Statistics for Management Unit 4

Unit 4 Measures of Central Tendency and Dispersion

Structure:
4.1 Introduction
Objectives
Relevance
Objectives of statistical average
4.2 Requisites of a Good Average
4.3 Statistical Averages
Arithmetic mean
Properties of arithmetic mean
Combined mean
Weighted arithmetic mean
Merits and demerits of arithmetic mean
4.4 Geometric Mean
Geometric Mean for Individual Series
Geometric Mean for discrete series
Geometric Mean for continuous series
4.5 Harmonic Mean
Relationship between Arithmetic mean, Geometric mean and
Harmonic mean
4.6 Median
Individual series
Discrete series
Continuous series
Merits and demerits of median
4.7 Mode
Merits and demerits of mode
4.8 Appropriate Situations for the Use of Various Averages
4.9 Positional Averages
Quartiles
Deciles
Percentiles
4.10 Dispersion
Range
Quartile deviation
Mean deviation
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4.11 Standard Deviation

Properties of standard deviation
Combined standard deviation
4.12 Coefficient of Variation
4.13 Summary
4.14 Glossary
4.15 Terminal Questions
4.16 Answers
4.17 Case Study

4.1 Introduction
In the previous unit, we have studied about data classification and
representation of data in tables and graphs. In this unit, we will study the
measures used to summarise data such as mean, median and mode.
Graphical representation is a good way to represent summarised data.
However, graphs provide us only an overview and thus may not be used for
further analysis. Hence, we use summary statistics like computing averages
to analyse the data. Mass data, which is collected, classified, tabulated and
presented systematically, is analysed further to bring its size to a single
representative figure. This single figure is the measure which can be found
at central part of the range of all values. It is the one which represents the
entire data set. Hence, this is called the measure of central tendency.
In other words, the tendency of data to cluster around a figure which is in
central location is known as central tendency. Measure of central tendency
or average of first order describes the concentration of large numbers
around a particular value. It is a single value which represents all units.
Objectives:
After studying this unit, you should be able to:
 describe the concept of statistical average
 explain arithmetic mean for discrete and continuous data
 explain median and mode of data
 explain quartiles, deciles and percentiles for the statistical data
 explain coefficient of variation for the statistical data

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4.1.1 Relevance
Small Fry Design
Founded in 1997, Small Fry Design is a toy accessories’ company that
designs and imports product for infants. The company‘s product line
includes teddy bears, mobiles musical toys, rattles and security blankets
and features high-quality soft toy designs with an emphasis on colour,
texture and sound. The products are designed in the United States and
manufactured in China.
Small Fry Design uses independent representatives to sell the products to
infant furnishing retailers, children’s accessory and apparel stores, gift
shops, upscale department stores, and major catalogue companies.
Currently, Small Fry Design products are distributed in more than 1000 retail
outlets throughout the United States.
Cash flow management is one of the most critical activities in the day-to-day
operation of this young company. Ensuring sufficient incoming cash to meet
both current and ongoing debt obligations can mean the difference between
business success and failure. A critical factor in cash flow management is
the analysis and control of accounts receivable. By measuring the average
age and dollar values of outstanding invoices, management can predict
cash availability and monitor changes in the status of account receivable.
The company has set the following goals: the average age for outstanding
invoices should not exceed 45 days and the dollar value of invoices more
than 60 days old should not exceed 5% of the dollar value of all accounts
receivable.
In a recent summary of accounts receivable status, the following descriptive
statistics were provided for the age of outstanding invoices.
Mean 40 days
Median 35 days
Mode 31 days
Interpretation of these statistics shows that the mean or average age of an
invoice is 40 days. The median shows that half of the invoices have been
outstanding 35 days or more. The mode of 31 days is the most common
length of time an invoice has been outstanding is 31 days. The statistical
summary also showed that only 3% of the dollar value of all accounts
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receivable was over 60 days old. Based on the statistical information,

management was satisfied that accounts receivable and incoming cash flow
were under control.
4.1.2 Objectives of statistical average
The statistical average or simply an average refers to the measure of middle
value of the data set. The objectives of statistical average are to:
 Present mass data in a concise form – The mass data is condensed
to make the data readable and to use it for further analysis. It is very
difficult for human mind to grasp a large body of numerical figures. A
measure of average is used to summarise such data into a single figure,
which makes it easier to understand.
 Facilitate comparison – It is difficult to compare two different sets of
mass data. However, we can compare those two after computing the
averages of individual data sets. While comparing, the same measure of
average should be used. It leads to incorrect conclusions when the
mean salary of employees is compared with the median salary of the
employees.
 Establish relationship between data sets – The average can be used
to draw inferences about the unknown relationships between the data
sets. Computing the averages of the data sets is helpful for estimating
the average of population.
 Provide basis for decision-making – In many fields such as business,
finance, insurance and other sectors, managers compute the averages
and draw useful inferences or conclusions for taking effective decisions.
Thus, we have studied the objectives of statistical average.

4.2 Requisites of a Good Average

In this section, we will discuss the requisites of a good average. The
following are the requisites of a good average:
 It should be simple to calculate and easy to understand.
 It should be based on all values.
 It should not be affected by extreme values.
 It should not be affected by sampling fluctuation.
 It should be rigidly defined, preferably by an algebraic formula, so that
different persons obtain the same value for a given set of data.
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By following these requisites, we can achieve a good average.

4.3 Statistical Averages

In this section, we will discuss the statistical averages. The average of a
distribution has been defined in various ways. Some of the important
definitions are as follows:
(i) "An average is an attempt to find one single figure to describe the whole
of figures".
– Clark and Sekkade
(ii) "Average is a value which is typical or representative of a set of data".
– Murray R. Spiegal
(iii) "An average is a single value within the range of the data that is used to
represent all the values in the series. Since an average is somewhere within
the range of data, it is sometimes called a measure of central value".
– Croxton and Cowden
(iv) "A measure of central tendency is a typical value around which other
figures congregate".
– Sipson and Kafka
The commonly used statistical averages are arithmetic mean, geometric
mean, harmonic mean.
4.3.1 Arithmetic mean
Arithmetic mean is defined as the sum of all values divided by number of
values and is represented by X . Arithmetic mean is also called ‘average’. It
is most commonly used measures of central tendency. Arithmetic Mean of
a series is the value obtained by adding all the observations of a series and
dividing this total by the number of observations.
There are two types of Arithmetic Mean:
a. Simple arithmetic Mean
b. Weighted arithmetic Mean
a. Simple arithmetic Mean
Arithmetic mean is simply sometimes referred as ‘Mean’. For example:
mean income, mean expenses, mean marks, etc.

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Unlike other averages, mean has to be computed by considering each and

every observation in the series. Hence, the mean cannot be found by either
inspection or observation of items.
Simple Arithmetic Mean is equal to the sum of the values of the variable
divided by their number of observations.
Individual Series: Arithmetic mean can be computed by following two
methods for direct observation of individual items.
1. Direct method
2. Short cut method.
1. Direct Method
Let Xi is the variable which takes values X1, X2, X3,……… Xn over ‘n’
observations, then arithmetic mean is given by.
n

X1  X 2  X3  ............... X n X i
X = i 1
where. i  1,2......n
n n

Here X = Arithmetic Mean

n

 X = Sum of the values of the observations of a series

i 1
i

n = Number of observations.

Where,  is the Greek symbol Summation denotes the sum of all Xi

values
Steps of this method:
Step1: Add all the values of the variable X and obtain X
Step 2: Divide this total by the number of observations N. This will give the
value of Arithmetic Mean
Solved Problem 1
Calculate the mean for following data. Marks obtained by 6 students are
given below:
20, 15, 23, 22, 25, 20

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Solution
Mean marks
n

X1  X 2  X3  ............... X n X i
X = i 1
where. i  1,2......n
n n
20  15  23  22  25  20 125
 
6 6
= 20.83
Solved Problem 2
Find out the arithmetic mean of 15, 17, 22, 21, 19, 26 and 20.
Solution
The arithmetic mean X is given by:
n

X1  X 2  X3  ............... X n X i
X = i 1
where. i  1,2......n
n n
15  17  22  21 19  26  20 140
X   20
7 7
Therefore, the arithmetic mean is 20.
Solved Problem 3
Six months’ income of departmental store is depicted in table 4.1. Find
mean income of stores.
Table 4.1: Six Months income of departmental store
Month Jan Feb Mar Apr May June
Income (Rs.) 25000 30000 45000 20000 25000 20000

Solution
Total income =  X = (25000 + 30000 + 45000 + 20000 + 25000 + 20000)
= 165000

Mean income X =
 X  165000  Rs. 27500
N 6

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The above example shows that if there are large data or large figures,
computations required to get mean in high. In order to reduce computations
one can go for short-cut method. The method is illustrated as follows.
2. Shortcut method
When the number of observations are large, the Arithmetic Mean can be
calculated using short cut method. The following formulation is used:

XA
d
N
Where d = Sum of deviation of each value from the assumed mean
A = Assumed Mean, N= Total Number of Observations
Steps of this method are as follows:
Step 1: Assume any value as a mean which is called arbitrary average or
assumed mean (A).
Step 2: Find the difference (deviations) of each value from arbitrary average.
d=X–A
Step 3: Add all deviations (differences) to get d
Step 4: Use following equation and compute the mean value.

XA
d
N
Discrete Series: Frequencies of each value is multiplied with respective
size to get total number of items is discrete series and their total number of
items is divided by total number of frequencies to obtain Arithmetic Mean.
This can be done in two methods:
1. Direct Method
2. Shortcut Method
1. Direct Method: When direct method is used, the following formula used
is

 fX  fX
X 
f N

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Steps of this method are as follows:

1. Multiply each size of item by frequency to get  fX
2. Add all frequencies (f = N)
 fX  fX
3. Use formula X   to get mean value.
f N
2. Shortcut Method: When this method is used the formula for calculating
arithmetic mean is
 fd
XA
N
Where d=X-A, A = Assumed Mean, N= Total Number of Observations
Solved Problem 4
Calculate the mean for following data depicted in table 4.2
Table 4.2: Frequency distribution

Value (X) 1 2 3 4 5
Frequency (f) 10 15 10 9 5

Solution
By direct method
Table 4.2a: Calculation of Mean using Direct Method

Value (X) Frequency (f) fX

1 10 10
2 15 30
3 10 30
4 9 36
5 5 25
f =N= 49 fx = 131

 fX 131
X   2.67
N 49

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By short-cut method
Let A = 3, (Assumed mean = 3)
Table 4.2b: Calculation of Mean using Short-cut method

Value (X) Frequency (f) d = (X –A)= (X-3) fd

1 10 -2 -20
2 15 -1 -15
3 10 0 0
4 9 1 9
5 5 2 10
f = 49 fd = - 16

 fd   16 
XA 3     2.67
N  49 
Solved Problem 5
The data in table 4.3 depicts the number of students with respect to age.
Calculate the arithmetic mean of the students’ ages.
Table 4.3: Number of Students with Respect to Age

Students’ Age (X) 20 23 25 28 30

Number of Students (f) 3 5 10 6 1

Solution
The arithmetic mean X is given by:

 fX  fX
X 
f N
20  3  23  5  25 10  28  6  30 1 623
X   24.92
3  5  10  6  1 25
Therefore, the arithmetic mean X is 24.92.
Continuous series: In continuous frequency distribution, the value of each
item in the frequency distribution is not known. In a continuous series, the
mid points of various classes are written down to replace the classes. In

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continuous series the mean can be calculated by any of the following

methods.
1. Direct method
2. Short cut method
3. Step deviation method
1. Direct method
When direct method is used, we apply the following formula:
 fm
X 
N
Where m= mid point of various classes, f = frequency of each class,
N = Total frequency
Steps of this method are as follows:
1. Find out the mid value of class group or class.
20  30 50
E.g.: For a class interval 20-30, the mid value is   25. Mid
2 2
value is denoted by ‘m’.
2. Multiply the mid value ‘m’ by frequency ‘f’ of each class and sum up to
get ∑fm.
 fm
3. Use X  where N = f to get mean value.
N
Solved Problem 6
Compute the mean for following data.
Table 4.4: Frequency table
Age Group 0-10 10-20 20-30 30-40 40-50
No of persons 5 15 25 8 7

Solution
Table 4.4a: Calculation of Arithmetic Mean
Age group No. of persons Mid point
f ‘m’ fm
0 – 10 5 5 25
10 – 20 15 15 225
20 – 30 25 25 625
30 – 40 8 35 280
40 – 50 7 45 315
Total f = 60 = N fm = 1470

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 fm  fm 1470
Mean age X =    24.5
f N 60
X = 24.5.
2. Short cut method
When this method is used, Arithmetic Mean is computed applying the
formula
 fd
XA where A= Assumed mean, d= deviations of mid value from
N
assumed mean i.e, m-A, N= Total frequency

Steps of this method are described below:

1. Find the mid value of each class
2. Assume any of the mid value as arbitrary average (A)
3. Multiply the deviation (differences) ‘d’ by frequency ‘f’
 fd
Using the formula, X  A  find the mean value.
N
3. Step deviation method
In case of continuous series with class intervals of equal magnitude, the
arithmetic mean is computed applying the formula:
 fd'
XA i
N
where

d' =
m  Assumed Mean 
Width of Class Interval

d' =
m  A
i
m= mid value of the class,
i= common magnitude of the class intervals( width of Class
Interval),
A= Assumed mean
Steps of the step deviation method:
1. Find out the mid value ‘m’
2. Select the arbitrary mean (assumed mean) ‘A’
3. Find the deviation (d) of mid value of each from ‘A’
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4. Deviations ‘d’ are divided by the common magnitude of the class

intervals ‘i’ to get d'
5. Multiply d' of each class by frequency ‘f’ to get fd' and sum up for all
classes to get ∑fd'
 fd'
6. Using the formula X  A   i calculate mean value
N
Solved Problem 7
Find the mean age of following data.

