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Quantitative Methods For Decision Making-1
Quantitative Methods For Decision Making-1
Quantitative Methods For Decision Making-1
Quantitative Methods
for Decision Making
A Practical and Philosophical approach
By,
Yaseen Ahmed Meenai
Faculty, FCS-IBA
ymeenai@iba.edu.pk
Inactivity breaker
Object: Allocate a blank page from your writing material and divide that
page into two columns in the following manner:
Qualitative Variables
Quantitative
Variables
1- Gender
1- Age
2- Complexion
2- Height
3- Qualification
3- Weight
4- Weather
4- Price
20.
20.
Data Sources
There are three major sources of data:
1. Survey/Census: An official, usually periodic
enumeration of a population, often including the
collection of related demographic information,
is called census. Survey means to inspect and
determine the conditions of interest.
2. Experiment: Any activity, which is usually
being conducted within an isolated atmosphere,
and produces results, is called experiment.
3. Simulation: An artificial way of data collection.
Data
Collection/compilation
Teaching Ranks where 1-Very Poor, 5-Excellent
4.5
3.7
4.3
3.3
2.7
4.7
3.8
4.5
3.4
4.0
3.8
2.7
4.3
3.4
3.2
3.7
3.9
3.8
3.8
3.7
3.6
5.0
4.2
4.1
4.2
4.1
3.9
4.5
5.0
3.7
4.8
3.2
4.2
4.5
4.2
5.0
2.9
Data collection/compilation is needed for getting
actual behavior of the variable.
Note: The above data is simulated version of the actual.
Data Process
Information
Freque
Ranks
ncy
2.7
3.1
3.4
10
3.8
4.2
4.6
Histogram
Frequency
12
10
8
6
4
2
0
Ranks
Data Process
Information
Freque
Ranks
ncy
2.7
7
3.1
3.4
11
9
3.8
4.2
6
3
4.6
Histogram
Frequency
12
10
8
6
4
2
0
Ranks
Dat
a
Processin
g
By Graph
Processin
g
By
Measure
Conclusio
ns
Frequenc
y
Relative
Frequency
(R.F.)
Cumulative
Relative Frequency
(C.R.F)
24
46
68
810
1012
2
5
9
7
2
f=25
2/25 = 0.08
5/25 = 0.20
9/25 = 0.36
7/25 = 0.28
2/25 = 0.08
R.F.=1
0.08
0.28
0.64
0.92
1.00
Statistical Measures
(Quartiles)
These
are
3
values
respectively
represented by Q1, Q2 and Q3 and divides
the data into 4 equal parts.
Each part contains 25% observations
Quartiles Usually highlight 4 different
classes i.e. Lower class, Lower Middle,
25% and
25%
25%
Upper Middle
Upper
class.25%
Lower
Class
Mi
n
Lower
Middle
Upper
Middle
Upper
Class
Ma
x
Computing Quartiles
In order to computer Quartile Values, we
need to consider the same frequency
distribution in addition to the column of
Cumulative Frequency.
Class
Frequenc
Cumulative
Intervals
y
Frequency
(C.F.)
24
2
2
46
5
7
68
9
16
810
7
23
1012
2
25
f=25
Computing Quartiles
(Procedure)
For any group-data, quartiles can be computed by
following two simple steps:
Step-1: Finding the location of ith Quartile: (where
i=1,2 and 3)
Frequenc
y
24
46
68
810
1012
Cumulative
Frequency
(C.F.)
2
7
16
23
25
2
5
9
7
2
f=25
Step-1 (For Q1): (1 x 25) / 4 = 6.25
Step-2:
1st
Quart
ile
Class
Quartiles (Income
Classes)
25%
Lower
Class
Mi
n
25%
Lower
Middle
25%
Upper
Middle
25%
Upper
Class
Ma
x
2000
5700 7222
8786
12000
Quartiles can be computed using MSEXCEL,
ungroup form of data is needed there, the
syntax is given below:
=QUARTILE(Data Range,i) where i=1,2,3
showing quartile numbers.
To divide the
data into 10
equal parts.
Deciles
are
Nine values D1,
D2 , D3 D9.
To
divide
the
data into 100
equal parts.
Percentiles are
Ninty nine values
P1, P2,. P99
Step-1:
i=1,2,3
Step-1:
i=1,2,3,,9
Step-1:
i=1,2,3,99
Step-2:
Step-2:
Step-2:
Practice Questions
Q. What should be the interval of income
which covers middle 50% individuals?
Ans.
5700 to 8786
Q. What should be the interval of income
which covers middle 40% individuals?
Mi
n
100
%
40%
30%
D3
30%
D7
Ma
x
The Box-Plot
Boxplot
Boxplot of
of Teaching
Teaching
Inter-quartile
Range=Q3-Q1
Min
Q1
33
Max
Q2
44
Teaching
Teaching Ranks
Ranks
Q3
55
Males are
Younger
than
Females
More
Variable
Less
35
Consistent
Heterogeneou
s
More Diversed
Less
Variable
More
Consistent
Homogenous
Less Diversed
Male Age
Female A
25
Structur
Admin
Teaching
Mod
al
Clas
s
Class
Intervals
24
Frequency
Mid-Points
fi
xi
(2+4)/2
2
=3
46
68
810
810
f1=5
fm
=9
m
ff2=7
=7
1012
1012
2
2
f
fii=25
=25
(4+6)/2
(6+8)/2
(8+10)/2
(8+10)/2
(10+12)/2
(10+12)/2
=11
=11
2 3
=5
=7
5 5
9 7
7
7
9
9
=9
=9
2
2
11
11
f
f ii
x
xi=179
=179
i
Mode= 7.333
= 7333/Majoritys Income
= 7160/- is the
Average Income
25
Median Q2
7.222
f m f1
h
Mode l
2 f m f1 f 2
Mean Median Mode
7.160
7.333
AM, GM & HM
(Computations)
Class
Intervals
24
46
68
810
1012
Frequenc
y
fi
2
5
9
7
2
f
fii=25
=25
MidPoints
xi
3
5
7
9
11
For
A.M.
