Introduction to Business Statistics
Introduction to Business Statistics
Unit – I
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Introduction to Statistics
Statistics is the study of the collection, organization, analysis,
and interpretation of data. It deals with all aspects of this,
including the planning of data collection in terms of the design
of surveys and experiments.
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Definition of Statistics
Definition 1 – Statistics may be defined as the aggregate of
facts affected to a marked extent by multiplicity of causes,
numerically expressed, enumerated or estimated according to a
reasonable standard of accuracy, collected in a systematic
manner, for a predetermined purpose and placed in relation to
each other. – Prof Horace Secrist.
Definition 2 – Statistics may be defined as the science of
collection, presentation, analysis and interpretation of
numerical data. – Croxton and Cowden
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Overview
In applying statistics to a scientific, industrial, or societal
problem, it is necessary to begin with a population or process
to be studied.
Populations can be diverse topics such as "all persons living in
a country" or "every atom composing a crystal".
A population can also be composed of observations of a
process at various times, with the data from each observation
serving as a different member of the overall group.
Data collected about this kind of "population" constitutes what
is called a time series. AGBS HYDERABAD
Overview
For practical reasons, a chosen subset of the population called
a sample is studied — as opposed to compiling data about the
entire group (an operation called census).
Once a sample that is representative of the population is
determined, data are collected for the sample members in an
observational or experimental setting.
These data can then be subjected to statistical analysis, serving
two related purposes: description and inference.
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Overview
Descriptive Statistics summarize the population data by
describing what was observed in the sample numerically or
graphically.
Numerical descriptors include mean and standard deviation for
continuous data types (like heights or weights), while
frequency and percentage are more useful in terms of
describing categorical data (like race).
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Overview
Inferential statistics uses patterns in the sample data to draw
inferences about the population represented, accounting for
randomness.
These inferences may take the form of:
answering yes/no questions about the data (hypothesis testing
),
estimating numerical characteristics of the data (estimation),
describing associations within the data (correlation) and
modeling relationships within the data (for example, using
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Overview
Inference can extend to forecasting, prediction and estimation
of unobserved values either in or associated with the
population being studied;
It can include extrapolation and interpolation of time series or
spatial data, and can also include data mining.
The concept of correlation is particularly noteworthy for the
potential confusion it can cause. Statistical analysis of a
data set often reveals that two variables (properties) of the
population under consideration tend to vary together, as if they
were connected.
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Overview
Randomness is studied using the mathematical discipline of
probability theory.
Probability is used in "mathematical statistics" to study the
sampling distributions of sample statistics and, more generally,
the properties of statistical procedures.
The use of any statistical method is valid when the system or
population under consideration satisfies the assumptions of the
method.
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Origin and Development
The word statistics have been derived from
Latin word “status” or
Italian word “statista” or
German word “statistik” or
French word “statistique”
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Origin and Development
In the past, the statistics was used by rulers. The kings needed
information about lands, agriculture, commerce, population of
their states to assess their military potential, their wealth,
taxation and other aspects of government.
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Origin and Development
In India, an efficient system of collecting official and
administrative statistics existed even 2000 years ago – during
the reign of Chandragupta Maurya (324-300 BC).
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Applications of Statistics
Statisticians improve the quality of data with the
design of experiments and survey sampling.
Statistics also provides tools for prediction and forecasting
using data and statistical models.
Statistics is applicable to a wide variety of
academic disciplines, including natural and social sciences,
government, and business.
Statistical consultants are available to provide help for
organizations and companies without direct access to expertise
relevant to their particular problems.
Applications of Statistics
Statistics in Mathematics
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Applications of Statistics
Inference is a vital element of scientific advance, since it
provides a prediction (based in data) for where a theory
logically leads.
Descriptive statistics and inferential statistics (a.k.a.,
predictive statistics) together comprise applied statistics.
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Applications of Statistics
Statistics is closely related to probability theory, with which it
is often grouped; the difference is roughly that in probability
theory, one starts from the given parameters of a total
population to deduce probabilities pertaining to samples, but
statistical inference moves in the opposite direction,
inductive inference from samples to the parameters of a larger
or total population.
