BS-chapter3-2021-Z - Score or STD Score

Measure Of Position
(Z Score/Std score/Standard Error of the Mean)
z = (x – μ) / (σ / √n)
IS 310 – Business Statistics Slide

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Z Score
1. What is a Z-Score?
 Simply put, a z-score (also called a standard score) gives you an idea of
how far from the mean a data point is. But more technically it’s a measure
of how many standard deviations below or above the population mean a
raw score is.
 A z-score can be placed on a normal distribution curve.
 Z-scores range from -3 standard deviations (which would fall to the far left
of the normal distribution curve) up to +3 standard deviations (which
would fall to the far right of the normal distribution curve). In order to use
a z-score, you need to know the mean μ and also the population standard
deviation σ.

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Z score are a way to compare results to a “normal”
population.
Results from tests or surveys have thousands of possible
results and units; those results can often seem meaningless.
For example, knowing that someone’s weight is 150 pounds
might be good information, but if you want to compare it to
the “average” person’s weight, looking at a vast table of data
can be overwhelming (especially if some weights are
recorded in kilograms).
A z-score can tell you where that person’s weight
is compared to the average population’s mean weight.
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For example, let’s say you have a test score of 190. The test has a mean (μ) of
150 and a standard deviation (σ) of 25. Assuming a normal distribution,
your z score would be:
z = (x – μ) / σ
= (190 – 150) / 25 = 1.6.
The z score tells you how many standard deviations from the mean your
score is. In this example, your score is 1.6 standard deviations above the
mean.
alternate-z-scoreYou may also see the z score formula shown to the left.
This is exactly the same formula as z = x – μ / σ, except that x̄ (the sample
mean) is used instead of μ (the population mean) and s (the sample
standard deviation) is used instead of σ (the population standard deviation).
However,
IS 310 – the steps
Business for solving it are exactly the same.
Statistics Slide
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Z Score Formula: Standard Error of the Mean
 When you have multiple samples and want to describe the standard deviation of those sample means (the standard
error), you would use this z score formula:
 z = (x – μ) / (σ / √n)
 This z-score will tell you how many standard errors there are between the sample mean and the population mean.
 Example problem: In general, the mean height of women is 65″ with a standard deviation of 3.5″. What is the
probability of finding a random sample of 50 women with a mean height of 70″, assuming the heights are normally
distributed?
 z = (x – μ) / (σ / √n)
 = (70 – 65) / (3.5/√50) = 5 / 0.495 = 10.1
 The key here is that we’re dealing with a sampling distribution of means, so we know we have to include the standard
error in the formula. We also know that 99% of values fall within 3 standard deviations from the mean in a normal
probability distribution (see 68 95 99.7 rule). Therefore, there’s less than 1% probability that any sample of women will
have a mean height of 70″.
3. How to Calculate a Z-Score
 You can easily calculate a z-score on a TI-83 calculator or in Excel. However, if you don’t have either, you can
calculate
IS 310it–by hand. Statistics
Business Slide
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Example question: You take the SAT and score 1100. The mean score for the SAT is 1026
and the standard deviation is 209. How well did you score on the test compared to the
average test taker?
 Step 1: Write your X-value into the z-score equation. For this example question the X-
value is your SAT score, 1100.
 Step 2: Put the mean, μ, into the z-score equation.
 Step 3: Write the standard deviation, σ into the z-score equation.
 (1100 – 1026) / 209 = .354. This means that your score was .354 std devs above the mean
 Step 5: (Optional) Look up your z-value in the z-table to see what percentage of test-
takers scored below you. A z-score of .354 is .1368 + .5000* = .6368 or 63.68%.
 *Why add .500 to the result? The z-table shown has scores for the RIGHT of the mean.
Therefore, we have to add .500 for all of the area LEFT of the mean. For more examples
of when to add (or subtract) .500, see several examples in:
Area under a normal distribution curve.
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4. Z scores and Standard Deviations
Technically, a z-score is the number of standard deviations from the mean value of the reference population (a
population whose known values have been recorded, like in these charts the CDC compiles about people’s weights).
For example:
A z-score of 1 is 1 standard deviation above the mean.
A score of 2 is 2 standard deviations above the mean.
A score of -1.8 is -1.8 standard deviations below the mean.
A z-score tells you where the score lies on a normal distribution curve. A z-score of zero tells you the values is exactly
average while a score of +3 tells you that the value is much higher than average.
5. How is it Used in Real Life?

You can use the z-table and the normal distribution graph to give you a visual about how a z-score of 2.0 means
“higher than average”. Let’s say you have a person’s weight (240 pounds), and you know their z-score is 2.0. You
know that 2.0 is above average (because of the high placement on the normal distribution curve), but you want to
know how much above average is this weight?
The z-score in the center of the curve is zero. The z-scores to the right of the mean are positive and the z-scores to the
left of the mean are negative. If you look up the score in the z-table, you can tell what percentage of the population is
above or below your score. The table below shows a z-score of 2.0 highlighted, showing .9772 (which converts to
97.72%). If you look at the same score (2.0) of the normal distribution curve above, you’ll see it corresponds with
97.72%.
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That tells you 97.72% of the population’s scores lie below that particular
score and 100% – 97.72% = 2.28% of the scores lie above that score. A
mere 2.28 of the population is above this person’s weight….probably a
good indication they need to go on a diet!
Z Score Formulas
Q.1 A test score of 190. The test has a mean (μ) of 150 and a
standard deviation (σ) of 25. Assuming a normal distribution, Find
your z score would be:
z = (x – μ) / σ
Z Score Formula: Standard Error of the Mean
• Q2, The mean height of women is 65″ with a standard deviation of

3.5″. What is the probability of finding a random sample of 50
women with a mean height of 70″, assuming the heights are normally
distributed?
• z = (x – μ) / (σ / √n)
Q.3: Student SAT score is 1100. The mean score for the SAT is 1026 and the standard deviation is
209. How well did you score on the test compared to the average test taker?
• Step 1: Write your X-value into the z-score equation. For this example question the X-value
is your SAT score, 1100.
• Step 2: Put the mean, μ, into the z-score equation.
• Step 3: Write the standard deviation, σ into the z-score equation.
• (1100 – 1026) / 209 = .354. This means that your score was .354 std devs above the mean.
• Step 5: (Optional) Look up your z-value in the z-table to see what percentage of test-takers
scored below you. A z-score of .354 is .1368 + .5000* = .6368 or 63.68%.
• *Why add .500 to the result? The z-table shown has scores for the RIGHT of the mean.
Therefore, we have to add .500 for all of the area LEFT of the mean. For more examples of
when to add (or subtract) .500, see several examples in: Area under a normal distribution curve
.

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BS-chapter3-2021-Z - Score or STD Score

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Measure Of Position

(Z Score/Std score/Standard Error of the Mean)

IS 310 – Business Statistics Slide

IS 310 – Business Statistics Slide

 Step 3: Write the standard deviation, σ into the z-score equation.

5. How is it Used in Real Life?

• Q2, The mean height of women is 65″ with a standard deviation of

• Step 3: Write the standard deviation, σ into the z-score equation.

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