This action might not be possible to undo. Are you sure you want to continue?

Statistics is the science dealing with the collection, organizing, analysis and interpretation of numerical data. Two topics mainly are covered under statistics: Measures of central tendency (average) Measures of variation (dispersion)

Measures of central tendency Measures of central tendency are measures of the location of the middle or the center of a distribution. The definition of "middle" or "center" is purposely left somewhat vague so that the term "central tendency" can refer to a wide variety of measures. The mean is the most commonly used measure of central tendency. The following measures of central tendency are discussed :-

1. ARITHEMATIC MEAN

In mathematics and statistics, the arithmetic mean, often referred to as simply the mean or average when the context is clear, is a method to derive the central tendency of a sample space.

**Merits and demerits of mean MERITS
**

Mean is well understood by most people. Computation of mean is easy. Finds the most accurate average of the set of numbers. Mean is the average-It is best used when there are no extreme values. It is unique - there is only one answer and is useful when comparing sets of data. It is based on all observation and it can be regarded as representative of data.

Arithmetic mean can be computed even if the detailed distribution is not known but some of the observation and number of the observation are known. It is least affected by the fluctuation of sampling

**DEMERITS OF ARITHMETIC MEAN
**

Sensitive to extreme values. It can neither be determined by inspection or by graphical location. Arithmetic mean cannot be computed for qualitative data like data on intelligence honesty and smoking habit etc. It is too much affected by extreme observations and hence it is not adequately represent data consisting of some extreme point. Arithmetic mean cannot be computed when class intervals have open ends. For example: X={1,1,1,1,2,9}, mean(X)=2.5 which does not reflect the actually central tendency of this set of numbers.

2. MEDIAN

In probability theory and statistics, a median is described as the numeric value separating the higher half of a sample, a population, or a probability distribution, from the lower half. The median of a finite list of numbers can be found by arranging all the observations from lowest value to highest value and picking the middle one. If there is an even number of observations, then there is no single middle value; the median is then usually defined to be the mean of the two middle values.

MERITS OF MEDIAN

Simplicity:- It is very simple measure of the central tendency of the series. I the case of simple statistical series, just a glance at the data is enough to locate the median value. It can easy to find out by inspection.

Median can be determined even when class intervals have open ends. Median can also be located graphically It is not much affected by extreme observations and also interdependent of range or dispersion of the data. It is only suitable average when the data are qualitative & it is possible to rank various items according to qualitative characteristics. It is not influenced by extreme values. Useful when comparing sets of data. It is unique - there is only one answer.

DEMERITS OF MEDIAN

Not as popular as mean as it does not take all the data into account. If the gap between some numbers is large, while it is small between other numbers in the data, this can cause the median to be a very inaccurate way to find the middle of a set of values. Lack of representative character: - Median fails to be a representative measure in case of such series the different values of which are wide apart from each other. Also, median is of limited representative character as it is not based on all the items in the series. Unrealistic:- When the median is located somewhere between the two middle values, it remains only an approximate measure, not a precise value. Lack of algebraic treatment: - Arithmetic mean is capable of further algebraic treatment, but median is not. For example, multiplying the median with the number of items in the series will not give us the sum total of the values of the series. When the number of items are small, median may not be representative, because it is a positional average.

3. MODE

In statistics, the mode is the value that occurs the most frequently in a data set or a probability distribution. In some fields, notably education, sample data are often called scores, and the sample mode is known as the modal score.

MERITS OF MODE

Simple and popular: - Mode is very simple measure of central tendency. Sometimes, just at the series is enough to locate the model value. Because of its simplicity, its a very popular measure of the central tendency. Less effect of marginal values: - Compared top mean, mode is less affected by marginal values in the series. Mode is determined only by the value with highest frequencies. Graphic presentation:- Mode can be located graphically, with the help of histogram. Best representative: - Mode is that value which occurs most frequently in the series. Accordingly, mode is the best representative value of the series. No need of knowing all the items or frequencies: - The calculation of mode does not require knowledge of all the items and frequencies of a distribution. In simple series, it is enough if one knows the items with highest frequencies in the distribution. Extreme values (outliers) do not affect the mode. It represents the most typical value in the distribution. Allows you to see what value happened the most in a set of data. This can help you to figure out things in a different way. It is also quick and easy. It can be determined even if distribution has open end classes. It is value around which more concentrations of observations and hence the best representative of data.