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functions of Statistics
1. To present facts in definite form
2. Precision to the facts
3. Comparisons
4. Presentation of data in a condensed form
5. Forecasting
6. Aggregation of facts
7. numerically expressed
8. reduce the complexity of data
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Limitations of Statistics
1. Statistics does not study qualitative phenomenon.
2. Statistics does not study individuals.
3. Statistical laws are not exact.
4. Statistics is liable to be misused.
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Collection of data
Data collection is defined as the procedure of collecting
measuring and analyzing accurate insights for research using
standard validated techniques.
There are two types of data collection - Primary data and
secondary data.
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Collection of data -
METHODS
1. Interviews
2. Questionnaires and Surveys
3. Observations
4. documents and records
5. focus groups
6. oral histories
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Classification and
presentation of data
• The process of grouping into different classes or subclasses
according to some characteristics is known as classification.
• Tabulation is concerned with the systematic arrangement and
presentation of classified data.
• classification is the first step in tabulation.
• The collected data also known as raw data or ungrouped data are
always in an unorganized form and need to be organized and
presented in meaningful and readily comprehensible form in
order to facilitate further statical analysis.
Classification of data
• Objectives of classification
• It condenses the mass of data in an easily assimilable form
• it eliminates unnecessary details
• it facilitates comparison and highlights the significant aspect of
data
• it enables one to get a mental picture of the information and helps
in drawing inferences
• it helps in the statistical treatment of the information collected
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Classification of data
Types of classification
1. Chronological classification
2. Geographical classification
3. Qualitative classification
4. Quantitative classification
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Functions of classification
1. Bulk of the data
2. Simplifies the data
3. Facilitates comparison of characteristics
4. Renders the data for statistical analysis
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When the data classified according to
geographical location or region (like states, cities,
regions, zones , areas etc) It is called a
geographical classification. For example, the
production of food grains in INDIA may be
presented state- wise in following manner.
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S.NO. Name of states Total food
grains
(thousands
tones)
1 ANDHRA 1093.90
PARDESH
2 BIHAR 12899.89
3 KARNATAKA 1834.78
4 PUNJAB 21788.20
5 UTTER 41828.30
PRADESH
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When data are observed over a period of time the
type of classification is known as chronological
classification ( on the basis of its time of occurrence ).
Various the serious such as National income figures ,
annual output of wheat monthly expenditure of a
house hold , daily consumptions of milk, etc. Are
some examples of chronological classification . For
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S.No. year Population
in
crores
1 1941 31.87
2 1951 36.11
3 1961 43.91
4 1971 54.82
5 1981 68.33
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We may first divide the population in to males
and females on the basis of the attribute ‘sex’,
each of this class may be further subdivide into
‘literate’ and ‘illiterate’ on the basis of attribute
‘literacy’ further classification can be made on the
basis of same other attribute ,say , employment.
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Quantitative classification is refers to the
classification of data according to some
characteristics that can be measured, such as
height, weight ,income, sales profit,
production,etc. For example, the student of a
college may be classified according to weight as
follows:
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Weight (kg) No. of
Students
40-50 60
50-60 50
60-70 28
70-80 20
80-90 12
Total 170
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When the data are arranged according to
alphabetical order, it is called alphabetical
classification. For example state-wise density of
population in India is depicted in an alphabetical
order below;
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Names of States Density of
Population
(Per Sq. Km)
Andhra Pradesh 157
Assam 150
Bihar 324
Gujarat 136
Haryana 225
Himachal Pradesh 62
Kerala 548
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PRESENTATION of data
Presentation of data is of utter importance.
it refers to an exhibition or putting up data in an attractive and useful
manner such that it can be easily interpreted.
the three main forms of presentation of data are -
Textual presentation
Data tables
diagrammatic presentation
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Presentation of Data
Textual
presentation
Presentation
of data
Tabular Graphical
presentation presentation
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TABULATION of data
A Statistical table is the logical listing of related quantitative data in
vertical columns and horizontal rows of numbers with sufficient
explanatory and qualifying words, phrases and statements in the
form of titles, headings and notes to make clear the full meaning of
data and their origin.
