Descriptive Statistics: A 2-Hour Lesson Handout for Pre-Master Business

Admin Student
Student: Abdulah

Level: Pre-Master

Background: Business Administration, Saudi Arabia

Lesson Duration: 2 Hours

Instructor: Joanna Uba

Lesson Objectives
By the end of this lesson, I will be able to:
- Understand what descriptive statistics are and why they are used in business.
- Identify and calculate key measures: mean, median, mode, range, variance, and standard
deviation.
- Interpret data using tables, charts, and summary statistics.
- Apply descriptive statistics to business scenarios.

1. What are Descriptive Statistics?

Descriptive statistics summarise and describe the features of a dataset. They are used in
business to:
- Understand trends
- Make comparisons
- Support decision-making
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1. What are Descriptive Statistics?

Descriptive statistics are tools used to summarise, organise, and present data in a
meaningful way. They help us understand patterns, identify relationships, and communicate
findings clearly without having to analyse every individual piece of data.

In business, descriptive statistics are essential for:

Understanding trends (e.g. tracking monthly revenue over time)

Making comparisons (e.g. comparing sales figures across different branches)

Supporting decision-making (e.g. deciding whether to invest more in a product that shows
higher average profits)

Types of Descriptive Statistics and Examples:

Measures of Central Tendency

These show the centre or average of a dataset:

Mean (average): Used to find the average salary of employees in a company.

Median: Useful when data has outliers. E.g., in a list of house prices, the median gives a
better idea of the 'typical' house price.

Mode: Tells which value appears most often – e.g., the most frequently sold product in a
supermarket.

Measures of Dispersion

These show how data values spread out:

Range: The difference between highest and lowest values. E.g., comparing the range of
monthly sales across branches.

Standard Deviation: Measures how consistent sales figures are each month. A higher value
means more fluctuation.

Variance: Helps understand how much values differ from the average.

Data Representation

Visual tools to help understand data easily:

Tables: List data in rows and columns. E.g., sales by day.

Bar Charts: Compare quantities. E.g., sales per region.

Pie Charts: Show parts of a whole. E.g., market share by product.

Histograms: Show how data is distributed. E.g., frequency of customer purchases within
different price ranges.

Example in a Business Context:

A café wants to analyse its sales data. It uses descriptive statistics to:

Calculate the mean number of coffees sold per day (e.g., 150 cups/day)

Find the most popular drink (e.g., cappuccino = mode)

See if sales are consistent or vary a lot (standard deviation)

Create a bar chart to compare sales of drinks over a week

Types of Descriptive Statistics:
1. Measures of Central Tendency – mean, median, mode
2. Measures of Dispersion – range, variance, standard deviation
3. Data Representation – tables, bar charts, pie charts, histograms
2. Median (Middle Value)

Order the values: 120, 140, 150, 150, 160, 180, 200

Middle value = 4th value = 150

✅ Answer: Median = 150 cups/day

3. Mode (Most Frequent Value)

Check for repeating values:

150 appears twice; all others appear once.

✅ Answer: Mode = 150 cups/day

4. Range

Range=200−120=80

Range=200−120=80

✅ Answer: Range = 80 cups

Q1. What is the mean number of cups sold per day?

a) 150

b) 157.14

c) 160

d) 180

Q2. What is the median number of cups sold?

a) 140

b) 150

c) 160

d) 180

Q3. What is the mode of the dataset?

a) 150
b) 160

c) 200

d) There is no mode

Q4. What is the range of the data?

a) 70

b) 60

c) 80

d) 90

Q5. The standard deviation is closest to:

a) 14.50

b) 20.50

c) 24.33

d) 30.00

Q6. Which measure of central tendency would be most affected by an extreme outlier?

a) Mean

b) Median

c) Mode

d) Standard Deviation

Q7. If Saturday’s sales dropped from 200 to 100 cups, what would happen to the mean?

a) It would stay the same

b) It would decrease

c) It would increase
d) It would double

2. Measures of Central Tendency

These tell us the 'typical' value in a dataset.