For
G.M.
f i xi
xi
23
23
55
97
79
211
ffii
xxi=179
=179
i
fi
32
55
79
97
11 22
fi
x
xi fi
i
For
H.M.
fi / x i
2/3
5/5
9/7
7/9
2/11
fi / x i
For Mean
For
For Mode
Statistical Measures
(Dispersion)
t
What is DISPERSION?? on
H
B
d
A dart-game can help us
in
this
C
r
l
l
U
e
i
t
M lay ch
Based
on
the
visual
s
A
observation; we can
declare
u
w
e
p
r
o
Player-A
as w
a
winner
m
e
e
h
because:
t
y
h
,
w
t
a
Player A is, u
l
w
o
B
d
p
More consistent/Less
o
H
e
n
e
Variable/Homogenous/Less
s
d
!
k
r
h
!
n
Dispersed
t
!
e
!
A
And
t
p
?
n
?
Player B is, is
?
?
e ?
d
t
Less Consistent/More
?
is sis is?
Variable/Heterogeneous/More
dispersed
n
Measures of Dispersion
Some Important Measures of
Dispersion are:
Range=Max-Min
Variance
Standard Deviation
Mean Deviation
Inter-quartile Range
Coefficient of Variation (C.V.)
Dispersion Measures
(Cont)
2
x x
Variance V ( X )
Standard Deviation=
=1.414 ???
V (X ) 2
Coefficient of Variation
(Consistency Check)
In order to check whether the
variable is consistent or not, we need
to compute the coefficient of
variation,
V (X )
C.V .
100 100
X
Frequenc
Midy
Points
fi
xi
2
(2+4)/2=3
f i xi
f i (xi-mean)2
2 3
2(3 7.16)2=34.61
5(5 7.16)2=23.33
9(7 7.16)2=0.230
7(9 7.16)2=23.69
2(11 7.16)2=29.49
=111.34
46
46
68
5
5
9
(4+6)/2=5
(4+6)/2=5
(6+8)/2=7
5 5
5 5
9 7
68
810
9
7
9
7 7
9
810
1012
7
2
1012
2
fi=25
(6+8)/2=7
(8+10)/2=
9
(8+10)/2=
(10+12)/2
9
=11
(10+12)/2
=11
9
2711
f i 2
x11
i=179
fi=25
f i xi=179
f x x
Variance V ( X )
f
i
111 .34
4.45
25
V (X )
1.414
C.V .
100
100 47.1%
X
3
And for the Income-data ( f = 25 ); it is,
V (X )
2.111
C.V .
100
100 29.48%
X Income data
7.16is more consistent
So technically,
Hand-Profile Analysis
(An exploratory approach)
X4
X3
S.N
o.
X2
X5
Span
(X6)
Lengt
h (X7)
Thum
b (X1)
in
cms
Measurement
s (X)
X1
X2
X3
X4
X5
X6
7
X7
Determine
the
Mean,
Standard
deviation
and
Coefficient
of
Variation.
Press MODE
Select STAT
Select 1-Var
Enter the Data in
appeared data column
For Finding Mean and
Standard Deviation:
Press Shift and then press 1
Select VAR
Select
for mean
Select X n for Standard
Deviation
Press MODE
Select SD
Entering the Data:
Obs1 M+
Obs2 M+
Obs3 M+
do it for all remaining data
observations.
For Finding Mean and
Stand. Dev.
Press Shift and Press 2
Select
for mean
Select X n for Standard
Deviation
several
Symmetrical
Determine
the
following
Quantiles/Percentage
Points/Z-scores
using the Standard Normal Table:
7- P(Z
a) 0.09
= 0.025
Z
0.06
0.00
-3.9
..
-1.9
0.025
P(Z b) = 0.05
Z
0.09
0.05
0.04
0.00
-3.9
..
-1.6
0.0495 0.0505
Index Numbers
Index Numbers are RELATIVE measures.
Index Numbers Could be Price Relatives or
Quantity Relatives.
Index Numbers are having two major types:
1) Simple Index 2) Composite Index
) Simple Index Number can be obtained
using this formula: In=Pn/P0100 where,
Pn is the current year (time) and Po is the Base year
(time)
Pric
e
(Rs/)
2006
54
2007
60
Fixed Base
In=Pn/54 100
Chain Base
In=Pn/Pn 100
=54/54 100=
100.0%
=54/54 100=
100.0%
=60/54 100=
111.1%
=60/54 100=
111.1%
2008 67
=67/54
100= base=67/60
100=by fixing
If we
want to use
a Fixed
method
111.7%
the base year 124.1%
as 2006 then the
possible Indices
will be computed by dividing all Price values with
54.
In Chain base method; the preceding year price
will be used as base.
e
e
e
City City City
1
2
3
200
6
54
52
50
200
7
60
65
62
Su
m
P
In=Pn/156
100
In=Pn/P0
100
156
100%
100%
187
119.9%
119.9%
200
128.2%
106.9%
200
Before
the fixed base or chain based
67 computing
65
68
8 index numbers, we have to obtain a sum for all
prices in the next column.
Finally we can compute both Fixed base and chain
base indices for the P column using the same
procedures.