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on the Family of Muhammad (PBUH) as you sent your

salutations upon Ibrahim & on the Family of Ibrahim verily

you are Most Praiseworthy & Glorious

Quantitative Methods

for Decision Making

A Practical and Philosophical approach

By,

Yaseen Ahmed Meenai

Faculty, FCS-IBA

ymeenai@iba.edu.pk

art?)

An activity of obtaining data and then;

Compiling,

summarizing,

presenting,

analyzing, interpreting and.

Drawing conclusions, is called Statistics.

In short it is;

Data Process

Information/Conclusions

Statistics is sort of a mixture of science and

art, till process it is a SCIENCE and drawing

conclusions is an individuals ART.

Keyword?)

DATA is a group of raw fact and figures

which may VARY from;

Person to Person, Object to Object,

Distance to Distance and Time to

Time.

Only the absence of VARIATION can

cause a CONSTANT and it doesnt

exists in our physical world. Only

spiritualism can define a CONSTANT.

Variable is the storage of data, its being represented by letters X,Y,Z etc.

There are two types of variables:

Qualitative Variable: It deals with the data which may vary by it

kind, which provides labels, or names, for categories of like

items, i.e. a set of observations where any single observation is

a word or code that represents a class or category.

Gender, Complexion, Weather, Type are some examples

Quantitative Variable: It deals with the numeric data, which

measures either how much or how many of something, i.e. a set

of observations where any single observation is a number that

represents an amount or a count.

Age, Height, number, price are some examples of Quantitative variable.

Source: http://www.microbiologybytes.com/maths/1011-17.html

Inactivity breaker

Object: Allocate a blank page from your writing material and divide that

page into two columns in the following manner:

Qualitative Variables

Quantitative

Variables

1- Gender

1- Age

2- Complexion

2- Height

3- Qualification

3- Weight

4- Weather

4- Price

20.

20.

like management, agriculture, medical, engineering, geology etc. Submit the

same sheet by writing your full name on the top.

Data Sources

There are three major sources of data:

1. Survey/Census: An official, usually periodic

enumeration of a population, often including the

collection of related demographic information,

is called census. Survey means to inspect and

determine the conditions of interest.

2. Experiment: Any activity, which is usually

being conducted within an isolated atmosphere,

and produces results, is called experiment.

3. Simulation: An artificial way of data collection.

What do you think about

Quality of the following in IBA??

1- Teaching 1,2,3,4,5

2- Administration 1,2,3,4,5

3- Structure 1,2,3,4,5

Where 1-Very Poor 5-Excellent

Data

Collection/compilation

Teaching Ranks where 1-Very Poor, 5-Excellent

4.5

3.7

4.3

3.3

2.7

4.7

3.8

4.5

3.4

4.0

3.8

2.7

4.3

3.4

3.2

3.7

3.9

3.8

3.8

3.7

3.6

5.0

4.2

4.1

4.2

4.1

3.9

4.5

5.0

3.7

4.8

3.2

4.2

4.5

4.2

5.0

2.9

Data collection/compilation is needed for getting

actual behavior of the variable.

Note: The above data is simulated version of the actual.

Exercise)

Step # 01: Finding the range

Range = Max. Min = 5.0-2.7 =2.3

Step # 02: Finding the number of classes

No. of classes = 1 + 3.3 log(n) = 1+3.3 log(37) = 6.175

Step # 03: Finding the width or height (h)

h = Range/No. of classes= 2.3/6.175 = 0.377 0.4

Class Interval: One of the intervals into which the range of a

variable of a distribution is divided, esp. one of the

divisions of the base line of a bar chart or histogram.

After forming the structure of Class-Intervals and frequencies by

using methods of tally-marks, we can observe the actual behavior.

Data Process

Information

Freque

Ranks

ncy

2.7

3.1

3.4

10

3.8

4.2

4.6

Histogram

Frequency

12

10

8

6

4

2

0

Ranks

Histogram are revealing the shape of thoughts generated from

the minds of students. If we discover a subsequent Mathematical

Model, it will called a Probability distribution.