Table 4.5: Frequency table

Age 0-10 10-20 20-30 30-40 40-50
No. of persons 5 15 25 8 7

Solution
Table 4.5a: Calculation of Arithmetic Mean

No. of
Mid value m  A m  25
Age persons
‘m’
d'=  fd'
‘f’ 10 10
0 – 10 5 5 -2 -10
10 – 20 15 15 -1 -15
20 – 30 25 25 0 0
30 – 40 8 35 1 8
40 – 50 7 45 2 14
Total f=60=N fd'= -3

Solution
Let A = 25
 fd'
i = 10 XA i
N
(3)
X  25  x 10
60
1
X  25   24.5
2

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Calculation of simple arithmetic mean

Key statistic
For Individual series, the arithmetic mean is given by:
n

X1  X 2  X3  ............... X n X i
X  i 1
where....i  1,2......n
N n
N= no of observations
Key statistic
For discrete data with frequency, the arithmetic mean is given by:

 fX  fX
X 
f N
∑f = N = total frequency

Key Statistic
‘For continuous series, the arithmetic mean is given by:
 fd'
XA i
N

d' =
m  Assumed Mean 
Width of Class Interval

d' =
m  A
i
m is the mid value of the class
A is the Assumed Mean
i is the common magnitude of the class intervals

4.3.2 Properties of Arithmetic Mean

You have studied how to calculate arithmetic mean for grouped and
ungrouped data. Let us study about the properties of Arithmetic Mean which
are helpful in understanding the concept of Arithmetic Mean. The properties
of arithmetic mean are:

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i. Algebraic sum of deviations of a set of values taken from their mean is

always zero, that is,
     0
ii. Sum of squares of deviation of a set of values from their mean is
always minimum among the sum of squares of deviation those values
from any fixed number. In other words,

(X  X ) 2
is lesser than  (X  A) 2

for any choice of A different from X

iii. Arithmetic mean is capable of further algebraic treatment. Suppose
X 1 , X 2 , X 3 ......Xn are the means of N1, N2…….Nn sets of values, then
their combined arithmetic mean value is given by:

N1 X 1  N2 X 2  ........ Nn Xn
X
N1  N2  ....  Nn

4.3.3 Combined mean

Combined arithmetic mean can be computed if we know the mean and
number of items in each group of the data.
The following equation is used to compute combined mean.

Let X1 & X 2 be the mean of first and second groups of data containing N1 &
N2 items, respectively.

N1 X1  N 2 X 2
Then, combined mean = X12 
N1  N 2

N1 X1  N 2 X 2  N3 X3
If there are 3 groups, then X123 
N1  N 2  N3

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Solved problem 8
a) Find the mean for the entire group of workers from the following data
depicted in table 4.6.
Table 4.6
Group – 1 Group – 2
Mean wages 75 60
No. of workers 1000 1500

Solution
Given data
N1 = 1000 N2 = 1500
X1  75 & X2  60
N1 X1  N 2 X 2
Group Mean = X12 
N1  N 2
1000 x 75  1500 x 60
=
1000  1500
X12  Rs. 66
Solved Problem 9
If average height of 30 men is 158 cm and average height of another group
of 40 men is 162 cm, find the average height of the combined group.
Solution
Given that,

N1  30 X1  158, N2  40 X2  162
30  158  40  162
X12   160.28 cm
30  40
The average height of the combined group is 160.28 cm.
Solved Problem 10

Suppose, N1  30, N2  40 X2  162 , and X12  160.28 .Find X1  ?

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Solution
On substituting the given values in the following equation, we get,
N1 X1  N 2 X 2
Then, X12 
N1  N 2
30  X1  40 162
 160.28
30  40
30X1  40 162  160.28  70
30X1  160.28  70  6480
30X1  11219.60  6480
4739 6
X1   157.99
30
Solved Problem 11
Average weight of 100 screws in box ‘A’ is 10.4 gm. It is mixed with 150
screws of box ‘B’. Average weight of mixed screws is 10.9 gm. Find the
average weight of screws of box ‘B’.
Solution
Given that,

N1  100 , N2  150 X1  10.4 , and X12  10.9

X2  ?
N1 X1  N 2 X 2
We know that, X12 
N1  N 2
100  10.4  150  X 2
 10.9
100  150
1040  150X2  10.9  250  2725
 150X2  2725 1040  150X2  1685

1685
 X2   11.23 gm
150
Therefore, the average weight of screws of box ‘B’ is 11.23 gm.

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Solved Problem 12
A clerk calculated arithmetic mean of 50 values as 39.2. However, it was
found that instead of taking two values as 25 and 32, he took them as 52
and 23. Find the corrected arithmetic mean.
Solution
Given that,
  50,   39.2

 Present Total = N    50  39.2  1960

 Corrected Total = Present Total – wrong values + correct values
Corrected Total  1960  52  23  25  32  1942
1942
 Corrected Average =  38.84
50
The arithmetic mean, therefore, is 38.84.
4.3.4 Weighted arithmetic mean
The weighted mean is computed by considering the relative importance of
each of the values to the total value. The arithmetic mean gives equal
importance to all the items of distribution. In certain cases, relative
importance of items is not the same. To give relative importance, weightage
may be given to variables depending on cases. Thus, weightage represents
the relative importance of the items.
The weighted arithmetic mean in computed by following equation.
Let
X1, X2, X3, ………… Xn are the variables and
W1, W 2, W 3, ………… Wn are the respective weights assigned. Then
weighted mean Xw is given by below equation.
n

X1 W1  X 2 W2  X 3 W3  ...... X n Wn   XW
X i Wi
Xw   n
i 1

W1  W2  W3  ............  Wn
 Wi W
i 1

i.e., weighted average is the ratio of product of all values and respective
weights to sum of weights.
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Solved Problem 13
Compute simple weighted arithmetic mean and comment on them.
Table 4.7: Weighted Arithmetic Mean
Strength of
Monthly salary (Rs)
Designation cadre
X XW
W
General Manager 25000 10 250000
Mangers 19000 20 380000
Supervisors 14000 10 140000
Office Assistant 10000 50 500000
Helpers 8000 25 200000
Total (N = 5) X = 76000 W = 115 XW = 1470000

 X 76000
a. Simple arithmetic mean =   Rs. 15200
N 5
 XW 1470000
b. Weighted arithmetic mean =   Rs. 12782.6087
W 115
In this example, simple arithmetic mean does not account the difference in
salary range for various staff. It is given equal importance. The salary of
General Manager and Manager has inflated the value of simple mean. The
weighted mean gives importance to the number of persons in various salary
range.
Solved Problem 14
Comment on performance of students of two universities depicted in table
4.8.
Table 4.8: Weighted Arithmetic Mean
University Bombay Madras
% of No. of
% of No. of
pass students
Course pass students
(000) XW
X W
X W XW
MBA 71 3 213 81 5 405
MCA 83 2 166 76 3 228
MA 73 5 365 58 3 174
M.Sc. 75 2 150 76 1 76
M.Com. 70 2 140 81 2 162
Total () 372 14 1034 372 14 1045

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Solution
a. Since X is same, simple arithmetic average for both universities.
 X 372
=   74.4
N 5
 XW 1034
b. Weighted mean for Bombay University =   73.86
W 14
 XW 1045
c. Weighted mean for Madras University =   74.64
W 14
Comment: Madras university student’s performance is better than Bombay
university students.

Solved Problem 15
The data in table 4.9 is a reflection of the marks scored by students of a
class in an examination. Calculate the mean of the marks scored by the
students in an examination.
Table 4.9: Marks Scored by Students

Percentage Less Less Less Less Less Less Less

marks than 10 than 20 than 30 than 40 than 50 than 60 than 70
Number of
4 16 20 65 85 97 100
students

Solution
Table 4.9a: Calculation of Arithmetic Mean
Marks Frequency Mid Point X  35 fd'
d' 
f X 10
0 – 10 4 5 –3 – 12
10 – 20 12 15 –2 – 24
20 – 30 4 25 –1 –4
30 – 40 45 35 0 0
40 – 50 20 45 1 20
50 – 60 12 55 2 24
60 – 70 3 65 3 9
N=100 ∑fd'=13

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In the table 4.9, the values given for the column ‘number of students’ are in
cumulative frequency distribution. Now, we have to convert it to frequency
distribution. The calculated values are depicted in table 4.9a.
The mean X is given by:
 fd'
XA i
N
13
X  35  10  36.3
100
Therefore, the mean score of the students is 36.3.
Solved Problem 16
Find the missing frequency for the distribution in table 4.10, given the mean
value as 129 and N=80.
Table 4.10: Distribution Table

Class
80-100 100-120 120-140 140-160 160-180
Interval
Frequency 8 – 26 14 10

Solution
Let the missing frequency be ‘f’. Then,
Table 4.10a: Frequency Distribution Table

Class Mid Point X X 130

Interval f d'   f d'
X i 20
80-100 8 90 -2 -16
100-120 f 110 -1 -1f
120-140 26 130=A 0 0
140-160 14 150 1 14
160-180 10 170 2 20
N=80 ∑fd'=18-f

Since, in case of grouped data, the arithmetic mean is given by:

 fd'
XA i
N

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18 - f
that is, 129  130   20
80
360  20f
1 
80
 20f  360  80
f =22
Hence, the missing frequency is 22.

4.3.5 Merits and demerits of arithmetic mean

The table 4.11 displays the merits and demerits of arithmetic mean.

Table 4.11: Merits and Demerits of Arithmetic Mean

Merits Demerits
It is simple to calculate and easy to It is affected by extreme values.
understand.

It is based on all values It cannot be determined for distributions

with open-end class intervals.

It is rigidly defined. It cannot be graphically located.

It is more stable. Sometimes it is a value which is not in the
series.

Self Assessment Questions

1. State whether the following questions are ‘True’ or ‘False’.
i. For a given set of values if we add a constant 5 to every value, then
the arithmetic mean is affected.
ii. Arithmetic mean can be calculated for distribution with open-end
classes.
iii. Arithmetic mean is affected by extreme values.
iv. Arithmetic mean of 12, 16, 23, 25, 28, 32 is 22.
2. Different methods give different averages which are known as the
i) Measures of central tendency ii) Statistics
iii) Measures of dispersion iv) Skewness

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3. If X1, X2, X3, ………… Xn are a set of N values of a variate, then the
mean is given by
i) N / Xi ii) Xi / N
N1 X1  N 2 X 2
ii) N Xi iv) X12 
N1  N 2
4. (a) Find the Arithmetic mean 68,41,75,91,53,86,59
i) 67.57 ii) 47.57
iii) 37.57 iv) 27.57
(b) The average computed by considering the relative importance of each
of values to the total value, is called
i) arithmetic mean ii) geometric mean
iii) weighted arithmetic mean iv) harmonic average.