A table is a systematic arrangement of classified data in columns and
rows.
it compares and often reveal certain patterns in data which are
otherwise not obvious.
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TABULATION of data
Classification and tabulation are not two distinct processes, they go
together.
Before tabulation data are classified and then displayed under
different columns and rows as a table.
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PRESENTATION OF DATA
1) 1..1 ) Tabular presentation
1.1. a) Components of table
1.1. b) Features of a good table
1.1. c) Kind of tables
1.1. d) Classification of data and Tabular
Presentation
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1. 2) Textual presentation
1. 3) Diagrammatic presentation
a) Bar diagrams
a.i.A) Simple Bar diagrams
a.i.B) Multiple Bar diagrams
a.i.C) Sub-divided Bar diagrams a.i.D)
Percentage Bar diagram
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b)Pie diagram
c)Frequency Diagrams
c.i) Histogram c.i.A)
Unequal c.i.B)Equal
c.ii) Frequency Polygon
c.iii) Frequency curve
c.iv) Ogive or Cumulative Frequency Curve
c.iv.A) Less than Ogive
c.iv.B) More than Ogive
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1.1 T a b u l a r P r e s e n t a t i o n
•In the process of Tabular presentation is
Data is organized in rows and columns, this
process is known as tabular presentation.
•The method used is known as
Tabulation( presenting data in the form of rows
and columns in a
•table ).
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Components o f a t a b l e
Following are the principal components of a table:-
Table number
first of all the table is to be numbered. These numbers
must be in the same order as the tables.
Numbers facilitates the location of the tables. For ex;
table no. 1, 2, 3,
4, 5, 6, 7, 8, ........
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Title
a table must have a title. The title must be
written in bold letters. The title must be simple,
clear and short. A good title must reveal:
i)The problem under consideration
ii)The time period of the study
iii) The place of study
iv)The nature of classification of data
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Head note
If the title of the table does not give complete
information, it is supplemented with head
note.
Head note completes the information in the
title of the table. The unit of data is preferably
expressed in lakhs, crores, tonnes etc. and
expressed in brackets as head note.
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Stubs
stubs are the title of rows of a table. These titles
indicate information contained in the rows of
the table.
Caption
Caption is the title given to the coloumns of a
table. A caption indicates information contained
in the coloumns of the table.
A caption may have sub-heads when the
information in the columns is divided in more
than one class.
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Body
body of a table means sum total of the items
in the table. Thus, body is the most important
part of the table. It indicates values of the
various items in the table. Each item in the
body is called “Cell”
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Footnote
Footnotes are given for the clarification of the
reader. These are generally given with
information in the table need to be
supplemented.
Source
when table are based on secondary data,
source of the data is to be given. Source of
the data is specified below the footnote.
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Format of a table
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Features of a gooD table
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7.) Headings
Heading should generally be written in the
singular form. For ex., in the columns
indicating goods, the word “good” should be
used.
8.) Abbreviations
Use of abbreviations should be avoided in
the heading or sub- headings of a table.
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9.) Footnote
Footnote should be given only if needed.
10.) Units
Units may be specified above the columns.
11.) Total
In the table, sub-totals of the items must be
given at the end of each row. Grand total of the
items must also be noted.
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12.) Percentage and Ratio Percentage figures
should be
provided in the table, if possible. This makes
the data more informative.
13.) Extent of Approximation
If some approximate figures have been used in
the table, the extent of approximation must
be noted.
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14.) Sources of Data
Sources of data must be noted at the foot of the
table. It is generally noted next to the footnote.
15.) Size of columns
Size of columns must be uniform and
symmetrical.
16.) Ruling of columns
Columns must be divided into different
sections according to similarities of the data.
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17.) Simple, Economical and Attractive
a table must be simple attractive and
economical in space.
