Histogram
In statistics, a histogram is a
graphical representation of the distribution of data. It is an estimate of the probability
distribution of a continuous variable.
A histogram is a representation of tabulated frequencies,
shown as adjacent rectangles, erected
over discrete intervals (bins), with an area equal to the frequency of the
observations in the interval.
Ø
The height of a rectangle is also equal to the
frequency density of the interval, i.e., the frequency divided by the width of
the interval. The total area of the histogram is equal to the number of data. A
histogram may also be normalized
displaying relative frequencies.
Ø
It then shows the proportion of cases that fall
into each of several categories, with
the total area equaling 1. The categories are usually specified as consecutive,
non-overlapping intervals
of a variable.
Ø
The categories (intervals) must be adjacent, and
often are chosen to be of the same size. The rectangles of a histogram are
drawn so that they touch each other to indicate that the original variable is
continuous.
Business Application:
1. Consider the Annual Returns for Inteloc Inc .
2.Determine the Relative Frequency any Relative Frequency
Histogram Analysis
Histograms provide three very important pieces of
information about distributions of data values: shape, central location
(the middle), and spread (how different the values are from each other
and from the middle). Getting the most from this tool means being able
to apply these statistical concepts.
Histograms show how data can pile up;
in any distribution of values, some values will occur more frequently
than others. The peaks on the histogram show where there is similarity
among the data. This is the central location, which is measured by mean,
median, and mode. While these statistics provide valuable information
about the process, central location alone does not provide a complete
picture of the process. When you consider the spread of the data, you
will see its extremes. The shape of the histogram can show if the system
leans toward one extreme or the other, or if there are multiple peaks.
