Great Land College

Module

Course: Business Statistics

January 2021

Business statistics

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 Chapter one
1. Introduction (4 lecture hours)
1.1 Definition and classification of Statistics
1.2 Stages in statistical investigation
1.3 Definition of some basic terms
1.4 Applications, uses and limitations of Statistics
1.5 Types of variables and measurement scales

1.1. Definitions and classification of Statistics

Definitions:
Statistics is defined differently by different authors over period of time. In the olden
days statistics was confined to only state affairs but in modern days it embraces almost
every sphere of human activity. Therefore, a number of old definitions, which were
confined to narrow field of enquiry, were replaced by more definitions, which are much
more comprehensive and exhaustive.
We can define it in two senses.
In the plural sense: statistics are the raw data themselves (Numerical facts) , like
statistics of births, statistics of deaths, statistics of students, statistics of imports and
exports, etc.
In the singular sense: statistics is concerned with scientific methods for collecting,
organizing, summarizing, presenting and analyzing data as well as deriving valid
conclusions and making reasonable decisions on the basis of this analysis.
Classifications:
Depending on how data can be used statistics is sometimes divided in to two main
areas or branches.
1. Descriptive Statistics:
is concerned with summary calculations, graphs, charts and tables.
Generally characterizes or describes a set of data elements by graphically
displaying the information or describing its central tendencies and how it is
distributed.
In descriptive statistics our objective is to describe a group of data that we have
‘in hand’ i.e. data that are accessible to us.
We are not interested in other data that we are not gathered.
Example: the following data refers to the number of malaria patients who have been
treated in Nekemte Hospital from 1986 to 1990 (Eth. Calendar).
3645; 4568; 5432; 6751; 7369
If we calculate the average malaria patients from 1986 to 1990 as

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 1
Average  (3645  4568  5432  6751  7369)  5553 then our work belongs to the
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domain of descriptive statistics.
If we say that there was an increase of 724 patients from 1986 to 1990, then again this
belongs to the domain of descriptive statistics.
2. Inferential Statistics: consists of generalizing from samples to populations,
performing estimations and hypothesis tests, determining relationships among
variables, and making predictions. Statistical techniques based on probability
theory are required. Example 1: In the above example if we predict the number of
malaria patients in the year 1995 to be 9917, then our work belongs to the domain
of inferential statistics. Example 2: Suppose we want to have an idea about the
percentage of illiterates in our country. We take a sample from the population and
find the proportion of illiterates in the sample. This sample proportion with the
help of probability enables us to make some inferences about the population
proportion. This study belongs to inferential statistics.

1.2. Stages in Statistical Investigation

Before we deal with statistical investigation, let us see what statistical data mean. Each
and every numerical data can’t be considered as statistical data unless it possesses the
following criteria. These are:
The data must be aggregate of facts
They must be affected to a marked extent by a multiplicity of causes
They must be estimated according to reasonable standards of accuracy
The data must be collected in a systematic manner for predefined purpose
The data should be placed in relation to each other
A statistician should be involved at all the different stages of statistical investigation.
This includes formulating the problem, and then collecting, organizing and classifying,
presenting, analyzing and interpreting of statistical data. Let’s see each stage in detail
II.. Formulating the problem: first research must emanate if there is a problem. At this
stage the investigator must be sure to understand the problem and then formulate it
in statistical term. Clarify the objectives very carefully. Ask as many questions as
necessary because “An approximate answer to the right question is worth a great deal
more than a precise answer to the wrong question.” -The first golden rule of applied
mathematics-
Therefore, the first stage in any statistical investigation should be to:
Get a clear understanding of the physical background to the situation under study;
Clarify the objectives;
Formulate the objective in statistical terms

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 IIII.. Proper collection of data: in order to draw valid conclusions, it is important ‘good’
data. Data are gathered with aim to meet predetermine objectives. In other words,
the data must provide answers to problems. The data itself form the foundation of
statistical analyses and hence the data must be carefully and accurately collected. In
section 1.6 we will see the methods of data collection.
IIIIII.. Organization and classification of data: in this stage the collected data organized in
a systematic manner. That means the data must be placed in relation to each other.
The classification or sorting out of data is, by itself, a kind of organization of data.
IIVV.. Presentation of data: The purpose of putting the organized data in graphs, charts
and tables is two-fold. First, it is a visual way to look at the data and see what
happened and make interpretations. Second, it is usually the best way to show the
data to others. Reading lots of numbers in the text puts people to sleep and does
little to convey information.
VV.. Analyses of data: is the process of looking at and summarizing data with the intent
to extract useful information and develop conclusions. Data analysis is closely
related to data mining, but data mining tends to focus on larger data sets, with less
emphasis on making inference, and often uses data that was originally collected for
a different purpose. In this stage different types of inferential statistical methods will
apply. For instance, hypothesis testing such as  2 test of association.
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VII.. Interpretation of data: interpretation means drawing valid conclusions from data
which form the basis of decision making. Correct interpretation requires a high
degree of skill and experience.
Note that: Analyses and interpretation of data are the two sides of the same coin.

1.3. Definition of Some Terms

In this section, we will define those terms which will be used most frequently. These
are:
Data: are the values (measurements or observations) that the variables can assume. OR
Facts or figures from which the conclusion can be drawn.
Data set: Facts or figures collected for a particular study. Each value in the data set is
called data value or datum.
Raw Data: Data sheets are where the data are originally recorded. Original data are
called raw data. Data sheets are often hand drawn, but they can also be printouts from
database programs like Microsoft Excel.
Population: The totality of all subjects with certain common characteristics that are
being studied in a specified time and place.

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Sample: Is a portion of a population which is selected using some technique of
sampling. Sample must be representative of the population so that it must be selected
by any of the developed technique.
Sampling: Is the process of selecting units (e.g., people, households, organizations)
from a population of interest so that by studying the sample we may fairly generalize
our results back to the population from which they were chosen. There are two types of
sampling techniques namely random sampling technique and non-random sampling
technique.
Random sampling technique or probability sampling technique gives a non- zero
chance for all elements to be included in the sample. In other words, there is no
personal bias regarding the selection. The five common random sampling techniques
are:
Simple Random sampling
Systematic Random sampling
Stratified Random sampling
Cluster Random sampling
Multi-stage sampling
Non-random sampling technique is mostly known as non-probability sampling
techniques and in this case not all elements of a population have a known chance of
inclusion or if some outcomes have a zero chance of being selected as a sample. The
most familiar examples of non-random sampling techniques are
Quota sampling
Convenience sampling
Volunteer sampling
Purposive sampling
Haphazard sampling
Snow ball sampling etc…
Sample size: The number of elements or observation to be included in the sample.
Parameter: Any measure computed from the data of a population.
Example: Populations mean   and population standard deviation  
Statistic: Any measure computed from the sample.

Example: sample mean x , sample standard deviation S 
Survey: A collection of quantitative information about members of a population when
no special control is exercised over any of the factors influencing the variable of interest.
Sample survey: A survey that include only a portion of the population.
Census: A collection of information about every member of a population
Sample survey has the following advantages over census
Sample survey saves time and cost
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 Has great accuracy
Avoid wastage of material
Variable: A variable is a characteristic or attribute that can assume different values.
Variables whose values are determined by chance are called random variables.
Variables are often specified according to their type and intended use and hence
variable can be classified in to two namely qualitative and quantitative variables.
A quantitative variable is naturally measured as a number for which meaningful
arithmetic operations make sense. Examples: Height, age, crop yield, GPA, salary,
temperature, area, air pollution index (measured in parts per million), etc.
Qualitative variable: Any variable that is not quantitative is qualitative. Qualitative
variables take a value that is one of several possible categories. As naturally
measured, qualitative variables have no numerical meaning. Examples: Hair color,
gender, field of study, marital status, political affiliation, status of disease infection.
Quantitative variables can be classified as discrete and continuous variable. Discrete
variables can assume certain numerical values. That is, there are gaps between the
possible values. Such as 0, 1, 2...It may be countable finite or countable infinite. For
example the number of students in a classroom, number of children a family.
Continuous variable can take any value within a specified interval with a finite enough
measuring device. No gaps between possible values. They are obtained by measuring.
For example, consider the heights of two people no matter how close it is we can find
another person whose height falls somewhere between the two heights is a continuous
variable.