Data Process

Information

Freque

Ranks

ncy

2.7

7

3.1

3.4

11

9

3.8

4.2

6

3

4.6

Histogram

Frequency

12

10

8

6

4

2

0

Ranks

Histogram are revealing the shape of thoughts generated from

the minds of students. If we discover a subsequent Mathematical

Model, it will called a Probability distribution.

(MSEXCEL)

case if it is not present there we can activate it by

running the Add-Ins present in Excel Options.

cont

After providing

data-range

and hitting the

Labels

and

Chart-output

options, we can

find

the

histogram

either in the

new worksheet

or

in

the

Bin numbersThese numbers represent

the intervals

specific

placethat

of

you want the Histogram tool to use for measuring

the input

the

existing

data in the data analysis.

sheet.

introduction)

The phrase descriptive statistics is used generically

in place of statistical measures.

These statistic(s) describe or summarize the qualities

of data.

Another name is summary statistics, which we

mostly used to ornament our reports/cases/research.

This would be beneficial if graphical summary is not

enough sufficient for the final conclusions.

Dat

a

Processin

g

By Graph

Processin

g

By

Measure

Conclusio

ns

Example)

Consider the following group data:

Class

Intervals

Frequenc

y

Relative

Frequency

(R.F.)

Cumulative

Relative Frequency

(C.R.F)

24

46

68

810

1012

2

5

9

7

2

f=25

2/25 = 0.08

5/25 = 0.20

9/25 = 0.36

7/25 = 0.28

2/25 = 0.08

R.F.=1

0.08

0.28

0.64

0.92

1.00

some individuals in late 1980s

Statistical Measures

(Quartiles)

These

are

3

values

respectively

represented by Q1, Q2 and Q3 and divides

the data into 4 equal parts.

Each part contains 25% observations

Quartiles Usually highlight 4 different

classes i.e. Lower class, Lower Middle,

25% and

25%

25%

Upper Middle

Upper

class.25%

Lower

Class

Mi

n

Lower

Middle

Upper

Middle

Upper

Class

Ma

x

Computing Quartiles

In order to computer Quartile Values, we

need to consider the same frequency

distribution in addition to the column of

Cumulative Frequency.

Class

Frequenc

Cumulative

Intervals

y

Frequency

(C.F.)

24

2

2

46

5

7

68

9

16

810

7

23

1012

2

25

f=25

Computing Quartiles

(Procedure)

For any group-data, quartiles can be computed by

following two simple steps:

Step-1: Finding the location of ith Quartile: (where

i=1,2 and 3)

frequency, C.F.=previous class C.F.

Class

Intervals

Frequenc

y

24

46

68

810

1012

Cumulative

Frequency

(C.F.)

2

7

16

23

25

2

5

9

7

2

f=25

Step-1 (For Q1): (1 x 25) / 4 = 6.25

Step-2:

1st

Quart

ile

Class

Quartiles (Income

Classes)

25%

Lower

Class

Mi

n

25%

Lower

Middle

25%

Upper

Middle

25%

Upper

Class

Ma

x

2000

5700 7222

8786

12000

Quartiles can be computed using MSEXCEL,

ungroup form of data is needed there, the

syntax is given below:

=QUARTILE(Data Range,i) where i=1,2,3

showing quartile numbers.

Percentiles

Quartiles:

Deciles:

Percentiles:

To divide the

data into 4

equal parts.

Quartiles are

three

values

Q1, Q2 and Q3

To divide the

data into 10

equal parts.

Deciles

are

Nine values D1,

D2 , D3 D9.

To

divide

the

data into 100

equal parts.

Percentiles are

Ninty nine values

P1, P2,. P99

Step-1:

i=1,2,3

Step-1:

i=1,2,3,,9

Step-1:

i=1,2,3,99

Step-2:

Step-2:

Step-2:

Practice Questions

Q. What should be the interval of income

which covers middle 50% individuals?

Ans.

5700 to 8786

Q. What should be the interval of income

which covers middle 40% individuals?

Mi

n

100

%

40%

30%

D3

30%

D7

Ma

x

which covers middle 30% individuals?

by Sir John Wilder Tukey

There are two types of studies:

Hypothetical Study

Exploratory Study

In Exploratory study, we can perform our

analysis

by

avoiding

conventional

methodologies. In EDA, we can observe

the trend of data by applying different

processes on the data.

