BSECE-4B

ASSIGNMENT NO. 5
Weighted mean, Harmonic mean
Geometric mean

What is a Weighted Mean?

A weighted mean is a kind of average. Instead of each data point contributing equally to the final mean,
some data points contribute more “weight” than others. If all the weights are equal, then the weighted
mean equals the arithmetic mean.

A weighted mean is a kind of mean where some values contribute more than others.

Weighted Mean Formula

∑𝒏𝒊=𝟏(𝒙𝒊 ∗ 𝒘𝒊 )
∑𝒏𝒊=𝟏 𝒘𝒊
Where 𝑤𝑖 is a weight indicating the relative importance of the 𝑖th observation. Or, we can simply write it
in this way:

∑(𝒘𝒙)
∑𝒘
Where, Σ = summation
w = the weights
x = the value

Examples:
1. Kath wants to buy a new car, and decides on the following rating system:
Appearance 10%
Reliability 40%
Miles per gallon 20%
Comfort 30%

The Coyota car gets 5/10 for Appearance, 9/10 for Reliability, 7/10 for Miles per gallon and
6/10 for Comfort.
 The Fonda car gets 6/10 for Appearance, 10/10 for Reliability, 8/10 for Miles per gallon
and 4/10 for Comfort.
The Hadillac car gets 4/10 for Appearance, 7/10 for Reliability, 3/10 for Miles per gallon
and 9/10 for Comfort.
The Tord car gets 7/10 for Appearance, 6/10 for Reliability, 9/10 for Miles per gallon and
3/10 for Comfort.
Which car is best?

Solution:

. 𝟏(𝟓)+. 𝟒(𝟗)+. 𝟐(𝟕)+. 𝟑(𝟔)

𝑪𝒂𝒚𝒐𝒕𝒂 = = 𝟕. 𝟑, 𝒕𝒉𝒆 𝒔𝒄𝒐𝒓𝒆 𝒊𝒔 𝟕. 𝟑 𝒐𝒖𝒕 𝒐𝒇 𝟏𝟎
𝟏
. 1(6) + .4(910) + .2(8) + .3(4)
𝐹𝑜𝑛𝑑𝑎 = = 7.4, 𝑡ℎ𝑒 𝑠𝑐𝑜𝑟𝑒 𝑖𝑠 7.4 𝑜𝑢𝑡 𝑜𝑓 10
1
. 1(4) + .4(7) + .2(3) + .3(9)
𝐻𝑎𝑑𝑖𝑙𝑙𝑎𝑐 = = 6.5, 𝑡ℎ𝑒 𝑠𝑐𝑜𝑟𝑒 𝑖𝑠 6.5 𝑜𝑢𝑡 𝑜𝑓 10
1
. 1(7) + .4(6) + .2(9) + .3(3)
𝑇𝑜𝑟𝑑 = = 5.8, 𝑡ℎ𝑒 𝑠𝑐𝑜𝑟𝑒 𝑖𝑠 5.8 𝑜𝑢𝑡 𝑜𝑓 10
1

Therefore, the best car is Cayota car.

2. If the grading system in Advance Math is given below, at least how much score do you need to get
on the final exam if you got 67/150 on the prelim exam, 138/200 on midterm exam and 78/150; to
pass the course. Given that you already have 15% for your active participation in class.

Grading System
Participation 20%
Examinations: 80%
Prelim Exam 15%
Midterm Exam 20%
Pre-final Exam 15%
Final Exam 30%
Total: 100%
Passing Grade: 70%

Solution:
67 138 78 70 − 43.3 = 26.7
15 + 15 ∗ + 20 ∗ + 15 ∗ 𝒙
150 200 150 𝟐𝟔. 𝟕 = 𝟑𝟎 ∗ , 𝒙 = 𝟐𝟔𝟕
= 43.3 𝟑𝟎𝟎

Difference between Arithmetic Mean and Harmonic Mean

The arithmetic mean is simply computed by adding all the values together and dividing by the number of
values in a set, it does not consider the weights of each element in the set while the weighted mean
considers the weights.

When we get the arithmetic mean we give equal weights in each elements.

Merits of Weighted mean:

• It is an appropriate average for averaging ratios and rates.
• It considers the values of each elements

Demerits of Weighted mean:

• Its calculation is more complex
• It can be easily influenced by outliers in your data. If you have very high or very low values in your
data set, the weighted mean may not be a good statistic to rely on.

What is a Harmonic Mean?

It is one of the different kind of average that is applied for the situations when you have desired rates of
average. It is the reciprocal of the arithmetic mean and is calculated by dividing the number of observations
by the sum of the reciprocal of the observation.

Harmonic Mean Formula

𝒏 Where, n = total number of terms
𝑯= x = individual terms or individual
𝟏 𝟏 𝟏 𝟏
+ + + ⋯ + values
𝒙𝟏 𝒙𝟐 𝒙𝟑 𝒙𝒏
Examples:
 1. Find the harmonic mean of the following data [8, 9, 6, 11, 10, 5]?

