Copyright © 2008, The McGraw-Hill Companies, Inc.
To make any use of the data we collect, we need to be able to convert this raw data into a
summary form that can be readily understood.
Statistics is a broad and deep area of mathematics; many colleges require an entire
course in statistics for business majors, as well as for students of other disciplines such as
the social sciences. In this chapter, we will introduce some of the most widely employed
tools of statistics for business.
Data can often be most easily understood by using a picture representation. Charts
and graphs are pictorial displays used to put data into an accessible form. In this section,
we will consider several basic types of charts and graphs. Since it is difficult to create
professional-appearing and accurately drawn charts or graphs by hand, they are almost
always created by using computer software. In this section, we will describe the steps
necessary to create basic charts and graphs with Microsoft Excel, since this is a commonly
used and widely available program. Other statistical programs are also widely available,
though, and the user’s manuals for these programs will usually include instructions for
creating basic charts and graphs.Pie Charts
Pie charts, also known as circle charts or circle graphs are a familiar tool for summarizing
statistical data. They are particularly useful for describing how different categories contrib-
ute to a larger whole. A pie chart consists of a circle and each category is given a wedge
whose area is the same percent of the overall circle’s area as the category it represents is of
the whole. Loosely speaking, the size of each category’s “piece of the pie” is determined
by its contribution to the overall total.
For example, suppose that you are working for a company that plans to introduce a
new brand of windshield washer fluid. Since there are already plenty of brands of washer
fluid on the market, you would naturally want to have a good idea of who your strongest
competitors are. One way of measuring this would be too look at what percent of overall
washer fluid sales go to each brand in the area where you plan to sell your product. Each
competitor’s sales can be thought of as a portion of the total market sales of washer fluid.
This situation is well-suited to a pie chart display.
We will first give the instructions to produce a basic pie chart with Excel, and then
illustrate the results for our wiper fluid example. Note that the steps may vary slightly,
depending on the version of Excel you are using; if you have difficulty using these instruc-
tions, check with your course instructor or your owner’s manual.How to Create a Pie Chart in Excel
- List the categories in Column A of a spreadsheet.
- List the amounts for each category in Column B. The amounts may be amounts or
percents. - Select from menus: Insert Chart Pie.
- Click on the chart style of your choice (the default is a basic pie chart).
- Click on NEXT.
- Use your mouse to highlight the area of the spreadsheet where your categories and
amounts are stored. - Next to “Series in” select “Columns.”
- Click on NEXT.
- If you wish, you can next enter a title or other formatting, using the options on the next
screen. - Click on NEXT and then FINISH.
Example 16.1.1 Suppose that the wiper fl uid market in your area is divided up as
follows: Brand A has 37%, Brand B 23%, Brand C 18%, Brand D 12%, and other brands
make up 10% of the market. Construct a pie chart to illustrate this.16.1 Charts and Graphs 609