4.4 Geometric Mean

In this section, we will discuss the geometric mean. The geometric mean
(GM) is nth root of product of quantities of the series. It is observed by
multiplying the values of items together and extracting the root of the
product corresponding to the number of items. Thus, square root of the
products of two items and cube root of the products of the three items are
the geometric mean.
The geometric mean (GM) of a series of “n” positive numbers is given by:
GM n X1.X 2 ..............X n
Usually, geometric mean is never larger than arithmetic mean. If there are
zeroes and negative numbers in the series, the geometric means cannot be
used, logarithms can be used to find geometric mean to reduce large
number and to save time.
In the field of business management various problems often arise relating to
average percentage rate of change over a period of time. In such cases,
the arithmetic mean is not an appropriate average to employ, so, we can
use geometric mean in such case. GM is highly useful in the construction of
index numbers. The table 4.12 displays the merits and demerits of
Geometric Mean.

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Table 4.12: Merits and Demerits of Geometric Mean

Merits Demerits
It is based on all the observations in It is not simple to understand.
the series.
It is rigidly defined It requires computational skill.
It is best suited for averages and GM cannot be computed if any of the
ratios. items is zero or negative
It is less affected by extreme values. It has restricted application
It is useful for studying social and
economics’ data.

4.4.1 Geometric Mean for Individual Series

The formula for calculating the Geometric Mean in case of individual series
is:
  log X 
Geometric Mean (GM) = Antilog  
 N 
Solved Problem 17
Find the GM of data 2, 4, 8.
X1 = 2, X2 = 4, X3 = 8 n=3
Solution
GM = n X1  X2  X3
GM = 3
2 48
GM = 3
64  4
GM = 4
Solved Problem 18
Find GM of data 2, 4, 8 using logarithms.
Data: X1 = 2, X2 = 4, X3 = 8, N=3

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Solution
Table 4.13: Calculation of Geometric Mean
X log X
2 0.301
4 0.602
8 0.903
log X = 1.806

  log X 
GM = Antilog  
 N 
1.806
GM = Antilog  
 3 
GM = Antilog (0.6020) = 3.9997
GM  4
Solved Problem 19
Compare the previous year the Over Head (OH) expenses which went up to
32% in year 2003, then increased by 40% in next year and 50% increase in
the following year. Calculate average increase in over head expenses.
Let 100% OH expenses at base year
Solution
Table 4.14: Calculation of Geometric Mean
Year OH Expenses
X log X
2002 Base year –
2003 132 2.121
2004 140 2.146
2005 150 2.176
 log x = 6.443

  log X 
GM = Antilog  
 N 
 6.443
GM = Antilog 
 3 
GM = 140.49

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Solved Problem 20
The growth in bad-debt expense for Das Office Supplies Company, over the
last few years is as depicted in table 4.15. Calculate the average percentage
increase in bad-debt expense over this time period.
Table 4.15: Bad-debt Expense Growth for Das Office Supplies Company
Year 1992 1993 1994 1995 1996 1997 1998
Expense Rate 1.110 1.090 1.075 1.080 1.095 1.080 1.200

Solution
The geometric mean is given by:
GM = 7 (1.110) (1.090) (1.075) (1.080) (1.095) (1.080) (1.200) = 1.10
Therefore, the average increase is 1.10 – 1 = 0.10 %
4.4.2 Geometric Mean for discrete series
Geometric Mean for discrete series is given as:
  f log X 
GM = Antilog  
 N 
Solved Problem 21
Find GM for the data depicted in table 4.16
Table 4.16: Frequency Table
Marks 130 135 140 145 150
No. of students 3 4 6 6 3

Solution
Table 4.16a: Calculation of Geometric Mean
Marks No. of students
log X f log X
X f
130 3 2.113 6.339
135 4 2.130 8.52
140 6 2.146 12.876
145 6 2.161 12.996
150 3 2.176 6.528
f = N = 22  f log X =47.23

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  f log X 
GM = Antilog  
 N 
 47.23 
GM = Antilog  
 22 
GM = 140.222
Solved Problem 22
The share-price of a particular company was moving up and down. The data
depicted in table 4.17 consolidates its movement for past 6 months. Find the
appropriate average share-price.
Table 4.17: Frequency Table of Share Price

Share Price 110 115 118 119 120

Frequency 4 11 21 6 2

Solution
The data in table 4.17 is obtained from the data in table 4.18a.
Table 4.17a: Calculation of Geometric Mean of Share Prices

Share Price Frequency

X f log X f log X
110 4 2.0414 8.1656
115 11 2.0607 22.6677
118 21 2.0719 43.5099
119 6 2.0755 12.4530
120 2 2.0792 4.1584
Total f = N = 44  f log X =90.9546

The geometric mean GM is calculated as:

  f log x 
GM = Antilog  
 N 
 90.9546
= Antilog 
 44 
= Antilog [2.0672] = 116.7
The appropriate average share price is Rs. 116.70.

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4.4.3 Geometric Mean for continuous series

GM for continuous series is given as:
  f log m 
GM = Antilog 
 N 
Steps:
1. Find mid value m and take log of m for each mid value.
2. Multiply log m with frequency ‘f’ of each class to get f log m and sum up
to obtain  f log m.
3. Divide  f log m by N and take antilog to get GM.
Solved Problem 23
Find the G.M. of the following distribution
Table 4.18: Frequency Table

Rank scored 0-9 10-19 20-29 30-39 40-49

No. of matches 5 12 18 14 3

Solution : Given C.I. is inclusive interval, firstly convert it into exclusive

interval
Table 4.18a: Calculation of Geometric Mean
C.I f X log X f log X
-0.5-9.5 5 4.5 0.6532 3.266
9.5-19.5 12 14.5 1.1614 13.9368
19.5-29.5 18 24.5 1.3892 25.0056
29.5-39.5 14 34.5 1.5378 21.5292
39.5-49.5 3 44.5 1.6484 4.9452
N = 52  f log X =68.6828

  f log m 
GM = Antilog 
 N 

GM = Antilog  68.6828
 52 
GM = Antilog (1.3208)
GM = 20.93

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Key statistic
Whenever data deals with rates, ratios, growth rates, etc., the geometric
mean is the best measure.
Geometric mean is not defined even if one of the values is zero or
negative.

Key statistic
Suppose the values X1, X2, … Xn are assigned the weights W 1, W 2………
Wn then their weighted average is given by:

Xw 
 WX
W
and their weighted Geometric Mean is given by:

Gw = Antilog
 W log X where, ‘W’ acts as frequency
W
4.5 Harmonic Mean
It is the total number of items of a value divided by the sum of reciprocal of
values of variable. It is a specified average which solves problems involving
variables expressed in within ‘time rates’ that vary according to time.
E.g.: Speed in km/hr, min/day, price/unit.

Key statistic
For Individual series Harmonic Mean is given by:
N
H.M.=
(1/ X)

Key statistic
For discrete series and continuous series, the harmonic mean is given
by:
N
H.M =
(f / X)
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The table 4.19 displays the merits and demerits of Harmonic Mean.
Table 4.19: Merits and Demerits of Harmonic Mean
Merits Demerits
It is based on all observations. It is not easy to compute.
It is rigidly defined It cannot be used when one of the
items is zero.
It is suitable in case of series having It cannot represent distribution
wide dispersion.
It is suitable for further mathematical
treatment.

Solved Problem 24
Calculate the harmonic mean of 9.7, 9.8, 9.5, 9.4, 9.7
Solution
The harmonic mean (HM) is calculated as:
Table 4.19: Calculation of Harmonic Mean

X 1/X
9.7 0.1031
9.8 0.1020
9.5 0.1053
9.4 0.1064
9.7 0.1031
∑1/X = 0.5199
N
H.M =
(1/ X)
5
HM = = 9.6172
0.5199
Therefore, the harmonic mean is 9.6172.
Solved Problem 25
A man travelled by a car for 3 days. He covered 480 km each day. On the
first day he drives for 10 hrs at the rate of 48 KMPH, on the second day for
12 hrs at the rate of 40 KMPH and on the 3rd day for 15 hrs at the rate of 32
KMPH. Compute HM and weighted mean and compare them.

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Solution
Table 4.20: Calculation of Harmonic Mean

X 48 40 32 Total
1/X 0.0208 0.025 0.0312 0.0770

Data: 10 hrs @ 48 KMPH

12 hrs @ 40 KMPH
15 hrs @ 32 KMPH
N 3
H.M = =
(1/ X) 0.0770
HM = 38.91
Table 4.20a : Weighted Mean

W X WX
10 48 480
12 40 480
15 32 480
W = 37 WX = 1440

 WX 1440
Weighted Mean = X w  =
W 37
X w  38.91
Both HM and WM are the same.
Solved Problem 26
Calculate H.M. of the following data
Table 4.21: Frequency table

Marks 30-40 40-50 50-60 60-70 70-80 80-90 90-100

Frequency 15 13 8 6 15 7 6

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Table 4.21a: Computation of H.M

Marks Frequency Mid Value f/X
F X
30-40 15 35 0.4286
40-50 13 45 0.2889
50-60 8 55 0.1455
60-70 6 65 0.0923
70-80 15 75 0.2
80-90 7 85 0.0824
90-100 6 95 0.0632
N=70 ∑f/X = 1.3009

N 70
H.M = =  53.81
(f / X) 1.3009
4.5.1 Relationship between arithmetic mean, geometric mean and
harmonic mean
The relationship between mean, geometric mean and harmonic mean can
be summarised as follows:
1. If all the items in a variable are the same, the arithmetic mean (AM) X ,
harmonic mean and Geometric mean are equal. i.e., AM  GM  HM .
2. If the size vary, mean will be greater than GM and GM will be greater
than HM. This is because of the property that geometric mean to give
larger weight to smaller item and of the HM to give largest weight to
smallest item.
Hence AM  GM  HM .
Thus, we have discussed about Arithmetic Mean, Geometric Mean and
Harmonic Mean.

4.6 Median
In this section, we will discuss the median of distribution. Median of
distribution is that value of the variate, which divides it into two equal parts.
In terms of frequency curve, the ordinate drawn at median divides the area
under the curve into two equal parts. Median is a positional average
because its value depends upon the position of an item and not on its
magnitude.

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Median of a set of values is the value which is the middle most value when
they are arranged in the ascending order of magnitude. Median is denoted
by ‘M’.
4.6.1 Individual series
The formula used for calculating median for individual series is

 N  1
th

Median= Size of   item

 2 
Where N= total number of items in the series
Steps for calculation:
1. Arrange the data in ascending or descending order

 N  1
th

2. Locate the median by using the formula Size of   item

 2 
3. The value or the size of the item is the Median
Odd number series
Solved Problem 27
Find the median value of the following set of values
22, 16, 18, 13, 15, 19, 17, 20, 23

Solution
Arranging in ascending order, we get:
13, 15, 16, 17, 18, 19, 20, 22, 23
we have, N= 9

 N  1
th

Median= Size of   item

 2 
 9  1
th

 Median =   item  5th item

 2 
The median for the given set of values is 18.
Even number series

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Solved Problem 28
Find the median value of the following set of values
45, 32, 31, 46, 40, 28, 27, 37, 36, 41, 47, 50
Solution
Arranging in ascending order, we get:
27, 28, 31, 32, 36, 37, 40, 41, 45, 46, 47, 50
we have, N= 12

 N  1
th

Median= Size of   item

 2 
 12  1 
th

 Median =   item  6.5th item

 2 
We have to take the average of 6th and 7th item

edian 
37  40  38.5
2
The median for the given set of values is 38.5.
Solved Problem 29
In a class 15 students, 5 students were failed in a test. The marks of 10
students who have passed were 9, 6, 7, 8, 9, 6, 5, 4, 7, 8. Find the median
marks of 15 students.

Solution
The marks of 10 students who passes when arranged in ascending order of
magnitude are: 4,5,6,6,7,7,8,8,9,9.

Since five students who have failed must have scored less than 4 marks,
then the marks of 15 students arranged in ascending order will be as
follows:
0,0,0,0,0, 4,5,6,6,7,7,8,8,9,9.

