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Business Statistics

Black. Chakrapani. Castillo

© 2008 The McGraw-Hill Companies

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Chapter 3

Descriptive Statistics
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Topics

 3.1 Measures of Central Tendency: Ungrouped Data

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3.1 Measures of Central tendency

Measure of central tendency

 use to describe set of data.
 yield information about the center or middle part of
a group of numbers.
 average, middle, and the most frequently occurring
 Ungrouped data: mean, median, mode, percentiles
and quartiles.

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3.1 Central tendency: Ungrouped

Arithmetic Mean / Mean

 average of a group of numbers
 Population mean:

 Sample mean:

Example: Suppose a company has five departments with

24, 13, 19, 26, and 11 workers each. Determine the
population mean.
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3.1 Central tendency: Ungrouped

Median
 middle value in an ordered array of numbers.
 Steps
1. Arrange the observations in an ordered data array.
2. For an odd number of terms, find the middle term of
the ordered array as the median.
3. For an even number of terms, find the average of the
middle of two terms as the median.
Example: Suppose a business researchers wants to
determine the median of the following data.
15 11 14 3 21 17 22 16 19 16 5 7 19 8 9 20 4
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3.1 Central tendency: Ungrouped

Mode
 most frequently occurring value in a set of data.
 organized data into an ordered array
 Bimodal – two modes are listed in case of a tie
 Multimodal – data sets with more than two modes

Example: Determine the mode of the given data.

15 11 14 3 21 17 22 16 19 16 5 7 19 8 9 20 4

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3.1 Central tendency: Ungrouped

Percentiles
 measures of central tendency that divide a group
of data into 100 parts.
 “Stair-step” values, 99 dividers
 used mainly in reporting test results.
Steps in determining location of a percentile:
1. Organize the numbers into an ascending-order array.
2. Calculate the percentile location (i) by:
where: i = percentile location
P = percentile of interest
n = number in the data set
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3.1 Central tendency: Ungrouped

3. Determine the location by either (a) or (b)
a. If i is a whole number, the Pth percentile is the average
of the value at the ith location and the value at the (i+1)th
location.
b. If i is not a whole number, the Pth percentile value is
located at the whole-number part of i + 1.

Example:
1. Suppose you want to determine the 80th percentile of
1,240 numbers.
2. Determine the 30th percentile of the eight numbers: 14,
12, 19, 23, 5, 13, 28, 17.

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3.1 Central tendency: Ungrouped

Quartiles
 measures of central tendency that divide a group
of data into four subgroups or parts.
 three quartiles are percentiles; 25th, 50th, 75th
 used percentiles to compute for accurate quartiles

Example:
Determine the quartiles of the given data 106 109
114 116 121 122 125 129.

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