Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

National Economics University

Bachelor of Logistics and Supply Chain Management - LSIC K65 Chapter 2
Part A - Descriptive Statistics: Tabular and Graphical Displays
• Summarizing Data for a Categorical Variable
Statistics for Business and • Categorical data use labels or names to identify categories of like items.
Economics: Chapter 2 (Part A) Group discussion: Application 5 in page 38
• Summarizing Data for a Quantitative Variable
• Quantitative data are numerical values that indicate how much or how many.
Bach Ngoc Thang Group discussion: Exercise 11 in page 50 (Dataset: Frequency)
thangbn@[Link]

Hanoi, 2024

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Summarizing Categorical Data Frequency Distribution

• Frequency Distribution • A frequency distribution is a tabular summary of data showing the
• Relative Frequency Distribution number (frequency) of observations in each of several non-overlapping
categories or classes.
• Percent Frequency Distribution
• The objective is to provide insights about the data that cannot be quickly
• Bar Chart obtained by looking only at the original data.
• Pie Chart

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Frequency Distribution Frequency Distribution

Example: Marada Inn • 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 Rating Frequency
poor. Poor 2
• The ratings provided by a sample of 20 guests are: Below Average 3

Average 5
Below Average Average Above Average
Above Average 9
Above Average Above Average Above Average
Excellent 1
Above Average Below Average Below Average
Total 20
Average Poor Poor
Above Average Excellent Above Average
Average Above Average Average
Above Average Average

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 Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Relative Frequency Distribution Percent Frequency Distribution

• The relative frequency of a class is the fraction or proportion of the • The percent frequency of a class is the relative frequency multiplied
total number of data items belonging to the class. by 100.
Frequency of the class
• A percent frequency distribution is a tabular summary of a set of
Relative frequency of a class = 𝑛 data showing the percent frequency for each class.

• A relative frequency distribution is a tabular summary of data

showing the relative frequency for each class.

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Relative Frequency and Percent Frequency Distributions Bar Chart

• Example: Marada Inn • A bar chart is a graphical display for depicting qualitative data.
• On one axis (usually the horizontal axis), we specify the labels that are
Rating Relative Frequency Percent Frequency used for each of the classes.
Poor .10 10
• A frequency, relative frequency, or percent frequency scale can be used
Below Average .15 15 for the other axis (usually the vertical axis).
Average .25 25
• Using a bar of fixed width drawn above each class label, we extend the
Above Average .45 45 height appropriately.
Excellent .05 5
• The bars are separated to emphasize the fact that each class is a
Total 1.00 100 separate category.

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Bar Chart Pareto Diagram

10 Marada Inn Quality Ratings • In quality control, bar charts are used to identify the most important
9 causes of problems.
8 • When the bars are arranged in descending order of height from left to
7 right (with the most frequently occurring cause appearing first) the bar
Frequency

6 chart is called a Pareto diagram.

5 • This diagram is named for its founder, Vilfredo Pareto, an Italian
4 economist.
3
2
1
Quality
Poor Below Average Above Excellent Rating
Average Average

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 Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Pie Chart Pie Chart

• The pie chart is a commonly used graphical display for presenting Marada Inn Quality Ratings
relative frequency and percent frequency distributions for
categorical data. Excellent
• First draw a circle; then use the relative frequencies to subdivide the 5%
circle into sectors that correspond to the relative frequency for each Poor
class. 10%
• Since there are 360 degrees in a circle, a class with a relative frequency of Below
Average
.25 would consume .25(360) = 90 degrees of the circle. Above 15%
Average Average
45% 25%
Average
25%

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Example: Marada Inn Group discussion: Application 5 in page 38

Insights
• One-half of the Gained
customers from the
surveyed Preceding
gave MaradaPie Chart rating of
a quality Insights Gained from the Preceding Pie Chart
• In alphabetical order, the six most common last names in the United States
“above average” or “excellent” (looking at the left side of the pie).
are Brown, Johnson, Jones, Miller, Smith, and williams (The world Almanac,
This might please the manager.
2012). Assume that a sample of 50 individuals with one of these last names
• For each customer who gave an “excellent” rating, there were two provided the following data. (Dataset: 2012Names)
customers who gave a “poor” rating (looking at the top of the pie). This
should displease the manager.

