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Course code: AIS-1202

Prahallad Chandra das (ACMA)

Assistant professor

Department of Accounting and Information systems

Group: 5

Name

Jannatul Fardous

Shurovi

Israt Jahan Mou

Momena Khatun

Md. Nahidul Hasan

Sadia Maliha Trisha

Md. Uzzal Miah

Md. Khairul islam

Md. Moin khan

Md. Nazmul Hasan

Roll

15132537

15132538

15132539

15132540

15132541

15132542

15132543

15132544

15132545

Table of content

Measures of variation

Introduction

Significance of measures of variation

Properties of a good measure of variation

Measuring variation

Range

Definition of range

Example of range

Merits of range

Limitations of range

Uses of range

Quartile Deviation

Definition of quartile deviation

Example of quartile deviation

Merits of quartile deviation

Limitation of quartile deviation

Average deviation

Definition of average deviation

Example of average deviation

Merits of average deviation

Limitation of average deviation

Standard deviation

Definition of standard deviation

Example of standard deviation

Merits of standard deviation

Limitation of standard deviation

Mathematical properties of standard deviation

Lorenz curve

Which measure of variation to use

Introduction

The Measure of central tendency serve to locate the center of the distribution, but they

do not reveal how the items are spread out on either side of the center. This characteristic

of a frequency distribution is commonly referred to as variation. In a series all the items

are not equal. There is difference or variation among the values. The degree of variation

is evaluated by various measures of variation. Small variation indicates high uniformity

of the items, while large variation indicates less uniformity.

1.

2.

3.

4.

Serving as a basis for the control of the variability.

Comparing two or more series with regard to their variability.

Facilitating the use of other statistical use. Such as correlation, regression etc.

1.

2.

3.

4.

5.

6.

7.

It should be easy to compute.

It should be rigidly defined.

It should be based on each and every observation of the distribution.

It should be amenable to further algebraic treatment.

It should have sampling stability.

It should not be unduly affected by extreme observation.

Measuring variation

The following are the important methods of studying variation.

1. Range,

2. The Inter-quartile range or Quartile deviation,

3. The Average deviation,

4. The Standard deviation,

5. The Lorenz curve.

Of these, the first four are mathematical methods and the last is a graphical one.

Range

Range is the simpliest and quickest measure of dispersion. Being a positional measure it

accounts only the difference between the highest and lowest observation in any data

series.

So, R = L-S

Here, R= Range

L= Largest value.

S= Smallest value.

Coefficient of range

The relative measure corresponding to the range, called coefficient of range.

Coefficient of range =

Example of range

LS

LS

Example 1: Find the value of range and its co-efficient for the following data.

7, 9, 6, 8, 11, 10, 4

Solution:

L=11, S = 4.

Range = L S = 11- 4 = 7

Coefficient of range =

LS

LS

11 4

11 4

7

15

= 0.467

Size:

60-63 63-66 66-69 69-72 72-75

Number: 5

18

42

27

8

Solution

L = Upper boundary of the highest class = 75

S = Lower boundary of the lowest class = 60

Range = L S = 75 60 = 15

Coefficient of range =

LS

LS

75 60

75 60

15

135

= 0.11

Example 3 : The yields (kg per plot) of a cotton variety from five plots are 8, 9, 8, 10 and

11. Find the range and coefficient of range.

Solution

L=11, S = 8.

Range = L S = 11- 8 = 3

Coefficient of range =

LS

LS

11 8

3

=

11 8 19

= 0.158

Example 4 : the following are the prices of shares of a company from Monday to

Saturday,

Day

Price (Rs.)

Day

Price (Rs.)

Monday

200

Thursday

160

Tuesday

210

Friday

220

Wednesday

208

Saturday

250

Calculate range and coefficient of range.

Solution : Range = L S = 250 160 = 90

Coefficient of range =

LS

LS

250 160

250 160

90

410

= 0.22

Profits (Rs. lakhs)

10-20

20-30

30-40

No. of cos.

8

10

12

40-50

50-60

No. of cos.

