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Chap 3-1
Mean
Median
Mode
Midpoint of
ranked values
Most frequently
observed value
x
i1
Arithmetic
average
Chap 3-2
Arithmetic Mean
x1 x 2 x N
N
N
i1
Population
values
Population size
x
i 1
x1 x 2 x n
Observed
values
Sample size
Chap 3-3
Arithmetic Mean
(continued)
0 1 2 3 4 5 6 7 8 9 10
Mean = 3
1 2 3 4 5 15
3
5
5
0 1 2 3 4 5 6 7 8 9 10
Mean = 4
1 2 3 4 10 20
4
5
5
Chap 3-4
Median
0 1 2 3 4 5 6 7 8 9 10
0 1 2 3 4 5 6 7 8 9 10
Median = 3
Median = 3
Chap 3-5
n 1
Note that
is not the value of the median, only the
2
position of the median in the ranked data
Chap 3-6
Mode
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Mode = 9
0 1 2 3 4 5 6
No Mode
Chap 3-7
Chap 3-8
Shape of a Distribution
Measures of shape
Symmetric or skewed
Left-Skewed
Symmetric
Right-Skewed
Mean = Median
Chap 3-9
Exercise 3.2
A department store manager is interested in the number of
complaints received by the customer service dept. about
the quality of electrical products sold. Records over a 5
week period show the following number of complaints for
each week:
13, 15, 8, 16, 8
a.Compute the mean number of weekly complaints
b.Compute the median
c.Find the mode
Ans: a.12; b.13; c.8
Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.
Chap 3-10
Ex. 3.6
The demand for bottled water increases during the
hurricane season in Florida. A random sample of 7 hours
showed that the following numbers of 1 gallon bottles were
sold in one store:
40, 55, 62, 43, 50, 60, 65.
a.
Describe the central tendency of the data
b.
Comment on symmetry or skewness
Chap 3-11
Measures of Variability
Variation
Range
Interquartile
Range
Variance
Standard
Deviation
Coefficient
of Variation
Range
Example:
0 1 2 3 4 5 6 7 8 9 10 11 12
13 14
Range = 14 - 1 = 13
Chap 3-13
10
11
12
Range = 12 - 7 = 5
10
11
12
Range = 12 - 7 = 5
Sensitive to outliers
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,5
Range = 5 - 1 = 4
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,120
Range = 120 - 1 = 119
Chap 3-14
Interquartile Range
Quartile Formulas
Find a quartile by determining the value in the
appropriate position in the ranked data, where
First quartile position:
Q1 = 0.25(n+1)
Q3 = 0.75(n+1)
Interquartile Range
Example:
X
minimum
Q1
25%
12
Median
(Q2)
25%
30
25%
45
Q3
maximum
25%
57
70
Interquartile range
= 57 30 = 27
Quartiles
(n = 9)
Q1 = is in the 0.25(9+1) = 2.5 position of the ranked data
so use the value half way between the 2nd and 3rd values,
so
Q1 = 12.5
Chap 3-18
Chap 3-19
Population Variance
Population variance:
Where
(x )
i1
= population mean
N = population size
xi = ith value of the variable x
Chap 3-20
Sample Variance
Sample variance:
s
2
Where
(x x)
i1
n -1
X = sample mean
n = sample size
Xi = ith value of the variable X
Chap 3-21
2
(x
)
i
i1
N
Chap 3-22
(x x)
i 1
n -1
Chap 3-23
Example:
Sample Standard Deviation
Sample
Data (xi) :
10
12
14
n=8
s
15
17
18
18
24
Mean = x = 16
126
7
4.2426
Example 3.5
50
60
70
80
90
Section 2
72
68
70
74
66
Chap 3-25
Chebyshevs Theorem
This theorem established data intervals for
any data set, regardless of the shape and
distribution
For any population with mean and
standard deviation , and k > 1 , the
percentage of observations that fall within
the interval
[ k]
Is at least
2
Chap 3-26
Chebyshevs Theorem
(continued)
Examples:
At least
within
Chap 3-27
68%
1
Chap 3-28
95%
99.7%
3
Chap 3-29
Exercise 3.18
Use Chebychevs theorem to approximate each of
the following observations if the mean is 250 and
S.D. is 20. Approximately what proportion of the
observations is
a)Between 190 and 310?
b)Between 210 and 290?
c)Between 230 and 270?
Coefficient of Variation
s
CV
x
100%
Chap 3-31
Comparing Coefficient
of Variation
Stock A:
Average price last year = $50
Standard deviation = $5
s
CVA
x
$5
100%
100% 10%
$50
Stock B:
Average price last year = $100
Standard deviation = $5
s
CVB
x
$5
100%
100% 5%
$100
Both stocks
have the same
standard
deviation, but
stock B is less
variable relative
to its price
Chap 3-32
Cov (x , y) xy
(x
i
i1
)(y i y )
Cov (x , y) s xy
(x x)(y y)
i1
n 1
Interpreting Covariance
Cov(x,y) > 0
Cov(x,y) < 0
Cov(x,y) = 0
Chap 3-34
Correlation Coefficient
Cov (x , y)
XY
Cov (x , y)
r
sX sY
Chap 3-35
Features of
Correlation Coefficient, r
Unit free
Chap 3-36
r = -1
r = -.6
X
Y
r = +1
r=0
r = +.3
r=0
X
Chap 3-37
r = .733
There is a relatively
strong positive linear
relationship between
test score #1
and test score #2
Example 3.13
(Covariance and Correlation Coefficient)
Rising Hills Manufacturing Inc. wishes to study the
relationship between the number of workers, X, and the
number of tables produced, Y. it has obtained a random
sample of 10 hours of production. The following (x,y)
combinations of points were obtained:
(12,20) (30,60) (15,27) (24,50) (14,21)
(18,30) (28,61) (26,54) (19,32) (27,57)
Compute the covariance and correlation coefficient. Briefly
discuss the relationship between X and Y.
Chap 3-39
Chap 3-40
y b0 b1 x
sy
Cov(x, y)
b1
r
2
sx
sx
b 0 y b1x
Chap 3-41
Example 3.15
Chap 3-42