1.4. Applications, uses and limitations of statistics

I. Applications of statistics
Apart from helping elicit an intelligent assessment from a body of figures and
facts, statistics is indispensable tool for any scientific enquiry-right from the stage
of planning enquiry to the stage of conclusion. It applies almost all sciences: pure
and applied, physical natural, biological, medical, agricultural and engineering. It
also finds applications in social and management sciences, in commerce, business
and industry.

In almost all fields of human endeavor.

Almost all human beings in their daily life are subjected to obtaining numerical
facts.
Applicable in some process e.g. invention of certain drugs, extent of
environmental pollution.
In industries especially in quality control area.

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 II. Uses of Statistics
Statistics presents fact in the form of numerical data.
It condenses and summarizes a mass of data in to a few presentable and precise
figures.
It facilitates comparison of data
It helps in formulating and testing hypothesis.
It helps in predicting future trend.
It helps in formulating polices.
III. Limitations of Statistics
Statistics with all its wide application in every sphere of human activity has its own
limitation. Some of them are given below
Statistics is not suitable to the study of qualitative phenomenon: Since statistics is
basically a science and deals with a set of numerical data, it is applicable to the study
of only these subjects of enquiry, which can be expressed in terms of quantitative
measurements. As a matter of fact, qualitative phenomenon like honesty, poverty,
beauty, intelligence etc, cannot be expressed numerically and any statistical analysis
cannot be directly applied on these qualitative phenomenons. Nevertheless,
statistical techniques may be applied indirectly by first reducing the qualitative
expressions to accurate quantitative terms. For example, the intelligence of a group
of students can be studied on the basis of their marks in a particular examination.
Statistics does not study individuals: Statistics does not give any specific
importance to the individual items; in fact it deals with an aggregate of objects.
Individual items, when they are taken individually do not constitute any statistical
data and do not serve any purpose for any statistical enquiry.
Statistical laws are not exact: It is well known that mathematical and physical
sciences are exact. But statistical laws are not exact and statistical laws are only
approximations. Statistical conclusions are not universally true. They are true only
on an average.
Statistics table may be misused: Statistics must be used only by experts; otherwise,
statistical methods are the most dangerous tools on the hands of the inexpert. The
use of statistical tools by the inexperienced and untraced persons might lead to
wrong conclusions. Statistics can be easily misused by quoting wrong figures of
data. As King says aptly ‘statistics are like clay of which one can make a God or
Devil as one pleases.’
Statistics is only, one of the methods of studying a problem: Statistical method
does not provide complete solution of the problems because problems are to be
studied taking the background of the countries culture, philosophy or religion into

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 consideration. Thus the statistical study should be supplemented by other
evidences.

1.5. Scales of measurement

Normally, when one hears the term measurement, they may think in terms of
measuring the length of something (i.e. the length of a piece of wood) or measuring a
quantity of something (i.e. a cup of flour). This represents a limited use of the term
measurement. In statistics, the term measurement is used more broadly and is more
appropriately termed scales of measurement. Scales of measurement refer to ways in
which variables or numbers are defined and categorized. Each scale of measurement
has certain properties which in turn determine the appropriateness for use of certain
statistical analyses. The four scales of measurement are nominal, ordinal, interval, and
ratio.
Nominal Scales
Nominal scales possess the following properties.
 Level of measurement which classifies data into mutually exclusive, all inclusive
categories in which no order or ranking can be imposed on the data.
 No arithmetic and relational operation can be applied.
 No quantitative information is conveyed
 Thus only gives names or labels to various categories.
Examples:
 Political party preference (Republican, Democrat, or Other,)
 Sex (Male or Female.)
 Marital status (married, single, widow, divorce)
 Country code
 Regional differentiation of Ethiopia.
2. Ordinal Scales
Ordinal Scales are measurement systems that possess the following properties:
 Level of measurement which classifies data into categories that can be ranked,
however Differences between the ranks do not exist.
 Arithmetic operations are not applicable but relational operations are applicable.
 Ordering is the sole property of ordinal scale.

Examples:
 Letter grades (A, B, C, D, F).
 Rating scales (Excellent, Very good, Good, Fair, poor).
 Military status.

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3. Interval Scales
Interval scales are measurement systems that possess the following properties:
 Level of measurement which classifies data that can be ranked and differences
are meaningful. However, there is no meaningful zero, so ratios are meaningless.
 All arithmetic operations except division are applicable.
 Relational operations are also possible.
Examples:
 IQ, Temperature in F0.
4. Ratio Scales
Ratio scales measurement possess the following properties: Level of measurement
which classifies data that can be ranked, differences are meaningful, and there is a true
zero. True ratios exist between the different units of measure.
 All arithmetic and relational operations are applicable.
Examples:
 Weight
 Height
 Number of students
 Age
Use of level of measurements
 Helps you decide how to interpret the data from the variable.
 Helps you decide what statistical analysis is appropriate on the values that were
assigned. For example if a measurement is nominal then you know that you
never average the data level.

Assignment: What is the application of statistics for your field of study (15%)?

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 2. Methods of Data Collection and Presentation (6 lecture hours)
1.6 Methods of data collection
1.6.1 Sources of data
1.6.2 Types of data
1.6.3 Methods of collection
1.7 Methods of Data Presentation
1.7.1 Motivating examples
1.7.2 Frequency distributions: qualitative, quantitative: absolute, relative,
percentage, cumulative
1.7.3 Tabular presentation of data
1.7.4 Diagrammatic display of data: Bar charts, Pie-chart, Cartograms
1.7.5 Graphical presentation of data: Histogram, Frequency Polygon,
Ogive Curves

