16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Introduction to Measures of Central
Tendency. – 10 min
• Calculating Mean for Individual
Series and discrete series – 30
min
• Introduction to the next class –
5min

1
 16-03-2023

Central Tendency
❖ Central tendency
is the middle
point of a
distribution.

❖ Measures of
central tendency
are also called
measures of
location.

Mean
• For a data set, mean is sum of the values
divided by the number of values.
• Mean is a unique measure of central tendency,
because every data set has one and only one
mean.
• It is highly influenced by extreme values.
• Mean can not be calculated for open class
interval.
• Mean can be calculated only for quantitative
measurement.

Calculation of Arithmetic mean – Individual

Series:

In a survey of 5 cement companies, the profit (in rs.

Crore) earned during a year was 15, 20, 10, 35 and
32. Find the arithmetic mean of the profit earned.

2
 16-03-2023

Davis Furniture company has a revolving credit

agreement with the First National Bank. The loan
showed the following ending monthly balances last year:
Months Balance

Jan $121,300 The company is eligible

Feb $112,300
Mar $72,800
for a reduced rate of
Apr. $72,800 interest if its average
May $72,800 monthly balance is over
June $57,300
July $58,700
$65,000. Does it qualify?
Aug. $61,100
Sept. $50,400
Oct. $52,800
Nov. $49,200
Dec. $46,100

Calculation of Arithmetic mean – Discrete

Series:

In general, when observations xi (i = 1,2,…,n) are grouped as a

frequency distribution, then A.M is:

1 n
xത = σ fx
n i=1 i i

Where fi represents the frequency (number of observations) with

which variable xi occurs in the given data set, i.e., 𝑛 = σ𝑛𝑖=1 𝑓𝑖

From the following information on the number of

defective components in 1000 boxes:

Number of defective components 0 1 2 3 4 5 6

Number of boxes 25 306 402 200 51 10 6

Calculate the arithmetic mean of defective

components for the whole of the production line.

3
 16-03-2023

Solution: The calculation of mean defective components for the

whole production line are shown in Table 1

Table 1: Calculations of 𝐱ത (mean)

Number of defective Number of boxes (fi) fi x i
components (x i)
0 25 0
1 306 306
2 402 804
3 200 600
4 51 204
5 10 50
6 6 36
n = σ 𝐟𝐢 = 1000 σ 𝐟𝐢 𝐱 𝐢 = 2000

Applying the formula, the arithmetic mean is

1 6 2000
xത = σ fx = 1000
n i=0 i i
= 2 defective components

10

4
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Calculating mean for Continuous
series – 20 min
• Miscellaneous Problems – 20 min
• Introduction to the next class –
5min

1
 16-03-2023

Calculation of Arithmetic mean – Continuous Series:

For calculating arithmetic mean for a grouped data set, the following
assumptions are made:
a. The class intervals must be closed.
b. The width of each class interval should be equal.
c. The values of the observations in each class interval must be uniformly
distributed between its lower and upper limits.
d. The mid-value of each class interval must represent the average of all
values in that class, that is, it is assumed that all the values of observations
are evenly distributed between the lower- and upper-class limits.

Direct Method
The formula for obtaining arithmetic mean for grouped data is given by
1
xത = σ fm
n
where m = middle value of class intervals
f = frequency of each class
n = total frequency

Calculate the arithmetic mean for the following data.

Marks 0-10 10-20 20-30 30-40 40-50 50-60

No. of Students 10 20 35 40 25 5

Solution:
Class Interval (Marks ) No. of Students(f) mid value(m) fm
0-10 10 5 50
10-20 20 15 300
20-30 35 25 875
30-40 40 35 1400
40-50 25 45 1125
50-60 5 55 275
n = σ 𝐟 = 135 σ 𝐟𝐦 = 4025

2
 16-03-2023

Substituting the values n = 135; σ fm = 4025 in

1
xത = σ fm
n
4025
xത = 135 = 29.81
The arithmetic mean of the marks = 29.81.

THANK YOU

3
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Calculating Median for Individual
Series, discrete series and
Continuous Series – 40 min
• Introduction to the next class –
5min

1
 16-03-2023

Positional Averages:
These averages are based on the position of the given observation in a
series, arranged in an ascending or descending order. The magnitude or the
size of the values does matter as was in the case of arithmetic mean. It is
because of the basic difference that the median and mode are called the
positional measures of an average.

Median:

The median is that value of the variate which divides the group into two equal parts, one
part comprising all values greater, and the other, all values less than median.

Merits of Median:

1. Median is not influenced by extreme values because it is a positional

average.
2. Median can be calculated in case of distribution with open-end
intervals.
3. Median can be located even if the data are incomplete.
4. Median can be located even for qualitative factors such as ability,
honesty etc.

2
 16-03-2023

Calculation of Median – Individual Observations

(Ungrouped or Raw data):

Arrange the given values in the increasing or decreasing order. If the number of values
is odd, median is the middle value. If the number of values is even, median is the mean
of middle two values.

Symbolically: Median = Size of (N + 1)\2th item.