8

4

Solution : Range = L S = 60 10 = 50

Coefficient of range =

LS

LS

60 10

60 10

50

70

= 0.714

Merits of range

1. Simple to compute.

2. Easy to understand.

3. Quickly calculated.

Limitations of range

1. It is very much affected by the extreme items.

2. It is based on only two extreme observations.

3. It cannot be calculated from open-end class intervals.

4. It is not suitable for mathematical treatment.

5. It is a very rarely used measure.

Uses of range

1. For quality control.

2. Fluctuation in the share price.

3. Weather forecast.

Quartile Deviation

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

is called Semi Inter Quartile Range. The interquartile range or the quartile deviation is a

better measure of variation in a distribution than the range.

Here, avoiding the 25 percent of the distribution at both the ends uses the middle 50

percent of the distribution. In other words, the interquartile range denotes the difference

between the third quartile and the first quartile.

Symbolically, interquartile range = Q3 -Q1

Many times the interquartile range is reduced in the form of semi-interquartile range or

quartile deviation as shown below:

Coefficient of quartile deviation

The relative measure corresponding to the quartile deviation, called coefficient of quartile

deviation.

It can be changed into a relative measure of dispersion as follows:

Q3 Q1

Coefficient of Q.D.=

Q3 Q1

Example 1: you are given the frequency distribution of 292 workers of a factory

according to their average weekly income. Calculate quartile deviation and its coefficient

from the following data:

Weekly income

No. of worker

Weekly income

No. of worker

Below 1350

8

1450-1470

22

1350-1370

16

1470-1490

15

1370-1390

39

1490-1510

15

1390-1410

58

1510-1530

9

1410-1430

60

1530 & above

10

1430-1450

40

Solution:

Weekly income

(Rs.)

Below 1350

1350-1370

1370-1390

1390-1410

1410-1430

1430-1450

1450-1470

1470-1490

1490-1510

1510-1530

1530 & above

No. of worker

f

8

16

39

58

60

40

22

15

15

9

10

N= 292

N

292

th observation =

= 146th observation

2

2

Median L

N / 2 p.c. f

i

f

c.f

8

24

63

121

181

221

243

258

273

282

292

= 1410+

Q1 = size of the

146 121

20 = 1410 + 8.333 = 1418.333

60

N

292

th observation =

= 73th observation

4

4

Q1 L

N / 4 p.c. f

i

f

= 1390 +

73 63

20 = 1390 + 3.448 = 1393.448

58

Q3 = size of the

3N

3 292

th observation =

= 219th observation

4

4

Q3 L

=

3 N / 4 p.c. f

i

f

1430 +

219 181

20 = 1430+ 8.333 = 1449

40

Q3 Q1 1449 1393.448

Coefficient of Q.D.=

Q3 Q1

1449 1393.448

55552

2842.448

= 0.020

Example 2 : Based on the frequency distribution given below, compute the following

statistical measures to characterize the distribution.

Annual tax paid

No. of Managers

(Rs. thousand)

5-10

18

10-15

30

15-20

46

20-25

28

25-30

20

30-35

12

35-40

6

Calculate the inter-quartile range.

Solution:

calculation of semi inter-quartile range

Annual tax paid

No of managers

p.c.f

(Rs.thousand)

f

5-10

18

18

10-15

30

48

15-20

46

94

20-25

28

122

25-30

20

142

30-35

12

154

35-40

6

160

N=160

Semi inter-quartile range = Q3 -Q1

Q1 = size of the

N

160

th observation =

= 40th observation

4

4

Q1 L

N / 4 p.c. f

i

f

= 10 +

40 18

5 = 10 + 3.67 = 13.67

30

Q3 = size of the

3N

3 160

th observation =

= 120th observation

4

4

Q3 L

=

3 N / 4 p.c. f

i

f

20 +

120 94

5 = 20.4.64 = 24.64

28

Example 3: From the following frequency distribution of heights of 360 boys in the agegroups 15-20 years, calculate the quartile deviation.

