Statistical Tools for Business Decision-Making
- You're a business owner trying to understand customer preferences or financial performance.
- How do you make sense of all the data?
This is where statistical tools come in, helping you summarize and analyze information to make informed decisions.
Measures of Central Tendency
1. Mean: The Average
- The mean is the average value of a dataset.
- It's calculated by adding all the values and dividing by the number of values.
A retail store wants to know the average amount spent by customers in a day. If the total sales were \$1,000 from 50 customers, the mean is \$20.
TipThe mean is sensitive to outliers (extremely high or low values), which can skew the result.
2. Mode: The Most Frequent
- The mode is the value that appears most frequently in a dataset.
- It's useful for identifying common trends.
- A clothing store finds that the most sold size is "Medium".
- This information helps in inventory planning.
A dataset can have more than one mode(bimodal or multimodal) or no mode at all.
3. Median: The Middle Value
- The median is the middle value when data is ordered from least to greatest.
- It isn't affected by outliers, making it a reliable measure of central tendency.
- A tech company wants to know the median salary of its employees.
- If the salaries are \$30,000, \$40,000, \$50,000, \$60,000, and \$200,000, the median is \$50,000.
If the dataset has an even number of values, the median is the average of the two middle numbers.
Visual Representation of Data
1. Bar Charts: Comparing Categories
- Bar charts are used to compare categorical data.
- Each bar represents a category, and the height shows the value.
A restaurant uses a bar chart to compare the sales of different menu items, helping identify the most popular dishes.
TipEnsure the bars are equally spaced and labeled for clarity.
2. Pie Charts: Showing Proportions
- Pie charts display data as proportions of a whole.
- Each slice represents a category's share of the total.
A company uses a pie chart to show the market share of its products, highlighting which product contributes the most to revenue.
TipUse pie charts for simple datasets with few categories to avoid clutter.