The Box-plot is a very useful part of EDA.

The Box-Plot

Boxplot

Boxplot of

of Teaching

Teaching

Inter-quartile

Range=Q3-Q1

Min

Q1

33

Max

Q2

44

Teaching

Teaching Ranks

Ranks

Q3

55

Box-Plots

Boxplots of Female Ages - Male Ages

(means are indicated by solid circles)

45

Males are

Younger

than

Females

More

Variable

Less

35

Consistent

Heterogeneou

s

More Diversed

Less

Variable

More

Consistent

Homogenous

Less Diversed

Male Age

Female A

25

ranks from Aventis Field Managers

Boxplots of Teaching, Administration & Structure

(means are indicated by solid circles)

5

Structur

Admin

Teaching

The main problem associated with the

mean value of some data is that it is

sensitive to outliers.

The median is simply the middle value

among some scores of a variable. Its

the 2nd Quartile (Q2) of any data.

The most frequent response or value

for a variable. Multiple modes are

possible: bimodal or multimodal.

Measurements are on x-axis and

frequencies are on y-axis

democracy, while median (Q2) follows the rule of

moderation. Mean took its place after being

influenced

by

the

higher

values

of

measurements. The above mentioned distribution

is +vely skewed.

(Computations)

f x

Mod

al

Clas

s

Class

Intervals

24

Frequency

Mid-Points

fi

xi

(2+4)/2

2

=3

46

68

810

810

f1=5

fm

=9

m

ff2=7

=7

1012

1012

2

2

f

fii=25

=25

(4+6)/2

(6+8)/2

(8+10)/2

(8+10)/2

(10+12)/2

(10+12)/2

=11

=11

2 3

=5

=7

5 5

9 7

7

7

9

9

=9

=9

2

2

11

11

f

f ii

x

xi=179

=179

i

Mode= 7.333

= 7333/Majoritys Income

= 7160/- is the

Average Income

Mean, Median and Mode

Following are the values for Mean,

Median and Mode obtained from the

Income data:

f i xi 179

Mean

25

Median Q2

7.222

f m f1

h

Mode l

2 f m f1 f 2

Mean Median Mode

7.160

7.333

Mean and Harmonic Mean

For any ungroup data, The Arithmetic Mean

is:

Where xi are the observations

and n is the sample size

is:

Mean and Harmonic Mean

Consider the Following ungroup data and

compute A.M. , G.M. and H.M.:

XI : 1,2,3,4,5 n=5

A.M. = (1+2+3+4+5)/5

= 15/5 = 3.0

G.M.

= (1x2x3x4x5) 1/5

= (120) 1/5= 2.6052

H.M. = 5 / (1/1+1/2+1/3++1/5)

5/2.8333 = 2.1898

HM

Theorem No. 1:

AM>GM>HM

3.0 > 2.6052 > 2.1898

Theorem No. 2:

AM x HM GM2

3.0 x 2.1898 2.60522

6.569 6.7870 diff. = 0.22

and Harmonic Mean for Group Data

For any Group data, The Arithmetic Mean is:

Where xi are the Mid-Points

and fi are class frequencies.

AM, GM & HM

(Computations)

Class

Intervals

24

46

68

810

1012

Frequenc

y

fi

2

5

9

7

2

f

fii=25

=25

MidPoints

xi

3

5

7

9

11

For

A.M.

For

G.M.

f i xi

xi

23

23

55

97

79

211

ffii

xxi=179

=179

i

fi

32

55

79

97

11 22

fi

x

xi fi

i

For

H.M.

fi / x i

2/3

5/5

9/7

7/9

2/11

fi / x i

MSEXCEL syntaxes for finding three

measures of central tendency are;

=Average(Data Range)

=Quartile(Data Range,2)

Median

=Mode(Data Range)

For Mean

For

For Mode

Statistical Measures

(Dispersion)

t

What is DISPERSION?? on

H

B

d

A dart-game can help us

in

this

C

r

l

l

U

e

i

t

M lay ch

Based

on

the

visual

s

A

observation; we can

declare

u

w

e

p

r

o

Player-A

as w

a

winner

m

e

e

h

because:

t

y

h

,

w

t

a

Player A is, u

l

w

o

B

d

p

More consistent/Less

o

H

e

n

e

Variable/Homogenous/Less

s

d

!

k

r

h

!

n

Dispersed

t

!

e

!

