ABM - Lecture 01 - Introductory Management Statistics

Topic 1 - Introductory Management Statistics Advanced Mathematics for Business
V1.0 Visuals Handout Page 1

AdvancedMathematics for
NCC Education Limited
V1.0
Advanced Mathematics for
Business
Topic 1:
Introductory Management Statistics
Introductory Management Statistics Topic 1 - 1.2
Scope and Coverage
This topic will cover:
Data types
A revision of summary statistics
Indexnumbers
NCC Education Limited V1.0
Index numbers
Learning Outcomes
By the end of this topic students will be able to:
recognise nominal, ordinal, interval and ratio data
types
recognise and use mode, median, mean, range,
recognise and use mode, median, mean, range,
standard deviation and coefficient of variation
calculate Laspeyres and Paasche index numbers
use index numbers to calculate percentage
changes and to deflate series
Data Types (Level of Measurement)
Nominal
Ordinal
Low
Interval
Ratio
Information Content
High
Nominal Data (Named)
Data which is only categorised(group
characteristic)
- Count but not order, nor measure nor ratio
Examples
- Gender (male or female)
- J ob role (administration, production, accounting, sales)
- Product type (fruit cake, chocolate cake, cream cake)
Summary statistics
- Mode
Parts in stock
Count
3 7 6 6 8
10 5 5 11 8
9 12 9 6 4
6 7 4 2 4
8 5 6 10 9
part number frequency
7 7
6 6
8 6
5 5
9 5
4 4
3 3
10 3
Mode
- The number or category that occurs the most
7 8 10 7 5
2 5 1 9 7
11 7 8 7 9
6 8 3 4 3
10 3
2 2
11 2
1 1
12 1
total 45
Ordinal (Ordered)
Data which can be ranked
- Count and put in order but not measure nor ratio
Examples
- Employee grades (A, B, C )
p y g ( , , )
- Voting preferences (best candidate, 2
nd
best )
- Product preferences
Summary statistics
- Mode, median
Score on rating scale
Order
score frequency
cumulative
frequency
1 1 1
2 2 3
3 3 6
4 4 10
5 5 15
6 6 21
7 7 28
3 7 6 6 8
10 5 5 11 8
9 12 9 6 4
6 7 4 2 4
8 5 6 10 9
7 8 10 7 5
Median
- Value of middle item of ordered data, (N +1)/2 term
8 6 34
9 5 39
10 3 42
11 2 44
12 1 45
7 8 10 7 5
2 5 1 9 7
11 7 8 7 9
6 8 3 4 3
Interval Data
Data which can be placed along a scale
- Count, put in order, measure but not ratio
Examples
- Centigrade temperature scale (10C, 15C, 20C)
g p ( , , )
- IQ score (100, 115, 130)
Summary statistics
- Mode, median, mean
- Range, standard deviation
Measure
Temperature C
3 7 6 6 8
10 5 5 11 8
9 12 9 6 4
6 7 4 2 4
8 5 6 10 9
temperature (x) Frequency (f) fx
1 1 1
2 2 4
3 3 9
4 4 16
5 5 25
6 6 36
7 7 49
8 6 48
9 5 45
Mean
- total value of all data / number of data
7 8 10 7 5
2 5 1 9 7
11 7 8 7 9
6 8 3 4 3
9 5 45
10 3 30
11 2 22
12 1 12
total 45 297
= mean = 297/45 = 6.6C
Standard Deviation
Measure
temperature
(x)
frequency
(f) fx x - (x - )
2
f(x - )
2
1 1 1 -5.6 31.36 31.36
2 2 4 -4.6 21.16 42.32
3 3 9 -3.6 12.96 38.88
4 4 16 -2.6 6.76 27.04
5 5 25 -1.6 2.56 12.80
6 6 36 -0.6 0.36 2.16
7 7 49 0.4 0.16 1.12
8 6 48 1.4 1.96 11.76
9 5 45 2.4 5.76 28.80
10 3 30 3.4 11.56 34.68
11 2 22 4.4 19.36 38.72
12 1 12 5.4 29.16 29.16
total 45 297 298.8
Standard deviation
Ratio (Scale with Natural Zero)
Data along a scale which can be ratioed
- Count, put in order, measure and ratio
Examples
- Kelvin temperature scale
- Time spent in queue (10 20 30 minutes)
Time spent in queue (10, 20, 30 minutes)
- Differences on interval scales
Summary statistics
- Mode, median, mean
- Range, standard deviation, coefficient of variation,
skewness
Ratio
queuing time
(x)
frequency
(f) fx x - (x - )
2
f(x - )
2
1 1 1 -5.6 31.36 31.36
2 2 4 -4.6 21.16 42.32
etc. etc. etc. etc. etc. etc.
11 2 22 4.4 19.36 38.72
12 1 12 5.4 29.16 29.16
total 45 297 298.8
Data types (Discrete & Continuous)
Discrete data
