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Quantitative Techniques in Management

Dr. Gayatri V Singh, PhD, AMITY University, INDIA

Todays Highlights

Introduction Application in Business and Management Classification of Data Graphical Presentation of Data Mean and Variance Correlation Analysis Regression Analysis

What is Statistics? It is the science of collecting, organizing, presenting, analyzing, and interpreting data (quantitative or qualitative) for the purpose of assisting in making a more effective decision.

WHO USES STATISTICS? Statistical techniques are used extensively by marketing, accounting, quality control, consumers, professional sports people, hospital administrators, educators, politicians, physicians, etc.

For empirical inquiry Financial Decisions How is the economy doing? The impact of technology at work Compensation survey Perfomance management Employee Satisfaction Survey Training feedback evaluation Human Resource Accounting HR Budgeting

Applications

Statistical Methods
Descriptive Univariate

Statistics Analysis Multivariate

Statistical Methods Contd


Descriptive Frequency Distribution Measurement of Central Tendency Measurement of Dispersion Graphical Presentation of Data Analysis/Inferential Correlation and Regression Analysis Estimation Theory Hypothesis Testing Decision Theory Operation Research

Data Classification
Data

Quantitative or Numerical
Discrete Continuous
Temperature, Time taken for exam

Qualitative or Attribute
Nominal Ordinal

Number of students

Gender

Education Rank of a performance

Frequency Distribution
Discrete
X 11 10 Frequency (f) 1 2 Xf 11 20 Class Interval 10-15 15-20 20-25 25-30 30-35 35-40 40-45

Continuous
Frequenc y (f) 6 22 35 29 16 8 4 X 12.5 15.5 22.5 27.5 32.5 37.5 42.5

9
8 7 6

1
2 2 4

9
16 14 24

15

X = score value ; f = N and X =fX f = frequency fx = total value associated with frequency

Graphs
Data

Qualitative

Quantitative

Or Numerical

Or Categorical

Histogram Frequency Polygon Box Plot

Bar Chart Pie Chart

A histogram is a bar graph that shows the frequency of data within equal intervals. There is no space between the bars in a histogram

Histogram

What is the most common age group for musicians?

Frequency Polygons
Shows same information with lines: traces shape of distribution Both histograms and polygons represent continuous data

Box Plot
A graph that uses a number line to show the distribution of a set of data. Second quartile: The median of the set of a data. Lower quartile: The median of the lower half of a set of data. Upper quartile: The median of the upper half of the set of data. Inter-quartile range: The difference between the lower and upper quartiles.

Box Plots
2, 3, 4, 4, 6, 7, 8, 10, 15, 20

least value = 2

greatest value = 20
lower quartile = 4 upper quartile = 10 middle quartile = 6.5 (median)

10

15

20

Bar Graphs
Bar Graph - a graph that uses vertical or horizontal bars to display data. Most Widely Spoken Languages
900 800 700 600 500 400 300 200 100 0
English Hindi Mandarin Spanish

Speakers in Millions

Fresh Fruit Consumption


30 25 20 15 10 5 0
Apples Bananas Grapes Oranges

1.) Which fruit was eaten the least? Most?


2.) How many pounds of apples were eaten per person? 3.) How many more pounds of bananas were eaten than

oranges?

Pie Chart
A pie chart (or a circle graph) is circular chart divided into sectors, illustrating proportion. In a pie chart, the arc length of each sector (and consequently its central angle and area), is proportional to the quantity it represents.

Central Tendency
Mean, Median, Mode are measures of central tendency. We can use them to describe a set of data.

Central Tendencies Mean: (Average) The sum of a set of numbers divided by the total number of the set.
To find the mean of the data set:

2, 1, 8, 0, 2, 4, 3, 4

Median: (Middle Value) The number in the middle of a set of numbers that are arranged in order from least to greatest.

To find the median of the data set:

2, 1, 8, 0, 2, 4, 3, 4

Mode: (Most frequent value) The number that occurs most often in a set of numbers. There can be 1 mode, more than 1 mode, or no mode.