Solution:
𝑛
𝐻=
1 1 1 1
+ + + ⋯+
𝑥1 𝑥2 𝑥3 𝑥𝑛

6
𝐻=
1 1 1 1 1 1
+ + + + +
8 9 6 11 10 5

𝑯 = 𝟕. 𝟓𝟔𝟎

2. A cyclist pedals from his house to his college at a speed of 10 m.p.h. and back from the college to
his house at 15 m.p.h. Find the average speed.

Solution:
Let, x = distance
T = 2x
𝑥 𝑥
t = ( + )ℎ𝑟𝑠.
10 15

𝑡𝑜𝑡𝑎𝑙 𝑑𝑖𝑠𝑡𝑎𝑛𝑐𝑒 𝑡𝑟𝑎𝑣𝑒𝑙𝑙𝑒𝑑 2𝑥

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑠𝑝𝑒𝑒𝑑 = = 𝑥 𝑥
𝑡𝑜𝑡𝑎𝑙 𝑡𝑖𝑚𝑒 𝑡𝑎𝑘𝑒𝑛 +
10 15
𝟐
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝒔𝒑𝒆𝒆𝒅 = = 𝟏𝟐 𝒎. 𝒑. 𝒉.
𝟏 𝟏
+
𝟏𝟎 𝟏𝟓
𝟐𝒗𝟏 𝒗𝟐
Note: The average speed on the roundtrip is
𝒗𝟏 +𝒗𝟐

Difference between Arithmetic Mean and Harmonic Mean

The arithmetic mean is simply computed by adding all the values together and dividing by the number of
values in a set and used when the data are not skewed. While Harmonic mean is best used where
extreme outliers exist in the population.

Using Arithmetic mean;

 35+48+35+40+50+35+35+40+150+35+40+35+45+45
x= = 47.7
14

Using Harmonic mean;

14
H= 1 1 1 1 1 1 1 1 1 1 1 1 1 1 = 41.4
+ + + + + + + + + + + + +
35 48 35 40 50 35 35 40 150 35 40 35 45 45

Merits of Harmonic mean:

• It is based on all observations.

• It not much affected by the fluctuation of sampling.
• It is capable of algebraic treatment.
• It is an appropriate average for averaging ratios and rates.
• It does not give much weight to the large items.

Demerits of Harmonic mean:

• Its calculation is difficult.

• It gives high weightage to the small items.
• It cannot be calculated if any one of the items is zero.
• It is usually a value which does not exist in the given data.

What is Geometric Mean?

The geometric average should be used much more frequently than we suspect it is, especially when
discussing average investment returns or interest rates.
Use the geometric average should be used whenever the data are inter-related–for example, when
discussing returns on investment or interest rates. Using the arithmetic average will result in the wrong
answer in these cases.

Geometric Mean Formula

𝑮𝑴 = 𝒏√𝒙𝟏 ∗ 𝒙𝟐 ∗ 𝒙𝟑 … . 𝒙𝒏 Where, n = total number

𝑥𝑖 = numbers

Examples:
1. An investor invests $100 and receives the following returns:

Year 1: 3% Year 4: -1%

Year 2: 5% Year 5: 10%
Year 3: 8%
Solution:
The $100 grew each year as follows:
Year 1: $100 x 1.03 = $103.00
Year 2: $103 x 1.05 = $108.15
Year 3: $108.15 x 1.08 = $116.80
Year 4: $116.80 x 0.99 = $115.63
Year 5: $115.63 x 1.10 = $127.20

The geometric mean is: [(1.03*1.05*1.08*.99*1.10) ^ (1/5 or .2)]-1= 4.93%. The average return per year is
4.93%, slightly less than the 5% computed using the arithmetic mean. Actually as a mathematical rule, the
geometric mean will always be equal to or less than the arithmetic mean.

In the above example the returns did not show very high variation from year to year. However, if a portfolio
or stock does show a high degree of variation each year, the difference between the arithmetic and
geometric mean is much greater.

2. An investor holds a stock that has been volatile with returns that varied significantly from year to
year. His initial investment was $100 in stock A, and it returned the following:

Year 1: 10%
Year 2: 150%
Year 3: -30%
Year 4: 10%

Solution:

In this example the arithmetic mean would be 35% [(10+150-30+10)/4].

However, the true return is as follows:

Year 1: $100 x 1.10 = $110.00

Year 2: $110 x 2.5 = $275.00
Year 3: $275 x 0.7 = $192.50
Year 4: $192.50 x 1.10 = $211.75

The resulting geometric mean, or a compounded annual growth rate (CAGR), is 20.6%, much lower than
the 35% calculated using the arithmetic mean.