Find the median for the following data

5, 10, 4, 25, 1.

Solution: Arranging the items in ascending order of magnitude, we

have
1, 4, 5, 10, 25.
Since we have five terms in total, the median is the middle
value i.e., 3rd term
Therefore 5 is the median.

Grouped Data:
In a grouped distribution, values are associated with frequencies. Grouping can be in
the form of a discrete frequency distribution or a continuous frequency distribution.
Whatever may be the type of distribution, cumulative frequencies have to be calculated
to know the total number of items.

Cumulative frequency: (cf) Cumulative frequency of each class is the sum of the
frequency of the class and the frequencies of the pervious classes, ie adding the
frequencies successively, so that the last cumulative frequency gives the total number
of items.

3
 16-03-2023

Calculation of Median – Discrete Series

Step 1: First arrange the data in the ascending order of magnitude, if
they are not.
Step 2: Find less than cumulative frequencies.
Step 3: Find Median = Size of (N + 1)\2)th item.
Step 4: See in the cumulative frequencies the value just greater than
(N + 1)\2).
Step 5: Then the corresponding value of x is median.

10

The following data pertaining to the number of members in a family.

Find median size of the family.

Number of
1 2 3 4 5 6 7 8 9 10
members (x)

Frequency (f) 2 4 6 8 12 14 9 4 3 1

11

Solution

Number of
Frequency (f)
members (x) Cumulative Frequencies(cf)
1 2 2
2 4 6
3 6 12
4 8 20
5 12 32
6 14 46
7 9 55
8 4 59
9 3 62
10 1 63
N = σ 𝑓 = 63

12

4
 16-03-2023

Median = Size of (N + 1)\2)th item

= (63+1) \2 = 32th item
The cumulative frequencies just greater than or equal to 32 is 32 and the
value of x corresponding to 32 is 5. Hence the median size is 5 members
per family.

Note:
It is an appropriate method because a fractional value given by mean
does not indicate the average number of members in a family.

13

Calculation of Median – Continuous Series

Step 1: First arrange the data in the ascending order of magnitude, if they are not.
Step 2: Find less than cumulative frequencies.
Step 3: Find Median = Size of (N\2)th item.
Step 4: See in the cumulative frequencies the value first greater than (N \2). Then the corresponding
class interval is called median class.
Step 5: Apply the formula
𝑁
−𝑚
2
Median = 𝑙 + 𝑓
× 𝑐
Where l = Lower limit of the median class
m = cumulative frequency preceding the median
c = width of the median class
f = frequency in the median class
N = Total frequency.

Note:
If the class intervals are given in inclusive type convert them into exclusive type and call it as true
class interval and consider lower limit in this

14

Q. The following table gives the frequency distribution of 325 workers of a

factory, according to their average monthly income in a certain year.

Income group (in ₹) Number of workers

Below 100 1
100-150 20 Calculate median
150-200 42 income.
200-250 55
250-300 62
300-350 45
350-400 30
400-450 25
450-500 15
500-550 18
550-600 10
600 and above 2

15

5
 16-03-2023

Income group (in ₹) Number of Cumulative

workers Frequencies(cf)
Below 100 1 1
100-150 20 21
150-200 42 63
200-250 55 118
250-300 62 180
300-350 45 225
350-400 30 255
400-450 25 280
450-500 15 295
500-550 18 313
550-600 10 323
600 and above 2 325
N = σ 𝑓 = 325

16

Median = Size of (N\2)th item.

= 325\2=162.5
Median class = 250 - 300
𝑁
−𝑚
2
Median = 𝑙 + × 𝑐
𝑓
Where l = Lower limit of the median class = 250
m = cumulative frequency preceding the median = 118
c = width of the median class = 50
f = frequency in the median class = 62
N = Total frequency = 325

325
− 118
2
Median = 250 + 62
× 50 = 250+35.89 = 285.89

17

THANK YOU

18

6
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Calculating Mode for Individual
Series, discrete series and
Continuous Series – 40 min
• Introduction to the next class –
5min

1
 16-03-2023

Mode:
The mode refers to that value in a distribution, which occur most
frequently. It is an actual value, which has the highest concentration of
items in and around it.

It shows the centre of concentration of the frequency in around a

given value. Therefore, where the purpose is to know the point of
the highest concentration it is preferred. It is, thus, a positional
measure. Its importance is very great in marketing studies where a
manager is interested in knowing about the size, which has the
highest concentration of items.

Example: In placing an order for shoes or ready-made garments

the modal size helps because this sizes and other sizes around in
common demand.

Calculation of Mode – Individual Observations (Ungrouped or

Raw Data):
For determining the mode, count the number of times the various
values repeat themselves and the value occurring maximum
number of times will be the mode.

Calculate mode from the following data of marks obtained by 10

students.
Marks: 10, 22, 24, 25, 20, 24, 10, 35, 24, and 15.

2
 16-03-2023

Solution:

We observe that the item 24 occurs 3 times and all the remaining items
either once or twice. Since the item 24 occurs the maximum number of
times, i.e., 3, the mode of the marks is 24.

