Cheat Sheet Statistics Business Decision

CHAPTER 1 : What is Statistic? 1. Statistic is one of a tools used to make decisions in business. 2. Why study statistics? Used as a basic knowledge for making a decision. 3. Types of statistics : a. Descriptive Statistics Organize, summarize and present data b. Inferential Statistics Analyze sample data and the results are applied to the population 4. Population VS Sample a. Population is a collection of all possible object b. Sample is a portion or part of the population 5. Types of Variables : a. Qualitative (the information is non-numeric) b. Quantitative (the information is numerically) 1. Special Multification P(A and B) = P(A)P(B) 2. General Multification P(A and B) = P(A)P(B|A) D. Classify Sample Observation 1. Contingency Table (for 2 or more characteristics) 2. Tree Diagram (for conditional/joint probabilities) E. Bayes Theorem (is a method for revising a probability given additional information) a. Uniform Distribution b. Mean of the Uniform Distribution c. Standard Deviation of the Uniform Distribution b. Sample Variance Example : 4. Standard Deviation a. Population Standard Deviation F. Counting Rules 1. Permutation (order of arrangement) n = total no of objects r = no of object selected 2. Combination (without regard to order) n = total no of objects r = no of object selected Graph of this distribution Px = 1 = 1/30-0 = 0.333 b-a b. Sample Standard Deviation C. Grouped Data : 1. The Mean of Grouped Data 6. Four level of measurement : a. Nominal (the data have no order) b. Ordinal (data arranged in some order) c. Interval Level (there’s no natural zero point) d. Ratio (zero as a starting point) CHAPTER 6 : Discrete Probability Distributions 1. Probability Distribution is a listing of all the outcomes of an experiment and the probability associated with each outcomes 2. Characteristics : outcome between 0 and 1 inclusive, outcomes are mutually exclusive, list is exhaustive. So the sum of event is equal 1. 3. Random Variables (result from experiment that assume diff values) a. Discrete Random Variables can assume only certain separated values. Result of counting something. e.g : no of students in class b. Continuous Random Variables an infinite no of values within range. Result of measurement. e.g : the weight of each student 4. Mean of Probability Distribution Show the area of this distribution is 1.00 Mean waiting time 3. Normal Approximation to the Binomial The normal distribution is generally good approximation of the binomial distribution for large values of n (when nπ and n(1-π) are both greater than 5 4. Correction Error At least X occurs, use the area above (X-,5) More than X occurs, use the area above (X+.5) X or fewer occurs, use the area below (X-.5) Fewer than X occurs, use the area below (X+.5) 5. Exponential Probability Distribution Characters : positively skewed, not symmetric, usually describes inter-interval situations e.g : the time until the next phone call arrives in CS λx Formula : P(X) = λe-λx P(arrival time < x) = 1-e Example : Standard deviation of waiting time Probability the student will wait > 25 mins 2. Standard Deviation of Grouped Data 5. Variance of Probability Distribution CHAPTER 2 : Describing Data – Freq Table, Freq Distribution 1. Qualitative Data a. Frequency Table b. Relative Frequency Table c. Graphic presentation : bar chart, pie chart 2. Quantitative Data a. Frequency Distribution (Class Interval, Class Frequency, Class Midpoint) b. Relative Frequency Distribution (To convert freq dist to relative freq, each of class divided by the sum or total no of observations) c. Graphic presentation : Histogram, Polygon d. Cumulative Distribution (determine how many observation lie above or below certain values) CHAPTER 3 : Describing Data – Numerical Measure A. Measure of Location : 1. Mean (Ungrouped Data) a. Arithmetic Mean - Population Mean µ = ∑x (total particular value) N (no of values in the population) - - Sample Mean x = ∑x (total particular value) n (no of values in the sample) Weighted Mean xw = w1X1 + w2X2 + … + wnXn w 3 + w3 + … + w n Probability the student will wait between 10 and 20 mins 6. Standard Deviation of Probability Distribution CHAPTER 4 : Describing Data – Displaying Exploring 1. Displaying data (Dot Plots, Box Plots, Steam-and-Leaf, Scatter Plots, Contingency Tables) 2. Measure of Pos (Quartiles, Deciles, Percentiles) 7. Binomial Distribution Characters : only two possible outcomes, the outcomes are mutually exclusive (success or failure), the random variable is the result of counts and each trial is independent of any other trial 2. Normal Probability Distribution Characters : bell-shaped, symmetrical, asymptotic (the curve gets closer to the X-axis but never touched it, mean median mode are equal, total area under the curve is 1.00, a. Graphics 3. Skewness Example : a. Mean of Binomial Distribution CHAPTER 5 : Probability Concepts A. Assigning Probability 1. Classical Probability (assumption the outcomes are equally likely) Classical = Number of favorable outcomes Total number of possible outcomes a. Mutually Exclusive if the occurrence of any one event means that none of the others can occur at the same time b. Independent if one event doesn’t affect the occurrence of another c. Collectively Exhaustive if at least one of the events occur when an experiment conducted 2. Empirical Probability (based on what happened in the past) Empirical = No of time the event occurs Total no of observation 3. Subjective Concept of Probability (based on available