QM Tutorial | Session 1

Introduction, Descriptive statistics and Numerical measures

Data: Facts and figures found in everyday life
All the data collected in a particular study are referred to as the
Data Set
So what is Statistics?
The art and science of collecting, organizing, analyzing,
presenting, and interpreting data is Statistics.
Helps us scale down the data sets that need to be studied
By collecting a small amount of data out of the whole, we can
generate meaningful measures and inferences about the whole


Why do we need to do all this?
Ex: Marketing and Sales
You are all ready for your new venture selling cigarettes outside IIM
Trichy
How would you ensure that customers will come to you and not go to
the swanky Dhaba nearby?
Market research: Surveys, 100 respondents, students of NITT
What will you ask? Amount of purchase, age group, income levels,
tastes
What did you get? 45% like listening to music when having a
smoke
55% of them listen to Psychedelic music
Result: You start playing Pink Floyd and Porcupine tree instead of
Himesh Reshamiya!
Do we even use this after an MBA?
Elements- Entities on which data is collected
Variable- Characteristic of interest for the elements
Observation- Set of measurements obtained for a particular
element
A data set with n elements contains n observations
Total number of data values in a complete data set= Number of
elements x Number of variables
Some basic terminologies
Company Stock exchange Annual sales
($mn)
Earnings per share
RIL BSE 1200 27
INFY NSE 800 12
IIPM 420 10 0.003
Elements
Variables
Observation
Nominal scales - Represented in words
Ordinal Similar to nominal, except that you can numerically or non-
numerically rank the observations
Interval scale Numerical ordinal scale that generates meaningful
intervals
Ratio The observation of one element can be expressed as the
ratio of another
The scale determines the amount of information contained in the
data


Students of a university are classified by the school in which they are
enrolled using a nonnumeric label such as Business, Humanities,
Education, and so on. Which scale is this?




Scales of measurement These are for variables
Concept check








Students of a university are classified by their class standing using a
nonnumeric label such as Freshman, Sophomore, Junior, or Senior. Which
scale is this?

Scales of measurement These are for variables
Concept check
Varun has an SAT score of 1205, while
Meera has an SAT score of 1090.
Meera scored 115 points more than
Varun. Which scale?
Meera has 72 college credits earned,
Varun has 36 credits earned. Meera has
earned twice as much credits as Varun.
Which scale?
Key points

Interval data is always numeric
Interval between observations is expressed in
terms of a fixed unit of measure
Ratio scale All properties of interval data, but the
ratio of two values is meaningful
Ex: Distance, Height, Weight, Time
Qualitative: Usually nominal or ordinal
Quantitative: Numerical
Cross sectional: Data collected at one point in time
Time series: Data collected in different points in time
Data detailing the number of new checkpoints installed on the
Trichy-Thanjavur highway on 17
th
July, 2014. Which type?


Number of checkpoints installed in the last 2 years. Which type?
Types of data
Concept check
Descriptive statistics: Considering the situation, deciding elements
and variables, magnitude of the data set, conducting experiments,
making observations, graphs tables, generating meaningful
numerical measures and discussing them
Inferential statistics: Considering and conducting experiments on a
sample and making inferences about the population
Common descriptive statistics: Mean, median, mode
Mean: Average
Median: The numerical value separating the higher half of a data
sample from the lower half. Ex: The median of {3, 3, 5, 9, 11} is 5
Mode: The mode is the value that appears most often in a set of
data. it is the value that is most likely to be sampled

Statistical types
Summarizing quantitative data:
Frequency Distribution
Relative Frequency Distribution
Percent Frequency Distribution
Bar Chart
Pie Chart

A frequency distribution is a tabular summary of data showing the frequency
(or number) of items in each of several non-overlapping classes.
The objective is to provide insights about the data that cannot be quickly
obtained by looking only at the original data

Data analysis
Frequency analysis
Collection
Organization
Summarization
Representation
Analysis and
Measures
Interpretation
Inference
Descriptive
Statistics
Inferential
Statistics
Frequency distributions can be used to summarize both
kinds of data
Empirical; related to experiments using data
Frequency number of times a data point (value) occurs
Distribution- Correspondence to each category or class
Frequency analysis
Easy example:

Coin tossing

Two mutually exclusive categories
H and T
Number of experiments conducted : 100
Variable Class H

Times H occurs = 52

Variable Class T

Times T occurs = 48

Qualitative data examples
Students emotional state-of-being in a fictitious class: brain-dead (BD), drowsy-sleepy-hazy (DSH), curiously
disinterested (CD), willing-to-give-achance (WGC), interested (I), intellectually stimulated (IS), ecstatic (E)
Lets assume 50 students

Frequency analysis
I
I E
WGC D
DSH C
DSH B
BD A
Z CD
Student Response
F
Elements
Domain
Variable of interest
This is the experiment - result table

How do we construct the frequency distribution table?
Thats for next class