Calculation of Mode – Discrete Series:

For Discrete distribution, see the highest frequency and corresponding

value of x is mode.

Calculate mode for the following data

Size of the 1 2 3 4 5 6
product
frequency 2 4 6 8 10 1

The size of the product “5” has the highest frequency 10. Therefore, the mode is
5.

Calculation of Mode – Continuous Series:

See the highest frequency then the corresponding value of class
interval is called the modal class. Then apply the formula.

𝑓1 − 𝑓0
Mode = l + × 𝑐
2𝑓1 − 𝑓0 − 𝑓2
Where l = lower limit of the model class
f1 = frequency of the modal class
f0 = frequency of the class preceding the modal class
f2 = frequency of the class succeeding the modal class
c = width of the median class

3
 16-03-2023

Calculate mode for the following data.

Marks No. of Students
0-10 2
10-20 6
20-30 8
30-40 10
40-50 12
50-60 15
60-70 12
70-80 4
80-90 3
90-100 7

10

Solution
Marks No. of Students
0-10 2
10-20 6
20-30 8
30-40 10
40-50 12 -f0
50-60 15- f1
60-70 12-f2
70-80 4
80-90 3
90-100 7

11

Model class: 50-60

𝑓1 − 𝑓0
Mode = l + 2𝑓1 − 𝑓0 − 𝑓2
× 𝑐
Where l = lower limit of the model class = 50
f1 = frequency of the modal class = 15
f0 = frequency of the class preceding the modal class = 12
f2 = frequency of the class succeeding the modal class = 12
c = width of the median class = 10

15 − 12
Mode = 50 + 2(15) − 12 −12
× 10 = 55
Mode of the marks 55.

12

4
 16-03-2023

The given distribution shows the number of runs scored by some top
batsmen of the world in one-day international cricket matches. Find
Mode of the data

Runs 3000- 4000- 5000- 6000- 7000- 8000- 9000- 10000-

Scored 4000 5000 6000 7000 8000 9000 10000 11000

Number 4 18 9 7 6 3 1 1
of
batsmen

13

A student noted the number of cars passing through a spot on a

road for 100periods each of 3 minutes and summarised it in the
table given below. Find the mode of the data:

Number 0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80

of cars

Frequency 7 14 13 12 20 11 15 8

14

EMPIRICAL RELATIONSHIP BETWEEN AVERAGES

In a symmetrical distribution the three simple averages

mean = median = mode.
For a moderately asymmetrical distribution, the relationship between them
are brought by Prof. Karl Pearson as

mode = 3median - 2mean.

15

5
 16-03-2023

1. If the mean and median of a moderately asymmetrical series are 26.8 and 27.9
respectively, what would be its most probable mode?

Solution: Using the empirical formula

Mode = 3 median− 2 mean = 3 × 27.9 − 2 × 26.8 = 30.

2. In a moderately asymmetrical distribution the values of mode and mean are 32.1
and 35.4 respectively. Find the median value.

Solution:
Using empirical Formula
Median = 1/3[2mean+mode]
= 1/3[2 × 35.4 + 32.1]
= 34.3

16

THANK YOU

17

6
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Special types of problems
1. Frequencies are given in
cumulative form (either ‘More Than
Type’ or ‘Less Than Type’) – 15 min
2. Missing Frequencies
• Introduction to the next class –
5min

1
 16-03-2023

Frequencies are given in cumulative form (More Than type)

The annual profits earned by 30 shops of a shopping complex in a locality

give rise to the following distribution. Calculate the median profit for the
given data.
Profit (Rs in lakhs) Number of Shops (Frequency)
More than or equal to 5 30
More than or equal to 10 28
More than or equal to 15 16
More than or equal to 20 14
More than or equal to 25 10
More than or equal to 30 7
More than or equal to 35 3

Frequencies are given in cumulative form (Less Than type)

The following distribution gives the daily income of 35 workers of a factory.
Calculate the mean income of the workers.

Daily income in (rs) Number of workers

Less than 100 0
Less than 120 3
Less than 140 5
Less than 160 9
Less than 180 14
Less than 200 28
Less than 220 32
Less than 240 35

Missing Frequencies

The following distribution shows the daily pocket allowances of children of a

locality. The mean pocket allowances is rs 18. Find the missing frequency f.

Daily pocket 11-13 13-15 15-17 17-19 19-21 21-23 23-25

allowances
(in rs)

Number of 7 6 9 13 f 5 4
children

2
 16-03-2023

Missing Frequencies

The median of the following data is 525. Find the values of x and y, if the total
frequency is 100.

Class 0-100 100- 200- 300- 400- 500- 600- 700- 800- 900-
Interval 200 300 400 500 600 700 800 900 1000

Freque 2 5 x 12 17 20 y 9 7 4
ncy

THANK YOU

3
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Range – 10 min
• Quartile Deviation – 30 min
• Introduction to the next class –
5min

1
 16-03-2023

Significance of Measuring Dispersion

1. Test the reliability of an average.

2. Control the variability.
3.Compare two or more sets of data with respect to their variability.
4. Facilitate the use of other statistical techniques.