Height(in cms)

No. of boys

126-130

31

131-135

44

136-140

48

141-145

51

146-150

60

151-155

55

156-160

43

161-165

28

Solution:

Calculation of quartile deviation

Height(in cms)

No of boys

p.c.f

f

126-130

31

31

131-135

44

75

136-140

48

123

141-145

51

174

146-150

60

234

151-155

55

289

156-160

43

332

161-165

Q1 = size of the

28

N=360

360

N

360

th observation =

= 90th observation

4

4

Q1 L

N / 4 p.c. f

i

f

= 135.5 +

Q3 = size of the

90 75

5 = 135.5+ 1.5625 = 137.06

48

3N

3 360

th observation =

= 270th observation

4

4

Q3 L

3 N / 4 p.c. f

i

f

270 234

5 = 150.5+3.27= 153.77

55

Q Q1

153.77 137.06

Quartile deviation = 3

=

=8.355

2

2

=

150.5 +

distribution of the no. of units consumed:

Number of units

Number of consumption

0-200

9

200-400

18

400-600

27

600-800

32

800-1000

45

1000-1500

38

1500-2000

20

2000 and above

2

Calculate the first quartile, third quartile and quartile deviation.

Solution:

Calculation of quartile deviation

Number of units

0-200

200-400

400-600

Number of

consumption ( f )

9

18

27

p.c.f

9

27

54

600-800

800-1000

1000-1500

1500-2000

2000 and above

Q1 = size of the

32

45

38

20

2

N=191

86

131

169

189

191

N

191

th observation =

= 47.75th observation

4

4

Q1 L

N / 4 p.c. f

i

f

= 400 +

47.75

200 = 400+ 153.7= 553.70

27

Q3 = size of the

3N

3 191

th observation =

= 143.25th observation

4

4

Q3 L

3 N / 4 p.c. f

i

f

143.25 131

500 = 1000+161.18= 1161.18

38

Q Q1

1161 .18 553.70

Quartile deviation = 3

=

= 303.74

2

2

=

1000 +

Example 5: You are given the data pertaining to kilowatt hours of electricity consumed

by 100 persons in Delhi.

Consumption(k.watt hours)

No. of users

0 but less than 10

6

10 but less than 20

25

20 but less than 30

36

30 but less than 40

20

40 but less than 50

13

Calculate the range within which middle 50% of the consumers fall.

Solution:

Calculation of range within which the middle 50% consumers fall

Consumption(k.watt

No. of users

p.c.f

hours)

0 but less than 10

6

6

10 but less than 20

25

31

20 but less than 30

36

67

30 but less than 40

20

87

40 but less than 50

13

100

N=100

Q1 = size of the

N

100

th observation =

= 25th observation

4

4

Q1 L

N / 4 p.c. f

i

f

= 10 +

25 6

10 = 10+ 7.6= 17.6

25

Q3 = size of the

3N

3 100

th observation =

= 75th observation

4

4

Q3 L

=

3 N / 4 p.c. f

i

f

30 +

75 67

10 = 30+4= 34

20

Range within which the middle 50% consumers fall= 34-17.6 = 16.4

1. It is Simple to understand and easy to calculate

2. It is not affected by extreme values.s

3. It can be calculated for data with open end classes also.

1. It is not based on all the items. It is based on two positional values Q1 and Q3 and

ignores the extreme 50% of the items 149

2. It is not amenable to further mathematical treatment.

3. It is affected by sampling fluctuations.

Average 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. The average deviation is measure of dispersion based on all items in a

distribution.

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.

Mathematically following formula represents the concept of A.D.

Case 1: Ungrouped data series; A.D=

X Med

N

X X

N

The relative measure corresponding to the average deviation, called coefficient of

average deviation.

If average deviation has been computed from median, the coefficient of average deviation

shall be obtained by dividing average deviation by the median.

Coefficient of average deviation =

A.D

Median

If average deviation has been computed from mean, the coefficient of average deviation

shall be obtained by dividing average deviation by the mean.

Coefficient of average deviation =

A.D

Mean

Example 1 : Calculate the average deviation and coefficient of average deviation of the

two income group of five and seven workers working in two different branches of a firm.