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kinds of tables
A.) According to purpose
1)General - these tables are just for general purposes . These tables
some specific purpose in the mind. In this table the data is presented
in the form of result of the analysis. That is why these tables are also
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C) Tables according to Construction
1) Simple or one-way
A simple table is that which shows only one
characteristics of the data. E.X.,
CLASS No. o f s t u d e n t s
11th 200
B.A. ( I ) 100
B.A.( II ) 80
B.A.( III ) 60
TOTAL 440
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2) Complex Table
A complex table is one which shows more
than characteristic of the data. On the basis of
the characteristics shown, these tables may be
further classified as:-
2.1) Double or two-way table
2.2) Treble table
2.3) Manifold table
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2.1) Double or two-way table
A two way table is hat which shows two
characteristics of the data. e.x.,
No. o f s t u d e n t s
Class total
boys girls
11th 160 40 200
B.A. ( I ) 40 60 100
B.A. ( II ) 60 20 80
B.A. ( III ) 50 10 0
B.A. 10 30 40 15 45 60 25 75 100
(I)
B.A. 15 45 60 5 15 20 20 60 80
( II )
B.A. 10 40 50 5 5 10 15 45 60
(III )
Tota 85 225 310 35 95 130 120 320 440
l
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2.3) Manifold table
The manifold Table is he one that shows more than
three characteristics. E.x.,
CLAS boys girls tota
S rural urban rural urban l
mar unm mar unm mar unm mar unm
ried arri ried arri ried arri ried arri
ed ed ed ed
11TH 5 55 10 90 2 8 5 25 200
B.A. 5 15 15 35 4 4 4 18 100
(I)
B.A. 5 10 15 30 2 3 5 10 80
( II )
B.A. 5 5 20 20 3 2 2 3 60
(III )
tota l 20 85 60 175 11 17 16 56 440
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Classification of data and tabular
presentation
i) Qualitative classification
Qualitative data occours when the data are classified on the
basis of qualitative characteristics for a phenomenon. E.x.,
Unemployement in punjab by sex and location
l ocatio n
sex rural Urban
Male 20 10
Female 30 20
Total 50 30
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ii) Quantitative classification
In temporal classification data is classifiedon the basis
of quantitative characteristics of a phenomenon. E.x.,
Marks obtained by students of
class 11th
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1. Simple bar diagrams
2. Sub divided or component bar diagrams
3. Percentage bar diagrams
4. Multiple bar diagrams
5. Deviation bar diagrams
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Horizontal or vertical bars with the same width, drawn with
their bases on the same horizontal or vertical line with equal
gaps in between
length proportional to the magnitude of the
observations
constitute a bar diagram.
This diagram is used when the data is in the form of
observations corresponding to different categories.
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Country India U.SA. Italy Egypt Japan
Yield in kgs per hectre 728 1469 2903 2153 2276
3500
3000
2500
2000
1500
1000
500
0
India U.S.A Italy Egypt Japan
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Used when the observations corresponding to the various categories have
different components
When comparison of the component parts is important.
Simple bar diagram is drawn first with the length of the bars proportional
to the totals of the component parts.
Subdivided into parts of length proportional to the component magnitudes.
Each part given a different color or shading.
Eg: The growth of production of fish for the period 1996-97 to 2002-03 is
given below:
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Year Marine Inland Total(lakh tonnes)
1996-97 5.34 2.18 7.52
1997-98 8.80 2.80 11.60
1998-99 10.86 6.70 17.56
1999-00 15.55 8.87 24.42
2000-01 16.98 11.03 28.01
2001-02 17.16 11.60 28.76
2002-03 12.47 8.42 20.89
35
30
25
20
Inland
15 Marine
10
0 AGBS HYDERABAD
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
This is a modification of the component bar diagram.
It is used when comparison of the component is thought to be
more important.
Component parts are expressed as the percentage of the total
Component bar diagram is drawn with all bars having equal
length.
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Components Family-1 Family-2 Family-3
100%
80%
60% others
rent
40% clothing
food
20%
0%
family-1 family-2 family-3
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This diagrams are used for representing two or more
interrelated data, for facilitating comparison.