2.1.Methods of data collection

Once it is decide what type of study is to be made, it becomes necessary to collected
information about the concerned study, mostly in the form of data. In order to generate
valid conclusion from a data, information has to be collected in a systematic manner.
Whatever the quality of sampling and analysis method, a haphazardly collected dataset
is less likely to produce valuable and generalizable information.
2.1.1 Types of Data:
There are two types (sources) for the collection of data.
(1) Primary Data (2) Secondary Data
(1). 1Primary data
The primary data are the first hand information collected, compiled and published
by organization for some purpose. They are most original data in character and have
not undergone any sort of statistical treatment.
refer to those that are collected by conducting survey to meet the specific problem
needs at hand.
Example: Population census reports are primary data because these are collected,
complied and published by the population census organization.
(2). Secondary data -
The secondary data are the second hand information which are already collected by
some one (organization) for some purpose and are available for the present study.
The secondary data are not pure in character and have undergone some treatment at
least once.
data taken from already available published or unpublished source.
Exercise-2: Write the merits and demerits of secondary data.
2.1.3. Methods of collection
There are three major methods of data collection
1. self-administered questionnaire
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 2. direct investigation-measurement (observation) of the subject and
interviewing(face-to-face, telephone, --- )
3. the use of documentary source
1. Self-administered questionnaire.
Questionnaire is the main data collection instrument in formal sample survey. Before
examining the steps in designing a questionnaire we need to review the types of
questions used in questionnaires. Depending on the amount of freedom given to
respondent in offering responses, there are two basic types of questions that can be
used in questionnaires: open-ended questions and closed ended questions.
The type of questions for use will be determined by the form of responses wanted, the
nature of the respondents and their ability to answer the questions.
Open-ended questions: - allows the respondent to answer it freely in his or her own
words.
Example: what do you think are the reasons for a high drop-out rate of village health
committee members?
Closed – ended questions:-
Predetermined list of alternate responses is presented to the respondent for checking
the appropriate one(s). It implies that the respondent’s answers are restricted in some
way to a limited range of alternatives.
Advantage
It is the cheapest and can be conducted by a single researcher.
Questionnaires can be sending to a wide geographical area.
There is no interviewer variability
Disadvantage
Low response rate
No assurance that the questioners was answered by the right person.
Mail questionnaire is not suitable for illiterate community
2. direct investigation
I. measurement or/and observation
data can be obtained through direct observation or measurement
provides accurate information but it is expensive and inconvenient
eg: Land area measurement, Animal weight gain, Physical examination, direct
observation of work.
II. Interview
a) Face-to-Face interview
Advantage:-
Interviewers can observe the surroundings and can use nonverbal
communication and visual aids.
The interviewer can help the respondent if he/she has difficulty in
understanding the questions.
Respondent is likely to answer all the questions alone
Disadvantage:-
Cost is high
Interviewer bias is also high
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 Untrained interviewer may distort the meaning of the questions
b) Telephone Interview
Advantage:-
It is less expensive in time and money compared to face to face interviews
Relatively high response rate
Reach people who would not open their doors to an interviewer, but might
willing to talk on the telephone
Disadvantage:-
Unrepresentative of the groups which do not have telephones
Unlisted telephone numbers are excluded from the study.
Respondent may be substitute by another
3. The use of documentary source
Extracting information from existing resources.
Is much less expensive than any other two sources
It is difficult to get the information needed when records are compiled in
unstandardized manner.
Example: - Hospital records, professional institutes, Official statistics, - - -
Editing of Data:
After collecting the data either from primary or secondary source, the next step is
its editing. Editing means the examination of collected data to discover any error and
mistake before presenting it. It has to be decided before hand what degree of accuracy is
wanted and what extent of errors can be tolerated in the inquiry. The editing of
secondary data is simpler than that of primary data.
2.2. Methods of Data Presentation
This topic introduces tabular and graphical methods commonly used to summarize
both qualitative and quantitative data. Tabular and graphical summaries of data can be
obtained in annual reports, newspaper articles and research studies. Everyone is
exposed to these types of presentations, so it is important to understand how they are
prepared and how they will be interpreted.
Modern statistical software packages provide extensive capabilities for summarizing
data and preparing graphical presentations. MINITAB, SPSS and STATA are three
packages that are widely available.
2.2.1. Classification of Data
The process of arranging data into homogenous group or classes according to some
common characteristics present in the data is called classification.
For Example: The process of sorting letters in a post office, the letters are classified
according to the regions and further arranged according to zones, cities, etc.
Bases of Classification:
There are four important bases of classification:
(1) Qualitative Base (2) Quantitative Base (3) Geographical Base (4) Chronological or
Temporal Base
(1) Qualitative Base:
When the data are classified according to some quality or attributes such as sex,
religion, literacy, intelligence etc…
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(2) Quantitative Base:
When the data are classified by quantitative characteristics like heights, weights, ages,
income etc…
(3) Geographical Base:
When the data are classified by geographical regions or location, like states, provinces,
cities, countries etc…
(4) Chronological or Temporal Base:
When the data are classified or arranged by their time of occurrence, such as years,
months, weeks, days etc… For Example: Time series data.
Tabulation of Data
The process of placing classified data into tabular form is known as tabulation. A table
is a symmetric arrangement of statistical data in rows and columns. Rows are horizontal
arrangements whereas columns are vertical arrangements.
2.2.2. Frequency distribution
A frequency distribution is the organization of row data in table form, using classes and
frequencies. There are three basic types of frequency distributions, and there are specific
procedures for constructing each type. The three types are categorical, ungrouped and
grouped frequency distributions.
The reasons for constructing a frequency distribution are as follows.
To organize the data in a meaningful, intelligible way.
To enable the reader to determine the nature or shape of the distribution
To facilitate computational procedures for measures of average and spread
To enable the researcher to draw charts and graphs for the presentation of data
To enable the reader to make comparisons between different data set.
Some of basic terms that are most frequently used while we deal with frequency
distribution are the following:
Lower Class Limits are the smallest number that can belong to the different class.
Upper Class Limits are the largest number that can belong to the different
classes.
Class Boundaries are the number used to separate classes, but without the gaps
created by class limits.
Class midpoints are the midpoints of the classes. Each class midpoint can be
found by adding the lower class limit to the upper class limit and dividing the
sum by 2.
Class width is the difference between two consecutive lower class limits or two
consecutive lower class boundaries.
2.2.2.1. Categorical Frequency Distribution
The categorical frequency distribution is used for data which can be placed in specific categories
such as nominal or ordinal level data. For example, data such as data such as political affiliation,
religious affiliation, or major field of study would use categorical frequency distribution.
The major components of categorical frequency distribution are class, tally and frequency.
Moreover, even if percentage is not normally a part of a frequency distribution, it will be added
since it is used in certain types of graphical presentations, such as pie graph.
Steps of constructing categorical frequency distribution

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 1. You have to identify that the data is in nominal or ordinal scale of measurement.
2. Make a table as show below
A B C D
class Tally Frequency Percent

3. Put distinct values of a data set in column A.

4. Tally the data and place the result in column B
5. Count the tallies and place the results in column C
6. Find the percentage of values in each class by using the formula

Where is frequency and is total number of values.

Example 2.1: Twenty-five army inductees were given a blood test to determine their blood type.
The data set is given as follows:
A B B AB O
O O B AB B
B B O A O
A O O O AB
AB A O B A
Construct a frequency distribution for the data.
Solution:
A B C D
class Tally Frequency Percent
A //// 5 20
B //// // 7 28
O //// //// 9 36
AB //// 4 16

2.2.2.2 Ungrouped Frequency Distribution.

When the data are numerical interested of categorical, the range of data is small and each class is
only one unit, this distribution is called an ungrouped frequency distribution.
The major components of this type of frequency distributions are class, tally, frequency and
cumulative frequency. The steps are almost similar with that of categorical frequency
distribution.
Cumulative frequencies are used to show how many values are accumulated up to and including
a specific class.
Example 2.2: The following data represent the number of days of sick leave taken by each of 50
workers of a company over the last 6 weeks.
2 0 0 5 8 3 4 1 0 0 7 1
7 1 5 4 0 4 0 1 8 9 7 0
1 7 2 5 5 4 3 3 0 0 2 5

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 1 3 0 2 4 5 0 5 7 5 1 1
0 2
A. Construct ungrouped frequency distribution
B. How many workers had at least 1 day of sick leave?
C. How many workers had between 3 and 5 days of sick leave?
Solution:
A. Since this data set contains only a relatively small number of distinct or different
values, it is convenient to represent it in a frequency table which presents each distinct
value along with its frequency of occurrence.

B. Since 12 of the 50workers had no days of sick leave, the answer is 50-12=38
C. The answer is the sum of the frequencies for values 3, 4 and 5 that is 4+5+8=17
2.2.2.3. Grouped Frequency Distribution
When the range of the data is large, the data must be grouped in which each class has more than
one unit in width. While we construct this frequency distribution, we have to follow the
following steps.
1. Find the highest and the lowest values
2. Find the range; or
3. Select the number of classes desired. Here, we have two choices to get the desired number
of classes:
I. Use Struge’s rule. That is, where is the number of class and
is the number of observations.
II. Select the number of classes arbitrarily between 5 and 20. This is a conventional
way. If you fail to calculate by Struge’s rule, this method is more appropriate.
When we choose the number of classes, we have to think about the following criteria
The classes must be mutually exclusive. Mutually exclusive classes have non
overlapping class limits so that values can’t be placed in to two classes.
The classes must be continuous. Even if there are no values in a class, the class must
be included in the frequency distribution. There should be no gaps in a frequency
distribution. The only exception occurs when the class with a zero frequency is the
first or last. A class width with a zero frequency at either end can be omitted with out
affecting the distribution.

