QUANTITATIVE TECHNIQUES FOR BUSINESS

LESSON 11:
MEDIAN, QUARTILES AND MODE

Median is defined as the value of the middle item (or the mean l2 = the upper limit of the class in which the median lies
of the values of the two middle items) when the data are f = the frequency of the class in which the median lies
arranged in an ascending or descending order of magnitude.
c= the cumulative frequency of the class preceding the one in
Thus, in an ungrouped frequency distribution if the n values are
which the median lies
arranged in ascending or descending order of magnitude, the
median is the middle value if n is odd. When n is even, the Let us take an example of a frequency distribution for which the
median is the mean of the two middle values. median is to be calculated.
Suppose we have the following series:
Monthly Wages (Rs) No. of Workers
15, 19, 21, 7, 33, 25, 18 and 5
We have to first arrange it in either ascending or descending 800-1,000 18
order. These figures are arranged in an ascending order as 1,000-1,200 25
follows:
1,200-1,400 30
5, 7, 10, 15, 18, 19, 21, 25, 33
Now as the series consists of odd number of items, to find 1,400-1,600 34
out the value of the middle item, we use the formula 1,600-1,800 26
N +1 1,800-2,000 10
2
Where n is the number of items. In this case, n is 9, as such Total 143
N +1 In order to calculate median in this case, we have to first provide
= 5, that is the size of the 5th item is the median.
2 cumulative frequency to the table. Thus, the table with the
This happens to be 18. cumulative frequency is written as:
Suppose the series consists of one more item, 23. We
Monthly Wages Frequency Cumulative Frequency
may, therefore, have to include 23 in the above series at an
appropriate place, that is, between 21 and 25. Thus, the series is 800-1,000 18 18
now 5, 7, 10, 15, 18, 19, 21, 23, 25, and 33. Applying the above
1,000-1,200 25 43
formula, the median is the size of 5.5th item. Here, we have to
take the average of the values of 5th and 6th item. This means an 1,200-1,400 30 73
average of 18 and 19, which gives the median as 18.5.
1,400-1,600 34 107
N +1 1,600-1,800 26 133
It may be noted that the formula itself is not the
2
1,800-2,000 10 143
formula for the median; it merely indicates the position of the
median, namely, the number of items we have to count until
we arrive at the item whose value is the median.
N 143
Determination of Median in a Now, Median is the value of = = 71.5th item, which lies
2 2
Continuous Frequency Distribution
In the case of a continuous frequency distribution, we first in the class (1,200-1,400). Thus (1,200-1,400) is the median
locate the median class by cumulating the frequencies until class. For determining the median in this class, we use interpola-
tion formula as follows:
th
N  N
  point is reached. Finally, the median is calculated byy −c
 2
M = l1 + 2 ( l 2 − l1 )
linear interpolation with the help of the following formula: f

N 71.5 − 43
−c = 1200 + ( 200)
M = l1 + 2 ( l 2 − l1 ) 30
f
= Rs 1393.2
Where M = the median
l1 = the lower limit of the class in which the median lies

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 Quartiles Table Computation of Median
QUANTITATIVE TECHNIQUES FOR BUSINESS

At this stage, let us introduce two other concepts viz. quartile

and decile. To understand these, we should first know what the Size of Item Frequency Cumulative Frequency
median belongs to a general class of statistical descriptions
Below 50 15 15
called fractiles. A fractile is a value below which lies a given
fraction of a set of data. In the case of the median this fraction 50-100 20 35
is one-half (1/2). Likewise, a quartile has a fraction one-fourth 100-150 36 71
(1/4). The three quartiles Q1, Q2 and Q3 are such that 25 percent
of the data fall below Q1, 25 percent fall between Q1 and Q2, 25 150-200 40 111
percent between Q2 and Q3, and 25 percent fall above Q3. It will 200 and above 10 121
be seen that Q2 is the median. We can use the above formula for
the calculation of quartiles as well. The only difference will be in
the value of N. Let us calculate both Q1 and Q3 in respect of the th
table given in Example. N 
Median is size   item
 2 
N
−c
= 121/2= 60.5th item
Q1 = l 1 + 4 ( l 2 − l 1)
Now, 60.5th item lies in the 100-150 class