Classification of Measures of Dispersion

There are two kinds of measures of dispersion, namely

1.Absolute measure of dispersion
2.Relative measure of dispersion.
Absolute measure of dispersion indicates the amount of variation in a set of values
in terms of units of observations. For example, when rainfalls on different days are
available in mm, any absolute measure of dispersion gives the variation in rainfall
in mm. On the other hand, relative measures of dispersion are free from the units
of measurements of the observations. They are pure numbers. They are used to
compare the variation in two or more sets, which are having different units of
measurements of observations.

The various absolute and relative measures of dispersion are listed below.

Absolute measure Relative measure

1. Range 1. Co-efficient of Range
2. Quartile deviation 2. Co-efficient of Quartile
deviation
3.Mean deviation 3. Co-efficient of Mean
deviation
4. Standard deviation 4. Co-efficient of variation

2
 16-03-2023

Range and coefficient of Range

Range
This is the simplest possible measure of dispersion and is defined as the
difference between the largest and smallest values of the variable.
In symbols, Range = L – S.
Where L = Largest value.
S = Smallest value.
In individual observations and discrete series, L and S are easily
identified. In continuous series, the following two methods are followed.

Method 1: L = Upper boundary of the highest class

S = Lower boundary of the lowest class.
Method 2: L = Mid value of the highest class.
S = Mid value of the lowest class

Co-efficient of Range
𝐿−𝑆
Co-efficient of Range = 𝐿+𝑆

Find the value of range and its co-efficient for the following data.
8, 4, 6, 10, 12, 2, 14.

Solution:
L =14, S = 2.
Range = L – S = 14-2 = 12
𝐿−𝑆
Co-efficient of Range =
𝐿+𝑆
14 −2
= 14+ 2
= 0.75.

3
 16-03-2023

Calculate range and its coefficient from the following

distribution.

Class 20-30 30-40 40-50 50-60 60-70 70-80 80-90 90-100

Interval
Frequen 18 30 25 45 35 25 16 20
cy

Solution:
L = Upper boundary of the highest class =100
S = Lower boundary of the lowest class = 20
Range = L – S = 100-20 = 80
𝐿−𝑆
Co-efficient of Range = 𝐿+𝑆
100 −20
= 100+ 20
= 0.66

10

Quartile Deviation and Coefficient of Quartile Deviation

Quartile Deviation (Q.D)

Quartile Deviation is half of the difference between the first and third quartiles.
Hence, it is called Semi Inter Quartile Range.

𝑄3 − 𝑄1
QD or Semi Inter Quartile Range =
2
Range = Q3 – Q1
Quartile Deviation gives the average amount by which the two quartiles differ from the
median. In a symmetrical distribution the two quartiles (Q1 and Q3) are equidistant
from the median, i.e., Med - Q1 = Q3 – Med, and as such the difference can be taken as
a measure of dispersion.

11

The median ± Q.D. covers exactly 50% of the observations.

When Quartile Deviation is very small, it describes high uniformity or small

variation of the central 50% items and a high quartile deviation means that
the variation among central items is large.

Quartile Deviation is an absolute measure of dispersion. The relative

measure corresponding to this measure, called the coefficient of quartile
deviation and is calculated as follows.

12

4
 16-03-2023

Co-efficient of Quartile Deviation

𝑄3 − 𝑄1
Co-efficient of QD = 𝑄3 + 𝑄1

Co-efficient of Quartile Deviation can be used to compare the

degree of variation in different distributions.

13

Individual Observation

Find the Quartile Deviation for the following data:

30, 28, 59, 40, 22, 33, 24.
Solution: Arrange the given values in ascending order.
22, 24, 28, 30, 33, 40, 59.
𝑁 + 1 𝑡ℎ
Q1 = size of 𝑖𝑡𝑒𝑚
4
7+ 1 𝑡ℎ
= size of 4
𝑖𝑡𝑒𝑚
= 2nd item = 22.

14

𝑁 + 1 𝑡ℎ
Q3 = size of 3 4
𝑖𝑡𝑒𝑚
7+ 1 𝑡ℎ
= size of 3 4
𝑖𝑡𝑒𝑚
= 6th item = 40.
𝑄3 − 𝑄1 40 − 22
QD = 2
= 2
=9
𝑄 −𝑄 40 − 22
Co-efficient of QD = 𝑄3 + 𝑄1 = 40 + 22 = 0.29.
3 1

15

5
 16-03-2023

Discrete Series

Weekly wages of labours are given below. Calculate Q.D and Coefficient of Q.D.

Weekly 100 200 400 500 600

Wages in
(₹)
No. of 5 8 21 12 6
weeks

16

Weekly Wage No. of weeks Cumulative frequency

of
No. of weeks
100 5 5
200 8 13
400 21 34
500 12 46
600 6 52
Total N= 52

𝑁 + 1 𝑡ℎ
Q1 = size of 4
𝑖𝑡𝑒𝑚
52+ 1 𝑡ℎ
= size of 4
𝑖𝑡𝑒𝑚
= 13.25th item.