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 The classes must be equal in width. The reason for having classes with equal width is
so that there is not a distorted view of the data. One exception occurs when a
distribution is open-ended. i.e., it has no specific beginning or end values.
4. Find the class width by dividing the range by the number of classes

Note that: Round the answer up to the nearest whole number if there is a reminder. For
instance, and
5. Select the starting point as the lowest class limit. This is usually the lowest score
(observation). Add the width to that score to get the lower class limit of the next class.
Keep adding until you achieve the number of desired class calculated in step 3.
6. Find the upper class limit; subtract unit of measurement from the lower class limit of
the second class in order to get the upper limit of the first class. Then add the width to
each upper class limit to get all upper class limits.
Unit of measurement: Is the next expected upcoming value. For instance, 28, 23, 52, and
then the unit of measurement is one. Because take one datum arbitrarily, say 23, then the
next upcoming value will be 24. Therefore, If the data is 24.12, 30,
21.2 then give priority to the datum with more decimal place. Take 24.12 and guess the
next possible value. It is 24.13. Therefore, .
Note that: is the maximum value of unit of measurement and is the value when
we don’t have a clue about the data.
7. Find the class boundaries.
and . In short, and
.
8. Tally the data and write the numerical values for tallies in the frequency column
9. Find cumulative frequency. We have two type of cumulative frequency namely
less than cumulative frequency and more than cumulative frequency. Less than
cumulative frequency is obtained by adding successively the frequencies of all
the previous classes including the class against which it is written. The cumulate
is started from the lowest to the highest size. More than cumulative frequency is
obtained by finding the cumulate total of frequencies starting from the highest to
the lowest class.
For example, the following frequency distribution table gives the marks obtained
by 40 students:

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 The above table shows how to find less than cumulative frequency and the table
shown below shows how to find more than cumulative frequency.

Example 2.3: Consider the following set of data and construct the frequency
distribution.
11 29 6 33 14 21 18 17 22 38
31 22 27 19 22 23 26 39 34 27
Steps
1.
2.
3.
4.
5. Select starting point. Take the minimum which is 6 then add width 6 on it to get
the next class LCL.
6 12 18 24 30 36
6. Upper class limit. Since unit of measurement is one. So 11 is the
UCL of the first class. Therefore, is the first class
Class limit 6-11 12-17 18-23 24-29 30-35 36-41

7. Find the class boundaries. Take the formula in step 7. and

Class Boundaries 5.5-11.5 11.5-17.5 17.5-23.5 23.5-29.5 29.5- 35.5-

35.5 41.5
8. 9 and 10

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2.2.2.4. Relative Frequency Distribution
An important variation of the basic frequency distribution uses relative frequencies, which are
easily found by dividing each class frequency by the total of all frequencies. A relative frequency
distribution includes the same class limits as a frequency distribution, but relative frequencies
are used instead of actual frequencies. The relative frequencies are sometimes expressed as
percents.

Relative frequency distribution enables us to understand the distribution of the data and to
compare different sets of data.
2.2.3. Graphical Presentation of Data
We have discussed the techniques of classification and tabulation that help us in
organizing the collected data in a meaningful fashion. However, this way of
presentation of statistical data does not always prove to be interesting to a layman. Too
many figures are often confusing and fail to convey the massage effectively.
One of the most effective and interesting alternative way in which a statistical data may
be presented is through diagrams and graphs. There are several ways in which
statistical data may be displayed pictorially such as different types of graphs and
diagrams.
General steps in constructing graphs
1. Draw and label the and axes
2. Choose a suitable scale for the frequencies or cumulative frequencies and label it
on the axis.
3. Represent the class boundaries for the histogram or Ogive or the mid point for
the frequency polygon on the axis.
4. Plot the points
5. Draw the bars or lines
2.2.3.1. Diagrammatic display of data: Bar charts, Pie-chart, Cartograms
I. Pie chart
Pie chart can used to compare the relation between the whole and its components. Pie
chart is a circular diagram and the area of the sector of a circle is used in pie chart.
Circles are drawn with radii proportional to the square root of the quantities because
the area of a circle is .
To construct a pie chart (sector diagram), we draw a circle with radius (square root of
the total). The total angle of the circle is . The angles of each component are
calculated by the formula.

These angles are made in the circle by mean of a protractor to show different
components. The arrangement of the sectors is usually anti-clock wise.
Example2.4: The following table gives the details of monthly budget of a family.
Represent these figures by a suitable diagram.

18 | P a g e
Solution: The necessary computations are given below:

Chart Title
misclaneous
20%
food
Fuel and Light 40%
7%

House Rent
27%

clothing
6%

II. Bar Charts

The bar graph (simple bar chart, multiple bar chart and stratified or stacked bar chart) uses
vertical or horizontal bars to represent the frequencies of a distribution. While we draw bar chart,
we have to consider the following two points. These are
Make the bars the same width
Make the units on the axis that are used for the frequency equal in size
A. A simple bar chart is used to represents data involving only one variable classified on
spatial, quantitative or temporal basis. In simple bar chart, we make bars of equal width
but variable length, i.e. the magnitude of a quantity is represented by the height or
length of the bars. Following steps are undertaken in drawing a simple bar diagram:

19 | P a g e
 Draw two perpendicular lines one horizontally and the other vertically at an
appropriate place of the paper.
Take the basis of classification along horizontal line (X-axis) and the observed
variable along vertical line (Y-axis) or vice versa.
Marks signs of equal breath for each class and leave equal or not less than half
breath in between two classes.
Finally marks the values of the given variable to prepare required bars.
Example 2.5: Draw simple bar diagram to represent the profits of a bank for 5 years.

B. Multiple bar charts are used two or more sets of inter-related data are represented
(multiple bar diagram facilities comparison between more than one phenomenon).
The technique of simple bar chart is used to draw this diagram but the difference is
that we use different shades, colors, or dots to distinguish between different
phenomena.
Example 2.6: Draw a multiple bar chart to represent the import and export of Canada
(values in $) for the years 1991 to 1995.

20 | P a g e
C. Stratified (Stacked or component) Bar Chart is used to represent data in which the total
magnitude is divided into different or components. In this diagram, first we make simple
bars for each class taking total magnitude in that class and then divide these simple
bars into parts in the ratio of various components. This type of diagram shows the
variation in different components within each class as well as between different
classes. Sub-divided bar diagram is also known as component bar chart or staked
chart.
Example 2.7: The table below shows the quantity in hundred kgs of Wheat, Barley and
Oats produced on a certain form during the years 1991 to 1994. Draw stratified bar
chart.

Solution: To make the component bar chart, first of all we have to take year wise total
production.