Branch 1 (income RS)

Branch 2 (income RS)

4000

3000

4200

4000

4400

4200

4600

4400

4800

4600

4800

5800

Soluation:

Calculation of average deviation

Branch 1

Income(RS)

Branch 1

Branch 2

Income(RS)

X Med

4000

4200

4400

4600

4800

med=4400

400

200

0

200

400

N=5

X Med =120

3000

4000

4200

4400

4600

4800

5800

N=7

0

Branch 1:

A.D=

X Med

N

Branch 2

X Med

med=4400

1400

400

200

0

200

400

1400

X Med =400

0

=

1200

=240

5

A.D

240

=

=0.054

Median 4400

X Med 4000

A.D=

=

=571.43

7

N

A.D

571.43

Coff. Of A.D=

=

=0.13

4400

Median

Coff. Of A.D=

Branch 2:

Example 1 : Calculate average deviation from mean and the following data.

10-20

20-30

30-40

40-50

50-60

No. of day

3

6

11

3

2

Solution:

Sales (In

Thousand)

10-20

20-30

30-40

40-50

50-60

m.p.

X

15

25

35

45

65

(X-35)/10 fd

3

6

11

3

2

N=25

-2

-1

0

1

2

-6

-6

0

3

4

fd 5`

f

A.D.=

204

25

X A

X X

N

=5.16

fd i

N

X X

18

8

2

12

22

X X

54

48

22

36

44

f

4

X X

=20

=35- 25 10 =33

Example 3: Calculate mean deviation for the following frequency distribution.

No. of colds

No of persons

experienced in 12

month

0

15

1

46

2

91

3

162

4

110

5

95

6

82

7

26

8

13

9

2

Solution:

X X

No. of colds

No of

d = X-A

fd

f X X

experienced

persons

in 12 month

(X)

f

0

15

-5

3.78

56.70

-75

1

46

-4

2.78

127.88

-184

2

91

-3

1.78

161.98

-273

3

162

-2

0.78

126.36

-324

4

110

-1

0.22

24.20

-110

5

95

0

1.22

115.90

0

6

82

1

2.22

182.04

82

7

26

2

3.22

83.72

52

8

13

3

4.22

54.86

39

9

2

4

5.22

10.44

8

N=642

f X X =941.3 fd=-783

0

f

A.D.=

X X

N

941.30

= 642 =1.47

X A

fd i

N

=5+

( 785)

1=

642

3.78

1. A major advantages of average deviation is that it is simple to understand and

easy to calculate.

2. It takes into consideration each and every items item in the distribution. As

a result, a change in the value of any item will have its effect on

the magnitude of mean deviation.

3. The values of extreme items have less effect on the value of the

mean deviation.

4. As deviations are taken from a central value, it is possible to

have meaningful comparisons of the formation of different

distributions.

1. It is not capable of further algebraic treatment.

2. At times it may fail to give accurate results. The mean deviation gives best results

when deviations are taken from the median instead of from the mean. But in a

series, which has wide variations in the items, median is not a satisfactory

measure.

3. Strictly on mathematical considerations, the method is wrong as

it ignores the algebraic signs when the deviations are taken from

the mean.

In view of these limitations, it is seldom used in business studies. A

better measure known as the standard deviation is more frequently

used.

STANDARD DEVIATION

It is a measure of spread or variability in the sample. It is defined on the square root of

the arithmetic mean of the squared deviations of individual values around the mean.

Mathematically following formula represents the concept of S.D.

Case 1: Ungrouped data series;

It has two formula; 1) Deviation taking from actual mean and

2) Deviation taken from assumed mean.

1) Actual mean:

2) Assumed mean:

d

N

d )

It has two formula; 1) Deviation taking from actual mean and

1) Actual mean:

fX

2) Assumed mean:

fd

fd )

Coefficient of variation

The standard deviation discussed so far is an absolute measure of variation. The

corresponding relative measures is known as the coefficient of variation.