DEMERITS OF MODE

Uncertain and vague: - Mode is an uncertain and vague measure of the central tendency. It may not be uniquely defined Example: X={1,1,2,2}, Mode(X)=1 or 2. Not capable of algebraic treatment: - Unlike mean, mode is not capable of further algebraic treatment. Difficult: - With frequencies of all items are identical, it is difficult to identify the modal value. Complex procedure of grouping:- Calculation of mode involves cumbersome procedure of grouping the data. If the extent of grouping changes there will be a change in the model value. Ignores extreme marginal frequencies:- It ignores extreme marginal frequencies. To that extent model value is not a representative value of all the items in a series. It is not based on all observations. It is not capable of further mathematical treatment. It is much affected by fluctuations of sampling. It is not suitable when different items of data are unequal importance. When no values repeat in the data set, the mode is every value and is useless.

4. VARIANCE

In probability theory and statistics, the variance is used as one of several descriptors of a distribution. It describes how far values lie from the mean. In particular, the variance is one of the moments of a distribution. In that context, it forms part of a systematic approach to distinguishing between probability distributions. While other such approaches have been developed, those based on moments are advantageous in terms of mathematical and computational simplicity.

MERITS OF VARIANCE

This variance analysis can lead to the identification of certain types of task that frequently overrun their budget whilst other tasks may be seen to regularly come in under their budget. Variance analysis is intrinsically connected with planned and actual results and effects of the difference between those two on the performance of the entity or company. Excellent measure of manufacturing efficiency and productivity. Helps you understand the root causes of deviations impacting your Profit & loss. Opportunities for improvement lie on both sides of the Variance equation. Variance analysis is a very important management tool to understand the cost behavior and take appropriate actions for controls where necessary. The analysis is used to monitor the areas where cost overrun are frequent to assess if the standard costs fixed for the activity or materials is reasonable or the process itself needs to be closely monitored. The analysis also identifies the areas of efficiency within the processes and can be used for rewarding the efficiency, just like it can be used to take corrective actions for areas with adverse variance. It must however be noted that this exercise must be properly carried out and analyzed before arriving at any conclusions. This variance analysis can lead to the identification of certain types of task that frequently overrun their budget whilst other tasks may be seen to regularly come in under their budget.

DEMERITS OF VARIANCE

The monitoring cycle can be so long that it renders the application of control impossible. Typically, by the time a problem has been identified through variance analysis it is too late to take corrective action. This is a major shortcoming of variance analysis and highlights the need for a monitoring system that depicts the current status of the project more effectively. One of the major disadvantages of variance analysis is that it a post-facto exercise and generally takes a longer time to assess the impact of the variance and consequently results in delayed corrective actions. This drawback can be effectively addressed by maintaining monitoring and data collecting systems that work more on real time basis as opposed to the traditional systems that provide the requisite data after a delayed gap after incurrence. Besides, the positives out of this exercise far out-weigh the disadvantages associated with this exercise.

5. STANDARD DEVIATION

In probability theory and statistics, the standard deviation of a statistical population, a data set, or a probability distribution is the square root of its variance. Standard deviation is a widely used measure of the variability or dispersion, being algebraically more tractable though practically less robust than the expected deviation or average absolute deviation. It shows how much variation there is from the "average" (mean or expected/budgeted value). A low standard deviation indicates that the data points tend to be very close to the mean, whereas high standard deviation indicates that the data is spread out over a large range of values.The standard deviation of a

statistical data is defined as the positive square root of the A.M of the squared deviations of items from the A.M. of the series under consideration.