17

Q1 = 13th value + 0.25(14th value – 13th value)

= 200+0.25(400-200)
= 250.
𝑁 + 1 𝑡ℎ
Q3 = size of 3 𝑖𝑡𝑒𝑚
4
= size of 3 × 13.25 𝑖𝑡𝑒𝑚 39.75th item.
= 39th value + 0.75(40th value – 39th value)
= 500 + 0.75(500-500)
= 500.

18

6
 16-03-2023

𝑄3 − 𝑄1 500− 250
QD = = = 125
2 2
𝑄3 − 𝑄1 500− 250
Co-efficient of QD = 𝑄3 + 𝑄1
= 500 + 250 = 0.33.

19

For the data given below, calculate the quartile deviation and
coefficient of quartile deviation.
Wages (per Less than 35-37 38-40 41-43 Over 43
week in ₹) 35
Frequency 24 62 100 20 6

Solution:
Wages (per week in ₹) Frequency Cumulative frequency
Less than 35 24 24
35-37 62 86
38-40 100 186
41-43 20 206
Over 43 6 212
Total N = 212

20

𝑁 𝑡ℎ
Q1 = size of 4
𝑖𝑡𝑒𝑚
212 𝑡ℎ
= size of 4
𝑖𝑡𝑒𝑚 = 53th item
Q1 lies in the class 35-37.
𝑁
4
−𝑚
Q1 = 𝑙 + 𝑓
× 𝑐

Where l = Lower limit of the median class = 35

m = cumulative frequency preceding the median = 24
c = width of the median class = 2
f = frequency in the median class = 62
N = Total frequency = 212

21

7
 16-03-2023

212
− 24
4
Q1 = 35 + 62
× 2
= 35.93
3𝑁 𝑡ℎ
Q3 = size of 4
𝑖𝑡𝑒𝑚
3 ×212 𝑡ℎ
= size of 4
𝑖𝑡𝑒𝑚 = 159th item
Q3 lies in the class 38-40.
3𝑁
4
−𝑚
Q3 = 𝑙 + 𝑓
× 𝑐

22

Where l = Lower limit of the median class = 38

m = cumulative frequency preceding the median = 86
c = width of the median class = 2
f = frequency in the median class = 100
N = Total frequency = 212

3(212)
− 86
4
Q3 = 38 + 100
× 2
= 39.46

𝑄3 − 𝑄1 39.46 − 35.93
QD = 2
= 2
= 1.76
𝑄 −𝑄 39.46− 35.93
Co-efficient of QD = 𝑄3 + 𝑄1 = 39.46 + 35.93 = 0.04.
3 1

23

THANK YOU

24

8
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Mean Deviation (Individual Series
and Discrete series) – 40 min
• Introduction to the next class –
5min

1
 16-03-2023

Mean Deviation and Coefficient of Mean Deviation

The range and quartile deviation are not based on all observations. They are
positional measures of dispersion. They do not show any scatter of the
observations from an average.

Mean Deviation

The mean deviation is measure of dispersion based on all items in a

distribution.

Mean deviation is the arithmetic mean of the deviations of a series

computed from any measure of central tendency; i.e., the mean,
median or mode, all the deviations are taken as positive i.e., signs are
ignored.

According to Clark and Schekade, “Average deviation is the average

amount scatter of the items in a distribution from either the mean or
the median, ignoring the signs of the deviations”.

Coefficient of mean deviation

Mean deviation calculated by any measure of central tendency is an absolute

measure. For the purpose of comparing variation among different series, a
relative mean deviation is required. The relative mean deviation is obtained
by dividing the mean deviation by the average used for calculating mean
deviation.
𝑀𝑒𝑎𝑛 𝐷𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛
Coefficient of mean deviation = 𝑀𝑒𝑎𝑛 𝑜𝑟 𝑀𝑒𝑑𝑖𝑎𝑛 𝑜𝑟 𝑀𝑜𝑑𝑒

If the result is desired in percentage, the coefficient of mean deviation

𝑀𝑒𝑎𝑛 𝐷𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛
= 𝑀𝑒𝑎𝑛 𝑜𝑟 𝑀𝑒𝑑𝑖𝑎𝑛 𝑜𝑟 𝑀𝑜𝑑𝑒 × 100

2
 16-03-2023

Computation of mean deviation – Individual Series:

1. Calculate the average mean, median or mode of the series.

2. Take the deviations of items from average ignoring signs and
denote these deviations by
|D|.
3. Compute the total of these deviations, i.e., Σ |D|
4. Divide this total obtained by the number of items.

σ𝐷
𝑀. 𝐷. =
𝑛

Q. Calculate mean deviation from mean and median for the

following data, also calculate coefficients of M.D.