C.V. =

100

Symbolically, variance = ( S .D.) 2

= 2

ungrouped data:

Example 1 : Find out the standard deviation from the weekly wages of ten workers

working in a factory.

Worker

Weekly wages

A

1320

B

1310

C

1315

D

1322

E

1326

F

1340

G

1325

H

1321

I

1320

J

1331

Solution:

Workers

A

B

C

D

E

Weekly wages

X

1320

1310

1315

1322

1326

(X-A)=d

d2

0

-10

-5

2

6

0

100

25

4

36

F

G

H

I

J

N=10

1340

1325

1321

1320

1331

20

5

1

0

11

d 30

d )

400

25

1

0

121

712

N

N

712

30

( ) 2 =7.89

10

10

Example 2: The following table gives the fluctuations in the prices of shares a company.

Price(in price)

318

322

325

312

324

315

308

318

Calculate the mean, standard deviation and coefficient of variation.

Solution: Calculation of mean, standard deviation and coefficient of variation.

X

(X-A)=d

d2

318

-6

36

322

-2

4

325

1

1

312

-12

144

324

0

0

315

-9

81

308

-16

256

318

-6

36

2

X= 2542

d 30

d 712

Solution: X

N

2542

8

= 317.75

d )

N

N

558

50 2

(

) = 5.54

=

8

8

5.54

100

C.V. = 100 =

x

317.75

= 1.74%

Example 3: Prices of shares a company.

Price(in price)

2542

2522

2534

2532

2542

2530

2556

2530

Calculate the mean, standard deviation and coefficient of variation.

Solution: Calculation of mean, standard deviation and coefficient of variation.

X

(X-A)=d

d2

2542

0

0

2522

-20

400

2534

-6

36

2532

-10

100

2542

0

0

2530

-12

144

2556

14

196

2530

-12

144

2

X= 20292

d 46 d 1020

Solution: X

N

20292

8

= 2536.5

d )

N

N

1020

46 2

(

) = 9.72

=

8

8

9.72

100

C.V. = 100 =

x

2536.5

= 38%

Example 4: blood serum cholesterol levels of 10 persons are as under:

240, 260, 290, 245, 255, 288, 272, 263, 277, 250

Calculate standard deviation with the help of assumed mean.

Solution:

Calculate standard deviation

X

(X-A)=d

d2

240

-15

225

260

5

25

290

35

1225

245

-10

100

255

288

272

263

277

250

X=2640

Solution: X

0

33

17

8

22

-5

d 90

N

2640

10

0

1089

289

64

484

25

3526

= 264

d )

N

N

4360

136 2

(

) = 15.84

=

10

10

15.84

100

C.V. = 100 =

x

264

= 6%

Example 5: The index number of price of cotton in April 2008 was as under:

Month Jan.

Fe. March April May June

July Aug. Sep.

Cotton 188

178

173

164

172

184

184

185

211

Solution:

Calculate standard deviation

X

(X-A)=d

d2

188

16

256

178

6

36

173

1

1

164

-8

64

172

0

0

184

12

144

184

12

144

185

13

169

211

39

1521

217

45

2025

X=1856

d 136

d 2 4360

d )

N

N

4360

136 2

(

)

10

10

= 15.84

grouped data:

Oct.

217

No. of Rejects operator

No. of Operator

21-25

5

26-30

15

31-35

28

36-40

42

41-45

15

46-50

12

51-55

3

Solution:

Calculation of Mean and Standard deviation

No. of

Rejects

operator

20.5-25.5

25.5-30.5

30.5-35.5

35.5-40.5

40.5-45.5

45.5-50.5

50.5-55.5

m.p

X

23

28

33

38

43

48

53

Let

No. of

Operator

f

5

15

28

42

15

12

3

N=120

d=

fX

(X-38)/5

d

fd

fd2

-3

-2

-1

0

1

2

3

-15

-30

-28

0

15

24

9

45

60

28

0

15

48

27

N

X A

X A id

i

X X

fd

Mean:

X A

fd )

fd i

N

25

=38- 120 5 =36.96

Standard deviation:

fd

fd )

i

N

N

223

25 2

(

) 5 =6.375

120

120

2

fd 25 fd

223

Example 2: the breaking strength of 80 test pieces of a certain alloy is given in the

following table, the unit being given to the nearest thousand pounds per square inch.

