Measures of Dispersion

According to A.L.Bowley, “Dispersion is the measure of the variation of the items”

Average gives us single figure that represents the entire data. But the average alone cannot
adequately describe a set of observations until all the observations are the same. It is necessary
to describe the variability or dispersion of the observations. In two or more distributions, the
central value may be the same but still there can be wide disparities in the formation of
distribution. Measures of dispersion help us in studying this important characteristic of a
distribution.

Measures of dispersion studies the extent to which the items vary from some central value.

Methods of studying variation

The following are the important methods of studying the variation:

1. The Range

2. The Interquartile range and the Quartile Deviation

3. The Mean Deviation or Average Deviation

4. The standard Deviation

5. The Lorenz curve

From the above, the range and quartile deviation are potential measures because they depend
on the values at a particular position in the distribution. The mean deviation and standard
deviation are called calculation measures of deviation because all of the values are employed in
their calculation and the last one is graphical method.

Range

Range is the difference between largest and smallest value

Range = L – S

Coefficient of Range = L-S/L+S

Range Individual Observation

1. The following are the share prices of 5 companies

Company Share Price

1 250

2 260
 3 270

4 280

5 290

Largest value = 290

Smallest value = 250

Range = L-S = 290-250 = 40

Coefficient of Range = L-S/L+S = 40/540 = 0.074

Range Discrete Series

2. The following shows the number of policies sold by development officer through the agents:

Development

Officer : Arun Biswas Chandru Dinesh

No. of policies: 150 151 152 153

No.of Agents : 3 4 5 6

Range = L-S

= 153-150

Coefficient of Range = L-S/L+S

= 3/303

= 0.009

Range Continuous Series

The following shows the income of 5 employees:

Income No.of Employees

5000-10000 3

10000-15000 10
15000-20000 7

20000-25000 20

L = 25000 S = 5000

Range = L-S = 25,000 – 5,000 = 20,000

Coefficient of Range = L-S/L+S = 20,000/30,000

= 2/3 = 0.67

Inter-Quartile Range and Quartile Deviation:

The inter-quartile range means the range which includes the middle 50 per cent of the distribution.
That is one quarter of the observations at the lower end, another quarter of the observations at the
upper end of the distribution are calculated in calculating the interquartile range. Interquartile range
is the difference between the third quartile and the first quartile.

Inter-Quartile Range = Q3-Q1

Quartile Deviation = Q3-Q1

Coefficient of Quartile Deviation = Q3-Q1/Q3+Q1

Individual Observation:

The number of policies sold by the insurance agent is as follows:

Month :1 2 3 4 5 6 7

Policies sold: 14 11 18 15 13 12 16

14 11 18 15 13 12 16

Write the data in ascending order

11 12 13 14 15 16 18

Q1 = N+1/4

= 7+1/4 = 2nd observation

= 12

Q3 = 3(N+1/4) th observation = 3(2)

= 6th observation

= 16

Inter Quartile Range = Q3-Q1

 = 16-12 = 4

Quartile Deviation = Q3-Q1/2

= 4/2 = 2

Coefficient of Quartile Deviation

= Q3-Q1/Q3+Q1

= 4/28 = 0.143

Discrete Series:

Class : 5 6 7 8 9 10 11

Frequency : 8 13 16 23 15 12 6

Class : 5 6 7 8 9 10 11

Frequency : 8 13 16 23 15 12 6

Cumulative

Frequency : 8 21 37 60 75 87 95

Q1 = N+1/4 = 95+1/4 = 24

Q3 = 3(N+1/4) = 3*24 = 72

Interquartile Range = Q3-Q1

= 72 – 24

= 48

Quartile Deviation = Q3-Q1/2 = 48/2 = 24

Coefficient of Quartile Deviation

= Q3-Q1/Q3+Q1 = 48/72+24 = 48/96 = 0.5

Continuos Séries :

The following shows the turnover of the companies in millions:

Turnover of company No. of companies

Less than 10 24

10-20 29
20-30 34

30-40 41

40-50 37

50-60 30

More than 60 22

The following shows the turnover of the companies in millions:

Turnover of company No. of companies cf

Less than 10 24 24

10-20 29 53

20-30 34 87

30-40 41 128

40-50 37 165

50-60 30 195

More than 60 22 217

Q1 = L + ((N/4 – c.f)/f))*i

N/4 = 217/4 = 54.25

L = 20, f=34, cf = 53, i =10

Q1 = 20 + ((54.25 -53/34))*i

= 20 + (1.25/34)*10

= 20.367

Q3 = L + ((3N/4 – c.f)/f))*I

3N/4 = 3(54.25) = 162.75

L=40, f = 37, cf = 128, i =10

= 40 + ((162.75 – 128)/37))*10

= 40 + (34.75/37)*10

= 49.392

I.Q.R = Q3-Q1
 = 49.392 – 20.367 = 29.025

Q.D = 14.513

Coefft.of QD = Q3-Q1/Q3+Q1

= 14.513/69.759

= 0.208

The Mean Deviation:

To study the formation of distribution, we measure the deviation from the average. It is the average
difference between the items in a distribution and the median or mean of that score.

