BUSINESS STATISTICS UNIT 1 1.

1) Types of statistical data, Preparation of frequency distribution and their presentation including histograms, frequency polygon, frequency curve and ogives. 1.2) Measures of Central Tendency a) Mathematical averages including AM, GM and HM. Properties and applications. b) Positional averages: mode, median(and other positional averages including quartiles, deciles and percentiles)
1.3)

Measures of Variation: absolute and relative: Range , QD, MD, SD, and their coefficients, properties of SD/ variance. Moments: Calculations ( including Sheppards corrections) and significance. Skewness, kurtosis and moments.

1.4)

DATA PROCESS Collection -Primary data -Secondary data Editing Classification - To endorse the mass of data - To facilitate comparison

- To pinpoint the most significant features of the data at a glance.

To give prominence to the important information gathered while dropping out the necessary elements.

- To enable a statistical treatment of the material collected.

Types of Classification Geographical, i.e. area wise, e.g. cites, districts, etc. Chronological, i.e. on the basis of time. Qualitative, i.e. in terms of magnitudes.

PRIMARY DATAOriginally collected: - Schedules set through enumerator - Mailed questionnaire method - Interviews - Indirect oral interview
-

Information from correspondents

SECONDARY DATA- Obtained from published or unpublished sources.

Choice between Primary and Secondary Data i. ii. iii. iv. Nature and scope of the enquiry. Availability of financial resources. Degree of accuracy required The collecting agency, i.e. , whether an individual, an institution or a government body.

Formation of a Discrete Frequency Distribution A frequency distribution refers to data classified on the basis of some variable that can be measured such as price, wages, age, number of units produced or consumed. The term variable refers to the characteristics that varies in amount or magnitude in a frequency distribution.

DISCRETE CONTINOUS No. of children no. of families no. of persons 0 10 1 15 2 40 3 45 10 40 80 100 Weight (lb) 100-110 110-120 120-130 130-140

4 20 5 4 6

250 150 50

140-150 150-160

A frequency distribution or table is simply a table in which the data grouped into classes and the no. of cases which fall in each class are recorded. The no. in each class are referred to as frequency.

Formation of a discrete F.D.- Just count the no. of times a particular value is repeated which is called the frequency of that class.

Formation of a continuous F.D.-

Class Limits- are the lowest and the highest values Class intervals- difference b/w the upper limit and lower limit of a class is known as class interval of that class. I = (L-S)/K Where, L= largest item S= smallest item K= no. of classes

 Class Frequency- The no. of observations corresponding to a particular class is known as the frequency of that class or the class frequency. Exclusive Method- When the class intervals are so fixed that the upper limit of one class is the lower limit of the next class. E.g. 100-200 200-300 300-400 400-500 10 20 15 10

Inclusive Method- upper limit of one class is included in that class itself. E.g. 100- 199 200-299 300-399 400-499 10 20 15 10

Consideration in the construction of F.D. The no. of classes should preferably be b/w 5 and 20. Avoid values of class-intervals as 3,7,11, etc. preferably 5,10,50,100,etc. The starting point, i.e. the lower limit of the first class should either be zero or 5 or multiple of 5.

To ensure continuity and to get correct class interval we should adopt Exclusive Method. In Inclusive make an adjustment. Convection Factor= (L. Limit of 2nd class- u. limit of 1st class)/2

Graphical Presentation: Graphs of FDA)Histogram B)Frequency Polygan C)Smoothed Frequency Curve D) Ogives or Cumulative Frequency Curves

HISTOGRAM- Is a set of vertical bars whose areas are proportional to the frequencies represented. Variable on X- axis Frequency of each class on Y-axis

MEAN
Individual observationMean=X/N Shortcut methodMean=A+d/ N Discrete seriesMean=fX/N Shortcut methodMean=A+fd/ N

MEDIAN
Individual observationMedian=size of (N+1)/2th item

MODE
Individual observationMode=item appearing the maximum no. of times.( If 2or more times i.e. bimodal or multi-modal) Discrete seriesMake grouping table.