- Can take a countable number of values
Number of products built (1,237,502)
Number of questions correct in test (4)
Continuous
- Can take an uncountable number of values
Length of fabric cut (45.9847248738metres)
Time in queue (23 minutes 5.2084792seconds)
Index numbers
Simple Price Index - 1
C id h l t b t 2009 b
Price (GBP)
Jan 2009 Jan 2010 Jan 2011
Chocolate bar 0.47 0.52 0.56
Sandwich 1.85 1.92 2.00
Bag of crisps 0.60 0.61 0.63
Consider chocolate bar, set 2009 as base year
year price
Jan 2009 0.47 1.0000 100.00
Jan 2010 0.52 1.1064 110.64
Jan 2011 0.56 1.1915 119.15
Simple Price Index - 2
Compare the prices of snack products over time
year chocolate bar
price index
sandwich
price index
bag of crisps
price index
Jan 2009 0.47 100.00 1.85 0.60
Jan 2010 0.52 110.64 1.92 0.61
Jan 2011 0.56 119.15 2.00 0.63
year chocolate bar
price index
sandwich
price index
bag of crisps
price index
Jan 2009 0.47 100.00 1.85 100.00 0.60 100.00
Jan 2010 0.52 110.64 1.92 103.78 0.61 101.67
Jan 2011 0.56 119.15 2.00 108.11 0.63 105.00
115 00
120.00
125.00
x
2.00
2.50
n
i
t
95.00
100.00
105.00
110.00
115.00
p
r
i
c
e
i
n
d
e
x
0.50
1.00
1.50
p
r
i
c
e
p
e
r
u
n
Percentage Change Between
Index Numbers
year chocolate bar
index annual
%
sandwich
price index
bag of crisps
price index
Jan 2009 100.00 - 100.00 - 100.00 -
Jan 2010 110.64 10.64 103.78 3.78 101.67 1.67
Jan 2011 119.15 7.69 108.11 ? 105.00 ?
Rebasing Price Relatives
Reasons for changing base period;
- Mature series =>large indices, relevance of base
period
- Compare different indices which have used different
base years
00 01 02 03 04 05 06 07 08 09 10 11
Index (02
as base) 93 97 100 106 119 122 133 148 164 177 188 196
Index (07
as base) ? 100
Rebasing Price Relatives
00 01 02 03 04 05 06 07 08 09 10 11
Index (02
as base) 93 97 100 106 119 122 133 148 164 177 188 196
Index (07
as base) 63 66 68 72 80 82 90 100 111 120 127 132
Simple Aggregate Indices
year price
chocolate bar sandwich bag of crisps I
Jan 2009 0.47 1.85 0.60 100.00
Jan 2010 0.52 1.92 0.61 104.45
Jan 2011 0.56 2.00 0.63 ?
Laspeyres (Base Weighted) Price
Index
Example
year chocolate bar
price quantity
sandwich
price quantity
bag of crisps
price quantity
09 0.47 45 1.85 17 0.60 13
10 0.52 30 1.92 20 0.61 13
11 0.56 22 2.00 22 0.63 13
Paasche (Current Weighted) Price
Index
Example
year chocolate bar
price quantity
sandwich
price quantity
bag of crisps
price quantity
09 0.47 45 1.85 17 0.60 13
10 0.52 30 1.92 20 0.61 13
11 0.56 22 2.00 22 0.63 13
Weighted Index Numbers
Weighted Index Numbers
w R
eggs 18 151.00 2718.00
flour 16 225.70 3611.20
fat 5 94.60 473.00
sugar 14 405.00 5670.00
lemons 2 256.40 512.80
gas 45 319 40 14373 00
gas 45 319.40 14373.00
100 27358.00
Deflating Data - 1
Year CPI
1
actual pay deflated (2007)
2007 104.7 16,769 16,769
2008 108.5 17,127
2009 110.8 17,582
2010 114.5 17,940
Deflating Data - 2
Year CPI actual pay deflated (2007)
2007 104.7 16,769 16,769
2008 108.5 17,127 16,527
2009 110.8 17,582 16,614
2010 114.5 17,940 16,405
16,000
16,500
17,000
17,500
18,000
actual
deflated (2007)
Recap
Recognise nominal, ordinal, interval and ratio data
types
Recognise and use mode, median, mean, range,
standard deviation and coefficient of variation
Calculate Laspeyres and Paasche index numbers
Use index numbers to calculate percentage
changes and to deflate series
References
ONS (2011),
www.statistics.gov.uk/statbase/product.asp?vlnk=86
8, accessed 2
nd
March 2011
Topic 1 Introductory Management
Statistics
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Topic 1 - Introductory Management Statistics Advanced Mathematics for Business

V1.0 Visuals Handout Page 1

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