Chap 2 A

Statistics for Business
and Economics
Anderson
Sweeney
Williams
Slides by
John Loucks
St. Edwards University
2011 Cengage Learning. All Rights Reserved. May not be scanned, copied Slide
1
or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 2, Part A
Descriptive Statistics:
Tabular and Graphical Presentations
Summarizing Categorical Data

Summarizing Quantitative Data
Categorical
Categorical data
data use
use labels
labels or
or names
names
to
to identify
identify categories
categories of
of like
like items.
items.
Quantitative
Quantitative data
data are
are numerical
numerical values
values
that
that indicate
indicate how
how much
much or
or how
how many.
many.
2
Summarizing Categorical Data
Frequency Distribution
Relative Frequency Distribution
Percent Frequency Distribution
Bar Chart
Pie Chart
3
A
A frequency
frequency distribution
distribution is
is aa tabular
tabular summary
summary of
of
data
data showing
showing the
the frequency
frequency (or
(or number)
number) of
of items
items
in
in each
each of
of several
several non-overlapping
non-overlapping classes.
classes.
The
The objective
objective is
is to
to provide
provide insights
insights about
about the
the data
data
that
that cannot
cannot be
be quickly
quickly obtained
obtained by
by looking
looking only
only at
at
the
the original
original data.
data.
4
Example: Marada Inn
Guests staying at Marada Inn were asked to rate

the
quality of their accommodations as being
excellent,
above average, average, below average, or
Above Average
Below
Average
poor.Average
The
Average
Above Average
Above
Average
ratings
provided by
a sample
of 20Above
guests
are:
Above Average
Average
Above Average
Average
Above Average
Below Average
Poor
Excellent
Above Average
Average
Below Average
Poor
Above Average
Average
5
Example: Marada Inn

Rating
Frequency
2
Poor
3
Below Average
5
Average
9
Above Average
1
Excellent
Total
20
6
Relative Frequency Distribution

The
The relative
relative frequency
frequency of
of aa class
class is
is the
the fraction
fraction or
or
proportion
proportion of
of the
the total
total number
number of
of data
data items
items
belonging
belonging to
to the
the class.
class.
A
A relative
relative frequency
distribution is
is aa tabular
tabular
summary
summary of
of aa set
set of
of data
data showing
showing the
the relative
relative
frequency
frequency for
for each
each class.
class.
7
Percent Frequency Distribution

The
The percent
percent frequency
frequency of
of aa class
class is
is the
the relative
relative
frequency
frequency multiplied
multiplied by
by 100.
100.
A
A percent
percent frequency
distribution is
is aa tabular
tabular
summary
summary of
of aa set
set of
of data
data showing
showing the
the percent
percent
frequency
frequency for
for each
each class.
class.
8
Relative Frequency and

Percent Frequency Distributions
Example: Marada Inn

Relative
Percent
Rating
Frequency Frequency
.10
10
Poor
15
Below Average .15
.25
25 .10(100) =
Average
10
.45
45
Above Average
.05
5
Excellent
Total
1.00
100
1/20 = .05
9
Bar Chart
A bar chart is a graphical device for depicting
qualitative data.
On one axis (usually the horizontal axis), we specify
the labels that are used for each of the classes.
A frequency, relative frequency, or percent frequency
scale can be used for the other axis (usually the
vertical axis).
Using a bar of fixed width drawn above each class
label, we extend the height appropriately.
The bars are separated to emphasize the fact that each
class is a separate category.
10
Bar Chart
Frequency
10
9
Marada Inn Quality Ratings
8
7
6
5
4
3
2
1
Poor Below Average Above Excellent
Average
Average
Rating
11
Pareto Diagram
In quality control, bar charts are used to identify the
most important causes of problems.
When the bars are arranged in descending order of
height from left to right (with the most frequently
occurring cause appearing first) the bar chart is
called a Pareto diagram.
This diagram is named for its founder, Vilfredo
Pareto, an Italian economist.
12
Pie Chart
The pie chart is a commonly used graphical device
for presenting relative frequency and percent
frequency distributions for categorical data.
First draw a circle; then use the relative frequencies

to subdivide the circle into sectors that correspond to
the relative frequency for each class.
Since there are 360 degrees in a circle, a class with a
relative frequency of .25 would consume .25(360) = 90
degrees of the circle.
13
Pie Chart
Marada Inn Quality
Ratings
Excellent
5%
Above
Average
45%
Poor
10%
Below
Average
15%
Average
25%
14
Example: Marada Inn
Insights Gained from the Preceding Pie Chart