The required diagram is given below:

21 | P a g e
 2.2.3.2. Graphical presentation of data: Histogram, Frequency Polygon, Ogive Curves
Statistical graphs can be used to describe the data set or to analyze it. Graphs are also
useful in getting the audience’s attention in a publication or a speaking presentation.
They can be used to discuss an issue, reinforce a critical point, or summarize a data set.
They can also be used to discover a trend or pattern in a situation over a period of time.
The three most commonly used graphs in research are
1. The histogram.
2. The frequency polygon.
3. The cumulative frequency graph, or ogive (pronounced o-jive).
(1). Histogram
Histogram is a special type of bar graph in which the horizontal scale represents classes of data
values and the vertical scale represents frequencies. The height of the bars correspond to the
frequency values, and the drawn adjacent to each other (without gaps).
We can construct a histogram after we have first completed a frequency distribution table for a
data set. The axis is reserved for the class boundaries.
Example2.8: Take the data in example 2.3.
7.0

6.0

5.0

Frequency 4. 0

3.0

2.0

1.0

0.0 5.5 11.5 17.5 23.5 29.5 35.5 41.5

Class boundaries

Relative frequency histogram has the same shape and horizontal ( ) scale as a histogram,
but the vertical ( ) scale is marked with relative frequencies instead of actual frequencies.
(2). Frequency Polygon
A frequency polygon uses line segment connected to points located directly above class midpoint
values. The heights of the points correspond to the class frequencies, and the line segments are
22 | P a g e
extended to the left and right so that the graph begins and ends on the horizontal axis with the
same distance that the previous and next midpoint would be located.
Example 2.9: Take the data in example 2.3.
7.0

6.0

5.0

4.0

3.0

2.0
2.5 8.5 14.5 20.5 26.5 32.5 38.5 44.5
Midpoints

(3). Ogive Graph

An Ogive (pronounced as “oh-jive”) is a line that depicts cumulative frequencies, just as the
cumulative frequency distribution lists cumulative frequencies. Note that the Ogive uses class
boundaries along the horizontal scale, and graph begins with the lower boundary of the first class
and ends with the upper boundary of the last class. Ogive is useful for determining the number
of values below some particular value. There are two type of Ogive namely less than Ogive and
more than Ogive. The difference is that less than Ogive uses less than cumulative frequency and
more than Ogive uses more than cumulative frequency on axis.
Example 2.10: Take the data in example 2.3 and draw less than and more than Ogive
20 Less than Ogive

15

10

More than Ogive

0
5.5 11.5 17.5 23.5 29.5 35.5 41.5
Class Boundaries

23 | P a g e
 CHAPTER 3

3. Measures of Central Tendency (12 lecture hours) Lecture Note

a. Motivating examples
b. Objectives of measures of central tendency
c. Important characteristics of a good average
d. Summation notation
e. Mean
f. Median
g. Mode

3.1 Introduction and objectives of measure of central tendency

Measures of central tendency are measures of the location of the middle or the
center of a distribution.
The tendency statistical data to get concentrated at certain value is called central
tendency. And various methods that determine the actual value at which the data
tend to concentrate are called measure of central tendency. One of the most
important objectives of statistical analysis is to get one single value that describes
the characteristics of the entire data. Such a value is called the central value or
average.
 When we want to make comparison between groups of numbers it is good to
have a single value that is considered to be a good representative of each
group. This single value is called the average of the group.
3.2 Objectives:
1. To comprehend the data easily i.e. to condensed the mass of data in to one
single value.
2. To facilitate comparison.
3. To make further statistical analysis.
3.3 Characteristic of a good measure of central tendency (A typical average
should posses the following):
It should be defined rigidly which means that it should have a definite value.
It should be based on all observation under investigation.
It should be not be affected by extreme observations.
It should be capable of further algebraic treatment.
It should be as little as affected by fluctuations of sampling or should be
stable with sampling.
It should be ease to calculate and simple to understand.
It should be unique and always exist.
Note:-There is no measure satisfied all the above condition!
3.4. The Summation Notation:
Let X1, X2 ,X3 …XN be a number of measurements where N is the total number of
observation and Xi is ith observation.
Very often in statistics an algebraic expression of the form X 1+X2+X3+...+XN is
used in a formula to compute a statistic. It is tedious to write an expression like
24 | P a g e
 this very often, so mathematicians have developed a shorthand notation to
represent a sum of scores, called the summation notation.
N
The symbol Xi=1
i is mathematical shorthand for X11+X2+X3+...+XN
N

X
i=1
i = X 1 + X 2 + + X N

The expression is read, "the sum of X sub i from i equals 1 to N." It means "add up
all the numbers."

Example: Suppose the following were scores made on the first homework
assignment for five students in the class: 5, 7, 7, 6, and 8. In this example set of five
numbers, where N=5, the summation could be written:

X
i=1
i = X 1 + X 2 + X 3 + X 4 + X 5 = 5 + 7 + 7 + 6 + 8 = 33

The "i=1" in the bottom of the summation notation tells where to begin the
sequence of summation. If the expression were written with "i=2", the summation
would start with the second number in the set.

5
For example: X
i= 2
i = X 2 + X 3 + X 4 + X 5 = 7 + 7 + 6 + 8 = 28

The "N" in the upper part of the summation notation tells where to end the
sequence of summation. If there were only three scores then the summation and
example would be:

X
i=1
i = X 1 + X 2 + X 3 = 5 + 7 + 7 = 19

Sometimes if the summation notation is used in an expression and the expression

must be written a number of times, as in a proof, then a shorthand notation for the
shorthand notation is employed. When the summation sign " ∑ " is used without
additional notation, then "i=1" and "N" are assumed

PROPERTIES OF SUMMATION
n
1. ∑ K = nK , Where k is any constant
i= 1
n n
2. ∑ KX i = K ∑ X i , Where k is any constant
i= 1 i= 1

25 | P a g e
 3. 
n
(a + bX i ) = na + b  X i
n
, where a and b are any constant
i i=1

4. n n n

 (X
i=1
i + Yi ) = X i=1
i +  Yi
i=1
N
5.  (X i  Yi ) = X 1  Y1 + X 2  Y2 +    + X N  YN
i=1

Example 3.1: considering the following data determine

X Y
5 6
7 7
7 8
6 7
8 8

5 5 5
∑ ∑ ∑ 11
5 5
a)
i= 1
Xi b)
i= 1
Yi c)
i= 1
d) 
i=1
(X i + Yi ) e) (X
i=1
i  Yi )

5 2 5 5 5
∑X ∑ XiYi g) ∑ X i ∑ Y i
5 5

 X + Y
i
f) g) h) i i
i= 1 i= 1 i= 1 i= 1
i=1 i=1

Types of measures of central tendency

There are several different measures of central tendency; each has its own
advantage and disadvantage.
The Mean
The Mode
The Median

The choice of these averages depends up on which best fit the property under
discussion.

3.5. The Mean

3.5.1. The Arithmetic Mean:

- Divided in to two i.e. simple arithmetic mean and the weighted arithmetic mean
1) Simple Arithmetic Mean:
Different methods exist for grouped and ungrouped data. These are direct method
and indirect method.
a) Direct method
- The mean is defined as the sum of the magnitude of the items divided by the
number of items
The mean of X1, X2 ,X3 …Xn is denoted by A.M, or X and is given by:

26 | P a g e
 X1 + X 2 +    + X n n
X= =  Xi /n
n i=1

When the data are arranged or given in the form of frequency distribution i.e.
there are k variate values such that a value X i has a frequency f i ( i=1,2,---
,k) ,then the Arithmetic mean will be

f i Xi
∑
k
f i= n
X= i=1 Where k is the number of classes and
k i= 1
f i=1
i

 Arithmetic Mean for Grouped Data

If data are given in the shape of a continuous frequency distribution, then the
arithmetic mean is obtained as follows:
n

fY i i
X= i=1
n
Where Y i = the class mark of the ith class and fi = the frequency of
f
i=1
i

the ith class

Example 3.2:

1) Daily cash earnings of 15 workers working in different industries are as

follows:
11.63,8.22,12.56,12.14,29.23,18.23,11.49,11.30,17.00,9.16,8.64,27.56,8.23,19.77,12.81
.Find the average daily earning of a worker?

2) The distribution of age at first marriage of 130 males was as given below

Age in years(X): 18 19 20 21 22 23 24 25 26 27 28 29
No. of males (f): 2 1 4 8 10 12 17 19 18 14 13 12

Compute the average age of males at first marriage?

27 | P a g e
 3) Calculate the mean for the following age distribution.