Individual observation

Find the mean deviation and its coefficient for the following data:

Income: 3,000 5,000 5,200 5,400 4,600 4,800 5,800

3,000 5,000 5,200 5,400 4,600 4,800 5,800

Ascending values are 3,000 4,600 4,800 5,000, 5,200 5.400 5,800

We have 7 values, Assumed mean is 3.5th observation i.e 4th observation = 5,000

X lDl = lX-Al

3000 2000 M.D = ∑lDl/N

5000 0 = 4100/7

5200 200 = 585.714

5400 400

4600 500 Coefficient of M.D = M.D/Median

4800 200 Median = ((N+1)/2)th observation

5800 800 = ((7+1)/2)th observation

------ = 4th observation = 5400

4100 Coefficient of M.D = 585.714/5400

= 0.108

Discrete Series

The number of CFL lamps in a given table.Find M.D and its coefficient for the following data

No.of CFL (x) Number of houses (f)

1 3

2 7

3 6

4 4

No.of CFL (x) Number of houses(f) lDl =lX-Al flDl cf

1 3 1 3 3

2 7 0 0 3

3 6 1 6 9

4 4 2 8 17

---- -----

20 17

---- -----

M.D = ∑flDl/∑f = 17/20 = 0.85

Median = (N+1)/2 = 17+1/2 = 9th observation

=3

Coefficient of M.D = M.D/Median = 0.85/3

= 0.283

M.D Continuous Series

Calculate mean deviation for the following data:

Age (years) : 4-6 4-8 8-10 10-12 12-14 14-16

No.of Students: 30 90 120 150 80 60

Age (years) : 4-6 6-8 8-10 10-12 12-14 14-16 No.of Students:30 90 120 150 80 60

X m f lDl flDl cf

4-6 5 30 4 120 30

6-8 7 90 2 180 120

8-10 9 120 0 0 240

10-12 11 150 2 300 390

12-14 13 80 2 160 470

14-16 15 60 2 120 530

--- -----

530 880

M.D = ∑flDl/∑f = 880/530 = =1.660

Coefft. Of M.D = M.D/Median

Median = L +((N/2-cf)/f)*i

N/2 = 265

L = 10, f= 150, c.f = 240 , i =2

= 10 +((265-240)/150)*2

= 10.333

Coefft.of M.D = M.D/Median = 1.660/10.333

= 0.161

Standard Deviation – Individual observation

The following data shows the number of cars sold during 7 months

Month : Jan Feb March April May June July

No.of cars: 90 100 110 120 130 140 150

Find the standard deviation for the above data

X d = X-A d2

90 -30 900

100 -20 400

110 -10 100

120 0 0

130 10 100

140 20 400

150 30 900

---- -----
 0 2800

Standard deviation = √∑d2 /N - (∑d/N) 2

=
√2800/7

= 20

Discrete Series

The number of CFL lamps in a house is given below:

No. of CFLs (X) : 1 2 3 4

No.of houses (f) : 3 8 5 6

X f d = X-A d2 fd fd2

1 3 -1 1 3 3

2 8 0 0 0 0

3 5 1 1 5 5

4 6 2 4 12 24

--- --- ---

22 20 32

Standard Deviation = √∑fd2 /N - (∑fd/N) 2

Here N = ∑f

Standard deviation = √((32/22) – (20/22) 2 )

= √ 1.455 -0.826

= 0.793

Continuous Series:

The following gives details of the price of the share of XYZ during the particular month. Find the
standard deviation of the data:

Share Price:100-150 150-200 200-250 250-300

No.of Companies: 5 7 9 12

Share Price:100-150 150-200 200-250 250-300

No.of Companies: 5 7 9 12

X f m d=m-a/i d2 fd fd2

100-150 5 125 -1 1 -5 5

150-200 7 175 0 0 0 0

200-250 9 225 1 1 9 9

250-300 12 275 2 4 24 48

---- --- ---

33 28 62

Standard Deviation = √∑fd2 /N - (∑fd/N) 2

Here N = ∑f

= √((62/33) – (28/33) 2 ) * 50

= √ 1.878 -0.720 = 1.07 * 50

= 53.5

Combined Mean and Combined Standard Deviation

An analysis of the monthly wages paid to workers in two firms A and B belonging to the same
industry, gave the following results:

Firm A Firm B

Number of Workers: 160 150

Average Wage : 550 575

Variance of wage distribution 400 625

Which firm pays larger amount as monthly wages?

In which firm is there greater variability in individual wages?

Calculate the combined standard deviation for the above data.