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Year Direct taxes( in crores Indirect taxes( in crores of
of Rs.) Rs.)
1972 1200 2300
1975 2250 4100
1978 2500 6300
1981 3500 10000
12000
10000
8000 Direct taxes( in
6000 crores of Rs.)
4000 Indirect taxes( in
2000 crores of Rs.)
0
1972 1975 1978 1981
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This diagram is usually used to represent net quantities, like
net profit, balance payable, deficit or excess etc.
As the observations may be positive or negative, the basic line
is usually drawn in the middle of the paper horizontally.
Positive values are indicated by bars of proportional length,
drawn above the horizontal line.
Negative values by bars of proportional length drawn below
the horizontal line.
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Year 1976 1977 1978 1979
Profit(millions of Rs.) 10 3 -5 -8
12
10
8
6
4
2
0 Profit(millions of Rs.)
-2
-4
-6
-8
-
1 1976 1977 1978 1979
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Temperature in Crete ( in ºC ) from January to May
44
40
36
Temperature in ºC
32
28
24
20
16
12
8
4
0
January february March April May
Months
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From the bar diagram,
we can interpret/infer:
When to visit crete
Which is the best month based on temperature
Which is the hottest / coolest month
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You can see that the temperature in january is 22ºC and then it
rises to 40ºC in may.
You would need to have an idea what these temperatures mean
and can then decide what would be best for you.
You might be decide that temperature above 26ºC would be
too hot for you.
You would then go on holiday in January or February, because
the weather will be pleasant but not too hot.
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BAR CHARTS
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Complaints by Passengers
COMPLAINT NUMBER PROPORTION DEGREES
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Schedules,
Personnel Etc.
14% 10%
Equipment
15%
Stations, Etc.
40%
Train
Performance
21%
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Histograms
Histograms are bar graphs in which
•The bars have the same width and always touch
(the edges of the bars are on class boundaries
which are described below).
•The width of a bar represents a quantitative
variable x, such as age rather than a category.
•The height of each bar indicates frequency.
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Before making a histogram, organize the
data into a frequency table which
shows the distribution of data into
classes (intervals).
The classes are constructed so that each
data values falls into exactly one class,
and the class frequency is the number
of data in the class.
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Histogram Construction
Class IntervalFrequency
20
20-under 30 6
30-under 40 18
40-under 50 11
Frequency
50-under 60 11
60-under 70 3
10
70-under 80 1
0 10 20 30 40 50 60 70 80
Years
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DEFINITION OF
FREQUENCY POLYGON
A frequency polygon is a graph that uses
lines that connect points plotted for the
frequencies at the midpoints of the classes;
frequency are represented by the heights of
the midpoints.
OR
Polygon is a form of diagrammatic
presentation of data. It is formed by joining
all the mid points of the tops of all
rectangles. However they can be formed
even without constructing
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DRAWING FREQUENCY
POLYGON
Frequency polygons can be
drawn in two ways;
1. With a Histogram.
2. Without a Histogram.
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FREQUENCY POLYGON: WITH A
HISTOGRAM
Class limits No. of Sarees
100-200 10
200-300 27
300-400 37
400-500 24
500-600 20
600-700 15
700-800 10
49.5---59.5 5 54.5
59.5---69.5 10 64.5
69.5---79.5 30 74.5
79.5---89.5 40 84.5
89.5---99.5 15 94.5
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.
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A gardener recorded the maximum daily temperature on 48 days
throughout the year 2000. She repeated this for the same dates in
2003. Comment on the differences in temperature for these years.
15
Frequency
10
0 10 15 20 25 30 35
Temperature oC
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Cumulative Frequencies & Ogives
• The cumulative frequency of a class is the
frequency of the class plus the
frequencies for all previous classes.
• An ogive is a cumulative frequency
polygon.
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Constructing Ogives
• Make a frequency table showing class
boundaries and cumulative frequencies.
• For each class, put a dot over the upper
class boundary at the height of the
cumulative class frequency.
• Place dot on horizontal axis at the lower
class boundary of the first class.
• Connect the dots.
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