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Quantitative
Methods Class
Instructor: Ms . Ayesha N. Rao
Instructors Profile
Done several projects of Time-Series with Pakistan
Publications
1. Zahid Asghar and Ayesha Nazuk. Iran-Pakistan-India
More Pulblications
4. Ayesha Nazuk, Fiza Amer, Quratulain Tanvir, Saba Nawaz, Sahar Zahid
Workshop Conducted
Registered with PDC NUST and have organized several
Econometrics.
Trained the faculty of AIOU with SPSS.
Have delivered guest lectures in various
universities/organizations.
Student Consultation
Students are expected to go through the class
Mid-Term =
30
Terminal
Exam=40
Assignments= 15
Quizzes= 15
Marking
Scheme
In case of
Term Paper
marks for
assig will be
scaled down.
Contact Details
Ms. Ayesha N. Rao
Office: Room 310, NBS Faculty
Block.
Phone: +92-51-9085-3560
E-mail:
ayesha.nazuk@nbs.edu.pk or
ayesha.nazuk@s3h.nust.edu.pk
COURSE OBJECTIVES
This
course
provides
an
introduction to theoretical and
applied statistics and Mathematics
for business and economics. The
main objective is to stress the
importance of applying statistical
analysis to the solution of common
business problems.
Text Book
- will be uploaded on LMS soon.
Assignments
Students are recommended to make a
INDIVIDUAL ASSIGNMENTS.
quizzes,
mid-term
exam
and
independently.
Review Worksheets
If required, review worksheets will be posted
on LMS.
You are encouraged to solve and discuss
Make-Up Quiz
There will be no make-ups for missed
Absentees are
supposed
To cover previous lecture and do not come in
class- unprepared.
It has been noticed in past few semesters that
CLASSROOM POLICY
Course Outline
Measures of Central Tendency &
Dispersion
Course Outline
Probability
Probability
Rules of Probability
The Rule of Complements
Addition Law & Mutually Exclusive Events
Conditional Probability
Independence of Events
Product Rules for independent events
Course Outline
Probability Distributions
Normal distribution
Student-t distribution
Course Outline
Hypothesis Testing
Course Outline
Hypothesis Testing II
Population
Tests of the Difference Between Two
Population Proportions
Tests of the Equality of the Variances Between
Two Normally Distributed Populations
Course Outline
Regression & Correlation Analysis
Regression versus Correlation
Regression versus Causation
Classical Linear Regression Model &
Assumptions
Method of Ordinary Least Squares
Method of Logistic Regression
Course Outline
Differentiation
Concepts of Derivatives
Rules of Derivatives
Examples & Practice
Applications in Business
Course Outline
Optimization
Course Outline
Depreciation &/or Annuities
Straight-line-method, Sum-of-year-digit
Course Outline
Markup
Markup on Cost
Markup on Selling Price, Relationships
between markups
Markdown and Shrinkage
Course Outline
Discounts
Trade discount, Trade discount series
Cash discounts, Discounts and Freight terms
Scales of
Measurem
ent
Scales of
Measurem
ent
Scales of
Measurem
ent
Type of Averages
Commerci
al
averages
Mathematical
average
Positional
Average
athematical Average is
based on an algebraic
formula
Harmonic
Mean
Arithmetic
Mean
Geometri
c Mean
Mode
Quartiles,
Octiles,
Deciles,
Percentiles
Median
Commercial Averages
Moving
Averages (To
Progressi
ve
Average
Composite
Average
(used
(used to
to report
report
average
average
profits/losses
profits/losses etc
etc in
in
the
starting
year
of
the starting year of
a
a firm)
firm)
Years
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
8
9
8
7
8
9
10
11
11
12
10
Progressive
total.
Progressive
average.
8
8.0
17
8.5
25
8.3
32
8.0
40
8.0
49
8.1
59
8.4
70
8.7
81
9.0
93
9.3
103 9.3
Composite Average-Use
The Dow Jones Composite
Average is a stock index from
Dow Jones Indexes that tracks 65
prominent companies. The
average's components are every
stock from the Dow Jones
Industrial Average, the Dow Jones
Transportation Average, and the
Dow Jones Utility Average.
C.A= Sum of all averages/ number
Unbias
ed
Arithmetic Mean
Scale
data
only.
Testing
possible
Comple
te Data
Use
Further
Treatme
nt
Outliers
need to
be
deleted
Not
Robust
Not
Unbias
ed
Relies
on only
one
value
Mode
Testing of
Hypothesi
s not
possible
No
Further
Treatme
nt
Can be
found in
any scale
Robust
Not
Unbias
ed
Median
Testing of
Hypothesis
possible
through nonparametric
test
Relies
on one
or at
most
two
values
No
Further
Treatme
nt
Ordinal or
more
Robust
Not
Unbias
ed
Relies
on
complet
e data
Geometric Mean
No
Further
Treatme
nt
Testing of
hypothes
is
possible
Scale
data only
Robust
Median is also
valid for use
both in
symmetric and
skewed data
set. It can be
used in ordinal
data set as well.
Mean or
Arithmetic mean
is valid for use
only in
symmetric data
only. It is valid
for use in scale
data only.
Geometric Mean
is a measure
that uses
complete data
and is yet
Robust .
Trimmed means
are used in case
we want to have
picture of data
free from extreme
values.
For a 10%
trimmed mean
we ignore
smallest 10%
and largest 10%
observations.
Calculate the
mean of the
truncated
dataset.
