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OPRE 6301/SYSM 6303

Quantitative Introduction to Risk and
Uncertainty in Business
2-1

Chapter Two
Graphical Descriptive Techniques I

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Types of Data & Information

Data fall into three main groups:
Interval Data
Nominal Data
Ordinal Data

2-4

Hierarchy of Data
INTERVAL

ORDINAL

NOMINAL

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Nominal Data
Numerical values represent categories
Also known as coding data
Calculations on this type of data
are meaningless
Limited to counting frequencies
for example the General Social Survey:
GSS2012
2-6

Ordinal Data
Values represent
the ranked order of the data
Calculations on this type of data
are meaningless
Frequencies, median apply
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Ordinal Data
Order
1
2
3
4
5

Most Active Stocks

Microsoft
Cisco Systems
Dell Computers
Sun Microsystems
JDS Uniphase
MEDIAN
2-8

Ratings System
Poor
1

Good
2

Excellent
3

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Interval Data
To be more complete Interval and Ratio Data
Combined because there is no
difference with respect to statistics

2-11

Interval Data
All real numbers:
Natural, Whole, Integer, Rational
and Irrational
All calculations are meaningful

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Random Variable
Numerical Value
Random
outcome determined by chance
upon conducting an experiment

2-13

Types of Data
Data

Qualitative

Quantitative

Categorical

Numerical

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Qualitative Data
Nominal Data
Labels
Coding
Assigned Values

DISCRETE
countable values

Ordinal Data
Order is important
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Quantitative Data
Interval Data
Differences are
meaningful

Ratio Data
Differences are
meaningful
Zero starting point

DISCRETE
OR
CONTINUOUS
infinite # of values

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Describing Relationships
between Variables
Between two NOMINAL variables
Between two INTERVAL variables

2-18

Describing Relationships between

Two NOMINAL Variables
Can only show the relationships
between the frequencies of each
variable
Cross-classification table
Junior
Senior

Men
120
80

Women
200
100
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Pivot Table
In Excel, we create cross-classification
tables using the Pivot Table
Lets explore Example 2.4 on page 33
of your textbook
Data File Xm02-04
2-20

Linear Correlation
Measures strength of the Linear
Relationship between two interval
variables
Linear Correlation Coefficient
(Chapter 4)

Sample Data
Population Data

1 r 1
1 1
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Linear Correlation

Strong positive
correlation
close to +1

Weak positive
correlation
close to 0
2-22

Linear Correlation

Strong negative
correlation
close to -1

Weak negative
correlation
close to 0
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Linear Correlation
IS NOT
Causation

2-24

Relationship between Two

Variables
Lets explore the relationship between
two variables using
Data File Xm03-07

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