Class frequency
6- 10 35
11- 15 23
16- 20 15
21- 25 12
26- 30 9
31- 35 6

1) Find the mean of the marks obtained by 51 students with A=48.5 and w=10 of

xi 28.5 38.5 48.5 58.5 68.5

fi 4 12 15 13 7

Merits and Demerits of Arithmetic Mean

Merits:

• It is rigidly defined.
• It is based on all observation.
• It is suitable for further mathematical treatment.
• It is stable average, i.e. it is not affected by fluctuations of sampling to some
extent.
• It is easy to calculate and simple to understand.
Demerits:
• It is affected by extreme observations.
• It can not be used in the case of open end classes.
• It can not be determined by the method of inspection.
• It can not be used when dealing with qualitative characteristics, such as
intelligence, honesty, beauty.
• It can be a number which does not exist in a serious.
• Some times it leads to wrong conclusion if the details of the data from which
it is obtained are not available.
• It gives high weight to high extreme values and less weight to low extreme
values.

3.6.The Mode
Mode is a value which occurs most frequently in a set of values
28 | P a g e
 The mode may not exist and even if it does exist, it may not be unique.
In case of discrete distribution the value having the maximum frequency is
the model value.
If in a set of observed values, all values occur once or equal number of
times, there is no mode
Examples:
1. Find the mode of 5, 3, 5, 8, and 9
Mode =5
2. Find the mode of 8, 9, 9, 7, 8, 2, and 5.
It is a bimodal Data: 8 and 9
3. Find the mode of 4, 12, 3, 6, and 7.
No mode for this data.
- The mode of a set of numbers X1, X2, …Xn is usually denoted by X̂ .

Mode for Grouped data.

If data are given in the shape of continuous frequency distribution, the mode is
defined as:

Δ1
Xˆ = Lmod + ( )W
Δ1 + Δ2

Where: X̂ = the mode of the distribution

L mod= the lower class boundary of the modal class
Δ1 = f mo  f1
Δ2 = f mo  f 2

F mod= frequency of the modal class

f1= frequency of the class preceding the modal class

f2= frequency of the class succeeding the modal class

W=the size of the modal class

Note: The modal class is a class with the highest frequency.

Example 3.7: The following is the distribution of the size of certain farms selected
at random from a district. Calculate the mode of the distribution.
Size of farms No. of farms
5- 15 _____________________________8
15- 25____________________________12
25- 35____________________________17
29 | P a g e
 35- 45____________________________29
45- 55____________________________31
55- 65____________________________5

65- 75____________________________3

Merits and Demerits of Mode

Merits:
It is not affected by extreme observations.
Easy to calculate and simple to understand.
It can be calculated for distribution with open end class.
Can be used for qualitative data as well.
Demerits:
It is not rigidly defined.
It is not based on all observations
It is not suitable for further mathematical treatment.
It is not stable average, i.e. it is affected by fluctuations of sampling to some
extent.
Often its value is not unique.

3.7. The Median

- In a distribution, median is the value of the variable which divides it in to two
equal halves.
- In an ordered series of data median is an observation lying exactly in the middle
of the series. It is the middle most value in the sense that the number of values less
than the median is equal to the number of values greater than it.
-If X1, X2, …Xn be the observations, then the numbers arranged in ascending order
will be X[1], X[2], …X[n], where X[i] is ith smallest value.
X[1]< X[2]< …<X[n]
 
-Median is denoted by. X

Median for ungrouped data.

X n +1 , if n is odd
2
1
(X n + X n ) ,if n is even
2 +1
2 2
Example 3.8: 1) Actual waiting time for the first job on the selected sample of nine
people having different field of specializations was given below.
Waiting time ( in month ):11.6, 11.3, 10.7, 18.0, 3.3, 9.2, 8.3, 3.8, 6.8
Calculate the median of the waiting time?

30 | P a g e
 2) The export of agricultural products in million dollars from a country during
eight quarters in 1974 and 1975 was, 29.7, 16.6, 2.3, 14.1, 36.6, 18.7, 3.5, 21.3.
Find the median of the given set of values?
Median for grouped data.
-If data are given in the shape of continuous frequency distribution, the median is
defined as:
~ W n
X = Lmed + (  fc )
f med 2
Where: L med =lower class boundary of the median class.
f med = The frequency of the median class
f c= The comulative frequency less than type preceding the median class .
W=the size of the median class.
n=total number of observation.
Note: The median class is the class with the smallest cumulative frequency (less
than type) greater than or equal to n/2.
Example 3.9: Find the median of the following distribution.
Class Frequency
40-44 7
45-49 10
50-54 22
55-59 15
60-64 12
65-69 6
70-74 3
Merits and Demerits of Median
Merits:
• Median is a positional average and hence not influenced by extreme
observations.
• Can be calculated in the case of open end intervals.
• Median can be located even if the data are incomplete.
Demerits:
• It is not a good representative of data if the number of items is small.
• It is not amenable to further algebraic treatment.
• It is susceptible to sampling fluctuations.
~
Empirical relationship between X, Xˆ, and X

~
 X = Xˆ = X , for symmetrical distribution
 
~
 X  Xˆ = 3 X  X , for unimodal skewed or asymmetrical frequency distribution.

4. Measures of Variation (Dispersion), Skewness and Kurtosis (4 lecture hours)

Lecture note

31 | P a g e
 a. Motivating examples
b. Objectives of measures of variation
c. Measures of Dispersion (Variation)
i. Range and Relative Range
ii. Variance, Standard Deviation and Coefficient of Variation
iii. Standard Scores
4.1 Introduction
Consider the following two sets of scores:

Set 1: 40, 50, 60, 60, 40, 50

Set 2: 0, 100, 25, 75, 80, 20

Both these sets have the same mean (50), but the second set is a lot more widely
dispersed ("scattered") than the first.

Set 1 Set 2

Measure of central tendency alone does not adequately describe a set of observation
unless all observations are the same. So we need some additional information like

1) The extent to which the items in a particular distribution are scatters around the
central tendency i.e. measure of dispersion.
2) The direction of scattered ness whether more items are attached towards higher or
lower values i.e. measure of skew ness.
3) The extent to which the distribution is more peaked or more flat toped than the
normal distribution i.e. measure of kurtosis.
Definition:
 The scatter or spread of items of a distribution is known as dispersion or variation.
In other words the degree to which numerical data tend to spread about an average
value is called dispersion or variation of the data.
 Measures of dispersions are statistical measures which provide ways of measuring
the extent in which data are dispersed or spread out.

4.2 Objectives of measuring variation

32 | P a g e
 To determine the reliability of an average by pointing out as how far an
average is representative of the entire data.
To determine the nature and cause of variation in order to control the
variation itself.
Enable comparison of two or more distribution with regard to their
variability.
Measuring variability is of great importance to other statistical analysis. E.g.,
it is the basis of statistical quality control.

A good measure of variation posses:

It should be easy to compute and understand.

It should be based on all observations.
It should be Uniquely defined
It should be capable of further algebraic treatment.
It should be as little as affected by extreme values.

Absolute and relative measures

Measures of dispersion may be either absolute or relative

1. Absolute measures of dispersion (AMD): Absolute measure is expressed in the SI

unit in which the original data are given such as kilograms, tones etc. These
measures are suitable for comparing the variability in two distributions having
variables expressed in the same units and of the same averaging size. These
measures are not suitable for comparing the variability in two distributions
having variables expressed in different units.
2. Relative measures of dispersion (RMD): when one desires to compare the
dispersion in two sets of data, however comparing the two AMDs may lead to
fallacious results. It may be that the two variables involved are measured in
different units. For example, we may wish to know, for a certain population,
whether serum cholesterol levels, measured in milligrams per 100 ml, are more
variable than body weight, measure in kilograms.

