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Dispersion
Defination
O While measures of central tendency indicate what value of a
variable is (in one sense or other) ―average‖ or ―central‖ or
―typical‖ in a set of data, measures of dispersion (or variability or
spread) indicate (in one sense or other) the extent to which the
observed values are ―spread out‖ around that center — how ―far
apart‖ observed values typically are from each other or from some
average value (in particular, the mean). Thus:
Þ if all cases have identical observed values (and thereby are
also identical to [any] average value), dispersion is zero;
Þ if most cases have observed values that are quite ―close
together‖ (and thereby are also quite ―close‖ to the average
value), dispersion is low (but greater than zero); and
Þ if many cases have observed values that are quite ―far away‖
from many others (or from the average value), dispersion is
high.
Measures of Dispersion
OSynonym for variability
OOften called ―spread‖ or ―scatter‖
OIndicator of consistency among a
data set
OIndicates how close data are
clustered about a measure of
central tendency
Example
O Consider the following data related to age
distribution of two groups A and B:
avg
Grp A 22 24 25 26 28 25
Grp B 8 15 20 28 54 25
O Above mentioned two groups have the
same average i.e. 25 years, so we are
likely to conclude that the two groups are
similar.
O Wrong conclusion as the obs. in group A
are close to one another indicating that
people in this group are more or less of
the age 22 to 28 years.
O While those in group B are widely dissimilar and
have greater variability of ages as it includes a
person who is 8 years old on one hand and a
person of age 54 on the other hand.
O This means that central value does not give the
clear indication of the pattern of distribution.
O Measure of dispersion or variability gives us the
information about the spread of the obs. In one
distribution
O Here, dispersion of group B is more than that of
group A
Purpose of Measuring Variation
OTo test the reliability of an average
OTo serve as a basis for control of
variability
OTo compare two or more series with
regard to variability
OTo facilitate as a basis for further
statistical analysis.
Properties of a good measure of
variation
O It should be simple to understand and easy to calculate.
O It should be based on all observations.
O It should be amenable to further algebraic treatment.
O It should not be affected by extreme observations.
Measures of variation
O Absolute measures
× Range
× Quartile deviation
× Mean deviation
× Standard deviation / variance
× Lorenz curve
O Relative measures
× Coefficient of range
× Coefficient of variation
× Coefficient of quartile deviation
× Coefficient of mean deviation
Absolute measures of variation
O They are expressed in the same statistical unit in
which the original data are given such as rupees,
kg etc.
O These values are used to compare the variation
in two or more than two distributions provided
the variables are expressed in the same units and
have almost the same average value.
Relative measures of variation
O Absolute measure of dispersion expresses
variation in the same units as the original
data
O To compare the variations of two different
series, relative measure of standard
deviation is calculated.
Range
O Range is the preliminary indicator of dispersion.
O The (―total‖ or ―simple‖) range is the maximum