 N  1
th

Median= Size of   item

 2 

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 15  1 
th

Median= Size of   item

 2 
Median= Size of 8th item in arranged series.
Thus Median =6.
4.6.2 Discrete series
In discrete series, the values are (already) in the form of array and the
frequencies are recorded against each value. However, to determine the
 N  1
th

Size of   item , a separate column is to be prepared for cumulative

 2 
frequencies. The median size is first located with reference to the
cumulative frequency which covers the size first. Then, against that
cumulative frequency, the value will be located as median.
The formula for calculating Median in Discrete series is:

 N  1
th

Median= Size of   item

 2 
Steps for calculation:
1. Arrange the data in ascending or descending order of size.
2. Obtain the total frequency, N= ∑f
2. Find the Cumulative Frequencies (In general less than type)
3. Locate Median by apply the formula:

 N  1
th

Median= Size of   item (Where N = ∑f)

 2 
4. The value for which the cumulative frequency includes
 N 1
th

  valuewill be taken as Median

 2 

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Solved Problem 30
Find the median value for the data depicted in table 4.22
Table 4.22: Frequency table
X 12 16 10 14 17 20 15
f 4 9 3 5 4 2 10

Solution
In this problem, we have, N = 37
Table 4.22a: Computation of Median
Less than Cumulative frequency
X F
LCF
10 3 3
12 4 7
14 5 12
15 10 22
16 9 31
17 4 35
20 2 37

 N  1
th

Median= Size of   item

 2 
 37  1 
th
   19th item
 2 
This value lies in cumulative frequency (22) for the value 15.
Therefore, the Median is 15.
4.6.3 Continuous series
The procedure to get a median is different in continuous series. The class
intervals are already in the form of array and the frequency are recorded
N th
against each class interval. For determining the size, we should take
2
item and median class located accordingly with reference to the cumulative
frequency, which covers the size first. When the median class is located,
the median value is to be interpolated using formula given below.

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h N 
Median =     c.f 
f 2 
Where  = lower limit of the median class
h = Class width,
f = frequency of median class
c.f = Cumulative frequency of class preceding the median class.

Key statistic
To solve problems on median,:
i) Arrange the data in ascending order or descending order
ii) Make class-interval as exclusive type

Solved Problem 31
Find the median of the data in table 4.23
Table 4.23: Distribution of Weight Data

Weight in Kg 30-35 35-40 40-45 45-50 50-55

Frequency 10 15 40 27 8

Solution
As it is an exclusive type of interval, we organise the data as shown in the
table 4.23a.
N 100
  50
2 2
Table 4.23a Cumulative Frequency Table

Frequency Less than Cumulative

Weight in Kg frequency
F LCF
30-35 10 10
35-40 15 25
40-45 40f 65
45-50 27 92
50-55 8 100

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Cum. frequency just above 50 is 65 and hence 40 – 45 is median class.

h N 
Median =     c.f 
f 2 
Where,
 = Lower limit of median class = 40.
c.f = Cumulative frequency of class preceding the median class = 25
f = frequency of median class = 40
h = class width = 5
5 100 
Median = 40    25
40  2 
 43125
Hence, the median weight is 43.125 kg.
Solved Problem 32
Find the median for data depicted in table 4.24. The class marks obtained
by 50 students are as follows.
Table 4.24: Computation of Median
Less than
Cumulative
CI Frequency
frequency
LCF
10 – 15 6 6
15 – 20 18 24
20 – 25 9 33
25 – 30 10 43
30 – 35 4 47
35 – 40 3 50
f = N = 50

N 50
  25
2 2
Cum. frequency just above 25 is 33 and hence, 20 – 25 is median class.
  20
h = 20 – 15 = 5
f=9
C = 24

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h N 
Median =    C
f  2 

Median = 20  25  24

5
9
5
= 20
9
Median = 20.555
Solved Problem 33
Find the missing frequency for the data depicted in table 4.25, given that its
median is 34.
Table 4.25: Frequency table
Class interval Frequency
0 – 10 4
10 – 20 9
20 – 30 -
30 – 40 20
40 – 50 18
50 – 60 7
60 – 70 3

Solution
Since median is 34, it falls in the class-interval 30-40. Let ‘f’ be the missing
frequency. Therefore, we have the data shown in table 4.25a

h N 
Median =     c.f 
f 2 
Table 4.25a: Cumulative Frequency Distribution for Data
Less than Cumulative frequency
Class interval Frequency
LCF
0 – 10 4 4
10 – 20 9 13
20 – 30 f 13 + f
30 – 40 20 33 + f
40 – 50 18 51 + f
50 – 60 7 58 + f
60 – 70 3 61 + f

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10  (61  f ) 
34 = 30    (13  f )
20  2 
10  (61  f ) 
34  30    (13  f )
20  2 
1  (61  f )  2(13  f ) 
34  30   
2 2
1  61  f  26  2 f 
34  30   
2 2
 35  f 
34  30  
 4 
120  35  f
34 
4
136 155  f
f  19
Therefore, the missing frequency is 19.

4.6.4 Merits and demerits of median

The table 4.26 depicts the merits and demerits of median.
Table 4.26: Merits and Demerits of Median

Merits Demerits
It can be easily understood and It is not based on all values.
computed.
It is not affected by extreme values. It is not capable of further algebraic
treatment.
It can be determined graphically It is not based on all values.
(Ogives).

Key statistic
In case of continuous series, Median M is given by:

h N 
Median =     c.f 
f 2 

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Where
 = lower limit of the median class
h = Class width,
f = frequency of median class
c.f = Cumulative frequency of class preceding the median class.

4.7 Mode
In this section, we will discuss the mode. Mode is the value which occurs
with the maximum frequency. It is the most typical or common value that
receives the height frequency. It represents fashion and often it is used in
business. Thus, it corresponds to the values of variable, which occurs most
frequently. The model class of a frequency distribution is the class with
highest frequency. It is denoted by ‘z’.
Mode is the value of variable which is repeated the greatest number of times
in the series. It is the usual, not casual size of item in the series. It lies at
the position of greatest density.
E.g.: If we say modal marks obtained by students in class test is 42, it
means that the largest number of student have secured 42 marks.
If each observation occurs the same number of times, we can say that there
is ‘no mode’. If two observations occur the same number of times, we can
say that it is a ‘Bi-modal’. If there are 3 or more observations occur the same
number of times we say that ‘multi-modal’ case.
Modal value is most useful for business people. For example, shoe and
readymade garment manufacturers will like to know the modal size of the
people to plan their operations. For individual and discrete series, it is that
value corresponding to highest frequency.

Key statistic
In case of continuous series, mode is given by:
f1  f 0
Mode     i.
2f1  f 0  f 2
Where,
 = lower limit of the modal class

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f1 = frequency of modal class

f 0 = frequency of previous modal class
f 2 = frequency of succeeding modal class
i = width of class interval
Solved problem 34
The following data relate to size of shoes. Find the mode.
6, 7, 6, 8, 9, 9, 9, 10, 8, 7, 7, 9, 10, 9, 9, 9, 8, 8, 11
Solution
Arranging the data in ascending order, data obtained is depicted in
table 4.27.
Table 4.27: Frequency Table for Data
Size Frequency
6 3
7 3
8 4
9 7
10 2
11 1

 Modal value is 9, which is corresponding to the highest frequency 7.

Solved Problem 35
Praveen, an apartment builder, concerned about the number of customers
who wishes to have plinth area of their apartments. He collects the data and
depicts in table 4.28. Find the modal plinth area.
Table 4.28: No of Customers wishing to have Plinth Area
Plinth Area Sq ft No. of Customers
600 – 800 4
800 – 1000 10
1000 – 1200 15 f0
1200 – 1400 25 f1
1400 – 1600 12 f2
1600 – 1800 8
Above 1800 2

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Solution
We note that the intervals are exclusive type and the highest frequency is
25. Therefore, the corresponding interval is 1200-1400, which is called
modal class.
f1  f 0
Mode     i.
2f1  f 0  f 2
Where,
 = lower limit of the modal class = 1200
f1 = frequency of modal class = 25
f 0 = frequency of previous modal class = 15
f 2 = frequency of succeeding modal class = 12
i = width of class interval = 200
Therefore, the mode is calculated as:

25  15 2000
Mode  1200   200  1200   1286.95
2  25  15  12 23
Hence, the modal plinth area is 1286.95 square feet.
Solved Problem 36
Find the mode for data depicted in table 4.29
Table 4.29: Frequency table

Marks (CI) No. of students (f)

1 – 10 3
11 – 20 16
21 – 30 26
31 – 40 31
41 – 50 16

51 – 60 8
Total f = N = 100

We will have to first convert the inclusive series into an exclusive series for
calculating the mode. To convert discontinuous distribution to continuous
distribution subtract 0.5 from lower limit and add 0.5 to upper limit

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Table 4.29a: Computation of Mode

Marks (CI) Conversions No. of students (f)
1 – 10 0.5 -10.5 3
11 – 20 10.5 - 20.5 16
21 – 30 20.5 – 30.5 26
31 – 40 30.5 - 40.5 31  Max. Frequency
41 – 50 40.5 – 50.5 16

51 – 60 50.5 – 60.5 8
Total f = N = 100

We shall identify the modal class being the class of maximum frequency,
i.e., 30.5 – 40.5
f1  f 0
Mode     i.
2f1  f 0  f 2
Where,
 = lower limit of the modal class = 30.5
f1 = frequency of modal class = 31
f 0 = frequency of previous modal class = 26
f 2 = frequency of succeeding modal class = 16
i = width of class interval = 10
Therefore, the mode is calculated as:
31  26
Mode  30.5  10 = 33
2  31  26  16
Key statistic
The empirical relationship between mean, median and mode:
Mean – Mode = 3 (Mean – Median)
which is same as, Mode = 3 Median – 2 Mean.

4.7.1 Merits and demerits of mode

The table 4.30 depicts the merits and demerits of mode.

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Table 4.30: Merits and Demerits of Mode

Merits Demerits
In many cases it can be found by It is not based on all values.
inspection.
It is not affected by extreme values. It is not capable of further
mathematical treatment.
It can be calculated for distributions with It is much affected by sampling
open end classes. fluctuations.
It can be located graphically.
It can be used for qualitative data.

Self Assessment Questions

5. State whether the following questions are true ‘T’ or false ‘F’.
i) Mode is based on all values
ii) Mode = 3 Median – Mean
iii) Geometric mean is used when we are interested in rate of growth
of any phenomena.
iv) Harmonic mean exists if one of the values is zero.
v) A.M < G.M < H.M for any two values ‘a’ and ‘b’.
vi) Arithmetic mean can be calculated accurately even when the
distribution has open-end class.
vii) Mode can be located graphically.
viii) Mode is used when data is on interval scale.
6. If the values of the variables are arranged in ascending order of
magnitude, the middle term is
i) mean ii) mode
iii) median iv) quartile
7. In a symmetrical distribution the mean, median and mode
i) differ ii) coincide
iii) mean-median = mode iv) differ by 0.5
8. The relation between mean, median and mode is given by
i) Mode= 3 Median-2 Mean ii) Mode=2 Mean-Median
iii) Mode= 3Median –Mean iv) Mode= Mean- Median

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9. The harmonic mean of 30 and 20 is

i) 25 ii) 24
iii) 20 iv) 30
10. If assumed mean A=32.5, h=8,  fd =-13 and f= 90
i) mean = 35.31 ii) mean=31.35
iii) mean = 33.15 iv) mean=35.35
11. In any distribution when the original items differ size, the value of AM,
GM and HM would also differ in the following order
i) AM>GM>HM ii) AM=GM=HM
iii) AM<HM<GM iv)AM.GM>HM

4.8 Appropriate Situations for the use of Various Averages

In this section, we will discuss the appropriate situations for using each of
the averages.
1. Arithmetic mean is used when:
a. In depth study of the variable is needed
b. The variable is continuous and additive in nature
c. The data are in the interval or ratio scale
d. When the distribution is symmetrical
2. Median is used when:
a. The variable is discrete
b. There exists abnormal values
c. The distribution is skewed
d. The extreme values are missing
e. The characteristics studied are qualitative
f. The data are on the ordinal scale
3. Mode is used when:
a. The variable is discrete
b. There exists abnormal values
c. The distribution is skewed
d. The extreme values are missing
e. The characteristics studied are qualitative
4. Geometric mean is used when:
a. The rate of growth, ratios and percentages are to be studied
b. The variable is of multiplicative nature

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5. Harmonic mean is used when:

a. The study is related to speed, time
b. Average of rates which produce equal effects has to be found
Thus, we have discussed the appropriate situations for using each of the
averages.