525, 425, 250, 400, 500, 300, 350, 450, 550,

Solution:

σx 3750
Mean = xത = = = 416.66
n 9
Now arrange the data in ascending order
250, 300, 350, 400, 425, 450, 500, 525, 550.
Median = Value of (n + 1) \2th item.
= Value of (9 + 1) \2th item
= value of 5th item = 425

3
 16-03-2023

X 𝐃 = 𝐱 − 𝐱ത 𝐃 = 𝐱 − 𝐌𝐝
250 166.66 175
300 116.66 125
350 66.66 75
400 16.66 25
425 8.33 0
450 33.33 25
500 83.33 75
525 108.33 100
550 133.33 125
σ x = 3750
෍ D = 733.33 ෍ D = 725

10

σD 733.33
MD from mean = = = 81.48
n 9
𝑀.𝐷. 81.48
Coefficient of M.D. = 𝑥ҧ
= 416.66 = 0.19
σD 725
MD from median = = = 80.55
n 9
𝑀.𝐷. 80.55
Coefficient of M.D. = 𝑀𝑒𝑑𝑖𝑎𝑛 = = 0.18
425

11

Mean Deviation – Discrete series:

Steps: 1. Find out an average (mean, median or mode)
2. Find out the deviation of the variable values from
the average, ignoring signs and denote them by |D|.
3. Multiply the deviation of each value by its
respective frequency and find out the total Σf|D|

4. Divide Σf|D| by the total frequencies N.

σ𝑓 𝐷
𝑀. 𝐷. =
𝑁

12

4
 16-03-2023

Q. Compute mean deviation and coefficient of mean

deviation from mean for the following data:

Height in cms 155 156 157 158 159 160 161 162 163

No. of persons 20 15 32 35 25 18 40 36 28

13

Solution:
Height in No. of d = x-A fd 𝐃 f𝐃
cms (x) persons (f) A=158 = 𝐱 − 𝐱ത
155 20 -3 -60 4.37751 87.5502
156 15 -2 -30 3.37751 50.66265
157 32 -1 -32 2.37751 76.08032
158 35 0 0 1.37751 48.21285
159 25 1 25 0.37751 9.437751
160 18 2 36 0.62249 11.20482
161 40 3 120 1.62249 64.8996
162 36 4 144 2.62249 94.40964
163 28 5 140 3.62249 101.4297
N = σ𝑓 = σ 𝑓 𝑑 = 343 σ 𝑓 𝐷 = 43.
249 8876

14

σ 𝑓𝑑 343
𝑥ҧ = 𝐴 + = 158 + = 159.37
𝑁 249

σ𝑓 𝐷 43.88
𝑀. 𝐷. = = = 2.18
𝑁 249

𝑀.𝐷. 2.18
Coefficient of M.D. = 𝑀𝑒𝑎𝑛 = 159.37 = 0.013.

15

5
 16-03-2023

Thank
You

16

6
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Mean Deviation (Continuous Series)
– 25 min
• Practice on Quartile Deviation and
Mean Deviation -15 min
• Introduction to the next class –
5min

1
 16-03-2023

Mean deviation-Continuous series

The method of calculating mean deviation in a continuous series same as

the discrete series. In continuous series we have to find out the mid points
of the various classes and take deviation of these points from the average
selected. Thus
σ𝑓 𝐷
𝑀. 𝐷. = 𝑁

Where D = m – average
m = mid-point.

Q. Calculate the mean deviation and its coefficient from the

following data:

Age in 0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80

years (x)

No. of 20 25 32 40 42 35 10 8
persons (f)

Solution:

X F m d=
𝑚−𝐴 fd 𝐃 f𝐃
𝑐
= 𝐱 − 𝐱ത
(A=35, c
=10)
0-10 20 5 -3 -60 31.5 630.0
10-20 25 15 -2 -50 21.5 537.5
20-30 32 25 -1 -32 11.5 368.0
30-40 40 35 0 0 1.5 60.0
40-50 42 45 1 42 8.5 357.0
50-60 35 55 2 70 18.5 647.5
60-70 10 65 3 30 28.5 285.0
70-80 8 75 4 32 38.5 308.0
212 32 3193.0

2
 16-03-2023

σ 𝑓𝑑 32
𝑥ҧ = 𝐴 + × 𝑐 = 35 + × 10 = 36.5
𝑁 212
σ𝑓 𝐷 3193
𝑀. 𝐷. = = = 15.06
𝑁 212

𝑀.𝐷. 15.06
Coefficient of M.D. = 𝑀𝑒𝑎𝑛 = = 0.41
36.5

Thank
You

3
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Standard Deviation (Individual
series, Discrete series, Continuous
series) – 40 min
• Introduction to the next class –
5min

1
 16-03-2023

Standard Deviation and Coefficient of variation

Standard Deviation:
Karl Pearson introduced the concept of standard deviation in 1893. It is the most
important measure of dispersion and is widely used in many statistical formulae.
Standard deviation is also called Root-Mean Square Deviation. The reason is that
it is the square–root of the mean of the squared deviation from the arithmetic
mean. It provides accurate result. Square of standard deviation is called Variance.

It is defined as the positive square-root of the arithmetic mean of the Square of

the deviations of the given observation from their arithmetic mean. The standard
deviation is denoted by the Greek letter σ (sigma)

Calculation of Standard Deviation-Individual Series:

Deviations taken from assumed mean

This method is adopted when the arithmetic mean is fractional value.

