.cecs.pdx.edu/~mperkows/CLASS_479/2017%20ML
%201/2017_0026_probability%20exercises.ppt

3. Probability Part 1: Rules and Patterns: Crash Course Statistics #13. Retrieved
at: https://www.youtube.com/watch?v=OyddY7DlV58

4. Probability Word Problems (Simplifying Math) https://www.youtube.com/watch?

v=vGcmjINp1x8

REFERENCES Books:

Albert, J.R. (2008). Basic Statistics for the Tertiary Level. Rex Bookstore Inc. Manila,
Philippines. Berenson, M., Levine, D. & Krehbiel, T. (2012). Basic Business Statistics.
Concepts and Application. 12th Edition. Prentice Hall, One Lake Street, Upper Saddle
River, New Jersey 07458.

Black, K. (2010). Business Statistics for Contemporary Decision Making. 6th Edition.
John Wiley & Sons, Inc. Dionsay, J., Villeta, R., Sollano, A, Dayap, J. (2018).
Exploring the Basics of Mathematics in the Modern World. Recoletos Educational
Apostolate in the Philippines (REAP). Manila, Philippines.

Walpole, R. (2000). Introduction to Statistics. 3rd Edition. Pearson Education Asia

Pte, Ltd. Singapore. Online Sources: Lehr, M. (2017). IMPORTANCE OF
PROBABILITY IN BUSINESS DECISION MAKING PROCESS.

Retrieved at: https://omegazadvisors.com/2017/11/20/importance-ofprobability-in-
business-decision-making/  Probabilty: the Basics by Khan Academy:

Retrieved at: https://www.khanacademy.org/math/statistics-probability/probability-
library/basictheoretical-probability/a/probability-the-basics-Probability.

Retrieved at: http://web.cecs.pdx.edu/~mperkows/CLASS_479/2017%20ML
%201/2017_0026_probability%20exercises.ppt  Probability Part 1: Rules and
Patterns: Crash Course Statistics #13.

Retrieved at: https://www.youtube.com/watch?v=OyddY7DlV58  Probability Word

Problems (Simplifying Math).
Retrieved at: https://www.youtube.com/watch?v=vGcmjINp1x8  Richards, L.(n.d). The
Role of Probability Distribution in Business Management.

Retrieved at: https://smallbusiness.chron.com/role-probability-distribution-
businessmanagement26268.html#:~:text=One%20practical%20use%20for
%20probability,to%20%20plan%20for%20future%20events.  Verial, D. (2019).
Importance of Probabilities in Business.

Retrieved at: https://bizfluent.com/info-8273907-importance-probabilities-
business.html