Day 05: Statistics for Business Applications

• Last Time:
  • Another histogram bin-size demo
  • Review of measures of central tendency
  • Beginning of measures of spread

• Today:
  • Return homework:
    • Chapter 1: #3 and 4
    • Use complete sentences! I'm going to crack down hard on that from now on. We actually want to see a nice little analysis. Check your grammar, check your spelling, etc.
    • In #4, we cannot conclude that the claim is true, only that it is plausible! We'll be talking more about this....

  • Collect Homework #2 (chapter 2)

  • Do you have any questions about the homework associated with 4? (Due Next Tuesday - no homework due Thursday)

  • Chapter 4: measures of spread
    • Review
      • sample mean
      • summation notation
      • range
      • sample variance
    • Difference between population and sample variance
    • standard deviation, the square root of variance
      • has the right units
      • is the proper measuring stick for spread
    • There are two rules based on the standard deviation that you'll want to be aware of:
      • The empirical rule - the 68/95/99 rule.
        • The standard deviation serves as a "typical deviation"
        • Works well when the distribution is bell-shaped
        • May work okay in any event.

      • Chebysheff's Theorem - the 1-(1/k^2) rule.
        • Works all the time, but is extremely conservative: it leads to a 0/75/89 rule!

  • Chapter 8: The normal distribution and probabilities

    • A recent story: Joe Six-Pack investigates beergate at Veterans Stadium Philadelphia

      Beers were being served 2 or 3 ounces short! The horror....
      Hear about it on NPR -- Minute 1:30/4:10

      What might the beer distribution have looked like?

      • Using Minitab to generate random data

        Calc -> Random Data -> Normal

      • My distribution demo

    • An old story: Poincare and his bread

    • The empirical rule - the 68/95/99 rule - comes from the normal curve

    • Probabilities and the area under the curve

    • Webster West's Normal demo

• Next time:
  • No problems due
  • Finish normal distribution (the bell-shaped curve) - calculation of probabilities

Links:

• Bread, bakers, and the normal curve:
  "Random errors involve scatter. A baker producing bread listed as twenty ounces per loaf has difficulty making each loaf such that it weights precisely twenty ounces. Some loaves are a little bit heavier, some might be a little bit lighter. If loaves sold customers average twenty ounces in weight, on a given day one family might get less bread for their money than another family. However, if the variations in weight are truly random and there is no effort made to select heavy loaves, customers are not at a disadvantage because loaves that are too light are balanced out by loaves that are too heavy. However, systematic error might also occur at the bakery. A baker setting out to cheat customers might modify his recipe such that only the heaviest loaves weight twenty ounces, while a baker concerned with legal or public relations consequences of selling underweight bread might see to it that all loaves weigh over twenty ounces."