4.9 Positional Averages

In this section, we will discuss the positional averages. Median is the mid-
value of series of data. It divides the distribution into two equal portions.
Similarly, we can divide a given distribution into four, ten or hundred or any
other number of equal portions.
4.9.1 Quartiles
A measure, which divides an array, in to four equal parts is known as
Quartile. Each portion contains equal number of items. The first, second
and third point are termed as first quartile (Q1). second quartile (Q2) and
third quartile (Q3). The first quartile is also known as lower quartile as 25%
of observations of distribution are below it and 75% of observations of the
distribution are about it. The Third Quartile is known as upper quartile as,
75% of observations of the distribution are below it and 25% of observations
of the distribution are above it.

Key statistic
Quartiles: When distribution is divided into four equal portions, then we
get first quartile (Q1), second quartile (Q2 = Median) and third quartile (Q3)
as the positional averages.
For Individual series Q1 and Q3 are given by:

 N  1
th

Q1 = Size of   item
 4 
 3(N  1) 
th

Q 3 = Size of   item
 4 

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For discrete series Q1 and Q3 are given by:

 N  1
th

Q1 = Size of   item
 4 

 3(N  1) 
th

Q 3 = Size of   item
 4 
For continuous distribution Q1 and Q3 are given by:
N / 4  c.f
Q1   i
f
3N / 4  c.f
Q3   i
f
Where,
 = lower limit of the quartile class
i = Class width
f = frequency of quartile class
N = total frequency
c.f = Cumulative frequency of class preceding the quartile class
Measures of quartiles
The quartile values are located on the principle similar to locating the
median value.
Table 4.31 depicts the procedure of locating quartiles.
Table 4.31: Procedure of locating quartiles
For Individual and Continuous Formula to be used for
Measure
Discrete series series Continuous series

 N  1
th
N th N / 4  c.f
Q1   item item Q1   i
f
 4  4
 2N  1  2N / 4  c.f
th

  item 2N th Q2   i
Q2
 4  item f
4

 3(N  1) 
th
3N th 3N / 4  c.f
Q3   item item Q3   i
f
 4  4

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Individual Series:
Solved Problem 37
Weekly sales of a product on 8 different shops are as follows. Calculate the
quartiles.
Sales in units: 309, 312, 305, 307, 310, 308, 308, 306
Solution
Arranging the data in ascending order
Sales in units: 305, 306, 307, 308, 308, 309, 310, 312

 N  1  8  1
th th

Q1 =   item =   item = 2.25th item

 4   4 
= 2nd value + 0.25 (3rd value – 2nd value)
= 306 + 0.25 (307 – 306) = 306.25

 2(8  1) 
th th
 2(N  1) 
Q2    item    item = 4.5th item
 4   4 
= 4 value + 0.5 (5 value – 4th value)
th th

= 308 + 0.5 (308 - 308) = 308

 3(8  1) 
th th
 3(N  1) 
Q3    item =    item = 6.75th item
 4   4 
= 6 value + 0.75 (7th value – 6th value)
th

= 309 + 0.75 (310 – 309)

= 309 + 0.75 = 309.75
Therefore, Q1, Q2, and Q3 are 306.25, 308 and 309.75, respectively.
Discrete Series:
Solved Problem 38
Locate the median and quartile from the data depicted in table 4.32.
Table 4.32: Frequency table

Size of shoes 4 4.5 5 5.5 6 6.5 7 7.5 8

Frequencies 20 36 44 50 80 30 30 16 14

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Table 4.32a: Computation of Quartiles

X f Less than Cumulative
frequency
LCF
4 20 20
4.5 36 56
5 44 100  Q1
5.5 50 150
6 80 230  Q2
6.5 30 260  Q3
7 30 290
7.5 16 306
8 14 320
N = f = 320

 N  1
th

Q1 = Size of   item
 4 

 320  1 
th

Q1 = Size of   item
 4 
Q1 = 80.25th item
Just above 80.25, the c.f (Cumulative Frequency) is 100. Against 100 c.f,
value is 5.
 Q1 = 5
 2(N  1) 
th

Q = Size of   item = Median

2
 4 
 2(320  1) 
th

Q = Size of   item
2
 4 
Q2 = 160.5th item
Just above 160.5, the c.f is 230. Against 230 c.f, value is 6.
 Q2 = 6= median

 3(N  1) 
th

Q 3 = Size of   item
 4 

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 3(320  1) 
th

Q 3 = Size of   item
 4 
Q3 = 240.75th item
Just above 240.75, the c.f is 260. Against 260 c.f, value is 6.5.
 Q3 = 6.5
4.9.2 Deciles
The deciles divide the arrayed set of variates into ten portions of equal
frequency and they are sometimes used to characterise the data for some
specific purpose. In this process, we get nine decile values. The fifth decile
is nothing but a median value. We can calculate other deciles by following
the procedure which is used in computing the quartiles.
Table 4.33: Formula to compute deciles

For Individual and Continuous Formula to be used for

Measure
Discrete series series Continuous series

 N  1
th
N th N / 10  c.f
D1   item item D1   i
f
 10  10
 9(N  1) 
th 9N / 10  c.f
  item 9N th D9   i
D9 item f
 10  10

The ith decile is given by

iN / 10  c.f
Di   i
f
Where,  = lower limit of the decile class, N = total frequency, f = frequency
of the decile class, c.f = cumulative frequency of preceding class and
i = width of the class interval

Key statistic
For deciles, we divide N / 10 and multiply by required deciles value.

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Solved Problem 39
Find the 7th decile for the data given below:
Table 4.34: Frequency table
Class 13 – 18 18-20 20-21 21-22 22-23 23-25 25-30
interval
Frequency 22 27 51 42 32 16 10

Solution
th
Table 4.34a: Computation of 7 decile

Class interval Frequency Less than Cumulative

f frequency
LCF
13 – 18 22 22
18 – 20 27 49
20 – 21 51 100
21 – 22 42 142
22 – 23 32 174
23 – 25 16 190
25 – 30 10 200

The 7th decile is given by:

7N th 7  200
D7 = item   140th value
10 10
D7 lies in the class 21 – 22

7N / 10  c.f
D7   i
f
140  100
D7 = 21  1 = 21.95
42
Therefore, the 7th decile is 21.95.
4.9.3 Percentiles
Percentile value divides the distribution into 100 parts of equal frequency. In
this process, we get ninety-nine percentile values. The 25th, 50th and 75th
percentiles are nothing but first quartile, median and third quartile values,
respectively.

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Table 4.35: Formula to compute Percentiles

For Individual and Continuous Formula to be used for
Measure
Discrete series series Continuous series

 N  1 N / 100  c.f
th
N th P1   i
P1   item item
 100  100 f

 25(N  1) 
th
25N t h 25N / 100  c.f
P25   item item P25   i
 100  100 f

 99(N  1) 
th
99N t h 99N / 10  c.f
P99   item item P99   i
 10  100 f

Notations are defined in the Decile definition.

Key statistic
To find percentiles we divide N/100 and multiply by required percentile
value.

Solved problem 40
From the following data, find the middle deciles and the two extreme
percentiles.
Table 4.36: Frequency table

Size of the 8” 6.5” 7.5” 7” 5.5” 6” 4.5” 4” 5”

shoes
Frequency 7 8 10 15 40 25 22 18 10
of sale

Solution
Table 4.36: Calculation of middle deciles and 2 extreme percentiles
Size of the shoes in Frequency Less than Cumulative
ascending order f frequency
LCF
4 18 18
4.5 22 40
5 10 50
5.5 40 90

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6 25 115
6.5 8 123
7 15 138
7.5 10 148
8 7 155
Total N=155
Middle Decile
 5(N  1)   5(155  1) 
th th

D5 =   item =   item = 78th item

 10   10 
Just above 78, the c.f is 90. Against 90 c.f, value is 5.5.
D5 = 5.5
Lower Percentile
 N  1  155  1 
th th

P1 =   item =   item = 1.56th item

 100   100 
Just above 1.56, the c.f is 18, Against 18 c.f, value is 4
P1 = 4.
Upper Percentile
 99N  1 
th

P99 =   item
 100 
 99 *155  1 
th

=   item
 100 
= 154.46th item
P99 = 8 (Just above 154.46, the c.f is 155, against 155 c.f, value is 8)

Solved Problem 41
For the data provided below, find the 20th percentile.
Table 4.37: Frequency table
Class
13 – 18 18-20 20-21 21-22 22-23 23-25 25-30
interval
Frequency 22 27 51 42 32 16 10

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Solution
th
Table 4.37a: Computation of 20 percentile

Class interval Frequency Less than Cumulative

frequency LCF
13 – 18 22 22
18 – 20 27 49
20 – 21 51 100
21 – 22 42 142
22 – 23 32 174
23 – 25 16 190
25 – 30 10 200

The 20th percentile is given by:

20N th 20 * 200
P20 = item = item = 40th item
100 100
P20 lies in the class 18 – 20
20N / 10  c.f
P20   i
f
40  22
P20 18  2
27
 P20  19.33

Therefore, the 20th percentile is 18.67.

Self Assessment Questions

12. State whether the following questions are ‘True’ or ‘False’.
i) Quartiles are positional value.
ii) Quartiles help us to find percentage of readings below or above a
certain value.
iii) Q2 = P50 = D7 = Median
13. State whether the following questions are True’ or ‘False’.
i) The cost of living index numbers calculated are based on weighted
averages.
ii) Many of the items which we use in our life can be assigned weights.
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4.10 Dispersion
In this section, we will discuss about the dispersion.
Definition: A measure of dispersion may be defined as a statistics
signifying the extent of the scattering of items around a measure of central
tendency.
It describes another characteristic of a distribution. Consider the two
distribution of weights of a product produced by two machines, depicted in
table 4.38.
Table 4.38: Distribution of Weights of a Product
Machine A B
Sample size 1000 1000
Average weight 80 80
Minimum weight 20 40
Maximum weight 140 100
Machine ‘B’ produces products with weights much closer to the average
than Machine ‘A’. As a manufacturer or customer, we would choose
Machine ‘B’. In other words, we choose that machine whose spread is
smaller.
The property of deviations of values from the average is called dispersion or
variations. The degree of variations is found by the measures of variations.
They are as follows:
1. Range (R)
2. Quartile Deviations (Q.D)
3. Mean Deviations (M.D)
4. Standard Deviations (S.D)
They have units of measurement attached to them. Therefore, they are
known as absolute measures of variations. However, we may want to
compare two different distributions whose measurements are in terms of
kilograms and in terms of centimetres. Then, we use the following relative
measures that do not have any units attached to them. The relative
measures are as follows:
1. Coefficient of Range
2. Coefficient of Quartile Deviations
3. Coefficient of Mean Deviations
4. Coefficient of Variation

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They are known as relative measures. In this unit, we study both measures
of variations and coefficients of variations simultaneously.
Prerequisite of a good measure of variations are as follows:
1. It should be easy to understand and simple to calculate.
2. It should be based on all values.
3. It should be rigidly defined.
4. It should not be affected by extreme values.
5. It should not be affected by sampling fluctuations.
6. It should be capable of further algebraic treatment.
4.10.1 Range
‘Range’ represents the differences between the values of the extremes’.
The range of any sample is the difference between the highest and the
lowest values in the series.
The values in between two extremes are not taken into consideration. The
range is a simple indicator of the variability of a set of observations. It is
denoted by ‘R’. In a frequency distribution, the range is taken to be the
difference between the lower limit of the class at the lower extreme of the
distribution and the upper limit of the class at the upper extreme of the
distribution. Range can be computed using following equation.
Range = Largest value – Smallest value = L - S
L arg est value  Smallest value L  S
Coefficient of Range  =
L arg e st value  Smallest value L  S
The table 4.39 depicts the merits and demerits of range.
Table 4.39: Merits and Demerits of Range
Merits Demerits
It is easily understood and simple to It is affected by extreme values.
calculate.
It is rigidly defined. It is not based on all values. It uses
extreme values only.