Taking deviations from fractional value would be a very difficult and tedious
task. To save time and labour, we apply short –cut method; deviations are
taken from an assumed mean. The formula is:
σ d2 σd 2
σ = N
− N
Where d-stands for the deviation from assumed mean = (x-A)

Steps:
1. Assume any one of the items in the series as an average (A)
2. Find out the deviations from the assumed mean; i.e., X-A denoted
by d and also the total of the deviations ∑d
3. Square the deviations; i.e., d2 and add up the squares of deviations,
i.e, ∑d2
4. Then substitute the values in the following formula:
σ d2 σd 2
σ = −
N N

2
 16-03-2023

Q. For the following data calculate the standard deviation from the
assumed mean.

Student 1 2 3 4 5 6 7 8 9 10
Nos:

Marks 43 48 65 57 31 60 37 48 78 59

Solution:
Student Nos: Marks(x) d = X-A (A=57) d2
1 43 -14 196
2 48 -9 81
3 65 8 64
4 57 0 0
5 31 -26 676
6 60 3 9
7 37 -20 400
8 48 -9 81
9 78 21 441
10 59 2 4
N=10 σ d = -44 σ 𝑑2 = 1952

σ d2 σd 2 1952 −44 2
σ = − = −
N N 10 10

= 175.84 = 13.26

Calculation of Standard Deviation - Discrete Series:

Assumed mean method:
Here deviation are taken not from an actual mean but from an assumed mean. Also this
method is used, if the given variable values are not in equal intervals.
Steps:
1. Assume any one of the items in the series as an assumed mean and denoted by A.
2. Find out the deviations from assumed mean, i.e, X-A and denote it by d.
3. Multiply these deviations by the respective frequencies and get the ∑fd
4. Square the deviations (d2).
5. Multiply the squared deviations (d2) by the respective frequencies (f) and get ∑fd2.
6. Substitute the values in the following formula:
σ 𝑓d2 σ fd 2
σ = N
− N

Where d = X −A, N = ∑f.

3
 16-03-2023

Q. Calculate Standard deviation from the following data.

X 20 22 25 31 35 40 42 45

F 5 12 15 20 25 14 10 6

10

Solution:
Deviations from assumed mean

X F d=x-A d2 fd fd2
(A=31)
20 5 -11 121 -55 605
22 12 -9 81 -108 972
25 15 -6 36 -90 540
31 20 0 0 0 0
35 25 4 16 100 400
40 14 9 81 126 1134
42 10 11 121 110 1210
45 6 14 196 84 1176
N = 107 σ fd=167 σ f𝑑2
=6037

11

σ 𝑓d2 σ fd 2
σ = −
N N

6037 167 2
σ = −
107 107

σ = 56.42 − 2.44
σ = 53.98 = 7.35

12

4
 16-03-2023

Calculation of Standard Deviation – Continuous series:

In the continuous series the method of calculating standard deviation is almost the
same as in a discrete series. But in a continuous series, mid-values of the class
intervals are to be found out.

13

Steps:
1.Find out the mid-value of each class.
2.Assume the center value as an assumed mean and denote it by A
3.Find out d = (m-A)/c
4.Multiply the deviations (d) by the respective frequencies and get Σfd
5.Square the deviations and get d2
6.Multiply the squared deviations (d2) by the respective frequencies and get
∑fd2
7.Substituting the values in the following formula to get the standard deviation
2
σ 𝑓d2 σ fd
σ = − × 𝑐
N N

14

Q. The following table shows the distribution of life time of 350 radio tubes.

Life time 300-400 400-500 500-600 600-700 700-800 800-900 900-1000

(hrs)

No. of 6 18 73 165 62 22 4
tubes

15

5
 16-03-2023

Solution:
The given series is a continuous series. Since the class intervals are equal for all
classes, we can apply step deviation method.

Life time(hrs) F Mid values (m) d = (m-A)/c d2 fd fd2

300-400 6 350 -3 9 -18 54

400-500 18 450 -2 4 -36 72
500-600 73 550 -1 1 -73 73
600-700 165 650 0 0 0 0
700-800 62 750 1 1 62 62
800-900 22 850 2 4 44 88
900-100 4 950 3 9 12 36
N= σ fd = -9 σ f𝑑2 =385
350

16

2
σ 𝑓d2 σ fd
σ = − × 𝑐
N N

2
385 −9
σ = − × 100
350 350
σ = 104.8 hrs
Standard deviation of the life time of radio tubes = 104.8hrs.

17

Thank
You

18

6
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Combined Arithmetic Mean -
• Combined Standard Deviation -
• Introduction to the next class –
5min

1
 16-03-2023

Combined mean
If the arithmetic averages and the number of items in two or more
related groups are known, the combined or the composite mean of
the entire group can be obtained by

𝑛1 𝑥ҧ 1 + 𝑛2 𝑥ҧ2
Combined mean 𝑥Ӗ =
𝑛1 + 𝑛2
The advantage of combined arithmetic mean is that, we can
determine the over, all mean of the combined data without going
back to the original data.