A

And

t

p

?

n

?

Player B is, is

?

?

e ?

d

t

Less Consistent/More

?

is sis is?

Variable/Heterogeneous/More

dispersed

n

Measures of Dispersion

Some Important Measures of

Dispersion are:

Range=Max-Min

Variance

Standard Deviation

Mean Deviation

Inter-quartile Range

Coefficient of Variation (C.V.)

Dispersion Measures

(Cont)

2

x x

Variance V ( X )

ungroup data:

X: 1,2,3,4,5

Mean=3

Standard Deviation=

=1.414 ???

V (X ) 2

Coefficient of Variation

(Consistency Check)

In order to check whether the

variable is consistent or not, we need

to compute the coefficient of

variation,

V (X )

C.V .

100 100

X

100%

C.V. is the unit-less measure of

(group-data)

Class

Intervals

24

Frequenc

Midy

Points

fi

xi

2

(2+4)/2=3

f i xi

f i (xi-mean)2

2 3

2(3 7.16)2=34.61

5(5 7.16)2=23.33

9(7 7.16)2=0.230

7(9 7.16)2=23.69

2(11 7.16)2=29.49

=111.34

46

46

68

5

5

9

(4+6)/2=5

(4+6)/2=5

(6+8)/2=7

5 5

5 5

9 7

68

810

9

7

9

7 7

9

810

1012

7

2

1012

2

fi=25

(6+8)/2=7

(8+10)/2=

9

(8+10)/2=

(10+12)/2

9

=11

(10+12)/2

=11

9

2711

f i 2

x11

i=179

fi=25

f i xi=179

f x x

Variance V ( X )

f

i

111 .34

4.45

25

of C.V.)

Coefficient of Variation for 1,2,3,4,5 (n = 5) is,

V (X )

1.414

C.V .

100

100 47.1%

X

3

And for the Income-data ( f = 25 ); it is,

V (X )

2.111

C.V .

100

100 29.48%

X Income data

7.16is more consistent

So technically,

Hand-Profile Analysis

(An exploratory approach)

X4

X3

S.N

o.

X2

X5

Span

(X6)

Lengt

h (X7)

Thum

b (X1)

in

cms

Measurement

s (X)

X1

X2

X3

X4

X5

X6

7

X7

Determine

the

Mean,

Standard

deviation

and

Coefficient

of

Variation.

Deviation Using Scientific

Calculators

New Models (ES

Series)

Series)

Press MODE

Select STAT

Select 1-Var

Enter the Data in

appeared data column

For Finding Mean and

Standard Deviation:

Press Shift and then press 1

Select VAR

Select

for mean

Select X n for Standard

Deviation

Press MODE

Select SD

Entering the Data:

Obs1 M+

Obs2 M+

Obs3 M+

do it for all remaining data

observations.

For Finding Mean and

Stand. Dev.

Press Shift and Press 2

Select

for mean

Select X n for Standard

Deviation

Distribution??

There

are

Distributions

several

Symmetrical

Distribution??

In a Bell-shaped distribution, extreme

values come with less frequency.

Majority

falls

within

one

standard

deviation.

Its Natures Distribution. God created

almost all natural measures with a bellshaped distribution.

Confidence Intervals

Bring One Neem Leaf and measure its length

in cms.

Obtain Mean and Standard Deviation

Empirically prove the following theorems:

1) will cover approximately 68% observations

2) 2 will cover approximately 95% observations

3) 3 will cover approximately 99.98% observations

Bell-shaped symmetric in nature)

(Distribution of a continuous random variable)

Perfectly symmetrical about the mean.

Tails are asymptotic: closer and closer to

horizontal axis but never reach it.

Approximate domain formula is -3 X

+3

Function

The PDF is written as:

which are Mean and Standard Deviation,

respectively.

Simplify the f(X) if =0 and =1?