G. MEAN
Individual observationG.M.= antilog(log X/N)

H. MEAN
Individual observationHM= n/(i/x)

Continuous seriesMean=f.m/N Shortcut methodMean=A+f.d /N * i

Discrete series1) Arrange the data in ascendi ng or descen ding order. 2) Find out CF 3) Apply the formula =(N+1) /2th item. 4) Look at CF column. Continuous seriesMed=L+(N/2 CF)/f *i L= lower limit CF= of preceding class F= frequency I= class interval

Discrete seriesGM=antilog( f.logX/N)

Discrete seriesHM=N/ (f.1/m) = N/(f/m)

Continuous seriesMo=L+{(f1f0)/2fi-f0-f2}*i L=lower limit F1=frequency of modal class F0=frequency of preceding class F2=freq of succeeding

Continuous seriesGM=antilog( f.logm/N)

Continuous seriesHM=N/(f/m)

Weighted AMMean=WX/ W Combined meanMean1.Mean2 =(N1.X1+N1. X2)/N1+N2

Q1=[(N+1)/4] th Q3=3[(N+1)/ 4]th D1=(n+1)/10 Continuous seriesQ3=3N/4th item D4=4N/10th item P50=50N/100t h item

class When mode is ill definedMode=3medi an-2mean

Methods Of Studying Dispersion1) Range 2) Inter-quartile Range or QD 3) MD or the Root Mean Square Deviation 4) Lorenz Curve

Absolute Measures of dispersion are expressed in the same statistical unit in which the original data are given. Relative Measures of dispersion is the ratio of a measure of absolute dispersion to an appropriate average. It is sometimes called coefficient of Dispersion because coefficient means a pure no. that is independent of the unit of measurement.

I.

Range= L-S

L=largest item S=smallest item

Coefficient of range= (L-S)/(L+S)

II.

QD or Inter Quartile Range Inter Quartile Range= Q3-Q1 Percentile Range= P90-P10

QD= Q3-Q1/2

Coefficient of QD= Q3-Q1/Q3+Q1 III. Mean Deviation(individual observation)

MD=|d|/N

Steps1) Compute the median of the series

2)

The deviations of items from median ignoring + and sign and denote these.

3) Obtain the total of these deviations, i.e. |D| 4) Divide the total obtained in step3 by the no. of observations Coefficient of MD= MD/Median or MD/Mean.

DISCRETE SERIESMD=f|D|/N

|D|= denotes deviations from median ignoring signs. STEPS1) Calculate the no. of the series. 2) Take the deviations of the items from median ignoring signs and denote them by |D|. 3) Multiply those deviations by the respective frequencies and obtain the total f|D|. 4) Divide the total obtained in step2 by the no. of observations. This gives us the value of MD.

CONTINOUS SERIESObtain the mid point. M.D.= f|D|/N.

STANDARD DEVIATION

Individual series- SD= x^2/N Where x= (X-mean)

Deviation taken from assumed mean SD=[(d^2/N)-(d/N)^2

Where d= X-A

Discrete series - Actual mean => SD=fx^/N Where x= X- mean - Assumed mean=> SD=[(fd^2/N)-(fd/N)^2 Where d= X-A - Step deviation=> SD= [fd^2/N)-(fd/N)^2 * C

Where d= X-A/C, C= common factor

COMBINED STANDARD DEVIATIONSD12= [(N1*SD1) +(N2*SD2) +(N1*d1^2) + (N2*d2^2)]/ (N1+N2)

COEFFICIENT OF VARIATIONCV= (SD/Mean)*100

MOMENTS

Moments is a familiar mechanical term which refers to the measure of a force with respect to its tendency to provide rotation. The strength of the tendency depends on the amount of force and the distance from the origin of the point at which the force is exerted. If a no. of forces F1, F2, Fn at distances X1, X2, X3 are applied the moment of the first force about the origin is F1X1, the moment of the second force is F2X2 etc. These moments are additive so that FX is the total moment about the origin. If the total moment is divided by the total force, the quotation is frames a moment. The formula is, FX/N where N=f is the total force. Moments refer to the average of the deviation from mean or some other value, raised to a certain power. Moments about mean are generally used in statistics. 3 methods1) Direct method 2) Short cut method 3) Step deviation method