One-half of the customers surveyed gave Marada
a quality rating of above average or excellent
(looking at the left side of the pie). This might
please the manager.
For each customer who gave an excellent rating,
there were two customers who gave a poor
rating (looking at the top of the pie). This should
displease the manager.
15
Summarizing Quantitative Data
Percent Frequency
Distributions
Dot Plot
Histogram
Cumulative Distributions
Ogive
16
Example: Hudson Auto Repair

The manager of Hudson Auto would like to
gain a
better understanding of the cost of parts used in
the
engine tune-ups performed in the shop. She
examines
50 customer invoices for tune-ups. The costs of
parts,
rounded to the nearest dollar, are listed on the
next
slide.
17
91
71
104
85
62
Sample of Parts Cost($) for 50 Tune78 ups

93 57 75 52 99 80 97
69
74
97
82
72
62
88
98
89
68
68
101
66
97
83
79
75
105
68
105
79
77
71
79
75
65
69
69
72
80
67
62
62
76
109
74
73
18
The three steps necessary to define the classes for a
frequency distribution with quantitative data are:
1. Determine the number of non-overlapping classes.
2. Determine the width of each class.
3. Determine the class limits.
19
Guidelines for Determining the Number of

Classes
Use between 5 and 20 classes.
Data sets with a larger number of elements
usually require a larger number of classes.
Smaller data sets usually require fewer classes.
The
The goal
goal is
is to
to use
use enough
enough classes
classes to
to show
show the
the
variation
variation in
in the
the data,
data, but
but not
not so
so many
many classes
classes
that
that some
some contain
contain only
only aa few
few data
data items.
items.
20
Guidelines for Determining the Width of Each

Class
Use classes of equal width.
Approximate Class Width =
Largest Data Value Smallest Data Value

Number of Classes
Making
Making the
the classes
classes the
the same
same
width
width reduces
reduces the
the chance
chance of
of
inappropriate
inappropriate interpretations.
interpretations.
21
Note on Number of Classes and Class Width
In practice, the number of classes and the
appropriate class width are determined by trial
and error.
Once a possible number of classes is chosen, the
appropriate class width is found.
The process can be repeated for a different

number of classes.
Ultimately, the analyst uses judgment to
determine the combination of the number of
classes and class width that provides the best
frequency distribution for summarizing the data.
22
Guidelines for Determining the Class Limits
Class limits must be chosen so that each data
item belongs to one and only one class.
The lower class limit identifies the smallest
possible data value assigned to the class.
The upper class limit identifies the largest

possible data value assigned to the class.
The appropriate values for the class limits
depend on the level of accuracy of the data.
An
An open-end
open-end class
class requires
requires only
only aa
lower
lower class
class limit
limit or
or an
an upper
upper class
class limit.
limit.
23
If we choose six classes:
Approximate Class Width = (109 - 52)/6 = 9.5 10
Parts Cost ($) Frequency

50-59
2
60-69
13
70-79
16
80-89
7
90-99
7
100-109
5
Total
50
24


Parts
Relative
Percent
Cost ($) Frequency Frequency
50-59 .04
4
60-69 .26
26
2/50
.
70-79 .32
04(100
32
Percent
) Percent
80-89 .14
14
frequency
frequency is
is
90-99 .14
14
the
the relative
relative
100-109 .10
10
frequency
frequency
multiplied
multiplied
Total 1.00
100
by
by 100.
100.
25


Insights Gained from the % Frequency
Distribution:
Only
4% of the parts costs are in the $50-59 class.
30% of the parts costs are under $70.
The greatest percentage (32% or almost one-third)

of the parts costs are in the $70-79 class.
10% of the parts costs are $100 or more.
26
Dot Plot
One of the simplest graphical summaries of

data is a dot plot.
A horizontal axis shows the range of data
values.
Then each data value is represented by a dot
placed above the axis.
27
Dot Plot

Tune-up Parts Cost
50
60
70
80
90
100
Cost ($)
28
110
Histogram
Another common graphical presentation of
quantitative data is a histogram.
The variable of interest is placed on the horizontal
axis.
A rectangle is drawn above each class interval with
its height corresponding to the intervals frequency,
relative frequency, or percent frequency.
Unlike a bar graph, a histogram has no natural
separation between rectangles of adjacent classes.
29
Histogram

18
Tune-up Parts Cost
16
Frequency
14
12
10
8
6
4
2
Parts
Cost ($)
5059 6069 7079 8089 9099 100-110
30
Histograms Showing Skewness
Symmetric
Left tail is the mirror image of the right tail
Examples: heights and weights of people
Relative Frequency
.35
.30
.25
.20
.15
.10
.05
0
31
Moderately Skewed Left