Furthermore, although the same unit of measurement is used, the two MCT
(means) may be quite different. If we compare the AMD of weights of first grade
children with the AMD of the weights of high school freshmen, we may find that
the latter AMD is numerically larger than the former, because the weights
themselves are larger, not because the AMD is larger.

What is needed in situation like these is a measure of relative variation rather

than absolute variation. It is the ratios of absolute dispersion to an appropriate
average such as co- efficient of Standard Deviation or Co-efficient of Mean
Deviation.

33 | P a g e
4.3 Types of Measures of Dispersion

Various measures of dispersions are in use. The most commonly used measures of
dispersions are:

Absolute measure Relative measures

Range Relative range

Variance Coefficient of variation

Standard deviation Standard scores

4.3.1 The Range (R)

The range is the largest score minus the smallest score. It is a quick and dirty measure of
variability, although when a test is given back to students they very often wish to know
the range of scores. Because the range is greatly affected by extreme scores, it may give
a distorted picture of the scores. The following two distributions have the same range,
13, yet appear to differ greatly in the amount of variability.

Distribution 1: 32 35 36 36 37 38 40 42 42 43 43 45
Distribution 2: 32 32 33 33 33 34 34 34 34 34 35 45

For this reason, among others, the range is not the most important measure of
variability.

For ungrouped data:

Rx x , where x  max imum value

max min max
X  min imum value
min

For grouped data:

R x x , where x  UCB for the last class
max min max
X  LCB for the first class
min

Relative Range (RR)

It is also some times called coefficient of range and given by:

X max  X min
For ungrouped data: RR =
X max + X min
34 | P a g e
 UCBlast  LCB first
For grouped data: RR =
UCBlast + LCB first
Merits and Demerits of range
Merits:
It is rigidly defined.
It is easy to calculate and simple to understand.
Demerits:
It is not based on all observation.
It is highly affected by extreme observations.
It is affected by fluctuation in sampling.
It is not liable to further algebraic treatment.
It can not be computed in the case of open end distribution.
It is very sensitive to the size of the sample.
Example 1
For raw data, 5, 6,8,4,5, 3,9,8,7,3,5,6,8,11
R=11-3=8
11  3 8
coefficient of range    0.57
11  3 14

Example 2:
Height Number of

(in) Students
Less than 59.5 0
Less than 62.5 5
Less than 65.5 23
Less than 68.5 65
Less than 71.5 92
Less than 74.5 100
R=74.5-56.5=18
xmax  xmin 74.5  56.5
coefficient range    0.135
xmax  xmin 74.5  56.5

Example 4.1:1) Find the R, and RR and then identify which data is more dispersed?

a) For the month income of 10 workers Xi: 347, 420, 500,600,696,710, 835, 850,
and 900.

35 | P a g e
 b) For the following age distribution.
Class frequenc
y
6- 10 35
11- 15 23
16- 20 15
21- 25 12
26- 30 9
31- 35 6

2. If the range and relative range of a series are 4 and 0.25 respectively. Then what is the
value of:
a) Smallest observation
b) Largest observation
4.3.2 The Variance
Population Variance
If we divide the variation by the number of values in the population, we get something
called the population variance. This variance is the "average squared deviation from the
mean".

N
( xi  u ) 2
Population Variance    i 1
, i  1,2,3,..., N
2

N
Sample Variance
One would expect the sample variance to simply be the population variance with the
population mean replaced by the sample mean. However, one of the major uses of
statistics is to estimate the corresponding parameter. This formula has the problem that
the estimated value isn't the same as the parameter. To counteract this, the sum of the
squares of the deviations is divided by one less than the sample size.

n
( xi  x ) 2
Sample Variance  i 1
n 1

2
I.e. The sample variance, denoted by s , of a set of n observed values having a mean x
is the sum of the squared deviations divided by n  1 .

The following steps are used to calculate the sample variance:

1. Find the arithmetic mean.
2. Find the difference between each observation and the mean.
3. Square these differences.
4. Sum the squared differences.
5. Since the data is a sample, divide the number (from step 4 above) by the number of
observations minus one, i.e., n-1 (where n is equal to the number of observations in
the data set).
For the case of frequency distribution it is expressed as:

36 | P a g e
 n

 f i ( xi  x) 2
 i 1
2
s n 1
We usually use the following short cut formula.
n 2


2
x  nx
i 1

2 i
s n 1
, for raw data
n 2

 f x  nx
2
i
 i 1
for frequency distribiti on, where  f i  n
2 i
s n 1
,

Standard Deviation
There is a problem with variances. Recall that the deviations were squared. That means
that the units were also squared. To get the units back the same as the original data
values, the square root must be taken.
population s tan dard deviation    
2

sample s tan dard deviation  s 

2
s
Examples: Find the variance and standard deviation of the following sample data
1. 5, 17, 12, 10,8
2. The data is given in the form of frequency distribution.
Class Frequency
40-44 7
45-49 10
50-54 22
55-59 15
60-64 12
65-69 6
70-74 3
Coefficient of Variation (C.V)
• Is defined as the ratio of standard deviation to the mean usually expressed as
percents.
S
C .V   100 0
0
X
• The distribution having less C.V is said to be less variable or more consistent.
Examples:
1. An analysis of the monthly wages paid (in Birr) to workers in two firms A and B belonging
to the same industry gives the following results
Value Firm A Firm B
Mean wage 52.5 47.5
Median wage 50.5 45.5
Variance 100 121
In which firm A or B is there greater variability in individual wages?

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Solutions:

Calculate coefficient of variation for both

SA 10 firms.
C.V A  100 0 0  100 0 0  19.05 0 0
XA 52.5

SB 11
C.VB   100 0 0   100 0 0  23.16
XB 47.5

Since C.VA < C.VB, in firm B there is greater variability in individual wages.

4.3.3 Standard Scores (Z-scores)

If X is a measurement from a distribution with mean X and standard deviation

S, then its value in standard units is

Xi  u
Zi  , for the population


Xi  x
Zi  , for the sample
s
Z gives the deviations from the mean in units of standard deviation.
Z gives the number of standard deviation a particular observation lie above or
below the mean.
It is used to compare two observations coming from different groups.
Examples:
1. Two sections were given introduction to statistics examinations. The following
information was given.
Value Section 1 Section 2
Mean 78 90
Stand. deviation 6 5

Student A from section 1 scored 90 and student B from section 2 scored 95. Relatively
speaking who performed better?
Solutions:
Calculate the standard score of both students.
X  X 1 90  78
Z1  1  2
S1 6

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 X 2  X 2 95  90
Z2   1
S2 5
 Student A performed better relative to his section because the score of student A is
two standard deviation above the mean score of his section while, the score of
student B is only one standard deviation above the mean score of his section.

2. Two groups of people were trained to perform a certain task and tested to find out
which group is faster to learn the task. For the two groups the following information
was given:
Value Group one Group two
Mean 10.4 min 11.9 min
Stand.dev. 1.2 min 1.3 min
Relatively speaking:
a) Which group is more consistent in its performance
b) Suppose a person A from group one take 9.2 minutes while person B from
Group two take 9.3 minutes, who was faster in performing the task? Why?

Solutions:
a) Use coefficient of variation.
S 1.2
C.V1  1  100 0 0  100 0 0  11.54 0 0
X1 10.4

S2 1.3
C.V2   100 0 0   100 0 0  10.92 0 0
X2 11.9
Since C.V < C.V , group 2 is more consistent.
2 1

b) Calculate the standard score of A and B

X  X 1 9.2  10.4
ZA  A   1
S1 1.2

X B  X 2 9.3  11.9
ZB    2
S2 1 .3
 Child B is faster because the time taken by child B is two standard deviation shorter
than the average time taken by group 2 while, the time taken by child A is only one
standard deviation shorter than the average time taken by group 1.