Range is used in the following cases:

 In Statistical Quality control
 When the study does not require deep analysis
 When data has no abnormal values

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Solved Problem 42
Find the range of the following series 26, 28, 28, 26, 28, 30, 27, 29, 26, 24
Solution
The range ‘R’ is calculated as follows:
R= Range = Largest value – Smallest value = L - S
R = 30 – 24 = 6
Therefore, the range of the given discrete series is 6.
Solved Problem 43
Compute range and coefficient of range for the following discrete series of
data.
Table 4.40: Frequency table

x: 6 12 18 24 30 36 42
f: 20 130 16 14 20 15 40

Solution:

R= Range = Largest value – Smallest value = L – S = 42 – 6 = 36

L arg est value  Smallest value L  S 36
Coefficient of Range  = =
L arg e st value  Smallest value L  S 48
=0.75
Solved Problem 44
Find the range for the continuous series of data depicted in table 4.41
Table 4.41: Frequency Table

Class Interval 0-5 5-10 10-15 15-20 20-25

Frequency 10 15 25 12 8

Solution
Range R is calculated as follows:
R = 25 – 0 = 25
Therefore, the range of the given continuous series is 25.

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Solved problem 45
Compute the range and also the co-efficient of range of the given series
Table 4.42

Series – I – 9, 10, 15, 19, 21 Series – II – 1, 15, 24, 28, 29

Solution:
Table 4.42: Computation of the range and also the co-efficient of range

Series – I – 9, 10, 15, 19, 21 Series – II – 1, 15, 24, 28, 29

R = L – S = 21 – 9 = 12 R = L – S = 29 – 1 = 28
L S 12 12 L  S 28
CR = =  = 0.4 CR =  = 0.933
L  S 21 9 30 L  S 30

Solved Problem 46
Find range of co-efficient of range from following data and state which is
more dispersed and which is more uniform:
Table 4.44

A 10 11 12 13 14
B 40 41 42 43 44
C 100 101 102 103 104

Table 4.44a
Series – I Series – II Series – III
R=L–S
R = 14 – 10 R = 44 - 40 R = 104 - 100
= 4 = 4 = 4
L S L S L S
CR = CR = CR =
LS LS LS
4 4 4
= = 0.166 = = 0.0476 = = 0.0196
24 84 204
Series III is less dispersed and more uniform

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Series I is more dispersed and less uniform

Key statistic
Range is not defined if the class intervals are open.

4.10.2 Quartile deviation

Quartiles divide the total frequency in to four equal parts. The lower quartile
Q1 refers to the values of variates corresponding to the cumulative
N
frequency .
4
Q2 corresponds to the value of variate with cumulative frequency is equal to
N
cumulative frequency .
2
Upper quartile Q3 refers the value of variants corresponding to cumulative
3N
frequency .
4
1
Hence, Quartile Deviation QD = (Q3 – Q1)
2
Q  Q1
Co-efficient of Quartile Deviation = 3
Q3  Q1

Key statistic
1. Q3-Q1 is called inter quartile range.
2. Q3-Q1 gives the middle 50% of reading. Q3 and Q1 are also known as
upper and lower limit of middle 50% of readings.
3. Quartile range is not capable of further algebraic treatment.

Solved Problem 47
Find the Quartile Deviation and the Co-efficient of Quartile Deviation, from
the marks of 12 students depicted in table 4.44.
Table 4.44
Sl. No 1 2 3 4 5 6 7 8 9 10 11 12
Marks 25 30 37 43 48 54 61 67 72 80 84 89

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Solution

 N  1  12  1 
th th

Q1 =   item =   item = 3.25th item

 4   4 
= 3rd item + 0.25 (4th item- 3rd item)
= 37 + 0.25 (43 - 37)
Q1 = 38.5

 3(12  1) 
th th
 3(N  1) 
Q3    item =    item = 9.75th item
 4   4 
= 9th item + 0.75 (10th item- 9th item)
= 72 + 0.75 (80- 72)
Q3 = 78
1
Quartile Deviation = (Q3 – Q1)
2
1
= (78 – 38.3)
2
QD = 19.75
Q3  Q1
Co-efficient Quartile Deviation =
Q3  Q1
78  38.5
= = 0.339
78  38.5
Solved Problem 48
Compute quartile deviation and its coefficient for the data depicted in the
table 4.45:
Table 4.45: Frequency table
X 58 59 60 61 62 63 64 65 65
f 15 20 32 35 33 22 20 10 8

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Solution
Table 4.45a: Computation of Quartile deviation and its coefficient
X f Less than Cumulative
frequency
LCF
58 15 15
59 20 35
60 32 67  Q1 Class
61 35 102
62 33 135
63 22 157  Q3 Class
64 20 177
65 10 187
65 8 195
N = 195

 N  1  195  1 
th th

Q1 =   item =   item = 48.78th item

 4   4 
Q1 = 48.78th size and corresponding to c.f 67, which gives Q1 = 60

Q3 =
3
N  1th size
4
=
3
196th  146.33th size.
4
It lies in 157, cf. Against cf 157
Q3 = 63
1
Quartile Deviation = (Q3 – Q1)
2
1
= (63 – 60)
2
QD = 1.5
Q3  Q1
Coefficient QD =
Q3  Q1
63  60 3
= 
63  60 123
= 0.024

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Solved Problem 49
Find Quartile Deviation and Coefficient of Quartile Deviation for the given
grouped data and also compute middle quartile.
Table 4.46: Frequency table

Class 1 – 10 11 – 20 21 – 30 31 – 40 41 – 50 51 – 60

f 3 16 26 31 16 8

Solution
Table 4.46a: Computation of Quartile Deviations and its coefficient

Class f Less than Cumulative frequency

LCF
1 – 10 3 3
11 – 20 16 19
21 – 30 26 45  Q1 Class
31 – 40 31 76  Q2 & Q3 Class
41 – 50 16 92
51 – 60 8 100
N = 100

The lower Quartile Q1 is given by

N / 4  c.f
Q1   i
f
100 / 4  19
Q1  20.5  10
26
Q1 = 22.80
The middle Quartile Q2 is given by
2N / 4  c.f
Q2   i
f
2(100) / 4  45
Q2  30.5  10
31
Q2 = 32.11

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The third Quartile Q3 is given by

3N / 4  c.f
Q3   i
f
3(100) / 4  45
Q3  30.5   10
31
Q3 = 40.17
1
Quartile Deviation = (Q3 – Q1)
2
1
= (40.17 – 22.80)
2
= 8.685
Q3  Q1
Co-efficient QD =
Q3  Q1
40.17  22.80
=
40.17  22.80
17.37

62.97
= 0.275
The table 4.47 depicts the merits and demerits of quartile deviations.
Table 4.47: Merits and Demerits of Quartile Deviations

Merits Demerits
It is easy to understand and to It is not based on all values.
compute.
It is rigidly defined. It is affected by sampling fluctuations.
It is not affected by extreme It is not capable of further algebraic
values. treatment.

4.10.3 Mean deviation

Mean deviation is defined as the mean of absolute deviations of the values
from the central value.

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For individual series, Mean deviation is calculated as:

M.D(X) 
 (X  X)i

f
For discrete and continuous series, Mean deviation is calculated as:

M.D(X) 
f (X  X) i

f
In case of continuous series ‘X’ represents mid value of class-interval.
Similarly, we can have mean deviation from median or mode. ‘ X ’ is
replaced by median or mode in the above formula. However, mean
deviation from median is the least. It is known as minimal property of mean
deviation.
The corresponding relative measures are coefficient of mean deviation.
M.D.(X)
Coefficient of M.D.X 
X
M.D.(Median)
Coefficient of M.D.Median 
Median
Solved Problem 50
Compute Mean deviation and its coefficient from Mean and Median for the
data.
X: 21, 32, 38, 41,49, 54, 59, 66, 68
Table 4.48: Computation of Mean Deviation

X ( X i  X) = (Xi  47.35) (Xi  M) = (Xi  49)

21 26.55 28
32 15.55 17
38 9.55 11
41 6.55 8
49 1.45 0
54 6.45 5
59 11.45 10
66 18.45 17
68 20.45 19
X = 428  ( X i  X) = 116.45  (Xi  M) = 115

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X
X1  X 2  X3  ............... X n

 X = 428  47.35
N N 9

M.D(X) 
 (X  X)i
=
116.45
f 9
M.D(X) = 12.938
M.D.(X) 12.938
Coefficient of M.D.X  = = 0.272
X 47.55

 N  1
th

Median= Size of   item

 2 
 9 1
th th
 10 
Median= Size of   item =   item = 5th item
 2  2
Median = 49

M.D(Median) 
 (X  M)i
=
115
= 12.778
f 9
M.D.(Median) 12.778
Coefficient of M.D.Median    0.2608
Median 49

Solved Problem 51
Compute Mean deviation and its coefficient from Mean and Median for the
data.

Table 4.49: Frequency table

Marks (X) 5 10 15 20 25
Students (f) 6 7 8 11 8

Table 4.49a: Mean Deviation about Mean

X f fX
( X i  X) = f ( X i  X)

(Xi  16)
5 6 30 11 66
10 7 70 6 42

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15 8 120 1 8
20 11 220 4 44
25 8 200 9 72
N=40
 fX  640 f ( X i  X) = 232

 fX  fX 640
X    16
f N 40

M.D(X) 
f (X  X)  232  5.8 marks
i

f 40

M.D.(X) 5.8
Coefficient of M.D.X  = = 0.363
X 16
Table 4.49b: Mean Deviation about Median
X f Cumulative (Xi  M) = f (Xi  M)
Frequency
(LCF) (Xi  15)
5 6 6 10 60
10 7 13 5 35
15 8 21 0 0
20 11 32 5 55
25 8 40 10 80
N=40
f ( X i  X) = 230

 40  1  th
Median =   item = 20.5th item = 15th item
 2 
This value lies in cumulative frequency (21) for the value 15.
Therefore, the Median is 15.

M.D(Median) 
 (X  M)
i
=
230
= 5.75 marks
f 40

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M.D.(Median)
Coefficient of M.D.Median 
Median
5.75
 = 0.383
15
Solved Problem 52
Compute MD about its mode and its coefficient from the data depicted in
table 4.50
Table 4.50: Mean Deviation about Mode
X f Xi  Mode f (Xi  Mode)
20 6 100 600
40 19 80 1520
60 40 60 2400
80 23 40 920
100 65 20 1300
120  Mode 83 0 0

140 55 20 1100
160 20 40 800
180 9 60 5401
f = 320 f Xi  Mode
= 9180

Solution
The highest frequency is 83 and hence
Mode = 120
 f Xi  Mode  9180 
M.D(Mode)  =  = 28.68
f  320 
M.D.(Mode) 28.68
Coefficient of M.D.Mode  = = 0.239
Mode 120
Solved Problem 53
Find out the mean deviation from the data depicted below about its median
and its coefficient.

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Table 4.51: Frequency table

Size 0-10 10-20 20-30 30-40 40-50 50-60 60-70
Frequency 7 12 18 25 16 14 8

Table 4.51a: Mean deviation about Median

Size Frequency Mid Cumulative
f value Frequency Xi  M f (Xi  M)
X (LCF)

0-10 7 5 7 30.2 211.4

10-20 12 15 19 20.2 242.4
20-30 18 25 37 10.2 183.6
30-40 25 35 62 0.2 5.0
40-50 16 45 78 9.8 156.8
50-60 14 55 92 19.8 277.2
60-70 8 65 100 29.8 238.4
f = 60 f Xi  M
= 1314.8
N  100
  = = 50
 2  2
Cum. frequency just above 50 is 62 and hence, 30 – 40 is the median class.
h N 
Median =     c.f 
f 2 
10 100 
Median = 30    37
25  2 
Median = 35.2

 f Xi  M  1314.8 
M.D(Median)  =  = 13.148
f  100 
M.D.(Median) 13.148
Coefficient of M.D.Median  = = 0.3735
Median 35.2
The table 4.52 depicts the merits and demerits of mean deviation.

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Table 4.52: Merits and Demerits of Mean Deviation

Merits Demerits
It is based on all values. It is not capable of further algebraic
treatment.
It is less affected by extreme values. It does not take into account negative
signs.
It is not affected much by sampling
fluctuations.

The mean deviation, MD is used in the following cases:

 When sample size is small.
 In Statistical analysis of certain economic, business and social
phenomena.

