STATISTICS FOR BUSINESS AND

ECONOMICS

Anderson, Sweeney, Williams

Slide 1

Chapter 2
Descriptive Statistics:
Tabular and Graphical Methods
n Summarizing Qualitative Data
n Summarizing Quantitative Data
n Exploratory Data Analysis
n Crosstabulations
and Scatter Diagrams

Slide 2

Summarizing Qualitative Data

n Frequency Distribution
n Relative Frequency
n Percent Frequency Distribution
n Bar Graph
n Pie Chart

Slide 3

1
 Frequency Distribution

n A frequency distribution is a tabular summary of

data showing the frequency (or number) of items in
each of several nonoverlapping classes.
n The objective is to provide insights about the data
that cannot be quickly obtained by looking only at
the original data.

Slide 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 poor. The
ratings provided by a sample of 20 guests are shown
below.

Below Average Average Above Average

Above Average Above Average Above Average
Above Average Below Average Below Average
Average Poor Poor
Above Average Excellent Above Average
Average Above Average Average
Above Average Average

Slide 5

Example: Marada Inn

n Frequency Distribution

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

Slide 6

2
 Relative Frequency Distribution

n The relative frequency of a class is the fraction or

proportion of the total number of data items
belonging to the class.
n A relative frequency distribution is a tabular
summary of a set of data showing the relative
frequency for each class.

Slide 7

Percent Frequency Distribution

n The percent frequency of a class is the relative

frequency multiplied by 100.
n A percent frequency distribution is a tabular
summary of a set of data showing the percent
frequency for each class.

Slide 8

Example: Marada Inn

n Relative Frequency and Percent Frequency

Distributions

Relative Percent
Rating Frequency Frequency
Poor .10 10
Below Average .15 15
Average .25 25
Above Average .45 45
Excellent .05 5
Total 1.00 100

Slide 9

3
 Bar Graph

n A bar graph is a graphical device for depicting

qualitative data that have been summarized in a
frequency, relative frequency, or percent frequency
distribution.
n On the horizontal axis we specify the labels that are
used for each of the classes.
n A frequency, relative frequency, or percent frequency
scale can be used for the vertical axis.
n Using a bar of fixed width drawn above each class
label, we extend the height appropriately.
n The bars are separated to emphasize the fact that
each class is a separate category.

Slide 10

Example: Marada Inn

n Bar Graph
9
8
7
Frequency

6
5
4
3
2
1
Rating
Poor Below Average Above Excellent
Average Average

Slide 11

Pie Chart

n The pie chart is a commonly used graphical device

for presenting relative frequency distributions for
qualitative data.
n First draw a circle; then use the relative frequencies
to subdivide the circle into sectors that correspond to
the relative frequency for each class.
n 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.

Slide 12

4
 Example: Marada Inn

n Pie Chart
Exc.
Poor
5%
10%
Below
Average
Above
15%
Average
45%
Average
25%

Quality Ratings

Slide 13

Example: Marada Inn

n 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.

Slide 14

Summarizing Quantitative Data

n Frequency Distribution
n Relative Frequency and Percent Frequency
Distributions
n Dot Plot
n Histogram
n Cumulative Distributions
n Ogive

Slide 15

5
 Example: Hudson Auto Repair

The manager of Hudson Auto would like to get a

better picture of the distribution of costs for engine
tune-up parts. A sample of 50 customer invoices has
been taken and the costs of parts, rounded to the
nearest dollar, are listed below.

91 78 93 57 75 52 99 80 97 62
71 69 72 89 66 75 79 75 72 76
104 74 62 68 97 105 77 65 80 109
85 97 88 68 83 68 71 69 67 74
62 82 98 101 79 105 79 69 62 73

Slide 16

Frequency Distribution

n Guidelines for Selecting 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.

Slide 17

Frequency Distribution

n Guidelines for Selecting Width of Classes

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

Slide 18

6
 Example: Hudson Auto Repair

n Frequency Distribution
If we choose six classes:
Approximate Class Width = (109 - 52)/6 = 9.5 10
Cost ($) Frequency
50-59 2
60-69 13
70-79 16
80-89 7
90-99 7
100-109 5
Total 50

Slide 19

Example: Hudson Auto Repair

n Relative Frequency and Percent Frequency

Distributions

Relative Percent
Cost ($) Frequency Frequency
50-59 .04 4
60-69 .26 26
70-79 .32 32
80-89 .14 14
90-99 .14 14
100-109 .10 10
Total 1.00 100

Slide 20

Example: Hudson Auto Repair

n Insights Gained from the Percent 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.