Breaking strength

No. of pieces

44-46

3

46-48

24

48-50

27

50-52

21

52-54

5

Calculate the average breaking strength of the alloy and the standard deviation.

Solution:

Calculation of mean and standard deviation

Breaking

strength

44-46

46-48

48-50

50-52

52-54

No. of

pieces

3

24

27

21

5

N=80

X A

Mid point

X

45

47

49

51

53

fd i

N

1

49+ 81 2 =

fd

d= X-A/i

fd

fd2

-2

-1

0

1

2

-6

-24

0

21

10

12

24

0

21

20

fd 1

fd

77

49.025

fd )

N

N

77

1

( )2 2 =

80

80

676.5

Thus the average breaking strength of the alloy 49.025 and standard deviation 676.5

Example 3 : An association doing charity work decided to give old age pensions to

people over sixty years to age.

The scales of pensions were fixed as follows :

Age group 60 to 65---Rs. 2500 per month

Age group 65 to 70---Rs. 3000 per month

Age group 70 to 75---Rs. 3500 per month

Age group 75 to 80---Rs. 4000 per month

Age group 80 to 85---Rs. 4500 per month

The age of 25 persons who secured the pensions benefits are given bellow

75

62

84

72

83

72

81

64

71

63

61

60

61

67

74

64

79

73

75

76

69

78

66

67

68

Solution :

Pensions

X

2500

3000

3500

4000

4500

(X-3500)/500

d

-2

-1

0

1

2

X A

fd

Fd2

7

5

6

4

3

-14

-5

0

4

6

28

5

0

4

12

fd i

N

9

=3500- 25 500 =3320

fd

fd )

i2

N

N

49

9 2

(

) 500 =676.5

25

25

Thus the monthly average pensions is Rs. 3320 and standard deviation 676.5

Example 4: Suppose that samples of polythene bags from a manufacturers are tested by a

prospective buyer for bursting pressure, with the following results:

Bursting pressure(lbs)

Number of begs

5.0-9.9

2

10.0-14.9

9

15.9-19.9

29

20.0-24.9

54

25.0-29.9

11

30.0-34.9

5

Solution:

Calculation of mean and standard deviation and C.V.

Bursting

pressure(lbs)

5.0-9.9

10.0-14.9

15.9-19.9

20.0-24.9

25.0-29.9

30.0-34.9

Number of

begs

f

2

9

29

54

11

5

N=110

Mid point

d= X-A/i

fd

fd2

X

7.45

12.45

17.45

22.45

27.45

32.45

-2

-1

0

1

2

3

-4

-9

0

54

22

15

8

9

0

54

44

45

fd 78

fd

160

X A

fd i

N

78

= 17.45+ 110 5 = 21

fd

fd )

2

i2

N

N

160

78 2

(

) 5 = 4.879

=

110

110

4.879

100

C.V. = 100 =

x

21

= 23.23%

Example 5: A purchasing agent obtained samples of 60 watt bulbs from a company. He

had the samples tested in his laboratory for length of life with the following results.

Length of life(in hours)

Samples

1700 and under 1900

10

1900 and under 2100

16

2100 and under 2300

20

2300 and under 2500

8

2500 and under 2700

6

Calculate the mean and standard deviation.

Solution:

Length of

life(in

hours)

1700-1900

1900-2100

2100-2300

2300-2500

2500-2700

Samples

f

Mid point

X

d= X-A/i

fd

fd2

10

16

20

8

6

N=60

1800

2000

2200

2400

2600

-2

-1

0

1

2

-20

-16

0

8

12

40

16

0

8

24

X A

fd i

N

(16)

200 = 2146.67

60

fd 2

fd ) 2 i 2

(

N

N

88

( 16) 2

(

) 200 = 236.3

=

60

60

236.3

100

C.V. = 100 =

x

2146.67

= 2200+

fd

16

fd

88

= 11%

Standard deviation has some very important mathematical properties in statistical work.