(highest) value observed in the data [the value of
the case at the 100th percentile] minus the
minimum (lowest) value observed in the data
[the value of the case at the 0th percentile]
Þ That is, it is the ―distance‖ or ―interval‖ between the
values of these two most extreme cases.
O Indicates how spread out the data are.
O Openended distributions have no range bz no
highest or lowest values exist in an openended
class.
The Range
O The range is defined as the difference
between the largest score in the set of
data and the smallest score in the set of
data, X
L
 X
S
O What is the range of the following data:
4 8 1 6 6 2 9 3 6 9
O The largest score (X
L
) is 9; the smallest
score (X
S
) is 1; the range is X
L
 X
S
= 9 
1 = 8
Coefficient of scatter
O Ratio of range
Coefficient of range =(Max Min )/ (Max +
Min) = Absolute range / Sum of the
extreme values
Dispersion Example
O Number of minutes 20
clients waited to see a
consultant
Consultant
X Y
05 15 11 12
12 03 10 13
04 19 11 10
37 11 09 13
06 34 09 11
O Consultant X:
Þ Sees some clients
almost immediately
Þ Others wait over 1/2
hour
Þ Highly inconsistent
O Consultant Y:
Þ Clients wait about 10
minutes
Þ 9 minutes least wait and
13 minutes most
Þ Highly consistent
Solution
1.Coefficient of range
=(Max Min )/ (Max + Min)
= (37 03 )/ (37 + 03) = 34/40 = 0.85
2. Coefficient of range
=(Max Min )/ (Max + Min)
= (13 09 )/ (13 + 09) = 4/22 = 0.18
Consultant X is inconsistent and Consultant Y is consistent in
their job.
Uses
O QUALITY CONTROL:
Þ The objective of quality control is to keep a check on the
quality of the product without 100% inspection
Þ When statistical methods of quality control are used,
control charts are prepared in which range plays an
important role.
Þ The basic idea is that as long as manufactured products
conform to set standards (range), the production
process is assumed to be in control.
O WHEATHER FORECASTS:
Þ This helps the general public to know as to what limits
the temperature is likely to vary on a particular day.
Quartile deviation
O It measures the distance between the
lowest and highest of the middle 50
percent of the scores of distribution.
O Q.D. is superior to range, as it is not
based on two extreme values but rather
on middle 50% observation.
O It can be calculated from openended
classes.
O It is often used with skewed data as it is
insensitive to the extreme scores
Interquartile Range
O Interquartile range = Q
3
– Q
1
O Semiinterquartile range or quartile
deviation is defined as
= (Q
3
– Q
1
)/2
O Coefficient of quartile deviation is
= = (Q
3
– Q
1
)/(Q
3
+ Q
1
)
O When Q.D. is small then it describes high
uniformity of central 50% observations.
O High Q.D. means high variation among the
central observations.
Interquartile Range Example
Þ The number of complaints received by the
manager of a supermarket was recorded for
each of the last 10 working days.
Þ 21, 15, 18, 5, 10, 17, 21, 19, 25 & 28
O Sorted data
Þ 5, 10, 15, 17, 18, 19, 21, 21, 25 & 28
n Observatio or Q
Q
n
Q
rd
3 75 . 2
4
11
4
1
1
1
1
=
=
+
=
( )
n Observatio or Q
Q
n
Q
th
8 25 . 8
4
33
4
1 3
3
3
3
=
=
+
=
Interquartile range = 21 – 15 = 6 days
Calculating exactly:Q1
Using the formula:
16
X f CF
0 < 20 15 15
20 < 40 60 75
40 <100 25 10
0
N/4 = 25
th
item
This is in the group 20 < 40
Lower limit (l) is 20
Width of group (i) is 20
Frequency of group (f) is 60
CF of previous group (F) is 15
Formula is:


.

\
 ÷
+ =
f
F N
i l Q
q
4
1 1
First Quartile

.

\

÷
+ =
60
15 25
20 20
1
Q
60
10
20 20 × + =
333 . 3 20+ =
= 23.3333
This means that 25% of the data is below 23.333 or 75% of the
data is above 23.333
Width of group (i) is 20
CF of previous group (F) is 15
Q3
17
Third Quartile
This is in the group 20 < 40
Lower limit (l) is 20
Width of group (i) is 20
Frequency of group (f) is 60
CF of previous group (F) is 15
X f CF
0 < 20 15 15
20 < 40 60 75
40 <100 25 10
0
3N/4 = 75
th
item
Formula is:


.

\
 ÷
+ =
f
F N
i l Q
q
4 3
3 3

.

\

÷
+ =
60
15 75
20 20
3
Q
60
60
20 20 × + =
20 20+ =
= 40
So 25% of the data is above this point( i. e 40).
Interquartile Range and Coefficient of Q.
D.
O Interquartile range = 4023.333= 16.67
1
O Semiinterquartile range or quartile
deviation is defined as
= (Q
3
– Q
1
)/2 = 16.67/2 =8.335
O Coefficient of quartile deviation is
= = (Q
3
– Q
1
)/(Q
3
+ Q
1
) = 16.67/ 63.33
= 0.26
Example
Weekly income (Rs.) no. of workers
below 1350 8
13501370 16
13701390 39
13901410 58
14101430 60
14301450 40
14501470 22
14701490 15
14901510 15
15101530 9
1530 and above 10
O Use an appropriate
measure to
evaluate the
variation in the
following data:
Problems with quartile Deviation
■ It is not based on all the observations
■ Affected by sampling fluctuations
■ Not suitable for further algebraic treatment
Deviation Measures of Dispersion (cont.)
O The deviation from the mean for a representative case i is
x
i
 mean of x.
Þ If almost all of these deviations are small, dispersion is small.
Þ If many of these deviations are large, dispersion is large.
O This suggests we could construct a measure D of dispersion
that would simply be the average (mean) of all the
deviations.
But this will not work because, as we saw earlier, it is a
property of the mean that all deviation from it add up to
zero.
Deviation Measures of Dispersion: Example
(cont.)
The Mean Deviation
O A practical way around this problem is simply to ignore the
fact that some deviations are negative while others are
positive by averaging the absolute values of the deviations.
O This measure (called the mean deviation) tells us the
average (mean) amount that the values for all cases
deviate (regardless of whether they are higher or lower)
from the average (mean) value.
O Indeed, the Mean Deviation is an intuitive, understand
able, and perfectly reasonable measure of dispersion, and it
is occasionally used in research.
O The mean deviation takes into consideration all of the
values.
The Mean Deviation (cont.)
O If the data are in the form of a frequency
distribution, the mean deviation can be calculated
using the following formula:
Where: f = the frequency of an observation x
n = Ef = the sum of the frequencies
O This measure is an improvement over the
previous two measures in the sense that it
considers all observations of a data set.
Frequency Distribution Mean Deviation
¿
¿
÷
=
f
x x f
MD
_
 
Coefficient of mean deviation
O Coefficient of mean deviation =
= Mean deviation
Mean
Example
Find out the mean deviation for the following distribution of
demand for a book
Quantity
demanded
(in unit)
Frequency
fx
xx
fxx
6 4 24 17.6 70.4
12 7 84 11.6 81.2
18 10 180 5.6 56
24 18 432 0.4 7.2
30 12 360 6.4 76.8
36 7
254
12.4 86.8
42 2
84
18.4 36.8
total 60
Efx = 1416 E fxx =415.2
mean =
1416/60=23.6
MD =
415.2/60=6.92
¿
¿
÷
=
f
x x f
MD
_
 
¿
¿
=
f
f x
x
_
x
Problems with Mean Deviation
■ Algebraic signs are ignored while taking
the deviations of the items.
■ Cannot be computed for distribution
with open end classes.
■ Not suitable for further mathematical
treatment.
Standard Deviation
O Standard deviation is the most commonly
used measure of dispersion
O Similar to the mean deviation, the
standard deviation takes into account the
value of every observation
O It is the measure of the degree of
dispersion of the data from the mean
value.
O First, it says to subtract the mean from
each of the scores
Þ This difference is called a deviate or a
deviation score
Þ The deviate tells us how far a given score is
from the typical, or average, score
Þ Thus, the deviate is a measure of dispersion
for a given score
O It is a static that tells us how tightly all
the various values are clustered around
the mean in set of data.
O Large S.D. indicates that data points are
far from the mean
O Small S.D. indicates that all the data
points cluster closely around the mean.
Standard Deviation
■ It is the positive square root of the
arithmetic mean of the squares of the
deviations of the observations from their
arithmetic mean.
■ Calculation:
´ Calculate the arithmetic mean (AM)
Subtract each individual value from the AM
Square each value  multiply it times itself
Sum (total) the squared values
Divide the total by the number of values (N)
Calculate the square root of the value
■ Formula:
n
x x
¿

.

