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BASIC BUSINESS CENTS: Graphs portray 'thousand bits of data' on a business

In our previous column, we discussed collecting data so we can make decisions based on fact, not just on intuition, experience or opinion. Some people are comfortable looking at lists of data to make decisions but most of us prefer to look at graphs of the data in order to make sense of it. Remember, "a picture is worth a thousand words," or in this case a graph is worth a thousand bits of data.

Many people assume graphs require a high degree of statistical comprehension. Yet, Kaoru Ishikawa in his book, Guide to Quality Control, said, "elementary school curricula include methods for making graphs at approximately the fourth grade level. At this point of their instruction, children already have enough background to understand the basic principles necessary to construct and interpret a simple graph."

This column will focus on line graphs, bar graphs and circle graphs.

The line graph, usually called a run chart, has a horizontal and a vertical axis showing characteristic values related to both axes, and the points which are joined to make a line are determined on the basis of data showing both values.

The horizontal axis is called the x axis and the vertical axis is labeled the y axis. The independent variable such as time is plotted on the x axis and the dependent variable data such as a value at any point in time or whatever we are measuring against on the x axis is plotted on the y axis.

Thus, if we look at any point on the horizontal or x axis, we can go up and determine what the value for the vertical or y axis. We say that y is a function of x.

The bar graph is used to compare data from different groups such as times, locations, symptoms, types, etc. The groups are listed on the x or independent axis and the value of our measurement for that group is plotted on the y or dependent axis. A vertical bar is drawn for each group so we can compare the magnitudes at a glance.

Variations of the bar chart such as the histogram and Pareto chart will be discussed later.

The circle chart, more commonly known as the pie chart, is used to show the division of a whole into its various parts. The name pie chart is a natural because the total measured is displayed as a circle and is divided by measurements of each group as a percentage of the whole. It then resembles a pie with uneven portions or slices.

Variations include more than one circle to show differences in magnitude (size of the circle) between two different populations or groups, a circle within a circle, different percentages between two different groups, etc.

The graphs are simply aids to make it easier to make informed decisions based on data or facts. It is always interesting to note how this reduces tension in the workplace.

Louis Schultz, managing director of Process Management LLC, has assisted organizations worldwide with performance improvement. He currently assists area business owners as a SCORE counselor. E-mail him with questions or comments at lou@processman