1. We also can compute combined standard deviation of two or more groups.

2

N1 1 N 2 2 N 3 3 N1d1 N 2 d 2 N 3 d 3

N1 N 2 N 3

123

2. Standard deviation of natural number: The standard deviation of the natural number

can be obtained by the following formula.

1

( N 2 1)

12

its mean. In a symmetrical bell- shaped curve.

Mean 1 covers 68.27 observation,

Mean 2 covers 95.45 observation,

Mean 3 covers 99.73 observation.

Example 1 : The number of workers employed. The mean wage per week and the S.D. in

each branch of a company are given bellow. Calculate mean wages and standerd

deviation of all the workers taken together for company.

Branch

A

B

C

Solution:

No. of worker

50

60

90

X 123

Weekly wages

1413

1420

1415

S.D.

60

70

80

N1 X 1 N 2 X 2 N 3 X 3

N1 N 2 N 3

(50 1413) (60 1420) (90 1415)

=

50 60 90

70650 85200 127350

=

200

=1416

Combined standard deviation of three branches

2

N1 1 N 2 2 N 3 3 N1d1 N 2 d 2 N 3 d 3

123

N1 N 2 N 3

d1=

d2=

X 1 X 123

X

X 123

= 1413 1416 =3

= 1420 1416 =4

d3=

123

X 123

= 1415 1416 = 1

50 60 70

1051500

200

=72.51

1. The standard deviation is the best measure of variation of its mathematical

characteristics. Because it is based on every items of the distribution.

2. It is possible to calculate the combined standard deviation of two or more

groups. This is not possible with any other measure.

3. For comparing the variability of two or more distributions coefficient of

variation is considered to be most appropriate and this measure is based on

mean and standard deviation.

4. Standard deviation is most prominently used in further statistical work.

Limitations

1. As compared to other measures it is difficult to compute.

2. It gives more weight to extreme values and less to those which are near the

mean. it is because of the fact the squares of the deviation which are big in

size would be proportionately greater than the squares of those deviations

which are comparatively small.

LORENZ CURVE

This measure of dispersion is graphical. It is known as the Lorenz curve named after Dr.

Max Lorenz. It is generally used to show the extent of concentration of income and

wealth. The steps involved in plotting the Lorenz curve are:

1. Convert a frequency distribution into a cumulative frequency table.

2. Calculate percentage for each item taking the total equal to 100.

3. Choose a suitable scale and plot the cumulative percentages of the persons and income.

Use the horizontal axis of X to depict percentages of persons and the vertical axis of Y to

depict percent ages of income.

4. Show the line of equal distribution, which will join 0 of X-axis with 100 of Yaxis.

5. The curve obtained in (3) above can now be compared with the straight line of equal

distribution obtained in (4) above. If the Lorenz curve is close to the line of equal

distribution, then it implies that the dispersion is much less. If, on the contrary, the

Lorenz curve is farther away from the line of equal distribution, it implies that the

dispersion is considerable.

The Lorenz curve is a simple graphical device to show the disparities of distribution

in any phenomenon. It is, used in business and economics to represent inequalities in

income, wealth, production, savings, and so on.

Figure 1: shows two Lorenz curves by way of illustration. The straight line AB is a

line of equal distribution, whereas AEB shows complete inequality. Curve ACB and

F

Figure 1: Lorenz Curve

Unlike the measures of central tendency, in case of measures of variation also the

question arises which measures to use. The choice of a suitable measure depends on the

following factors:

1. The types of data available. If observation are few in numbers, or contain extreme

values, avoid the standard deviation. If they are generally skewed, avoid the mean

deviation as well. If they are gaps around the quartiles, the quartiles deviation

should be avoided. If there are open-end classes, the quartiles measures of

variation should be preferred.

2. the purpose of investigation. In an elementary treatment of statistical series in

which a measures of variability is desired only for itself, any of the three

measures, namely. Range, quartile deviation, and average deviation, would be

acceptable. Probably the average deviation would be superior.

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