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Group discussion: The dataset “2021Names” Summarizing Quantitative Data

Insights Gained from the Preceding Pie Chart • Frequency Distribution
• Relative Frequency and Percent Frequency Distributions
• Dot Plot
• Histogram
• Cumulative Distributions
• Stem-and-Leaf Display

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 Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Frequency Distribution Frequency Distribution

• Example: Hudson Auto Repair • Example: Hudson Auto Repair
The manager of Hudson Auto would like to gain a better Sample of Parts Cost($) for 50 Tune-
understanding of the cost of parts used in the engine tune-ups ups
performed in the shop. She examines 50 customer invoices for tune- 91 78 93 57 75 52 99 80 97 62
ups. The costs of parts, rounded to the nearest dollar, are listed on the 71 69 72 89 66 75 79 75 72 76
next slide. 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

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Frequency Distribution Frequency Distribution

The three steps necessary to define the classes for a frequency • Guidelines for Determining the Number of Classes
distribution with quantitative data are: • Use between 5 and 20 classes.
1. Determine the number of non-overlapping classes. • Data sets with a larger number of elements usually require a larger
2. Determine the width of each class. number of classes.
3. Determine the class limits. • Smaller data sets usually require fewer classes.
• The goal is to use enough classes to show the variation in the data,
but not so many classes that some contain only a few data items.

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Frequency Distribution Frequency Distribution

• Guidelines for Determining the Width of Each Class • Note on Number of Classes and Class Width
• Use classes of equal width. • In practice, the number of classes and the appropriate class width
• Approximate Class Width = are determined by trial and error.

Largest data value − Smallest data value • Once a possible number of classes is chosen, the appropriate class
width is found.
Number of classes
• The process can be repeated for a different number of classes.
• Making the classes the same width reduces the chance of
inappropriate interpretations. • Ultimately, the analyst uses judgment to determine the
combination of the number of classes and class width that provides
the best frequency distribution for summarizing the data.

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 Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Frequency Distribution Frequency Distribution

• Guidelines for Determining the Class Limits • Class Midpoint
• Class limits must be chosen so that each data item belongs to one • In some cases, we want to know the midpoints of the classes in a
and only one class. frequency distribution for quantitative data.
• The lower class limit identifies the smallest possible data value
assigned to the class. • The class midpoint is the value halfway between the lower and
upper class limits.
• The upper class limit identifies the largest possible data value
assigned to the class.
• The appropriate values for the class limits depend on the level of
accuracy of the data.
• An open-end class requires only a lower class limit or an upper
class limit.

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Frequency Distribution Relative Frequency and Percent Frequency Distributions

• Example: Hudson Auto Repair • Example: Hudson Auto Repair
If we choose six classes: Parts Relative Percent
Approximate Class Width = (109 - 50)/6 = 9.83 10 Cost ($) Frequency Frequency
50-59 .04 = 2/50 4 = .04(100)
Parts Cost ($) Frequency
50-59 2 60-69 .26 26
60-69 13 70-79 .32 32
70-79 16 80-89 .14 14
80-89 7 90-99 .14 14
90-99 7 100-109 .10 10
100-109 5 Total 1.00 100
Total 50

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Relative Frequency and Percent Frequency Distributions Dot Plot

• Example: Hudson Auto Repair • One of the simplest graphical summaries of data is a dot plot.
Insights Gained from the Percent Frequency Distribution: • A horizontal axis shows the range of data values.
• Only 4% of the parts costs are in the $50-59 class. • Then each data value is represented by a dot placed above the axis.
• 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.

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 Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Dot Plot Histogram

• Example: Hudson Auto Repair • Another common graphical display of quantitative data is a histogram.
• The variable of interest is placed on the horizontal axis.
• A rectangle is drawn above each class interval with its height
corresponding to the interval’s frequency, relative frequency, or percent
frequency.
50 60 70 80 90 100 110 • Unlike a bar graph, a histogram has no natural separation between
rectangles of adjacent classes.
Tune-up Parts Cost ($)

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Histogram Histograms Showing Skewness

• Example: Hudson Auto Repair • Symmetric
18
Tune-up Parts Cost • Left tail is the mirror image of the right tail
16
• Example: Heights of People
14
.35
Frequency

12
Relative Frequency

.30
10
.25
8
.20
6
.15
4 .10
2 .05
Parts
0
50-59 60-69 70-79 80-89 90-99 100-110 Cost ($)

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Histograms Showing Skewness Histograms Showing Skewness

• Moderately Skewed Left • Moderately Right Skewed
• A longer tail to the left • A Longer tail to the right
• Example: Exam Scores • Example: Housing Values
.35 .35
Relative Frequency