\

÷
=
2
_
σ
The Mean, Deviations, Variance, and SD
O What is the effect of adding a constant amount to (or
subtracting from) each observed value?
O What is the effect of multiplying each observed value (or
dividing it by) a constant amount?
) O Adding (subtracting) the same amount to
(from) every observed value changes the
mean by the same amount but does not
change the dispersion (for either range or
deviation measures
O Multiplying every observed value by the
same factor changes the mean and the SD
[or MD] by that same factor and changes
the variance by that factor squared.
usefulness
O Manufacturers interested in producing items of
consistent quality are very much concerned with
S.D.
O If the mean life of the component is 4 years and
the S.D. is very large, it would correspond to
many failures large before 4 years.
O Quality control requires consistency and
consistency requires a relatively small S.D.
The square of the standard deviation.
More useful when we begin analysis rather
than description:
1
) (
2
2
÷
÷
=
¿
n
x x
s
Variance
What Does the Variance Formula
Mean?
O Variance is the mean of the squared
deviation scores
O The larger the variance is, the more the
scores deviate, on average, away from the
mean
O The smaller the variance is, the less the
scores deviate, on average, from the
mean
Combined Variance (For different means)
o
2 1
2
2
2
2 2
2
1
2
1 1
) ( ) (
n n
d n d n
+
+ + +
=
o o
o
Exercise 3
■ The mean and s.d of the ‗lives‘ of tyres of
manufactured by two factories of ‗Durable‘ tyre
company, making 50,000 tyres annually , at each
of the two factories , are given below. Calculate
combined mean and standard deviation of the
‗life‘ of all the 100000 tyres produced in a year.
Factory Sample Size Mean (‗000 Kms) SD
(‗000 Kms)
1 50 60 8
2 50 50 7
Combined Variance (For same means)
2 1
2
2 2
2
1 1
n n
n n
+
+
=
o o
o
Example
O The following data is
related to clients
obtained by insurance
agents during a given
period for two types of
insurance policies, a
child policy and a
retirement policy.
Calculate the
combined S.D.
Child
policy
Retirem
ent
policy
No. of
agents
25 18
Average
no. of
clients
booked
72 64
Variance
of the
distributi
on
8 6
The Coefficient of Variation
O It is the most important relative measures of
dispersion
O One ratio measure of dispersion/inequality is the coefficient
of variation, which is simply the standard deviation divided
by the mean.
Þ It answers the question: how big is the SD relative to
the mean?
100 variation of t coefficien ×

.