information) e.g : estimating the likelihood you will be married before age 30 4. Summary of Types of Probability b. The Family of Normal Distribution CHAPTER 8:Sampling Method Central Limit Theorem 1. Most Probability Sampling : Simple Random(sample selected so each item has the same chance of being included) Systematic Random Sampling (the items of population are arranged in some order) Stratified Random Sampling (population divided in group based on some characteristics) Cluster (population is divided into cluster) 2. Sampling Error (difference between sample statistic & its corresponding populating parameter) 3. Sampling Distribution of the Sample Mean (is a probability consisting of all possible mean) Example 1 : b. Variance of Binomial Distribution c. Normal Distribution 8. Hypergeometric Probab Characters : one or two mutually exclusive (success or failure), the probability of success or failure changes from trial to trial, the trial not are not independent Example : d. Standard Normal Distribution mean of 0, standard deviation of 1x. its called z distribution. z = particular observation µ = mean of the distribution δ = standard deviation Example 1 : b. Geometric Mean (always less than or equal to arithmetic mean) GM = √(X1)(X2)…(Xn) 2. Median (the midpoint of the value) 3. Mode (The value that appears most frequently) 4. Relative Positions of Mean, Median Mode a. Zero Skewness (mode = median = mean) b. Positive Skewness (mode < median < mean) c. Negative Skewness (mode > median > mean) B. Measure of Dispersion : 1. Range Range = Largest value – Smallest value 2. Mean Deviation MD = ∑|X – X| (x = value of each observation) n (x = arithmetic mean of x values) (n = number of sample) 4. Central Limit Theorem (if all samples are selected from any population, the sampling distribution mean only a normal distribution) 5. Standard Error of the Mean (Known Sigma) The mean of the distribution sample will exactly equal to population mean B. Add 1. S P(A or B) = P(A) + P(B) Example 2 : 2. General Addition (Not Mutually Exclusive) P(A or B) = P(A) + P(B) – P(A and B) 3. The Complement of Addition P(A) = 1-P(~A) 9. Poisson Probability Distribution Characters : event occurs during a specified interval (time, distance, area, volume), the interval are independent, the probability is proportional to the length of the interval. e.g : the no of vehicles sold per day, the no of calls per hour Example : Example 4 : μ = nπ b. Variance of Poisson Distribution δ = nπ 3. Variance a. Population Variance C. Multification to Calculate Probability Example 3 : CHAPTER 7 : Continuous Probability Distribution Total area within a continuous probability distribution is equal to 1 1. Uniform Probability Distribution Example 5 : Curve area = 0.498 – 0.4332 = 0.0606 Example 6 : Finding X Given Area 6. Standard Error of the Mean (Unknown Sigma) CHAPTER 9 : Estimation and Confidence Interval 1. Point Estimate for Population Mean (sample value that estimates a population parameter) 2. Confidence Interval for Population Mean C.I = point estimate +- margin of error 3. Factors Affecting Confidence Interval (the sampel size n, variability in the population usually δ estimated by s, the desired level of confidence) 4. Obtain Z Value for a Given Confidence Level Confidence 90% = Z value 1.65 = 0.4505 Confidence 95% = Z value 1.96 = 0.4750 Confidence 98% = Z value 2.33 = 0.4901 Confidence 99% = Z value 2.58 = 0.4951 5. Confidence Intervals Population Mean– δ Known b. Testing Population Mean – δ Unknown 11. Sample Size for Estimating Pop. Proportion Example : Example 2: Example : Example : 12. Finite Population Correction Factor 13. C.I For Estimating Means & Proportion with FPC 6. The Interval Estimates – Interpretation If the confidence level is 95%, the interval include the population mean 7. Confidence Intervals – δ Unknown Characters : continuous distribution, bell-shaped, symmetrical, not one but a family of t distribution, more spread out than Z Value Comparing z and t distribution with 95% C.I One-Tailed VS Two-Tailed Example : Example : CHAPTER 10: One Sample Test of Hypothesis 1. Hypothesis (a statement about population parameter subject to verification) a. Hypothesis Testing (a procedure based on sample evidence to determin reasonable statement) b. Null Hypothesis (statement about the value of population parameter develope for the purpose of testing numerical evidence) c. Alternate Hypothesis (statement that is accepted if the sample data provid sufficient evidence that the null hypothesis is false) 2. 6 Steps Procedure for Testing Hypothesis 3. Important Things about H0 and H1 a. H0 : Null Hypothesis, H1 : Alternate Hypothesis b. H0 and H1 are mutually exclusive & collectively exhaustive c. H0 is always presumed to be true d. H1 has the burden of proof e. Equality is always part of H0 (e.g : = , ≥ , ≤ ) f. ≠ , < , > always part of H1 4. Decisions and Errors in Hypothesis testing 8. When to Use z or t Distribution for C.I ? 9. Confidence Interval for Proportion a. Sample Proportion 5. Type of Errors in Hypothesis Testing a. Type I Error : Rejecting H0 when it is true b. Type II Error : Rejecting H0 when it is false 6. Select the Test Statistic : a. Test Statistic : used to determine reject H0 b. Critical Value : point between the region where H0 is rejected and region wher it’s not rejected 7. One-Tail VS Two-Tail Test b. Population Proportion c. Example 8. Testing a Mean a. Testing a Population Mean, δ Known Example 1: 10. Sample Size for Estimating the Population Mean Example :