Winsorized mean
is also used in the
presence of
outliers
Replaces
outliers with
most extreme
values in the
remaining
dataset.
See example in
next slide
Quadratic Mean is
SQUARE ROOT
of the sum of
squares divided
by no. of values
Q.M is better in
performance in
presence of
negative values
Example: Q.M
X
-100
0
100
X**2
10000
0
10000
A.M=0
Q.M= 81.64966
etc. G.M
Rate of change per unit of time such as
speed, number of items produced per day etc.
H.M
Well behaved (that is outlier free) data which
is purely quantitative A.M
NominalMode
Ordinal---Median
Median
The Middle observation of an arrayed
C.F
C.B
01
23
45
Total
5
11
13
-------
-0.51.5
1.53.5 Median Class
as 7.5 lies
3.55.5 here
5
6
2
13
Contd.
Median=1.5+(2/6)
(7.5-5)=2.33
So, the value 2.33
cuts previous data in
two equal halves.
Example Continued
Mode
Mode
Mode
Mode
Mode
Mode
=
=
=
=
=
=
15 + [(7 - 5) / (2 x 7 - 5 - 2)] x 5
15 + [2 / (14 - 7)] x 5
15 + (2 / 7) x 5
15 + (10 / 7)
15 + 1.42
16.42
Summary of
Central Tendency Measures
Measure
Equation
Mean
Xi / n
Median
(n+1)Position
2
Mode
none
Description
Balance Point
Middle Value
When Ordered
Most Frequent
Quartiles
1. Measure of Non-central Tendency
2. Split Ordered Data into 4 Quarters
25
25
25
25
% of i-th
% Quartile
%
%
3. Position
Q1
Q2
Q3
i (n 1)
Positioning Point ofQi
4
Deciles
Deciles are 9 break points that divide an
Percentiles
Percentiles are 99 break points that divide an
Measures of
Variation
Data Summary; A
To recall the data
compaction process,
Glance
1. To summarize the data we use graphs and charts
2. For more technical analysis, a frequency distribution
is made.
3. To report a summary value that may represent the
data, we find measure of central tendency.
4. BUT there may be data sets who have same value of
central tendency but differ in terms of
variation/scatter around the central value.
Illustrative example
On the average
31 patients get
satisfactory
treatment from
both D1 and D2.
However the
data, number of
patients that
come to D1 or
D2, is very
different.
30.75 12,35,36,40
D2
30.75 1,4,3,115
Measure of variation
Definition of Measure of Variation
Measure of variation is a measure that
describes how spread out or scattered a set of
data. It is also known as measures of
dispersion or measures of spread.
Examples of Measure of Variation
Some Important measures of variation:
The range, the variance, and the standard
deviation.
Range
The range is the distance between the lowest
Variance &
Standard Deviation
1. Measures of Dispersion
2. Most Common Measures
3. Consider How Data Are Distributed
4. Show Variation About Mean ( X or )
X = 8.3
4 6
8 10 12
Sample Variance
Formula
n
2
n - 1 in
X)
(Xi
denominator! (Use
i 1
n1
N if Population
Variance)
Standard Deviation
The standard deviation of a set of scores
score
Square each of the values in step 2
Add up all the squares obtained in step 3
Divide the total in step 4 by n-1
Find the square root of step 5.
deviation of the
data 1, 2, 12, 3, 6
and 11.
The mean of X is
5.83
Variance is
(110.833/5) =
22.166
And S.D is 4.708.
X
1
2
12
3
6
11
X X
-4.8
-3.8
6.1
-2.8
0.17
5.17
Sum -----
X X
23.4
14.7
38.0
8.03
0.03
26.7
110.833
(X)
01
23
45
Total
0.5 -1.538
2.5 0.462
4.5 2.462
------
5
6
2
13
X-A.M
(X-A.M)^2
f(X-A.M)^2
2.3654
0.2134
6.0614
11.82
1.280
12.12
25.23
A.M=sum of f*x/sum of
f=26.50/13=2.038
S.D=Square root of (25.23/13-
Variance
Variance is the square of S.D
Because the differences are squared, the
Welcome to
Mathematics &
Statistics Class
Instructor: Ms . Ayesha N. Rao
76
Inter-quartile Range
When there are extreme values in a
Summary of
Variation Measures
Measure
Range
Equation
Interquartile Range
Standard Deviation
(Sample)
Standard Deviation
(Population)
Variance
(Sample)
Description
n1
X i
X
N
(Xi - X )2
n- 1
Dispersion about
Sample Mean
Dispersion about
2
Population Mean
Squared Dispersion
about Sample Mean
Relative Measure of
Dispersion
single data.
Direct comparison of variance/standard
deviation is not valid. Because they
depend on unit of measurement.
For example if we have data on weights of
potatoes and another on weights of milk
cartons. Then variance of 0.1 kg may be
considered large for potatoes but small for
milk cartons.
Relative measures of variation are those
that help in comparing two or more data
sets; as to which data is more
Coefficient of Variation
It is defined as the ratio of the standard
S.D Vs C.V
For example, the value of the standard
C.V interpretation
Lesser the C.V,
lesser is the
variability in the
data.
Z-Scores
Z-scores are a means of answering the
X
Z
s
Z Score Interpretation
A positive (negative) Z-
Example
In a certain city the mean price of a quart of
Solution
Z (Milk)=(0.89-0.63)/0.08=3.25
Z (Bacon)= (2.19-1.80)/0.15=2.60
Our Z-scores show us that we are overpaying