\

=
x
s
O It is therefore a useful statistic to compare the
degree of variation from one data series to
another.
O It helps us to determine how much volatility
(risk) we are assuming in comparison to the
amount of return one can expect from an
investment
O Lower the coefficient of variation, better the risk
return tradeoff.
O The distribution for which C.V. is more is said to
be less stable, less uniform, less consistent, less
homogeneous.
Measure of Skew
O Skew is a measure of symmetry in the
distribution of scores
Positive
Skew
Negative Skew
Normal
(skew = 0)
Measure of Skewness
O Measure of skewness of a distribution is
given by
=3(mean – median)
S.D.
This measure is known as Karl Pearson‘s
coefficient of skewness and lies b/w 3
and +3.
O A distribution is said to be symmetric if mean =
median = mode
O A distribution is said to be positively skewed if
mean > median > mode
O A distribution is said to be negatively skewed if
mean < median < mode
The smaller the number the less the skewness.
If co.skew=0 then the data is exactly balanced.
µ÷
3o
µ÷2o µ÷1o µ µ+1o µ+2o µ+ 3o
Bell Shaped Curve showing the relationship between and . o µ
68%
95%
99.7%
Defination
While measures of central tendency indicate what value of a variable is (in one sense or other) ―average‖ or ―central‖ or ―typical‖ in a set of data, measures of dispersion (or variability or spread) indicate (in one sense or other) the extent to which the observed values are ―spread out‖ around that center — how ―far apart‖ observed values typically are from each other or from some average value (in particular, the mean). Thus: if all cases have identical observed values (and thereby are also identical to [any] average value), dispersion is zero; if most cases have observed values that are quite ―close together‖ (and thereby are also quite ―close‖ to the average value), dispersion is low (but greater than zero); and if many cases have observed values that are quite ―far away‖ from many others (or from the average value), dispersion is high.
Measures of Dispersion
Synonym
for variability Often called ―spread‖ or ―scatter‖ Indicator of consistency among a data set Indicates how close data are clustered about a measure of central tendency
Example
Consider the following data related to age distribution of two groups A and B:
avg Grp A 22 24 25 26 28 25
Grp B
8
15
20
28
54
25
Above mentioned two groups have the same average i.e. 25 years, so we are likely to conclude that the two groups are similar. Wrong conclusion as the obs. in group A are close to one another indicating that people in this group are more or less of the age 22 to 28 years.
In one distribution Here. While those in group B are widely dissimilar and have greater variability of ages as it includes a person who is 8 years old on one hand and a person of age 54 on the other hand. dispersion of group B is more than that of group A . Measure of dispersion or variability gives us the information about the spread of the obs. This means that central value does not give the clear indication of the pattern of distribution.
Purpose of Measuring Variation To test the reliability of an average To serve as a basis for control of variability To compare two or more series with regard to variability To facilitate as a basis for further statistical analysis. .
Properties of a good measure of variation It It It It should should should should be simple to understand and easy to calculate. be based on all observations. . be amenable to further algebraic treatment. not be affected by extreme observations.
Measures of variation Absolute measures Range Quartile deviation Mean deviation Standard deviation / variance Lorenz curve Relative measures Coefficient of range Coefficient of variation Coefficient of quartile deviation Coefficient of mean deviation .
Absolute measures of variation They are expressed in the same statistical unit in which the original data are given such as rupees. These values are used to compare the variation in two or more than two distributions provided the variables are expressed in the same units and have almost the same average value. . kg etc.
.Relative measures of variation Absolute measure of dispersion expresses variation in the same units as the original data To compare the variations of two different series. relative measure of standard deviation is calculated.
Openended distributions have no range bz no highest or lowest values exist in an openended class. Indicates how spread out the data are. . it is the ―distance‖ or ―interval‖ between the values of these two most extreme cases.Range Range is the preliminary indicator of dispersion. The (―total‖ or ―simple‖) range is the maximum (highest) value observed in the data [the value of the case at the 100th percentile] minus the minimum (lowest) value observed in the data [the value of the case at the 0th percentile] That is.
XS What is the range of the following data: 4 8 1 6 6 2 9 3 6 9 The largest score (XL) is 9. XL .The Range The range is defined as the difference between the largest score in the set of data and the smallest score in the set of data. the smallest score (XS) is 1. the range is XL .XS = 9 1=8 .
Coefficient of scatter Ratio of range Coefficient of range =(Max.Min )/ (Max + Min) = Absolute range / Sum of the extreme values .