Simplified form is said to be the Standard

Normal Distribution.

probability

Standard Normal Curve

Standard Normal Table comprises all

possible Areas under the Standard

Normal Curve.

These Areas are to the left of Z=z i.e.,

Standard Normal Curve

Determine the following Areas/probabilities

using the Standard Normal Table:

1- P(Z1.25) =

2- P(Z< -1.00) =

3- P(Z= -1.00) =

4- P(Z +1.00) =

Solution,

P(Z +1.00)= 1 P(Z< +1.00)

= 1 0.8413 = 0.1587

Theorem: P(Z +1.00) = P(Z -1.00)

Standard Normal Curve

Determine the following Areas/probabilities using

the Standard Normal Table:

5- P(-1.00 Z +1.00) =

Solution,

P(-1.00 Z +1.00) = P(Z +1.00) P(Z <

-1.00)

Theorem:

P(a Z b) = P(Z b) P(Z < a)

6- P(-2.25 Z -1.00) =

consideration of Standard Normal Table)

Determine

the

following

Quantiles/Percentage

Points/Z-scores

using the Standard Normal Table:

7- P(Z

a) 0.09

= 0.025

Z

0.06

0.00

-3.9

..

-1.9

0.025

consideration of Standard Normal Table)

8-

P(Z b) = 0.05

Z

0.09

0.05

0.04

0.00

-3.9

..

-1.6

0.0495 0.0505

-1.645

Elsewhere we can also consider the

nearest value.

Soft-drink Analysis from KU canteens

Amount of soft-drink within a glass follows a

Normal Distribution with =220 ml. and =5 ml.

If a student purchases one glass of soft-drink

then determine the probability that he will get

less than 215 ml within his glass:

P(X<215) = ??

We must use the z-transformation: Z = (X-)/, so:

P[(X-)/ < (215-220)/5] =

P(

Z<

- 1.00

) = 0.1587

Soft-drink Analysis from KU canteens

P(X<215) = 15.87%

1- There is a 16% chance that he will get less

than 215ml within his glass.

2- We are 16% confident that he will get less

than 215 ml. within his glass.

3- If 50 students purchasing 50 glasses of softdrink then approx. 50 x 0.1587 8 of them will

be having less than 215 ml. within their

glasses

Find: P( 215 X 225 ) = P(X 225) P(X<215)

For any Normal distribution with =250

and =5, we can obtain the P(X<245)

using the following syntax:

=Normdist(x,,,cumulative)

=Normdist(245,250,5,1)

And for P(X>255)

=1 - Normdist(255,250,5,1)

We can apply the same scenario on a soft-drink case

study.

Index Numbers

Index Numbers are RELATIVE measures.

Index Numbers Could be Price Relatives or

Quantity Relatives.

Index Numbers are having two major types:

1) Simple Index 2) Composite Index

) Simple Index Number can be obtained

using this formula: In=Pn/P0100 where,

Pn is the current year (time) and Po is the Base year

(time)

Consider the following table comprising prices of

a commodity in different years:

Year

s

Pric

e

(Rs/)

2006

54

2007

60

Fixed Base

In=Pn/54 100

Chain Base

In=Pn/Pn 100

=54/54 100=

100.0%

=54/54 100=

100.0%

=60/54 100=

111.1%

=60/54 100=

111.1%

2008 67

=67/54

100= base=67/60

100=by fixing

If we

want to use

a Fixed

method

111.7%

the base year 124.1%

as 2006 then the

possible Indices

will be computed by dividing all Price values with

54.

In Chain base method; the preceding year price

will be used as base.

Consider the following table comprising prices of

a commodity in different years for three different

cities:

Yea Pric Pric Pric

Fixed Base

Chain Base

rs

e

e

e

City City City

1

2

3

200

6

54

52

50

200

7

60

65

62

Su

m

P

In=Pn/156

100

In=Pn/P0

100

156

100%

100%

187

119.9%

119.9%

200

128.2%

106.9%

200

Before

the fixed base or chain based

67 computing

65

68

8 index numbers, we have to obtain a sum for all

prices in the next column.

Finally we can compute both Fixed base and chain

base indices for the P column using the same

procedures.

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