Larger amount of wages:

Firm A : 160 * 550 = Rs.88,000

Firm B : 150 * 575 = Rs.88,500

Combined Mean X12 = (N1X1 + N2 X2)/ N1+N2

= (88,000+ 86,250)/1125

= 174250/1125 = 175.375

Combined standard deviation σ12

= √ (N1 (σ1)2 + N2 (σ2)2 + N1 (d1)2 +

N2 (d2)2 )/N1+N2

d1 = l X12 - X 1 l = l175.375 -550l

= 374.625

d2 = l X12 - X 1 l = l 175.375 -575l

= 399.625

σ12 = √ ( 160* 400 + 150 * 625) + 160 * (374.625)2 + 150 *

(399.625)2 )/ 310

= Rs. 920.059

Coefficient of variation (C.V for Firm A) = (σ1/X 1 )*100

= (20/550)*100

= 3.636%

Coefficient of variation (C.V for Firm B) = (σ1/X 1 )*100

= (25/575)*100

= 4.34%

Firm B has more variability in paying wages.

Coefficient of Variation:

This method developed by Karl Pearson. It is commonly used measure of relative variation.
Coefficient measure the variability of two or more series.

Following are the records of two players regarding their performance in cricket matches.

 Scores of Player A: 48 52 55 60 65 45 63 70

 Scores of Player B: 33 35 80 70 100 15 41 25

Which player is more consistent in his performance?

Column1

Mean 58.57142857

Standard Error 3.213491965

Median 60

Mode #N/A

Standard Deviation 8.502100581

Sample Variance 72.28571429

Kurtosis -0.478338984

Skewness -0.372379493

Range 25

Minimum 45

Maximum 70

Sum 410

Count 7

For Player B

Column1

Mean 52.28571429

Standard Error 11.87176379

Median 41

Mode #N/A

Standard Deviation 31.40973461

Sample Variance 986.5714286

Kurtosis -1.341833562

Skewness 0.427106157

Range 85

Minimum 15

Maximum 100

Sum 366

Count 7

C.V for Player B = (σ/X )*100

= (11.8716379/52.28571429)*100

= 22.70556%

Since C.V of player A is lesser than C.V of B and hence player A is more consistent.

Coefficient of Variation – Discrete Series

From the following data of the heights of hundred persons in a commercial concern, determine the
coefficient of variation for the following data:

Height in inches: 58 60 61 62 63 64 65 66 68 70

No. of persons : 4 6 5 10 20 22 24 6 2 1

X f d = X-63 d2 fd f d2

58 4 -5 25 -20 100

60 6 -3 9 -18 36

61 5 -2 4 -10 20

62 10 -1 1 -10 10

63 20 0 0 0 0

64 22 1 1 22 22

65 24 2 4 48 96

66 6 3 9 18 54

68 2 5 25 10 50
70 1 7 49 7 49

100 7 127 47 437

C.V = (σ/X )*100

σ = √ ( f d2/N) – (fd/N)2

= 2.0369

X = A + ∑fd/N

C.V = (2.0369/63.47)*100 = 3.209%

Coefficient of Variation – Continuous Series

The following table shows that monthly expenditures of 80 students of a University on morning
breakfast:

Expenditure (in Rs.) No. of Students

78-82 2

73-77 5

68-72 8

63-67 10

58-62 20

53-57 13

48-52 9

43-47 5

38-42 6

33-37 2

X m f d = (m-A)/i d2 fd f d2

33-37 35 2 -4 16 -8 32
38-42 40 5 -3 9 -15 45

43-47 45 8 -2 4 -16 32

48-52 50 10 -1 1 -10 10

53-57 55 20 0 0 0 0

58-62 60 13 1 1 13 13

63-67 65 9 2 4 18 36

68-72 70 5 3 9 15 45

73-77 75 6 4 16 24 46

78-82 80 2 5 25 10 20

C.V = = (σ/X )*100

σ = √ ( f d2/N) – (fd/N)2 )*I

= 8.803

X= A + ∑fd/N

= 55 +(31/80)*5

= 56.938

C.V = (8.803/56.938)*100

= 15.461%

Graphical Representation of Data:

 It gives the visual representation of data.

 The information presented is easily understood
 The interpretation of data is easy

In any business environment, a variety of diagrams are used. The frequently used diagrams are:

1. One dimensional diagrams, e.g bar diagrams

2. Two-dimensional diagrams, e.g. rectangles, squares and circles.

3. Three dimensional diagrams, e.g, cubes, cylinders and spheres.

4. Pictograms and cartograms

Types of bar diagrams

(i) Simple bar diagrams

(ii) Sub divided bar diagrams

(iii) Multiple bar diagrams

2.Pie diagram

3.Curves

Simple bar diagram

The fixed assets of ABC ltd, from 2016-17 to 2018-19 are as follows:

Year : 2016-17 2017-18 2018-19

Fixed ssets (Rs.Lakh) : 410 520 630

Multiple bars

The following data shows the sales revenue and advertisement expenditure of XYZ ltd.

Year Sales (Rs.lakhs) Advertisement Expenditure (Rs.lakhs)

2015-16 33.9 20.8

2016-17 40.1 30.3

2017-18 50.6 40.3

2018-19 60.8 50.7

Sub divided bar diagram

Pie Diagram and Curves

The fixed assets of ABC ltd, from 2016-17 to 2018-19 are as follows:

Year : 2016-17 2017-18 2018-19

Fixed ssets (Rs.Lakh) : 410 520 630

Scatter Diagram