Dispersion Example Number of minutes 20 Consultant X: clients waited to see a Sees some clients almost immediately consultant Others wait over 1/2 Consultant hour X Y Highly inconsistent 05 15 11 12 Consultant Y: 12 03 10 13 Clients wait about 10 minutes 04 19 11 10 9 minutes least wait and 37 11 09 13 13 minutes most 06 34 09 11 Highly consistent .
Min )/ (Max + Min) = (37.Min )/ (Max + Min) = (13. .85 2. Coefficient of range =(Max.18 Consultant X is inconsistent and Consultant Y is consistent in their job.Solution 1.Coefficient of range =(Max.09 )/ (13 + 09) = 4/22 = 0.03 )/ (37 + 03) = 34/40 = 0.
WHEATHER FORECASTS: This helps the general public to know as to what limits the temperature is likely to vary on a particular day. the production process is assumed to be in control. . The basic idea is that as long as manufactured products conform to set standards (range).Uses QUALITY CONTROL: The objective of quality control is to keep a check on the quality of the product without 100% inspection When statistical methods of quality control are used. control charts are prepared in which range plays an important role.
It is often used with skewed data as it is insensitive to the extreme scores . as it is not based on two extreme values but rather on middle 50% observation. It can be calculated from openended classes. Q.Quartile deviation It measures the distance between the lowest and highest of the middle 50 percent of the scores of distribution. is superior to range.D.
Interquartile Range Interquartile range = Q3 – Q1 Semiinterquartile range or quartile deviation is defined as = (Q3 – Q1 )/2 Coefficient of quartile deviation is = = (Q3 – Q1 )/(Q3 + Q1) .
D.D. High Q. means high variation among the central observations. is small then it describes high uniformity of central 50% observations. .When Q.
5. 25 & 28 n 1 4 11 Q1 4 Q1 2. 21. 25 & 28 Sorted data 5. 17. 19.25or8th Observation Q3 Interquartile range = 21 – 15 = 6 days . 10. 17. 15. 15. 21. 19. 18. 21. 10. 21.75or3rd Observation Q1 3n 1 4 33 Q3 4 Q3 8.Interquartile Range Example The number of complaints received by the manager of a supermarket was recorded for each of the last 10 working days. 18.
333 .3333 This means that 25% of the data is below 23.Calculating exactly:Q1 First Quartile Using the formula: X 0 < 20 20 < 40 40 <100 f 15 60 25 CF 15 75 10 0 N/4 = 25th item 25 15 20 20 10 Q1 20 20 60 60 This is in the group 20 < 40 Lower limit (l) is 20 Width of group (i) is 20 Frequency of group (f) is 60 CF of previous group (F) is 15 N 4 F Formula is: Q1 lq1 i f 20 3.333 = 23.333 or 75% of the 16 data is above 23.
e 40).Q3 Third Quartile X 0 < 20 20 < 40 40 <100 3N/4 = 75th item f 15 60 25 CF 15 75 10 0 This is in the group 20 < 40 Lower limit (l) is 20 Width of group (i) is 20 Frequency of group (f) is 60 CF of previous group (F) is 15 3N 4 F Formula is: Q3 lq 3 i f 75 15 20 20 60 Q3 20 20 60 60 20 20 = 40 17 So 25% of the data is above this point( i. .
671 Semiinterquartile range or quartile deviation is defined as = (Q3 – Q1 )/2 = 16.333= 16.67/2 =8.33 = 0. D.67/ 63.335 Coefficient of quartile deviation is = = (Q3 – Q1 )/(Q3 + Q1) = 16.26 .Interquartile Range and Coefficient of Q. Interquartile range = 4023.
of workers below 1350 13501370 13701390 13901410 14101430 14301450 14501470 14701490 14901510 15101530 1530 and above 8 16 39 58 60 40 22 15 15 9 10 Use an appropriate measure to evaluate the variation in the following data: .Example Weekly income (Rs.) no.
Problems with quartile Deviation ■ ■ ■ It is not based on all the observations Affected by sampling fluctuations Not suitable for further algebraic treatment .
If almost all of these deviations are small. as we saw earlier.Deviation Measures of Dispersion (cont. dispersion is small. dispersion is large. . But this will not work because.) The deviation from the mean for a representative case i is xi . it is a property of the mean that all deviation from it add up to zero. If many of these deviations are large.mean of x. This suggests we could construct a measure D of dispersion that would simply be the average (mean) of all the deviations.
) .Deviation Measures of Dispersion: Example (cont.
and it is occasionally used in research. . The mean deviation takes into consideration all of the values. Indeed.The Mean Deviation A practical way around this problem is simply to ignore the fact that some deviations are negative while others are positive by averaging the absolute values of the deviations. the Mean Deviation is an intuitive. and perfectly reasonable measure of dispersion. understandable. This measure (called the mean deviation) tells us the average (mean) amount that the values for all cases deviate (regardless of whether they are higher or lower) from the average (mean) value.
The Mean Deviation (cont.) .
Frequency Distribution Mean Deviation If the data are in the form of a frequency distribution. . the mean deviation can be calculated using the following formula: Where: f = the frequency of an observation x n = f = the sum of the frequencies f  xx MD f _ This measure is an improvement over the previous two measures in the sense that it considers all observations of a data set.
Coefficient of mean deviation Coefficient of mean deviation = = Mean deviation Mean .