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 Chapter 5.
1. Elementary probability (4 lecture hours) Lecture
note
5.1.Introduction
• Probability theory is the foundation upon which the logic of inference is built.
• It helps us to cope up with uncertainty.
• In general, probability is the chance of an outcome of an experiment. It is the measure of
how likely an outcome is to occur.
5.2. Definitions of some probability terms
1. Experiment: Any process of observation or measurement or any process which
generates well defined outcome.
2. Probability Experiment (Random Experiment): It is an experiment that can be
repeated any number of times under similar conditions and it is possible to enumerate
the total number of outcomes without predicting an individual out come.
Example: If a fair coin is tossed three times, it is possible to enumerate all possible
eight sequences of head (H) and tail (T). But it is not possible to predict which
sequence will occur at any occasion.
3. Outcome: The result of a single trial of a random experiment
4. Sample Space(S): Set of all possible outcomes of a probability experiment.
Example 1: Sample space of a trial conducted by three tossing of a coin is
S= {HHH, HHT, HTH, HTT, THH, THT, TTH, TTT}
Example 2: Recording the gender of children of two-child families.
S= {bb, bg, gb, gg}. An event B may be:B=“children of both genders.” Then B={bg,
gb}.
Sample space can be
Countable (finite or infinite)
Uncountable
5. Event (Sample Point): It is a subset of sample space. It is a statement about one or
more outcomes of a random experiment. It is denoted by capital letter A, B, C - - -.
For example, in the event, that there are exactly two heads in three tossing of a coin, it
would consist of three points HTH, HHT and THH.
Remark: If S (sample space) has n members with two possible outcomes in each trial then
there are exactly 2n subsets or events.
6. Equally Likely Events: Events which have the same chance of occurring.
7. Complement of an Event: the complement of an event A means non- occurrence of A
and is denoted by A' orAc or {A , contains those points of the sample space which
don’t belong to A.
8. Elementary (simple) Event: an event having only a single element or sample point.
9. Mutually Exclusive (Disjoint) Events: Two events which cannot happen at the same
time.
10. Independent Events: Two events are said to be independent if the occurrence of one
does not affect the probability of the other occurring.
11. Dependent Events: Two events are dependent if the first event affects the outcome or
occurrence of the second event in a way the probability is changed.
5.3 Counting Techniques

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The number of outcomes of the random experiment or number of cases favorable to an event
can be determined by using mathematical methods (multiplication rule, addition rule,
permutation and combinations) without direct enumeration.

Addition rule

If there are k procedures and the ith procedure may be performed in ways , then
the number of ways in which we may perform procedure1 or procedure 2 or …procedure k is
given by assuming that no two procedures may be performed together.

Example:

1. Suppose that we are planning a trip and are deciding between bus or train
transportation. If there are 3 bus routes and 2 train routes, how many different routes
are available for the trip?
Solution: There are 3 bus and 2 train routes. Thus there routes are available for trip.

Multiplication rule

In a sequence of n events in which the first one has possibilities, the second one has , the
3rd one has and etc, the total possibility of the sequence will be

Example:

1. An instructor gives a six question multiple choice examinations. There are four possible
responses for each question. How many answer keys can be made?
2. A product is assembled in three stages. At the first stage there are five assembly lines, at
the second stage there are there are 6 assembly lines and at the third stage there are 10
assembly lines. In how many different ways may the product be routed through the
assembly process?
Solution:

Totally
the product can be routed in an assembly process by

Permutations

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A permutation is an arrangement of n objects in a specific order. The number of arrangement
of n different objects taking all together is given by

The number of arrangement of n different objects in a circle is given by

Example:

1. Suppose that the photographer want to arrange 4 people in a raw for photographing. By
how many different ways can the arrangement be done?
2. How many different 5 letter permutation can be performed from the letters in the word
DISCOVER?
Solution:
1. The number of arrangement of 4 people in a raw is given by
2.
8!
8 p5   6720
(8  5)!

Combination

A selection of distinct objects without regard to order is called a combination. The difference
between a permutation and a combination is that in a combination, the order or arrangement
of the objects is not important; by contrast, order is important in a permutation.

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Example: 1 how many different committees of 3 people can be chosen to work on a special
project

from a group of 9 people? 9C3 = 84

I n a club there is 7 women and 5 men. A committee of 3 women and 2 men is to be chosen.
How many different possibilities are there?

Solution:

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Example:

Exercise

A committee of 5 people must be selected from 5 men and 8 women. By how many ways
can the selection be done if there are at least 3 women in the committee?

Axiomatic Approach:
Let E be a random experiment and S be a sample space associated with E. With each event A a
real number called the probability of A satisfies the following properties called axioms of
probability or postulates of probability.
a) 0  P A  1
b) P(s) =1
c) If A and B are mutually exclusive events, the probability that one or the other occur
equals the sum of the two probabilities. i. e. P (AuB) =P (A) +P (B)
d) For any event A , P A  0
e) Pφ = 0
f) For any event A and B ,P(AuB)=P(A)+P(B)-P(AnB)
 
g) P A = 1  P(A)

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5.5. Conditional Probability and Independence

Conditional Events: If the occurrence of one event has an effect on the next occurrence of the
other event then the two events conditional or dependant events.

Conditional Probability
Let A and B be two events such that P(A) 0. Denote by P(B|A) the probability of B given that A

has occurred. Since A is known to have occurred, it becomes the new sample space replacing
the original S .From this we are led to the definition

p(A  B
Or PA B = , P (B)  0 or P (A  B) = P (A|B).P(B)
P B 

The above definition implies that the probability that both A and B occur is equal to the
probability that A occurs times the probability that B occurs given that A has occurred. We call P
the conditional probability of B given A, i.e., the probability that B will occur given that A has
occurred. It is easy to show that conditional probability satisfies the axioms of probability.

Remark:
1) 2) and
 
3) P A  / B  1  P A / B   
4) P B  / A  1  PB / A
5) if and are mutually exclusive
6) For three events

Examples

1. The probability that it is Friday and that a student is absent is 0.03. Since there are 5 school
days in a week, the probability that it is Friday is 0.2. What is the probability that a student
is absent given that today is Friday?

Solution:

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 P Absent | Friday  
P( Friday and Absent ) 0.03
  0.15
P( Firday ) 0.2

2. A jar contains black and white marbles. Two marbles are chosen without replacement.
The probability of selecting a black marble and then a white marble is 0.34, and the
probability of selecting a black marble on the first draw is 0.47. What is the probability of
selecting white marble on the second draw, given that the first marble drawn was black?

Solution:

PWhite | Black  
P( Black and White) 0.34
  0.72
P( Black ) 0.47

Assignment:

1. What is the application of statistics for your field of study ?

2. Proof that the sum of the deviation of each observation from the mean is equal to zero?
3. The median of the distribution given below is 14.4. Find the values of x and y if the total
frequency is 20.
Class 0-6 6-12 12-18 18-24 24-30
interval
Frequency 4 x 5 y 1

4. Suppose a study conducted at Wollega University reveals that students who attended class
95 % to 100% of the time usually scored an A in the class. Students who attended class

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 80% to 90% of the time usually scored B or C in the class. Students who attended class less
than 80% of the time usually received D or F or eventually withdrew from the class.
i) Are descriptive, inferential, or both types of statistics used? Why?
ii) What is the population under study?
iii) What are the data in the study?
iv) What are the variables under study?
v) Identify the types of variables?
vi) Which type of scale of measurement is used for those variables?

5. A meteorologist interested in the consistency of temperatures in three cities during

a given week collected the following data. The temperatures for the five days of
the week in the three cities were
City 1 25 24 23 26 17
City2 22 21 24 22 20
City3 32 27 35 24 28
Which city have the most consistent temperature, based on these data?
(Exercise)
6.

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