Relative Frequency

.30 .30
.25 .25
.20 .20
.15 .15
.10 .10
.05 .05
0 0

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 Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Histograms Showing Skewness Cumulative Distributions

• Highly Skewed Right • Cumulative frequency distribution - shows the number of items with
• A very long tail to the right values less than or equal to the upper limit of each class.
• Example: Executive Salaries • Cumulative relative frequency distribution – shows the proportion of
items with values less than or equal to the upper limit of each class.
.35
• Cumulative percent frequency distribution – shows the percentage of
Relative Frequency

.30
items with values less than or equal to the upper limit of each class.
.25
.20
.15
.10
.05
0

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Cumulative Distributions Cumulative Distributions

• The last entry in a cumulative frequency distribution always equals the • Hudson Auto Repair
total number of observations.
Cumulative Cumulative
• The last entry in a cumulative relative frequency distribution always Cumulative Relative Percent
equals 1.00. Cost ($) Frequency Frequency Frequency
• The last entry in a cumulative percent frequency distribution always < 59 2 .04 4
equals 100. < 69 15 = 2+13 .30 = 15/50 30 = .30(100)
< 79 31 .62 62
< 89 38 .76 76
< 99 45 .90 90
< 109 50 1.00 100

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Group discussion: Exercise 11 in page 50 (Dataset:

Stem-and-Leaf Display
Frequency) • A stem-and-leaf display shows both the rank order and shape of a
distribution of data.
• It is similar to a histogram on its side, but it has the advantage of showing
the actual data values.
• The leading digits of each data item are arranged to the left of a vertical
line.
• To the right of the vertical line we record the last digit for each item in
rank order.
• Each line (row) in the display is referred to as a stem.
• Each digit on a stem is a leaf.

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 Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Example: Hudson Auto Repair Stem-and-Leaf Display

The manager of Hudson Auto would like to gain a better understanding • Example: Hudson Auto Repair
of the cost of parts used in the engine tune-ups performed in the shop. She
Sample of Parts Cost ($) for 50 Tune-
examines 50 customer invoices for tune-ups. The costs of parts, rounded ups
to the nearest dollar, are listed on the next slide. 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

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Stem-and-Leaf Display Stretched Stem-and-Leaf Display

• Example: Hudson Auto Repair • If we believe the original stem-and-leaf display has condensed the data too
much, we can stretch the display vertically by using two stems for each
5 2 7 leading digit(s).
6 2 2 2 2 5 6 7 8 8 8 9 9 9 • Whenever a stem value is stated twice, the first value corresponds to leaf
7 1 1 2 2 3 4 4 5 5 5 6 7 8 9 9 9 values of 0 - 4, and the second value corresponds to leaf values of 5 - 9.
8 0 0 2 3 5 8 9
9 1 3 7 7 7 8 9
10 1 4 5 5 9

Stems Leaves

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Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Stretched Stem-and-Leaf Display Stem-and-Leaf Display

• Example: Hudson Auto Repair • Leaf Units
5 2
• A single digit is used to define each leaf.
5 7
6 2 2 2 2 • In the preceding example, the leaf unit was 1.
6 5 6 7 8 8 8 9 9 9 • Leaf units may be 100, 10, 1, 0.1, and so on.
7 1 1 2 2 3 4 4
• Where the leaf unit is not shown, it is assumed to equal 1.
7 5 5 5 6 7 8 9 9 9
8 0 0 2 3 • The leaf unit indicates how to multiply the stem-and-leaf numbers in
8 5 8 9 order to approximate the original data.
9 1 3
9 7 7 7 8 9
10 1 4
10 5 5 9

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 Statistics for Business and Economics (13e) Statistics for Business and Economics (13e)

Stem-and-Leaf Display Stem-and-Leaf Display

• Example: Leaf Unit = 0.1 • Example: Leaf Unit = 10
If we have data with values such as If we have data with values such as
8.6 11.7 9.4 9.1 10.2 11.0 8.8 1806 1717 1974 1791 1682 1910 1838

Leaf Unit = 0.1 Leaf Unit = 10

16 8
8 6 8
17 1 9
9 1 4
18 0 3
10 2
19 1 7
11 0 7
The 82 in 1682 is rounded down to 80 and is represented as
an 8.
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Statistics for Business and Economics (13e)

End of Chapter 2, Part A

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