To find the mode of the data set:

2, 1, 8, 0, 2, 4, 3, 4

Range: The difference between the greatest and least values in a set.

To find the range of the data set:

2, 1, 8, 0, 2, 4, 3, 4

80=8 The range is 8.

Central Tendencies
18, 21, 8, 12, 26

Find the mean, median, mode and range of these numbers.


8, 12, 18, 21, 26

Mean = 8 + 12 + 18 + 21 + 26 = 85 = 17
5 Median = 8, 12, 18, 21, 26 Mode = NO MODE Range = 26 - 8 = 18 5

Central Tendencies
80, 60, 76, 60, 90, 80, 70, 60 Find the mean, median, mode and range of these numbers. 60, 60, 60, 70, 76, 80, 80, 90 Mean = 576 = 72 8

Median = 60, 60, 60, 70, 76, 80, 80, 90

76 + 70 = 73 2

Mode = 60

Range = 90 - 60 = 30

Measurement of Variability
A certain amount of variability will naturally occur when a control is tested repeatedly. Variability is affected by operator technique, environmental conditions, and the performance characteristics of the assay method. The goal is to differentiate between variability due to chance from that due to error.

Measures of Variability
There are several terms that describe the dispersion or variability of the data around the mean:
Range Variance Standard Deviation Coefficient of Variation

Calculation of Variance
Variance is the measure of variability about the mean. It is calculated as the average squared deviation from the mean.
the sum of the deviations from the mean, squared, divided by the number of observations (corrected for degrees of freedom)

Correlation Analysis
the degree to which two variables are associated strength of the relationship (correlation) between two variables may be either positive or negative. Its magnitude depends on the units of measurement. Assumes the data are from a bivariate normal population. Does not necessarily imply causation

Correlation Analysis
Data

Qualitative
Or Numerical

Quantitative
Or Categorical

Karl Pearson Correlation Coefficient

Spearmans Rank Correlation

Correlation
The value of r can range between -1 and + 1. If r = 0, then there is no correlation between the two variables. If r = 1 (or -1), then there is a perfect positive (or negative) relationship between the two variables.

Scatter Plot
3 2 2 2 1 1 y2 y2 0 y2 -1 -1 -2 -2 -3

-2

-1

0 y1

-2

-1

0 y1

-4

-3

-2

-1

-2

-1

0 y1

r=+1

r=-1

r=0

Calculation
Correlation Coefficient Karl Pearson Spearman

rxy

xy x y / n
x y
x
y

6 d 2 n(n 2 1)

x y

x / n
2

d is the difference between ranks of two variables

y / n
2

Regression Analysis
Regression analysis includes any techniques for modeling and analyzing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables. More specifically, regression analysis helps us understand how the typical value of the dependent variable changes when any one of the independent variables is varied, while the other independent variables are held fixed. Most commonly, regression analysis estimates the conditional expectation of the dependent variable given the independent variables that is, the average value of the dependent variable when the independent variables are held fixed.

Regression Analysis
Purpose To determine the regression equation. It is used to predict the value of one variable (Y, called the dependent variable) based on another variable (X, called the independent variable). Procedure: Select a sample from the population, and list the paired data (X, Y) for each observation. Draw a scatter diagram to give a visual portrayal of the relationship. Determine the regression equation Y = a + bX.

Regression Analysis
Y is the average predicted value of Y for any X. a is the Y-intercept, or the estimated Y value when X = 0. b is called the slope of the line.
change of one unit in X. It is the average change in Y for each

The least squares principle is used to obtain a and b and are given by:

y b yx rxy x

a y b yx x

x bxy rxy y

Example
Develop a regression equation for the information given in the EXAMPLE that can be used to estimate the selling price based on the number of pages. b = 0.01714, a = 16.00175. Y = 16.00175 + 0.01714X . What is the estimated selling price of a 650page book? Y = 16.00175 + 0.01714(650) = $27.14.

Thank you You may send in your queries at gvsingh@amity.edu