Slide 21

7
 Dot Plot

n One of the simplest graphical summaries of data is a

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

Slide 22

Example: Hudson Auto Repair

n Dot Plot

.. .. .. ... ... ..
. . .. ....... .......... .. . .. . . ... . ... .
50 60 70 80 90 100 110

Cost ($)

Slide 23

Histogram

n Another common graphical presentation of

quantitative data is a histogram.
n The variable of interest is placed on the horizontal
axis and the frequency, relative frequency, or percent
frequency is placed on the vertical axis.
n A rectangle is drawn above each class interval with
its height corresponding to the intervals frequency,
relative frequency, or percent frequency.
n Unlike a bar graph, a histogram has no natural
separation between rectangles of adjacent classes.

Slide 24

8
 Example: Hudson Auto Repair

n Histogram
18
16
14
Frequency

12
10
8
6
4
2
Parts
Cost ($)
50 60 70 80 90 100 110

Slide 25

Cumulative Distribution

n The cumulative frequency distribution shows the

number of items with values less than or equal to the
upper limit of each class.
n The cumulative relative frequency distribution shows
the proportion of items with values less than or equal
to the upper limit of each class.
n The cumulative percent frequency distribution shows
the percentage of items with values less than or equal
to the upper limit of each class.

Slide 26

Example: Hudson Auto Repair

n Cumulative Distributions
Cumulative Cumulative
Cumulative Relative Percent
Cost ($) Frequency Frequency Frequency
< 59 2 .04 4
< 69 15 .30 30
< 79 31 .62 62
< 89 38 .76 76
< 99 45 .90 90
< 109 50 1.00 100

Slide 27

9
 Ogive

n An ogive is a graph of a cumulative distribution.

n The data values are shown on the horizontal axis.
n Shown on the vertical axis are the:
cumulative frequencies, or
cumulative relative frequencies, or
cumulative percent frequencies
n The frequency (one of the above) of each class is
plotted as a point.
n The plotted points are connected by straight lines.

Slide 28

Example: Hudson Auto Repair

n Ogive
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.

Slide 29

Example: Hudson Auto Repair

n Ogive with Cumulative Percent Frequencies

Cumulative Percent Frequency

100

80

60

40

20
Parts
Cost ($)
50 60 70 80 90 100 110

Slide 30

10
 Exploratory Data Analysis

n The techniques of exploratory data analysis consist of

simple arithmetic and easy-to-draw pictures that can
be used to summarize data quickly.
n One such technique is the stem-and-leaf display.

Slide 31

Stem-and-Leaf Display

n A stem-and-leaf display shows both the rank order

and shape of the distribution of the data.
n It is similar to a histogram on its side, but it has the
advantage of showing the actual data values.
n The first digits of each data item are arranged to the
left of a vertical line.
n To the right of the vertical line we record the last
digit for each item in rank order.
n Each line in the display is referred to as a stem.
n Each digit on a stem is a leaf.

Slide 32

Example: Hudson Auto Repair

n Stem-and-Leaf Display

5 2 7
6 2 2 2 2 5 6 7 8 8 8 9 9 9
7 1 1 2 2 3 4 4 5 5 5 6 7 8 9 9 9
8 0 0 2 3 5 8 9
9 1 3 7 7 7 8 9
10 1 4 5 5 9

Slide 33

11
 Stretched Stem-and-Leaf Display

n If we believe the original stem-and-leaf display has

condensed the data too much, we can stretch the
display by using two more stems for each leading
digit(s).
n Whenever a stem value is stated twice, the first value
corresponds to leaf values of 0-4, and the second
values corresponds to values of 5-9.

Slide 34

Example: Hudson Auto Repair

n Stretched Stem-and-Leaf Display

5 2
5 7
6 2 2 2 2
6 5 6 7 8 8 8 9 9 9
7 1 1 2 2 3 4 4
7 5 5 5 6 7 8 9 9 9
8 0 0 2 3
8 5 8 9
9 1 3
9 7 7 7 8 9
10 1 4
10 5 5 9

Slide 35

Stem-and-Leaf Display

n Leaf Units
A single digit is used to define each leaf.
In the preceding example, the leaf unit was 1.
Leaf units may be 100, 10, 1, 0.1, and so on.
Where the leaf unit is not shown, it is assumed to
equal 1.

