ASSIGNMENT

DRIVE Spring 2015

PROGRAMBBA SEMESTER 1 SUBJECT CODE & BBA104 NAME QUANTITATIVE TECHNIQUES IN

BUSINESS BK ID B1500 CREDITS 2 MARKS 30

QNO1 What do you mean by Measures of Central Tendency? Explain the Measures of Central
Tendency.

Meaning of Measures of Central Tendency 3 10

Explanation of the Measures of Central Tendency (Arithmetic Mean, 7 Geometric Mean,

Median, Mode)

ANSWER -

The most important objective of statistical analysis is to determine a single value for the entire mass of
data, which describes the overall level of the group of observations. It is a single figure and describes the
entire series of observations with their varying sizes. A single number describing some features of a
frequency distribution is called descriptive statistics. There are various ways in which frequency curves
can differ from one another. Even though the „general‟ shapes of the curves are the same (the area
under them is already made equal by the strategy of plotting the percent density), the details of the
shape may change. Fig 3.1 shows the curve B has a smaller spread than A. Even though the curves have
almost the same shape as in curves A and C, the two may differ in location along the variable axis. Thus
items of C are generally larger than those of A. Thus, a kind of an „average‟ location of the distribution
along the variable axis is an important descriptive statistics. These statistics are collectively known as
measures of location or of central tendency. Since a typical value usually occupies a central position, so
that some observations are larger and some others are smaller than it, and termed as averages or
measures of central tendency.

There are three measures of central tendency-Mean, Median, and Mode. Again Mean is of
three types-Arithmetic Mean (A.M), Geometric Mean (G.M), and Harmonic Mean (H.M). The words
„mean‟ and „average‟ only refers to Arithmetic Mean.
 While, Arithmetic Mean is the most commonly used measure of central location, mode and
median are more suitable measures under certain set of conditions and for certain types of data.
However all measures of Central Tendency should meet the following requisites:

a) It should be easily calculated.

b) It should be rigidly defined.

c) It should have sampling stability.

d) It should be affected as little as possible by sampling fluctuations. This means that if we collect 10
different groups of components from a lot at random and we compute the average of each group, then
we should expect to get approximately the same value from these groups.

e) It should be based on all observations.

f) It should be readily comprehensible.

Arithmetic Mean

Arithmetic Mean is the most widely used measure of central Tendency. Before the discussion of the
arithmetic mean, we shall introduce certain notations.

Median

Median of distribution is that value of the variety which divides it into two equal parts. The median is
simply the middle point of a set of values or scores. It is the point, in a set of values, at which one half of
the scores fall above and one half falls below. The median is a midpoint observation.

Mode

The mode can be defined as “the most frequently occurring value in the data.” The mode is not
influenced by the extreme values in the data and can easily be obtained from an ordered array data. It
can be useful and more representative of the data under certain situations and is the only measure of
the central tendency that can be used for qualitative data. For example, when a teacher quotes the
opinion of the “average student,” he is probably referring to the most frequently expressed opinion,
which is the “modal” opinion. For example, the ages of 15 students are as follows: 19 20 23 23 23 23 24
23 25 16 24 24 15 27 23. The mode is 23, since it occurs more often than any other value in this data.
2 Briefly explain the following:

a) Cumulative frequency distribution

b) Pie Chart

c) Bar Chart

d) Histogram

e) Frequency polygon

Explanation of Cumulative frequency distribution 2 10

Explanation of Pie Chart 2

Explanation of Bar Chart 2

Explanation of Histogram 2

Explanation of Frequency polygon 2

Answer –

Cumulative frequency distribution

This can be determined from a „cumulative frequency distribution‟. The cumulative frequency
distribution is a modified form of frequency distribution, as shown in table 2.3. In a given row, the value
of the last column is the cumulative value of the frequencies shown in its last but one column up to that
value.

Pie chart

Pie chart is a circle whose area is divided proportionately among the different components by straight
lines drawn from the center to the circumference of the circle. When statistical data are given for a
number of categories, and we are interested in the comparison of the various categories or between a
part and the whole, such a chart is very helpful in effectively displaying the data. The chart can be drawn
with the help of a compass and a protractor. A numerical example has been demonstrated its
application.
Bar chart

In bar charts, we make use of rectangles to present the given data. It consists of a group of equispaced
rectangular bar, one for each category (or class) of given statistical data. The bars starting from a
common base line must be of equal width and their lengths represent the value of statistical data. A bar
chart can be set up in different forms: vertical, horizontal. Vertical bars are used to represent time series
data or data classified by the values of a variable. Horizontal bars are used to depict data classified by
attributes only.

Histogram

In the representation of „histogram‟, the given data are plotted in the form of series of rectangles. Class
intervals are marked along the X-axis and the frequencies along the Y-axis according to a suitable scale.
Unlike the bar chart, which is one dimensional meaning that only the length of the bar material and not
the width, a histogram is two-dimensional in which the length and the width are important. A histogram
is constructed from a frequency distribution of grouped data, where the height of the rectangle is
proportional to the respective frequency and the width represents the class interval.

Frequency polygon

A „frequency polygon‟ is a line chart of frequency distribution in which either the values of discrete
variables or the mid-points of class intervals are plotted against the frequencies and these plotted points
are joined together by straight lines. Since the frequencies don’t start at zero or end at zero, this
diagram as such would not touch the horizontal axis. However, since the area under the entire curve is
the same as that of a histogram which is 100%, the curve must be „enclosed.‟ The starting mid-point is
joined with a „fictitious‟ preceding mid-point whose value is zero. This makes the beginning of the curve
touch the horizontal axis. The last mid-point is joined with a „fictitious‟ succeeding mid-point, whose
value is also zero. Now, the curve will end at the horizontal axis. The enclosed diagram is known as the
„frequency polygon‟.
3 a. Explain the methods of determining trend in time series.

b. Fit a straight line trend by method of least squares to the following data:

Meaning of Trend 2

Methods of determining Trend 3

Fitting a straight line trend by method of least squares 5

Answer –

Trend is a smooth regular and long term movement of time series exhibiting the basis tendency to grow
decline or stagnate over a period of time.

Measurement of Trend or Secular Trend

There are four possible methods of secular trend which are the following: 1. Free hand method or
graphic method

2. Semi-average method

3. Moving average method

4. Least square method of fitting mathematical curves

Method of least Squares:

This is the most widely used method and provides us with a mathematical device to obtain an objective
fit to the trend of a given time series. This method can be used to fit either a straight line trend .The
straight line trend has an equation of the type: bXaY c  

Where c Y denotes the trend value of the dependent variable i.e. of the Y series. X is the independent
variable i.e. time series of X series. The constants a denotes the value of c Y when 0

X and bdenoting the change of c Y for a unit change in X variable.

In order to determine the value of the constants a & b the following normal equations are to
be solved

Where nrepresents the number of years in the series .We can understand it with an example:

Following table shows the computation for fitting a straight line trend by method of least squares

Where nrepresents the number of years in the series .We can understand it with an
example: Following table shows the computation for fitting a straight line trend by method of least
squares