Measure Definition Example

Mean The average (10 + 20 + 30) / 3 = 20

Median The middle value when data 10, 20, 30, 40, 50 → Median
is ordered = 30

Mode The value that appears most 5, 5, 6, 7 → Mode = 5

often

Business Example: Average sales per month, most popular product.

3. Measures of Dispersion
These tell us how spread out the data is.

Measure Definition Formula

Range Difference between highest Max - Min

and lowest

Variance Average of the squared Σ(x - x̄)² / n

differences from the Mean

Standard Deviation Square root of the variance √variance

Use in Business: Understand risk or volatility in sales, returns, or costs.

3. Measures of Dispersion

Measures of dispersion tell us how spread out or variable the data is. In business, they help
us understand consistency, volatility, or risk in different areas like sales, profits, or
customer behaviour.

a) Range – The Simplest Measure of Spread

Definition: The range is the difference between the largest and smallest values in a dataset.

Formula: Range=Maximum value−Minimum value

Range=Maximum value−Minimum value

Example:
Sales values: 100, 150, 200 → Range = 200 - 100 = 100

Use in Business:

Measuring how much daily sales vary

Identifying the spread in costs of materials from different suppliers

Checking if customer satisfaction ratings are consistent

Explanation: A larger range means more fluctuation or inconsistency. A smaller range

means more stable or reliable performance.

b) Variance – Measuring Spread Around the Mean

Definition: Variance shows how much the numbers in a dataset differ from the mean, on
average. It squares the differences to avoid negative values.

Formula:Variance=∑(𝑥−𝑥ˉ)2𝑛

Variance= n∑(x− xˉ ) 2

(where 𝑥 -x is a data point, 𝑥-xˉ is the mean, and 𝑛 -n is the number of data points)

Example:

If average weekly profit is £1000, and one week it’s £1500 while another it’s £500, variance
will capture this variation in profit.

Use in Business:
Measuring risk in investments

Checking how much monthly revenue varies

Comparing performance across branches

Explanation: A higher variance means greater variation from the average. A lower variance
means values are more consistent.

c) Standard Deviation – The Most Common Measure

Definition: The standard deviation is the square root of the variance. It tells us, on average,
how far data points are from the mean.

Formula:

Standard Deviation=Variance

Standard Deviation= Variance

Example:

If weekly sales figures have a standard deviation of £100, it means most weeks’ sales are
about £100 above or below the average.

Use in Business:

Evaluating volatility in stock prices

Analysing how customer spending differs

Estimating how predictable future sales might be

Explanation: It’s the most widely used dispersion measure in business because it is easy to
interpret and stays in the same units as the original data (e.g. pounds, cups sold).

Real-Life Business Insight:

Two shops have the same average sales (£5000), but:

Shop A: Standard Deviation = £200 → sales are very consistent

Shop B: Standard Deviation = £1500 → sales vary a lot

📈 This helps a manager decide which shop is more stable or which needs closer monitoring.

4. Visualising Data
- Tables: Organise raw data
- Bar Charts: Compare categories (e.g., sales by product)
- Pie Charts: Show proportions
- Histograms: Show frequency distribution

Task: Create a bar chart to represent the monthly sales of four products.

5. Applying Descriptive Statistics to Business

Case Study: A coffee shop tracks sales of coffee types over a month. Use descriptive statistics
to:
- Find the average daily sales
- Identify the most sold product (mode)
- Determine variation in daily revenue (standard deviation)
Homework Task
Create a short report using data provided in Excel:
1. Calculate mean, median, and mode for daily transactions.
2. Create a table and chart to represent the data.
3. Write 3 sentences explaining what the data shows.

Useful Vocabulary
- Outlier: A value much higher or lower than others
- Distribution: How data is spread
- Fluctuation: Changes or variations in values
- Insight: A useful understanding from data

Video Resources
- Descriptive Statistics for Beginners (YouTube): [Link]
v=Vfo5le26IhY
- Bar Charts and Histograms Explained: [Link]
v=GZ4d3HEn9Z8

Grammar Focus (Optional for English practice)

Using Comparative Forms:
- Product A is more popular than Product B.
- Sales were higher in April than in May.

Prepared by Joanna Uba

British English
2025