Slide 36

12
 Example: Leaf Unit = 0.1

If we have data with values such as

8.6 11.7 9.4 9.1 10.2 11.0 8.8
a stem-and-leaf display of these data will be

Leaf Unit = 0.1

8 6 8
9 1 4
10 2
11 0 7

Slide 37

Example: Leaf Unit = 10

If we have data with values such as

1806 1717 1974 1791 1682 1910 1838
a stem-and-leaf display of these data will be

Leaf Unit = 10
16 8
17 1 9
18 0 3
19 1 7

Slide 38

Crosstabulations and Scatter Diagrams

n Thus far we have focused on methods that are used

to summarize the data for one variable at a time.
n Often a manager is interested in tabular and
graphical methods that will help understand the
relationship between two variables.
n Crosstabulation and a scatter diagram are two
methods for summarizing the data for two (or more)
variables simultaneously.

Slide 39

13
 Crosstabulation

n Crosstabulation is a tabular method for summarizing

the data for two variables simultaneously.
n Crosstabulation can be used when:
One variable is qualitative and the other is
quantitative
Both variables are qualitative
Both variables are quantitative
n The left and top margin labels define the classes for
the two variables.

Slide 40

Example: Finger Lakes Homes

n Crosstabulation
The number of Finger Lakes homes sold for each
style and price for the past two years is shown below.

Price Home Style

Range Colonial Ranch Split A-Frame Total

< $99,000 18 6 19 12 55
> $99,000 12 14 16 3 45

Total 30 20 35 15 100

Slide 41

Example: Finger Lakes Homes

n Insights Gained from the Preceding Crosstabulation

The greatest number of homes in the sample (19)
are a split-level style and priced at less than or
equal to $99,000.
Only three homes in the sample are an A-Frame
style and priced at more than $99,000.

Slide 42

14
 Crosstabulation: Row or Column Percentages

n Converting the entries in the table into row

percentages or column percentages can provide
additional insight about the relationship between the
two variables.

Slide 43

Example: Finger Lakes Homes

n Row Percentages

Price Home Style

Range Colonial Ranch Split A-Frame Total

< $99,000 32.73 10.91 34.55 21.82 100

> $99,000 26.67 31.11 35.56 6.67 100

Note: row totals are actually 100.01 due to rounding.

Slide 44

Example: Finger Lakes Homes

n Column Percentages

Price Home Style

Range Colonial Ranch Split A-Frame

< $99,000 60.00 30.00 54.29 80.00

> $99,000 40.00 70.00 45.71 20.00

Total 100 100 100 100

Slide 45

15
 Scatter Diagram

n A scatter diagram is a graphical presentation of the

relationship between two quantitative variables.
n One variable is shown on the horizontal axis and the
other variable is shown on the vertical axis.
n The general pattern of the plotted points suggests the
overall relationship between the variables.

Slide 46

Scatter Diagram

n A Positive Relationship
y

Slide 47

Scatter Diagram

n A Negative Relationship
y

Slide 48

16
 Scatter Diagram

n No Apparent Relationship
y

Slide 49

Example: Panthers Football Team

n Scatter Diagram
The Panthers football team is interested in
investigating the relationship, if any, between
interceptions made and points scored.

x = Number of y = Number of
Interceptions Points Scored
1 14
3 24
2 18
1 17
3 27

Slide 50

Example: Panthers Football Team

n Scatter Diagram
y
Number of Points Scored

30
25
20
15
10
5
0 x
0 1 2 3
Number of Interceptions
Slide 51

17
 Example: Panthers Football Team

n The preceding scatter diagram indicates a positive

relationship between the number of interceptions
and the number of points scored.
n Higher points scored are associated with a higher
number of interceptions.
n The relationship is not perfect; all plotted points in
the scatter diagram are not on a straight line.

Slide 52

Tabular and Graphical Procedures

Data
Qualitative Data Quantitative Data

Tabular Graphical Tabular Graphical

Methods Methods Methods Methods

Frequency Bar Graph Frequency Dot Plot

Distribution Pie Chart Distribution Histogram
Rel. Freq. Dist. Rel. Freq. Dist. Ogive
% Freq. Dist. Cum. Freq. Dist. Scatter
Crosstabulation Cum. Rel. Freq. Diagram
Distribution
Stem-and-Leaf
Display
Crosstabulation

Slide 53

End of Chapter 2

Slide 54

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