A longer tail to the left
Example: exam scores
Relative Frequency
.35
.30
.25
.20
.15
.10
.05
0
32
Moderately Right Skewed

A Longer tail to the right
Example: housing values
Relative Frequency
.35
.30
.25
.20
.15
.10
.05
0
33
Highly Skewed Right

A very long tail to the right
Example: executive salaries
Relative Frequency
.35
.30
.25
.20
.15
.10
.05
0
34
Cumulative
Cumulative frequency
distribution shows
shows the
the
number
number of
of items
items with
with values
values less
less than
than or
or equal
equal to
to the
the
upper
upper limit
limit of
of each
each class..
class..
Cumulative
Cumulative relative
relative frequency
distribution shows
shows
the
the proportion
proportion of
of items
items with
with values
values less
less than
than or
or
equal
equal to
to the
the upper
upper limit
limit of
of each
each class.
class.
Cumulative
Cumulative percent
percent frequency
distribution shows
shows
the
the percentage
percentage of
of items
items with
with values
values less
less than
than or
or
equal
equal to
to the
the upper
upper limit
limit of
of each
each class.
class.
35
The last entry in a cumulative frequency distribution
always equals the total number of observations.
The last entry in a cumulative relative frequency
distribution always equals 1.00.
The last entry in a cumulative percent frequency
distribution always equals 100.
36
Hudson Auto Repair

Cumulative Cumulative
Cumulative Relative
Percent
Cost ($) Frequency Frequency Frequency
< 59
2
.04
4
< 69
15
.30
30
< 79
31
62
.
2 +.62
15/50
30(100)
< 89
38
13 .76
76
< 99
45
.90
90
< 109
50
1.00
100
37
Ogive
An ogive is a graph of a cumulative

distribution.
The data values are shown on the horizontal
axis.
Shown on the
cumulative
cumulative
cumulative
vertical axis are the:

frequencies, or
relative frequencies, or
percent frequencies
The frequency (one of the above) of each class

is plotted as a point.
The plotted points are connected by straight

lines.
38
Ogive
Hudson Auto Repair

Because the class limits for the parts-cost
data are 50-59, 60-69, and so on, there
appear to be one-unit gaps from 59 to 60,
69 to 70, and so on.
These gaps are eliminated by plotting points
halfway between the class limits.
Thus, 59.5 is used for the 50-59 class, 69.5

is used for the 60-69 class, and so on.
39
Ogive with Cumulative Percent

Frequencies
Cumulative Percent Frequency
100
Tune-up Parts Cost
80
60
(89.5,
76)
40
20
50
60
70
80
90
100
Parts
Cost ($)
110
40
End of Chapter 2, Part A
41

Chap 2 A

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Chap 2 A

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Statistics for Business

Summarizing Categorical Data

Summarizing Categorical Data

Example: Marada Inn

Guests staying at Marada Inn were asked to rate

Example: Marada Inn

Relative Frequency Distribution

Percent Frequency Distribution

Relative Frequency and

Example: Marada Inn

Marada Inn Quality Ratings

First draw a circle; then use the relative frequencies

Example: Marada Inn

Insights Gained from the Preceding Pie Chart

Summarizing Quantitative Data

Example: Hudson Auto Repair

Example: Hudson Auto Repair

Sample of Parts Cost($) for 50 Tune78 ups

Guidelines for Determining the Number of

Guidelines for Determining the Width of Each

Approximate Class Width =

Largest Data Value Smallest Data Value

The process can be repeated for a different

The upper class limit identifies the largest

Parts Cost ($) Frequency

Relative Frequency and

Example: Hudson Auto Repair

Relative Frequency and

Example: Hudson Auto Repair

30% of the parts costs are under $70.

The greatest percentage (32% or almost one-third)

10% of the parts costs are $100 or more.

One of the simplest graphical summaries of

Example: Hudson Auto Repair

Example: Hudson Auto Repair

Tune-up Parts Cost

Histograms Showing Skewness

Histograms Showing Skewness

Moderately Skewed Left

Histograms Showing Skewness

Moderately Right Skewed

Histograms Showing Skewness

Highly Skewed Right

Hudson Auto Repair

An ogive is a graph of a cumulative

vertical axis are the:

The frequency (one of the above) of each class

The plotted points are connected by straight

Hudson Auto Repair

Thus, 59.5 is used for the 50-59 class, 69.5

Ogive with Cumulative Percent

Cumulative Percent Frequency

Tune-up Parts Cost

End of Chapter 2, Part A

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