4.11 Standard Deviation

In this section, we will study the standard deviation. Standard deviation is
the root of sum of the squares of deviations divided by their numbers. It is
also called ‘mean error deviation’. It is also called mean square error
deviation (or) root mean square deviation. It is a second moment of
dispersion. Since the sum of squares of deviations from the mean is a
minimum, the deviations are taken only from the mean (But not from median
and mode).
The standard deviation is root mean square (RMS) average of all the
deviations from the mean. It is denoted by sigma ().
Individual series: There are two methods of calculating standard deviation
in an individual observation or series:
i) When deviations taken from Actual Mean: This method is used only when
the mean is a whole number.

Variance =
(X  X) 2

N
= ( Variance)
ii) Deviation Taken from Assumed Mean: When the Arithmetic Mean is a
fractional value the method explained in (i) will be tedious and time-
consuming. Hence we use the following formula.

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Variance =
d 2
 (d) 2
f
= ( Variance)
Where, d stands for the deviation from assumed mean  X  A , A is
assumed mean, f = N
Discrete series:
i) Actual Mean Method:

Variance =
f (X  X) 2
       (B)
f
= ( Variance)
ii) Assumed Mean Method:
 fd 2  fd  2 
Variance = 
    
 f   f  

= ( Variance)
Where d  X  A , A = assumed mean, f = N
Continuous series:
In a continuous series mid-values of the class intervals are to be found out.
Where, ‘X’ is the mid value of class interval for continuous series.
 fd 2  fd  2 
Variance = 
       (i) 2
  f   f  
 
= ( Variance)
XA
Where d 
i
, A = assumed mean,  f = N, i= class width
Key statistic
The square of standard deviation is called variance. It is denoted by 2.
4.11.1 Properties of standard deviation
The properties of standard deviation are as follows:
1. It is independent of origin but not independent of scale.
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2. Standard deviation is always greater than or equal to zero.

3. It is the least of all root-mean-square deviations.
4. Suppose the mean of N1 values is X1 and that of N2 values is X 2 and
standard deviation of the N1 and N2 values is 1 and 2 respectively.
Then the combined standard deviation of both the values is given by:

N1 (12  d12 )  N 2 ( 2 2  d 2 2 )
Variance = ;   Variance
N1  N 2
Where, d1 = X1  X12 , d2 = X 2  X12 , X12 being the combined mean
of N1 and N2 values
4.11.2 Combined standard deviation
Suppose we have different samples of sizes N1, N2 having mean X1 , X 2
and standard deviation 1, 2,, then combined standard deviation can be
computed by using the following formula.
2 (N1 + N2) = N1 (12 + d12) + N2 (22 + d22)

d1 = X1  X12

d2 = X 2  X12 ,

The table 4.53 depicts the merits and demerits of standard deviation.
Table 4.53: Merits and Demerits of Standard Deviation

Merits Demerits
It is rigidly defined. It is difficult to understand.
It is based on all values. It gives undue weightage for extreme
values.
It is capable of further algebraic It cannot be calculated for classes with
treatment. open end interval.
It is not very much affected by
sampling fluctuations.

Solved Problem 54
Find the Standard Deviation of (Rs.) 7, 9, 16, 24, 26

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Solution:
Table 4.54: Computation of Standard Deviation
Variate (Rs.)
(X  X) (X  X) 2
X
7 -9.4 88.36
9 -7.4 54.76
16 -0.4 0.16
24 7.6 57.76
26 9.6 92.16

 X = 82 (X  X) 2
= 293.20

X =
 X  82  Rs. 16.40
N 5

Variance =
(X  X) 2 293.20
  58.64 =
N 5
= ( Variance) = 58.64 = Rs. 7.66
Hence the standard deviation is Rs. 7.66
Solved Problem 55
Find the Standard Deviation from the following:
Table 4.55: Frequency table
Weight (K.g) 44-46 46-48 48-50 50-52 52-54 Total
No. of persons 3 24 27 21 5 80

Solution
Table 4.55a: Computation of Standard Deviation
Weight Mid Point Frequency X  49
(K.g) X f
d fd fd
2

2
44-46 45 3 -2 -6 12
46-48 47 24 -1 -24 24
48-50 49 27 0 0 0
50-52 51 21 1 21 21
52-54 53 5 2 10 20

 f = 80  fd =1  fd 2
= 77

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 fd 2  fd  2 
Variance = 
       (i) 2 =  77  1  2 
      (2) = 3.8494
2
  f   f    80 80  
 
= ( Variance) = 3.8494 = 1.96 kg
Hence the standard deviation is 1.96 kg
Solved Problem 56
The average weight of 100 apples from area “A” is 150 gm with standard
deviation of 10 gm. Similarly the average weight of 200 apples from area “B”
is 200 gm with standard deviation of 15 gm. Find the combined standard
deviation.
Solution
Given that:

N1  100, N2  200 1  150, 2  200

1 = 10, 2 = 15

N1 X1  N 2 X 2
Combined mean = X12 
N1  N 2
100  150  200  200

100  200
15000 40000 55000
   183.33gm
300 300
 d12 = (150 – 183.33)2 = (33.33)2 = 1110.889
 d 22 = (200 – 183.33)2 = (16.66)2 = 277.5556
100(100  1110.8889)  200(225  277.5556)
=
100  200
(100  1210.8889  200  302.5556)
Standard deviation = =27.17
300
Hence, the standard deviation is 27.17.
Solved Problem 57
The mean of two samples of sizes 50 and 100 respectively are 54.1 and
50.3 and their standard deviations are 8 and 7 respectively. Obtain the SD
for combined group.

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Solution
N1 = 50, 1 = 54.1, 1 = 8

N2 = 100, 2 = 50.3, 2 = 7

N1 X1  N 2 X 2 (50 x 54.1)  (100 x 50.3)

Combined mean = X12  
N1  N 2 50  100

X12 = 51.56
d1 = 1  12 = 54.1 – 51.56 = 2.54

d12 = 6.45

d2 =  2  12 = 50.3 – 51.56 = - 1.26

d22 = 1.587
2 (N1 + N2) = N1 (12 + d12) + N2 (22 + d22)
2 (150) = 50 (82 + 6.45) + 100 (72 + 1.58)

32 = (64 + 6.45) + 2 (49 + 1.58)

32 = 70.45 + 2 x 50.58

 = 7.56
Hence the standard deviation for the combined group is 7.56
Solved Problem 57
The mean wage is Rs. 75 per day, SD wage is Rs. 5 per day for a group of
1000 workers and the same is Rs. 60 and Rs. 4.5 for the other group of
1500 workers. Find mean and standard deviation for the entire group.
Solution
We have by data, 1 = 75, 1 = 5, N1 = 1000

2 = 60, 2 = 4.5, N2 = 1500

Let X12 and  be the mean and SD of the entire group.

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N1 X1  N 2 X 2
Consider X12  i.e.,
N1  N 2
1000 x 75  1500 x 60
X12  60
1000  1500
Also we have,
(N1 + N2) 2 = N1 (12 + d12) + N2 (22 + d22),
Where, d1 = 1  12 = 75 – 66 = 9;
d2 =  2  12 = 60 – 66 = -6
 (1000 + 1500) 2 = 1000 (52 + 92) + 1500 (4.52 + (-6)2)
 2 = 76.15 and  = 8.73

4.12 Coefficient of Variation

In this section, we will discuss the coefficient of variation. When we want to
compare two different sets of values pertaining to different characteristics or
pertaining to same characteristic, then we use coefficient of variation (CV). It
is a relative measure expressed in percentage and is defined as:
S.D.
Coefficient of Variation(CV) =  100
Mean

CV = x 100
X
It is used to compare the homogeneity or stability or uniformity or
consistency of two or more data sets. A low value of coefficient of variation
indicates a low degree of variation.
Solved Problem 59
From the prices of shares X and Y. State which share is more stable in its
value?
Table 4.56: Prices of shares X and Y
X 55 54 52 53 56 58 52 50 51 49
Y 108 107 105 105 106 107 104 103 104 101

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Solution:
Table 4.56a
Prices of Prices of
(X) (X  X) = (X  X) 2 (Y) (Y  Y) = (Y  Y) 2
shares (X - 53) shares (Y - 105)
55 2 4 108 3 9
54 1 1 107 2 4
52 -1 1 105 0 0
53 0 0 105 0 0
56 3 9 106 1 1
58 5 25 107 2 4
52 -1 1 104 -1 1
50 -3 9 103 -2 4
51 -2 4 104 -1 1
49 -4 16 101 -4 16

 (X  X) =
2
 (X  X) = 70
2
X = 530 Y = 1050
40

Solution
 X 530
X= = = 53
N 10
 Y 1050
Y= = = 105
N 10

x 
 (X  X) 2 = 70  2.64
N 10

y 
 (Y  Y) 2


40
2
N 10
x 2.64
CVx = x 100 = x 100 = 4.98%
X 53
y 2
CVy = x 100 = x 100 = 1.903%
Y 105

Y shares are more stable in value than X shares since the coefficient of
variation of Y shares is lower than the coefficient of variation of X shares.

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Solved Problem 60
Goals scored by two teams A & B in a football season are as depicted in
table 4.53. By calculating CV in each, find which team may be considered
as more consistent.
Table 4.57: Goals scored by 2 teams A and B
No. of matches
No. of goals Team (A) Team (B)
A-team B-team
X fX fX
f f
0 27 17 0 0
1 9 9 9 9
2 8 6 16 12
3 5 5 15 15
4 4 3 16 12
N = f = 53 N= f = 40 fX= 56 fX = 48

Solution
With the help of the given data and data depicted in table 4.57, we can
calculate the more consistent team.
Table 4.57a
Team (A) Team (B)
2 2
fX fX
0 0
9 9
32 24
45 45
64 48
fx = 150 fx = 126
2 2

 fX 56
XA = = = 1.056
N 53
 fX 48
XB = = = 1.2
N 40

2 
A
 fX2
N
 XA =
2 150
53
 
 1.0562  1.715

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  1.30
A

 
B
2  fX2
N
 XB   2
=
126
40
 1.22  1.71

  1.30
B

A 1.30
CVA = x 100 = x 100 = 123.1%
XA 1.056
B 1.30
CVB = x 100 = x 100 = 109%
XB 1.2

Since, CVB < CVA, Team B is a more consistent player

Solved Problem 61
A student while computing the coefficient of variation obtained the mean and
SD values of 100 observations equal to 40 and 5.1 respectively. It was later
discovered that he had wrongly copied an observation as 50 instead of 40.
Calculate the correct coefficient of variation.
Solution
X X
X= i.e. 40 
N 100
 X (Incorrect) = 4000
Now Correct X = 4000 – 50 + 40 = 3990
3990
 Correct X  = 39.9
100

Let us consider  2 
 X2
N
 X
2

 X2
5.1 
2
 402
100
 X2  X2
i.e., 40  5.1   1626.01
2 2
or
100 100
 X2 (Incorrect) = 100 x 1626.01 = 162601

Now Correct X2 = 162601 – (50)2 + (40)2 = 161701

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 Correct 2 = correct
 X2
n

 correct X
2

 39.92  25
161701
i.e., Correct 2 =
100

Now Correct Coefficient of variation = x 100
x
5
x 100  12.56%
39.9
Hence correct C.V. = 12.53%

Self Assessment Questions

14. State whether the following questions are True or False
i. Standard deviation is based on all values.
ii. Standard deviation of a set of values is increased if every value of
the set is increased by a constant.
iii. Standard deviation can be calculated for distributions with open-end
classes.
iv. C.V % can be used to compare the variability of two sets of data
measuring the same characteristics.

Activity
1. The average rainfall of a city from Monday to Saturday is 0.3 inches.
Due to heavy rainfall Sunday the average rainfall for the week
increased to 0.5 inches. What is the rainfall on Sunday?
2. The average salary of male employees in a firm was Rs. 520 and that
of females Rs. 420. The mean of salary of all the employees as a
whole is Rs. 500. Find the percentage of male and female
employees.
3. For a given frequency table, find out the missing data. The average
accident is 1.46 and N= 200.

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Table 4.58: Frequency table

No. of accidents Frequency
0 46
1 ?
2 ?
3 25
4 10
5 5
4. The AM of two observations is 25 and their GM is 15. Find the HM.
5. The GM is 60 an HM is 28.24. Find AM for two observations.