**MERITS OF STANDARD DEVIATION
**

It is a rigidly defined measure of dispersion. It is based on all the observations. It is capable of being treated mathematically. For example, if standard deviations of a number of groups are known, their combined standard deviation can be computed. It is not very much affected by the fluctuations of sampling and therefore is widely used in sampling theory and test of significance. This takes care of both positive and negative deviation. It is based on every item of the data. It is least affected by variation in sampling. Standard deviation can be used to compare the dispersions of two or more distributions when their units of measurements and arithmetic means are same It is used to test the reliability of mean. It is amenable to algebraic treatment and possesses many mathematical properties. It is on account of these properties that standard deviation is used in many advanced studies. The standard deviation of a statistical data is defined as the positive square root of the A.M of the squared deviations of items from the A.M. of the series under consideration.

Squaring the difference has at least three advantages:

1. Squaring makes each term positive so that values above the mean do not cancel values below the mean. 2. Squaring adds more weighting to the larger differences, and in many cases this extra weighting is appropriate since points further from the mean may be more significant. 3. The mathematics are comparatively convenient when using this measure in subsequent statistical calculations. The standard deviation is reported as the square root of the variance and the units then correspond to those of the data set.The computation and notation of the

variance and standard deviation depends on whether we are considering the entire population or a sample set.

**DEMERITS OF STANDARD DEVIATION
**

As compared to the quartile deviation and range etc, it is difficult to understand and difficult to calculate. It gives more importance to extreme observation. Since it depends upon the units of measurement of the observations, it cannot be used to compare the dispersion of the distribution expressed in different units. Standard deviation is not easy to calculate, nor is it easily understood. In any case it is more cumbersome in its calculation than either quartile deviation or mean deviation. It gives more weight to extreme items and less to those which are near the mean, because the squares of the deviations, which are big in size, would be proportionately greater than the squares of those deviations which are comparatively small. Thus, deviation 2 and 8 are in the ratio of 1:4 but their square i.e, 4 and 64 would be in the ratio of 1 : 16. Conclusion: Despite the drawbacks mentioned above the standard deviation is the best measure of dispersion and should be used wherever possible. Just as mean is the best measure of central tendency (leaving exceptional cases) standard deviation is the best measure of dispersion, excepting a few cases where mean deviation or quartile deviation may give better results. However since standard deviation gives greater weight to extreme items, it does not find much favor with economists and businessmen who are more interested in the results of the model class.

Sign up to vote on this title

UsefulNot useful- Ungrouped Data
- Coumpound Interest and Mean Median
- Grouped and Ungrouped Data
- Chapter 3 - Describing Comparing Data
- Econ321Ch04
- Math212 Additional Notes
- Addmaths Project
- 221 Chapter3 Student
- 2005-05-10_104130_CI_and_meanmedian
- CI_and_meanmedian
- statistics
- Chapter 16 Measures of Dispersion
- test-bank-elementary-statistics-11th-edition-johnson.rtf
- 5ulangkaji T4 Statistic
- Introduction, Cont. ( script # 2 )
- Chap 003
- SM McClave Stat10 Wm
- Chapter 1 STATS PROB Part2
- Lesson4 Descriptive Statistics
- Dispersion Biostate
- Exercise Lesson 4,5,6
- MQM100_MultipleChoice_Chapter3
- Statistics 1
- Merits and Demerits of Arithemetic Mean
- add math statistics
- Practice Exam Chapter 3 Solution
- ch 13
- 3.MMS Lec3 (Dispersion)
- Mean,mode,median.doc
- Chap003 Describing Data Numerical Measures
- Mean

Are you sure?

This action might not be possible to undo. Are you sure you want to continue?

We've moved you to where you read on your other device.

Get the full title to continue

Get the full title to continue reading from where you left off, or restart the preview.

scribd