2 18 24 30 36 42 total 10 18 12 7 2 60 180 432 360 5.4 6.8 86.6 0.6 MD f  xx f _ .4 81.4 12.2/60=6.6 fxx x 70.2 MD = 415.4 56 7.2 76.Example Find out the mean deviation for the following distribution of demand for a book Quantity demanded (in unit) 6 12 Frequency 4 7 fx 24 84 xx 17.92 x _ fx f mean = 1416/60=23.8 254 84 fx = 1416 fxx =415.4 18.8 36.6 11.
. Not suitable for further mathematical treatment. Cannot be computed for distribution with open end classes.Problems with Mean Deviation ■ ■ ■ Algebraic signs are ignored while taking the deviations of the items.
Standard Deviation Standard deviation is the most commonly used measure of dispersion Similar to the mean deviation. . the standard deviation takes into account the value of every observation It is the measure of the degree of dispersion of the data from the mean value.
First. the deviate is a measure of dispersion for a given score . it says to subtract the mean from each of the scores This difference is called a deviate or a deviation score The deviate tells us how far a given score is from the typical. score Thus. or average.
Large S. . indicates that all the data points cluster closely around the mean.D. indicates that data points are far from the mean Small S.It is a static that tells us how tightly all the various values are clustered around the mean in set of data.D.
Calculation: Calculate the arithmetic mean (AM) Subtract each individual value from the AM Square each value .Standard Deviation ■ ■ It is the positive square root of the arithmetic mean of the squares of the deviations of the observations from their arithmetic mean.multiply it times itself Sum (total) the squared values Divide the total by the number of values (N) Calculate the square root of the value _ 2 ■ Formula: x x σ n .
The Mean. Variance. and SD What is the effect of adding a constant amount to (or subtracting from) each observed value? What is the effect of multiplying each observed value (or dividing it by) a constant amount? . Deviations.
) .Adding (subtracting) the same amount to (from) every observed value changes the mean by the same amount but does not change the dispersion (for either range or deviation measures Multiplying every observed value by the same factor changes the mean and the SD [or MD] by that same factor and changes the variance by that factor squared.
Quality control requires consistency and consistency requires a relatively small S. it would correspond to many failures large before 4 years.D. .D.usefulness Manufacturers interested in producing items of consistent quality are very much concerned with S.D. If the mean life of the component is 4 years and the S. is very large.
Variance The square of the standard deviation. More useful when we begin analysis rather than description: s 2 ( x x) n 1 2 .
on average. away from the mean The smaller the variance is. from the mean . on average. the more the scores deviate. the less the scores deviate.What Does the Variance Formula Mean? Variance is the mean of the squared deviation scores The larger the variance is.
Combined Variance (For different means) n1 ( d ) n2 ( d ) n1 n2 2 1 2 1 2 2 2 2 .
are given below. Calculate combined mean and standard deviation of the ‗life‘ of all the 100000 tyres produced in a year. at each of the two factories . Factory Sample Size Mean (‗000 Kms) SD (‗000 Kms) 1 50 60 8 2 50 50 7 ■ .Exercise 3 The mean and s.000 tyres annually .d of the ‗lives‘ of tyres of manufactured by two factories of ‗Durable‘ tyre company. making 50.
Combined Variance (For same means) n1 n2 n1 n2 2 1 2 2 .
Child policy No. of clients booked Variance of the distributi on 25 Retirem ent policy 18 72 64 8 6 .D. a child policy and a retirement policy.Example The following data is related to clients obtained by insurance agents during a given period for two types of insurance policies. Calculate the combined S. of agents Average no.
It answers the question: how big is the SD relative to the mean? s coefficien t of variation 100 x . which is simply the standard deviation divided by the mean.The Coefficient of Variation It is the most important relative measures of dispersion One ratio measure of dispersion/inequality is the coefficient of variation.
. It is therefore a useful statistic to compare the degree of variation from one data series to another. It helps us to determine how much volatility (risk) we are assuming in comparison to the amount of return one can expect from an investment Lower the coefficient of variation. less homogeneous. less consistent. better the riskreturn tradeoff. is more is said to be less stable. less uniform. The distribution for which C.V.
Measure of Skew Skew is a measure of symmetry in the distribution of scores Normal (skew = 0) Positive Skew Negative Skew .
This measure is known as Karl Pearson‘s coefficient of skewness and lies b/w 3 and +3. .Measure of Skewness Measure of skewness of a distribution is given by =3(mean – median) S.D.
skew=0 then the data is exactly balanced. If co. . A distribution is said to be symmetric if mean = median = mode A distribution is said to be positively skewed if mean > median > mode A distribution is said to be negatively skewed if mean < median < mode The smaller the number.the less the skewness.
68% 95% 99.7% m 3 m2 m1 m m1 m2 m 3 .Bell Shaped Curve showing the relationship between and m.
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