Activity Solution
Solution 1
Given: Mon – Sat = 0.3”
Sun = 0.5”
 fX1  fX1
X , 0.3  , fX1 = 1.8
N 6
 fX2  fX2
X , 0.5  , fX2 = 3.5
N 7
Rainfall on Sunday = fX2 – fX1
= 3.5 – 1.8
= 1.7”
Solution 2
Given: X1  520 X2  420 X12  500
N1 = Male persons. N2 = Female persons.
N1 X1  N 2 X 2 (N1  520)  (N2  420)
X12  500 
N1  N 2 N1  N2
500N1 + 500N2 = 520N1 + 420N2
500N2 - 420N1 = 520N1 – 500N1
80N2 = 20N1
N1 = 4N2
Let N1 + N2 = 100
4N2 + N2 = 100
5N2 = 100

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N2 = 20%  Female
N1 = 80%  Male
20% and 80% are male and females in the firm.
Solution 3
Table 4.59
No. of accidents Frequency
fX
(X) (f)
0 46 0
1 f1 f1
2 f2 2f2
3 25 75
4 10 40
5 5 25
N = 200 fX = 140 + f1 + 2f2

 fX
X
N
140  f1  2f2
1.46 =
200
292 = 140 + f1 + 2f2
 f1 + 2f2 = 152 ---- (1)
w.k.t. N = f
200 = 86 + f1 + f2
f1 + f2 = 114 ---- (2)
From (1) and (2)
f1 + 2f2 = 152 ---- (1)
f1 + f2 = 114 ---- (2) (1) – (2)
----------------------------------
f2 = 38
---------------------------------
 f2 = 38
f1 + f2 = 114
f1 = 114 – 38, f1 = 76
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Solution 4
Given:
AM = 25 GM = 15 HM = ?
ab GM = ab 2
X HM =
1 1
2 
GM = ab a b
ab
X 15 = ab 2ab
2 HM =
ab
ab (15)2 = ( ab )2
25 2 x 225
2 ab = 225 HM =
50
a + b = 50
HM = 9
Solution 5
GM = 60 HM = 28.24 AM = ?

60 = ab
2ab ab
28.24 = X
602 = ab ab 2
ab = 3600 2ab 254. 95
a+b= X
28.24 2
2 x 3600 = 127.475
=
28.24
a + b = 254.95

4.13 Summary
Let us recapitulate the important concepts discussed in this unit:
 The measures of central tendency and measures of dispersion
summarise mass data in terms of its two important features. They are as
follows:
i. With respect to nature of data to cluster around a central value
ii. With respect to their spread from their central value
 Arithmetic mean is defined as the sum of all values divided by number of
values.
 Median of a set of values is the middle most value when the values are
arranged in the ascending order of magnitude.
 Mode is the value which has the highest frequency.

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 The measures of variations are as follows:

i. Range (R)
ii. Quartile Deviations ( Q.D)
iii. Mean Deviations (M.D)
iv. Standard Deviations (S.D)
 Coefficient of variation is a relative measure expressed in percentage
and is defined as:
S.D.
CV =  100
Mean

4.14 Glossary
Arithmetic mean: Sum of observations divided by number of observations.
Coefficient of variation: The ratio of standard deviation to the mean,
usually expressed in % form.
First quartile: The value which divides the data in two parts, 25% less than
this value & 25% more than this value.
Geometric mean: The nth root of the product of n observation.
Harmonic Mean: The reciprocal of the arithmetic mean of the reciprocals of
observations.
Inter-quartile range (IQR): The difference between the third quartile and
first quartile.
Mean or average deviation: Sum of the absolute deviations of the values
from their mean or median divided by number of values.
Median: The middle most value of a series of values arranged in first
ascending or descending order.
Mode: The values which maximum number of observations have or trend to
have as compared to any other value.
Percentiles: The value which divides the data in such a way that “given
percent of the observations is less than it”.
Range: The difference between the maximum and the minimum values of
the observations.
Semi inter-quartile range: The difference between the third quartile and
first quartile divided by 2.

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Standard deviation: The square of variance.

Third quartile: The value which divides the data in two parts, 75% less than
this value & 75% more than this value.
Variance: The sum of squares of deviations of observations from their mean
divided by number of observations.

4.15 Terminal Questions

1. In an office there are 84 employees. Their salaries in Indian rupees are
as given in table 4.60. Find the mean salary per day.
Table 4.60: Salaries of 84 Employees

Salary / day 60 70 80 90 100 120

Employees 3 5 8 10 4 2

2. A survey of 128 smokers gave the results represented in table 4.61,

which are frequency distributions of smokers’ daily expenses on
smoking. Find the mean expenses and standard deviation. Determine
coefficient of variation.
Table 4.61: Survey Results of 128 Smokers
Expenditure
10 - 20 20 - 30 30 - 40 40 – 50 50 - 60 60 - 70 70 - 80
(Rs.)
No. of
23 44 35 12 9 3 2
Smokers

3. For the distribution shown in table 4.62, find the median and mode.
Table 4.62: Distribution Data for Terminal Question 4
% Marks 0 - 10 10 - 20 20 - 30 30 - 40 40 – 50 50 - 60 60 - 70
No. of 4 9 19 20 18 7 8
Smokers

4. Find the geometric mean of the following distribution given in table

4.63.
Table 4.63: Distribution Data for Terminal Question 5

X 110 115 118 119 120

f 4 11 21 6 2

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5. Find the harmonic mean of the following distribution given in table 4.64.
Table 4.64: Distribution Data for Terminal Question 6

X 121 122 123 124 125

f 5 25 36 37 20

6. Given that, sum of upper and lower quartiles is 122 and their difference
is 23; find the quartile deviation of the series.
7. If C.V = 22 and S.D. = 4, find the mean.
8. The table 4.65 shows the distribution of age at the time of first delivery
of 65 women. Find mean deviation from mean and median.
Table 4.65: Distribution of Age at the Time of First Delivery of 65 Women

Age 18 – 22 22 – 26 26 – 30 30 – 34 34 – 38
Frequency 20 30 11 3 1

9. Read the data given below and find the combined mean, S.D. and
coefficient of variation.
n1 = 15 n2 = 20
X 1 = 40 X 2 = 50
1 = 3 2 = 5
10. Mean and Standard deviation of lengths of tails of 8 rats were found to
be 4.7 cm and 0.8 cm respectively. However, one reading was taken as
3.6 cm instead of 6.3 cm; find the corrected mean and standard
deviation.

4.16 Answers

Self Assessment Questions

1. i) True, ii) False, iii) Tue, iv) False
2. i) measures of central tendency
3. ii) Xi / N
4. (a) i) 67.57 (b). iii) weighted arithmetic mean
5. i) False, ii) False, iii) True, iv) False, v) False, vi) False, vii) True, viii)
True

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6. iii) median
7. ii) coincide
8. i) Mode= 3 Median-2 Mean
9. ii) 24
10. ii) mean=31.35
11. i) AM>GM>HM
12. i) True, ii) True, iii) False
13. i) True, ii) True
14. i) True, ii) False, iii) False, iv) True
Terminal Questions
1. Rs. 84.69
2. Mean = 31.64, SD=13.36, CV=42.225
3. Median=35.25, Mode=33.33
4. 116.7 cm
5. 123.33
6. 11.5
7. 18.18
8. 2.462
9. Combined Mean = 45.7
Combined S.D = 6.53,
C.V in % = 14.29
10. Corrected Mean = 5.0375 cm
Corrected S.D = 0.8336 cm

4.17 Case Study

Case Study 1: Consolidated Foods, Inc
Consolidated Foods, Inc. operates a chain of supermarkets in New Mexico,
Arizona and California. The following table shows a portion of the data on
dollar amounts and method payments for a sample of 16 customers.
Company’s managers requested the sample be taken to learn about
payment practices of the stores’ customers. In particular, managers were
interested in learning about how a new credit card payment option was
related to the customer’s purchase amounts.

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Managerial report
Use the methods of descriptive statistics to summarise the sample data.
Provide summaries of the dollar purchase amounts for each customers,
personal check customers, and credit card customers separately. Your
report should contain the following summaries and discussion:
1. A comparison and interpretation of mean and medians.
2. A comparison and interpretation of measures of variability such as range
and standard deviations.
3. The identification and the interpretation of the five–number summaries
for each methods of payment.
Use summary section of your report to provide a discussion of what you
have learnt about the method and amount of payments for customers of
Consolidated Foods'.
Purchase amount and method of payment for a sample of 16 Consolidated
Foods’ customers.
Table 4.66
Customer Amount ($) Method of Payment
1 28.58 Check
2 52.04 Check
3 7.41 Cash
4 11.71 Cash
5 43.79 Credit Card
6 48.95 Check
7 57.59 Check
8 27.60 Check
9 26.91 Credit Card
10 9.00 Cash
11 18.09 Cash
12 54.84 Check
13 41.10 Check
14 43.14 Check
15 3.31 Cash
16 69.77 Credit Card

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Case Study 2
All insurance companies, offering unit linked insurance policies, charge
certain amount of money by way of meeting initial expenses. However, the
percentages of such expenses ratio vary from company to company. The
following table gives the expenses ratio including allocation charges for
some companies and for various maturity periods.
HDFC unit Bajaj Tata AIG Kotak Safe ICICI SBI Unit Birla
linked Allianz Invest Investment Prulife Plus II Sun life
Endowment New Assurell Plan Time Regular Premie
Unit Super r
Gain Regular
1 year 6.4 4.8 7.4 3.7 5.4 5.6 3.5
10 years 2.7 2.9 3.6 2.4 3.5 2.9 2.2
15 year 1.8 2.4 2.8 2.1 3.0 2.3 1.9
20 years 1.5 2.2 2.4 1.9 2.8 2.0 1.7
25 years 1.3 2.1 2.2 1.8 2.6 1.9 1.6
30 years 1.2 2.0 2.1 1.7 2.6 1.8 1.5

(Source: Economic Times dt 23rd October 2006)

Discuss the given data using measures of location and dispersion including
disparity measures.
References:
 Agarwal, B. L. (2006), Basic Statistics, Fourth Edition, New Age
International Publishers.
 Barron's AP Statistics with CD-ROM (Barron's AP Statistics (W/CD)) by
Martin Sternstein (Feb 1, 2010) .
 Barron's AP Statistics, 6th Edition by Martin Sternstein.
 Bowerman, B. L & O Connel, R.T., (1996), Applied Statistics: Improving
Business Processes, Irwin.
 Freedman, D.R. Pisani and Purves, R. (1997), Statistics, 3rd edition,
W.W. Norton.
 Hogg, R. V. and Craig, A.T., (2001), Introduction to Mathematical
Statistics, 5th edition, Prentice Hall.
 Joiner, B.L., and Ryan, B.F. (2000), Minitab Handbook, Brooks/Cole.
 Levin, Richard I. & Rubin, David S. (2008), Statistics for Management,
Seventh Edition, PHI Learning Private Limited.
 Miller, I and Miller, M. (1998), John E Freund’s Mathematical Statistics,
Prince Hall.
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 Roberts, H. (1991), Data Analysis for Managers with Minitab, Scientific

Press.
 Schaum's Outline of Introduction to Probability and Statistics (Schaum's
Outline Series) by Seymour Lipschutz and John J. Schiller (Sep 7, 2011)
 Schaum's Outline of Probability and Statistics by Murray R. Spiegel,
John J. Schiller and R. Alu Srinivasan (Mar 17, 2000) .
 Schaum's Outline of Probability and Statistics, 3rd Ed. (Schaum's
Outline Series) by John Schiller, R. Alu Srinivasan and Murray Spiegel
(Aug 26, 2008).
 Schaums Outline of Statistics, Fourth Edition (Schaum's Outline Series)
by Murray Spiegel and Larry Stephens (Jan 31, 2011) .
 Statistics (Cliffs Quick Review) by David H. Voelker, Peter Z. Orton and
Scott Adams (Jun 15, 2001) .
 Tanur, J. M., (2002), Statistics: A Guide to the Unknown, 4th edition,
Brooks /Cole.
 Tukey, J. W., (1977), Exploratory Data Analysis, Addison–Wesley.
 Wilcox, Rand R. (2009), Basic Statistics – Understanding Conventional
Methods and Modern Insights, Oxford University Press

E-References:
 http://www.textbooksonline.tn.nic.in/Books/11/Stat-EM/Chapter-3.pdf

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