Copyright by Michael S. Watson, 2012 Statistics Quick Overview Class #2
Copyright by Michael S. Watson, 2012
Statistics Quick Overview
Class #2
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 2
Thought Exercise with Our Packaging ExampleOriginal Case (mean = 290, sd = 53)
Less Variability (m = 290, sd = 5) More Variability (m = 290, sd = 186)
If a store manager came to you and said, “what will my sales be?” how would you answer?
If CEO came to you and said, “what will average sales be?” how would you answer?
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 3
Thought Exercise II- We Doubled The Samples
If a store manager came to you and said, “what will my sales be?” how would you answer?
If CEO came to you and said, “what will average sales be?” how would you answer?
(mean = 290, sd = 53) (mean = 290, sd = 53)
What do you think of these questions now?
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 4
Sampling Distribution
is approximately normally distributed with a mean of µ and st dev of
Since we never know the actual σ, we approximate it with the sample standard deviation, s.
Xn
is commonly used in statistics
We call this term the standard error of the mean
Xssn
Let’s see how this applies to our examples
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 5
We Have 3 Measures for a Sample of Data
Mean (average)
Standard Deviation (sample standard deviation)
Standard Error of the Mean
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 6
Central Limit Theorem– General Idea
is approximately normally distributed with a mean of µ and st dev of
In other words, as you take various samples, the collection of these samples will be approximately normally distributed The larger the value of n, the closer to normally distributed
The population data does not have to be normally distributed
Xn
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 7
A New Game
1 2 3
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 8
Basic Probability
A BA and B
𝑃 (𝐵|𝐴 )= 𝑃 (𝐴𝑎𝑛𝑑𝐵)𝑃 ( 𝐴)
Solution space = 1
𝑃 ( 𝐴𝑜𝑟 𝐵 )=P ( A )+P (B )−P (A∧B)
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 9
Car Example- Neither Will Start?
A (90%) B (80%)A and B (75%)
Solution space = 1
= 90% + 80% - 75%=95% 1-95% = 5% chance neither will start
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 10
Neither Will Start?A Table Can Be Helpful
BMW
Acura
Starts
Doesn’t
Starts Doesn’t
75% 80%
90%
20%
10%
15%
5%
5%
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 11
Car Example- A Starting if B Starts?
A (90%) B (80%)A and B (75%)
= 75% / 80% = 93.75%
Solution space = 1
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 12
Conditional Probability:A Table Can Be Helpful
BMW
Acura
Starts
Doesn’t
Starts Doesn’t
75% 80%
90%
20%
10%
15%
5%
5%
Normalize this row:75% / 80%
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 13
Counting: What Do These Five Guys in Front……
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 14
….Have to Do with the Front Line in Hockey….
Right Center Left
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 15
…or the Front Line In Quiditch?
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 16
Let’s Say A Coach (Maybe Mr. Brown?) Had to Pick 3 Players for Hockey and Then Quiditch
Let’s start with hockey…
Here, order matters The person on the left must stay on the left The person on the right must stay on the right
So, how many different potential line-ups does Mr. Brown have to consider? Choices are: Mr Blonde, Mr White, Mr Orange, Mr Pink, and Mr Blue
5 x 4 x 3 = 60
𝑛 !(𝑛−𝑘)!
Where n is the number of choices, and k is the number picked. In Excel, this is PERMUT(n,k)
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 17
Let’s Carefully Write Out the Permutations
(Blnd, Blue, Orng) (Blue, Blnd, Orng) (Blnd, Orng, Blue) (Blue, Orng, Blnd) (Orng, Blnd, Blue) (Orng, Blue, Blnd)
(Blnd, Blue, Wht) (Blue, Blnd, Wht) (Blnd, Wht, Blue) (Blue, Wht, Blnd) (Wht, Blnd, Blue) (Wht, Blue, Blnd)
(Blnd, Blue, Pink) (Blue, Blnd, Pink) (Blnd, Pink, Blue) (Blue, Pink, Blnd) (Pink, Blnd, Blue) (Pink, Blue, Blnd)
(Blnd, Orng, Wht) (Blnd, Wht, Orng) (Orng, Blnd, Wht) (Orng, Wht, Blnd) (Wht, Blnd, Orng) (Wht, Orng, Blnd)
