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mb0040

mb0040

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12/05/2013

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STATISTICS FOR MANAGEMENT (MB0040)Assignment Set- 21--- (a) What are the characteristics of a good measure of central tendency? [ 5 marks]ANS--- Graphical representation is a good way to represent summarized data. However,graphs provide us only an overview and thus may not be used for further analysis. Hence, weuse summary statistics like computing averages. to analyse the data. Mass data, which iscollected, classified, tabulated and presented systematically, is analyzed further to bring itssize to a single representative figure. This single figure is the measure which can be found atcentral 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 tendencyThe data presented has to be carefully analyzed to make any inference from it. The inferencescan be of various types, for example, as measures of central tendencies, dispersion,correlation, regression.Measures of central tendency will quantify the middle of the distribution. The measures incase of population are the parameters and in case of sample, the measures are statistics that areestimates of population parameters. The three most common ways of measuring the centre of distribution is the mean, mode and median.In case of population, the measures of dispersion are used to quantify the spread of thedistribution. Range, inter Quartile range, mean absolute deviation and standard deviation are four measures to calculatethe dispersion.(b) What are the uses of averages?ANS--- 1. Arithmetic mean is used when:a. In depth study of the variable is needed b. The variable is continuous and additive in naturec. The data are in the interval or ratio scaled. When the distribution is symmetrical2. Median is used when:a. The variable is discrete b. There exist abnormal valuesc. The distribution is skewedd. The extreme values are missinge. The characteristics studied are qualitativef. The data are on the ordinal scale3. Mode is used when:a. The variable is discrete b. There exists abnormal valuec. The distribution is skewedd. The extreme values are missinge. The characteristics studied are qualitative
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4. Geometric mean is used when:a. The rate of growth, ratios and percentages are to be studied b. The variable is of multiplicative nature5. 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
2----Calculate the 3 yearly and 5 yearly averages of the data in table below.Table 1: Production data from 1988 to 1997Year1988198919901991199219931994199519961997Production(in Lakh ton)15181622192420282230
Ans--
YearProduction(ThousandY Tonnes)3 yearlymovingtotals3 yearlymoving totalsY
e
Short termfluctuations(Y – Y
c
)
198815---1989186622.0001990167023.33- 0.331991227224.001.001992197123.670.331993247123.67- 1.671994207324.330.671995287926.330.67199622--199730-
When period of moving averages is even
(such as 4 years)
3-- (a) What is meant by secular trend? Discuss any two methods of isolating trendvalues in a time series.
ANS— This refers to the smooth or regular long term growth or decline of the series. Thismovement can be characterised by a trend curve. If this curve is a straight line, then it is calleda trend line. If the variable is increasing over a long period of time, then it is called an upwardtrend. If the variable is decreasing over a long period of time, then it is called a downwardtrend. If the variable moves upward or downwards along a straight line then the trend is calleda linear trend, otherwise it is called a non-linear trend.Seasonal variationsVariations in a time series that are periodic in nature and occur regularly over short periods of time during a year are called seasonal variations. By definition, these variations are precise
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and can be forecasted.The following are examples of seasonal variations in a time series.i. The prices of vegetables drop down after rainy season or in winter months and they go upduring summer, every year.ii. The prices of cooking oils reduce after the harvesting of oil seeds and go up after sometime.Cyclic variationsThe long-term oscillations that represent consistent rises and declines in the values of thevariable are called cyclic variations. Since these are long-term oscillations in the time series,the period of oscillation is usually greater than one year. The oscillations are about a trendcurve or a trend line. The period of one cycle is the time-distance between two successive peaks or two successive troughs.Random variationsRandom variations are called irregular movements. Movements that occur usually in brief  periods of time, without any pattern and which are unpredictable in nature are called irregular movements. These movements do not have any regular period or time of occurrences. For example, the effect of national strikes, floods, earthquakes and so on. It is very difficult tostudy the behaviour of such a time series.
(b)What is seasonal variation of a time series? Describe the various methods you knowto evaluate it and examine their relative merits.
ANS*--- “Seasonal variation through moving averages method is also known as percentage of moving average method.”The steps involved in the computation of seasonal indices by this method are described below.i) The moving averages of the data are computed. If the data are monthly then 12-monthlymoving averages, if they are quarterly, then 4-quarterly moving averages will be computed. In both the cases, time periods of moving averages are even. Hence, these moving averages areto be centered.ii) Under additive model, from each original value, the corresponding moving average isdeducted to find out short time fluctuations, which is given as:Y – T = S + C + Iiii) By preparing a separate table, monthly (or quarterly) short time fluctuations are added for each month (or quarter) over all the years and their average is obtained. These averages areknown as seasonal variations for each month or quarter.iv) If we want to isolate / measure irregular variations, the mean of the respective month or quarter is deducted from the short time fluctuations.The steps involved in the chain or link relative method are described below.i) Each quarterly or monthly value is divided by the preceding quarterly or monthly value andthe result is multiplied by 100. These percentages are known as Link Relatives of the seasonalvalues. Thus:There shall be no Link Relative corresponding to the first.ii) The mean of the link relatives for each season is computed over all the years. Median can
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