1)

Direct method i. Calculate A.M( mean) ii. Calculate the sum of deviation(x) from AM.

iii. Calculate the sum of x^2,x^3 and x^4. In case of frequenct distribution, find fx^2, fx^3, fx^4. iv. Apply the following formula rule- 1= x/N= 0 - 2= x^2/n ,where x=( X- mean) - 3= x^3/N - 4= x^4/N

In case of frequency distribution- 1= fx/N - 2= fx^2/N - 3= fx^3/N - 4= fx^4/N

2) Short Cut Method i. Take assumed mean (A)

ii.

Calculate deviations (d) from A and calculate first four moments.

These moments are called moments about an arbitrary origin which are represented by the Greek word read as nu. -v1= (X-A)/N = d/N, where d= X-A -v2= (X-A)^2/N = d^2/N -v3=(X-A)^3/N = d^3/N

-v4=(X-A)^4/N = d^4/N

In case of frequency distribution- v1=f (X-A)/N = fd/N - v2=f (X-A)^2/N =fd^2/N - v3=f (X-A)^3/N = fd^3/N - v4=f (X-A)^4/N= fd^4/N

after calculating moments about an arbitrary origin convert them into moments about mean by using the following equation= - 1= v1-v1 =0 - 2= v2-v1^2 = SD^2 - 3= v3-3v2.v1+2v1^3 - 4= v4-4v3.v1+6v2.v1^2-3v1^4

We can calculate the moments About an arbitrary originfrom moments about the mean by this relationship- v1= 1+d - v2= 2+d^2 - v3= 3+32d+d^3 - v4= 4+43+62d^2+d^4

3)

Step Deviation Method- appropriate method in continuous frequency distribution with equal class intervalsi. Calculate (d)

ii. Take a common factor from all the values of d and find out the sum of d. iii. Find out the values of d1, d2, d3,d4 and their aggregates. iv. Calculate the values of v1, v2, v3, v4.
v.

Convert the calculated Moments about an arbitrary origin into moments about the mean using above.

Illus. Calculate the 1st 4 moments about mean with the help of moments about an assumed mean 35 from the following data: CLASS 0-10 10-20 20-30 30-40 40-50 50-60 60-70 FREQUENCY 4 10 21 32 21 7 5

SOLUTION: CLASS X 0-10 5 F 4 d(X-A/C) Fd Fd^2 Fd^3 -3 -2 -1 0 -12 -20 -21 0 +36 40 21 0 -108 -80 -21 0 Fd4 324 160 21 0

10-20 15 10 20-30 25 21 30-40 35 32

40-50 45 21 50-60 55 60-70 65 7 5 =100

1 2 3

21 14 15 =-3

21 28 45 =191

21 56 135 =3

21 112 405 =1043

First of all, we shall calculate the 1st 4 moments about an arbitrary mean by substituting the valuesV1= fd/N *C = -3/100 *10= -0.3 V2= fd^2/N *c^2 = 191/100*100 =191 V3= fd^3/N *C^3 = 3/100 *1000= 30 V4= fd^4/N *C^4 = 1043/100 *10000= 104300

From these we get the central moments as below1= v1-v1= -0.3 (-0.3) = 0 2= v2- v1^2 = 191-(-0.3)^2= 190.91 3= v3-3v2.v1+2v1^3= 30-3*191*(-0.3) +2*(-0.3)^3=30+171.90.054=201.846 4= v4-4v3v1+6v2v1^2-3v1^4=104300- 4(30)(-0.3) +6*191*(0.3)^2-3(-0.3)^4 =104439.12