(Blnd, Orng, Pink) (Blnd, Pink, Orng) (Orng, Blnd, Pink) (Orng, Pink, Blnd) (Pink, Blnd, Orng) (Pink, Orng, Blnd)
(Blnd, Pink, Wht) (Blnd, Wht, Pink) (Pink, Blnd, Wht) (Pink, Wht, Blnd) (Wht, Blnd, Pink) (Wht, Pink, Blnd)
(Blue, Orng, Wht) (Blue, Wht, Orng) (Orng, Blue, Wht) (Orng, Wht, Blue) (Wht, Blue, Orng) (Wht, Orng, Blue)
(Blue, Orng, Pink) (Blue, Pink, Orng) (Orng, Blue, Pink) (Orng, Pink, Blue) (Pink, Blue, Orng) (Pink, Orng, Blue)
(Blue, Pink, Wht) (Blue, Wht, Pink) (Pink, Blue, Wht) (Pink, Wht, Blue) (Wht, Blue, Pink) (Wht, Pink, Blue)
(Orng, Pink, Wht) (Orng, Wht, Pink) (Pink, Orng, Wht) (Pink, Wht, Orng) (Wht, Orng, Pink) (Wht, Pink, Orng)
Note: Each column is a unique combination of players
Note: The entries within each row are different permutations of the players. This is our same problem again where n= 3 and k = 3
==6
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 18
Mr. Brown’s Choices for a Quiditch Front Line
Here, order does not matter He just needs a front line
All that matters is the number of unique combinations
What observation from the permutation table helps us determine the unique combinations
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 19
Figuring out the Combinations
(Blnd, Blue, Orng) (Blue, Blnd, Orng) (Blnd, Orng, Blue) (Blue, Orng, Blnd) (Orng, Blnd, Blue) (Orng, Blue, Blnd)
(Blnd, Blue, Wht) (Blue, Blnd, Wht) (Blnd, Wht, Blue) (Blue, Wht, Blnd) (Wht, Blnd, Blue) (Wht, Blue, Blnd)
(Blnd, Blue, Pink) (Blue, Blnd, Pink) (Blnd, Pink, Blue) (Blue, Pink, Blnd) (Pink, Blnd, Blue) (Pink, Blue, Blnd)
(Blnd, Orng, Wht) (Blnd, Wht, Orng) (Orng, Blnd, Wht) (Orng, Wht, Blnd) (Wht, Blnd, Orng) (Wht, Orng, Blnd)
(Blnd, Orng, Pink) (Blnd, Pink, Orng) (Orng, Blnd, Pink) (Orng, Pink, Blnd) (Pink, Blnd, Orng) (Pink, Orng, Blnd)
(Blnd, Pink, Wht) (Blnd, Wht, Pink) (Pink, Blnd, Wht) (Pink, Wht, Blnd) (Wht, Blnd, Pink) (Wht, Pink, Blnd)
(Blue, Orng, Wht) (Blue, Wht, Orng) (Orng, Blue, Wht) (Orng, Wht, Blue) (Wht, Blue, Orng) (Wht, Orng, Blue)
(Blue, Orng, Pink) (Blue, Pink, Orng) (Orng, Blue, Pink) (Orng, Pink, Blue) (Pink, Blue, Orng) (Pink, Orng, Blue)
(Blue, Pink, Wht) (Blue, Wht, Pink) (Pink, Blue, Wht) (Pink, Wht, Blue) (Wht, Blue, Pink) (Wht, Pink, Blue)
(Orng, Pink, Wht) (Orng, Wht, Pink) (Pink, Orng, Wht) (Pink, Wht, Orng) (Wht, Orng, Pink) (Wht, Pink, Orng)
When calculating the permutations, we naturally determined the unique combinations (the columns) and then ran the permutations for each combination. If we divide out that last step, we will have just the combinations:
= 60 / 6=10
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 20
By Convention, we write these with brackets {}
{Blnd, Blue, Orng}
{Blnd, Blue, Wht}
{Blnd, Blue, Pink}
{Blnd, Orng, Wht}
{Blnd, Orng, Pink}
{Blnd, Pink, Wht}
{Blue, Orng, Wht}
{Blue, Orng, Pink}
{Blue, Pink, Wht}
{Orng, Pink, Wht}
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 21
Binomial Distribution
Sample Size of 10
Case #1: Assume that the lot is good with 5% defectives When will you reject because you find 3 or more defectives
Case #2: Assume that the lot has 40% defectives When will you accept because you find 2 or less defectives
Let’s assume: s is the probability of success f is the probability of failure
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 22
Case #1 (only 5% of the lot is defective)
Example of getting 3 Failures fssfsssssf Probability of this is (5%)3(95%)7
Example of getting 4 Failures fssfsfsssf Probability of this is (5%)4(95%)6
What are we missing?
The number of combinations
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 23
Bayes’ Rule
A1 uses drugs P(A1) = 5% A2 does not use drugs P(A2) = 95% B tests shows drug use P(B | A1) = 98% P(B | A2) = 2%
𝑃 ( 𝐴1|𝐵 )=𝑃 ( 𝐴1𝑎𝑛𝑑𝐵)𝑃 (𝐵)
What we want….
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 24
Bayes Rule- Calculate
𝑃 (𝐵|𝐴1 )=𝑃 ( 𝐴1𝑎𝑛𝑑𝐵)𝑃 (𝐴1)
𝑃 ( 𝐴1|𝐵 )=𝑃 ( 𝐴1𝑎𝑛𝑑𝐵)𝑃 (𝐵)
𝑃 (𝐴 1)𝑃 (𝐵|𝐴1 )= 𝑃 (𝐴 1𝑎𝑛𝑑𝐵)1
P (𝐵 )=𝑃 ( 𝐴1𝑎𝑛𝑑𝐵 )+𝑃 ( 𝐴 2𝑎𝑛𝑑𝐵 )=𝑃 ( 𝐴1 ) 𝑃 (𝐵|𝐴1 )+𝑃 ( 𝐴2 ) 𝑃 (𝐵|𝐴2 )
Copyright by Michael S. Watson, 2012; Slides from Managerial Statistics book 25
Bayes Rule- Calculation
=𝑃 (𝐴 1)𝑃 (𝐵|𝐴1 )
𝑃 ( 𝐴1 ) 𝑃 (𝐵|𝐴 1 )+𝑃 ( 𝐴2 ) 𝑃 (𝐵|𝐴2 )
= 5%*(98%) / ((5%*98%)+(95%*2%)) =72%