Find the combined mean for the data given below

𝑛1 = 20 , 𝑥ҧ1 = 4, 𝑛2 = 30 , 𝑥ҧ2 = 3.

Solution

𝑛1 𝑥ҧ 1 + 𝑛2 𝑥ҧ2 20×4+ 30×3 80+ 90

Combined mean 𝑥Ӗ = = = = 3.4
𝑛1 + 𝑛2 20 + 30 50

Combined Standard Deviation

If a series of N1 items has mean X1 and standard deviation σ1 and another series
of N2 items has mean X2 and standard deviation σ2, we can find out the combined
mean and combined standard deviation by using the formula.
𝑁1 𝑋ത1 + 𝑁2 𝑋ത2
𝑥ҧ12 =
𝑁1 + 𝑁2

𝑁1 𝜎12 + 𝑁2 𝜎22 + 𝑁1 𝑑12 + 𝑁2 𝑑22

𝜎12 =
𝑁1 + 𝑁2

ഥ𝟏 − 𝑿
Where 𝒅𝟏 = 𝑿 ഥ 𝟏𝟐
𝒅𝟐 = 𝑿ഥ𝟐 − 𝑿ഥ 𝟏𝟐

2
 16-03-2023

Particulars regarding income of two villages are given below.

Village
A B
No. of people 600 500
Average income 175 186
Standard deviation of 10 9
income

Compute combined mean and combined Standard deviation.

Solution:
Given N1 = 600, 𝑋ത1 = 175, 𝜎1 = 10
N2 = 500, 𝑋ത2 = 186, 𝜎2 = 10
𝑁1 𝑋ത1 + 𝑁2 𝑋ത2 600×175 + 500×186
Combined mean 𝑥ҧ12 = 𝑁1 + 𝑁2
= 600 + 500
198000
= 1100
= 180
Combined Standard Deviation:

𝑁1 𝜎12 + 𝑁2 𝜎22 + 𝑁1 𝑑12 + 𝑁2 𝑑22

𝜎12 =
𝑁1 + 𝑁2
ഥ𝟏 − 𝑿
Where 𝒅𝟏 = 𝑿 ഥ 𝟏𝟐 = 175 -180 = -5 and

ഥ𝟐 − 𝑿
𝒅𝟐 = 𝑿 ഥ 𝟏𝟐 = 186 – 180 = 6

𝑁1 𝜎12 + 𝑁2 𝜎22 + 𝑁1 𝑑12 + 𝑁2 𝑑22

𝜎12 =
𝑁1 + 𝑁2

600×100 + 500×81 + 600×25 +500×36

= 600 + 500

= 121.364
= 11.02

3
 16-03-2023

Thank
You

10

4
 16-03-2023

BBA
(2023-2024)
Semester: II

Fundamental Business Statistics

(OPTS 1101)

Dr. Y L P THORANI

UNIT 2
Measures of Central Tendency
Mean, Median, Mode. Measures of Dispersion: Range,
Quartile Deviation, Mean Deviation, Standard Deviation,
Variance, Coefficient of Dispersion, Coefficient of
Variation, Combined Arithmetic Mean and Combined
Standard Deviation.

SESSION PLAN
• Attendance – 5min
• Coefficient of Variation – 20 min
• Problems -20 min
• Introduction to the next class –
5min

1
 16-03-2023

Coefficient of Variation

The coefficient of variation is obtained by dividing the standard

deviation by the mean and multiply it by 100. symbolically,
𝜎
Coefficient of variation (C.V) = × 100
𝑥ҧ

The following data refer to the dividend (%) paid by two companies A and B
over the last 7 years.

A 4 8 4 15 10 11 9

B 12 8 3 15 6 4 10

Calculate coefficient of variation for both the companies and comment.

Solution:
We have the calculated arithmetic mean and standard deviation of the
dividends.
Company A

X d=x-8 d2
4 -4 16
8 0 0
4 -4 16
15 7 49
10 2 4
11 3 9
9 1 1
5 95

2
 16-03-2023

σd 5
xത = A + N
= 8 + 7
= 8.71

σ d2 σd 2 95 5 2
σ = − = −
N N 7 7

σ = 13.57 − 0.51 = 3.61

𝜎
Coefficient of variation (C.V) = × 100
𝑥ҧ
3.61
= 8.71
× 100 = 41.45%

Company B

y d=y-8 d2
12 4 16
8 0 0
3 -5 25
15 7 49
6 -2 4
4 -4 16
10 2 4
2 114

σd 2
yത = B + N
= 8 + 7
= 8.29

σ d2 σd 2 114 2 2
σ = N
− N
= 7
− 7

σ = 16.29 − 0.08 = 4.03

𝜎
Coefficient of variation (C.V) = 𝑥ҧ
× 100
4.03
= 8.29 × 100 = 48.61%

Coefficient of variation for dividends of company B is more than that of

company A. Hence, we conclude that dividends of company B are having more
variations. In other words the dividends of company A are more consistent.

3
 16-03-2023

Thank
You

10