143 N
− 18 −c
Q1 = 1,000 + 4 (1, 200 − 1,000) Now, M = l1 + 2 (l 2 − l 1 )
25 f
= Rs.1,144 = 136.11 approx.
In the case of Q3 the formula will be Let us take another example.
3N Example
−c
Q3 = l 1 + 4 (l 2 − l 1 ) The following data give the savings bank accounts balances of
f nine sample households selected in a survey. The figures are in
rupees.
Deciles and Percentiles
74 2,000 1,500 68,000 461 549 3,750 1,800 4,795
In the same manner, we can calculate deciles (where the series is
divided into 10 parts ) and percentiles (where the series is a. find the mean and the median for these data.
divided into 100 pats ). b. Do these data contain an outlier? If so, exclude this value
It may be noted that unlike arithmetic mean, median is not and recalculate the mean and median. Which of these
affected at all by extreme values as it is a positional average. As summary measures has a greater change when an outlier is
such, median is particularly very useful when a distribution dropped?
happens to be skewed. Another point that goes in favour of c. Which of these two summary measures is more appropriate
median is that it can be computed when a distribution has for this series?
open-end classes. median is that it can be computed when a
Solutions
distribution has open-end classes. Yet, another merit of median
is that when a distribution contains qualitative data, it is the Mean =Rs 745 + 2 ,000 + 1, 500 + 68, 000 + 461 + 549 + 3,750 + 1,800 + 4,795
9
only average that can be used. No other average is suitable in 83,600
case of such a distribution. Let us take a couple of examples to = Rs.
9
illustrate what has been said in favour of median.
= Rs 9,289.
Example
Calculate the most suitable average for the following data:  N + 1
th

Size of the Item Below 50 50-100 100-150 150-200 200 and above Median = Size of   item
 2 
Frequency 15 20 36 40 10
th
Solutions  9 +1 
=   = 5th item
Since the data have two open-end classes- one in the beginning  2 
(below 50 ) and the other at the end (200 and above), median Arranging the data in an ascending order, we find that the
should be the right choice as a measure of central tendency. median is Rs 1,800.
b. An item of Rs 68,000 is excessively high. Such a figure is
called an ‘outlier’ .We exclude this figure and recalculate both the
mean and the median.

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56 11.203
 QUANTITATIVE TECHNIQUES FOR BUSINESS
83,000 − 68,000
Mean =Rs Marks less than ‘Less than’ c.f. Marks more than ‘More than’ c.f.
8
5 7 0 100
15,600 10 17 5 93
= Rs = Rs 1,950
8 15 37 10 83
20 50 15 63
th
 N + 1 25 67 20 50
Median = Size of   item
 2  30 77 25 33
35 91 30 23
8 +1
= = 4.5th item 40 100 35 9
2

1,500 + 1,800 Here, from the graph we can see that the median is 20.
= Rs = Rs .1,650
2 Mode
The mode is another measure of central tendency. It is the value
at the point around which the items are most heavily concen-
It will be seen that the mean shows a far greater change than the
trated. As an example, consider the following series:
median when the outlier is dropped from the calculations.
8, 9, 11, 15, 16, 12, 15, 3, 7, 15
c. As far as these data are concerned, the median will be a more
appropriate measure than the mean. There are ten observations in the series wherein the figure 15
occurs maximum number of times- three. The mode is
Graphical Location of Median and Partition Values therefore 15. The series given above is a discrete series; as such,
For grouped data, median and partition values can also be the variable cannot be in fraction. If the series were continuous,
calculated with the help of cumulative frequency curves or we could say that the mode is approximately 15, without
ogives. The procedure involves the following steps: further computation.
1. Obtain ‘less than’ and ‘more than’ cumulative frequencies for In the case of grouped data, mode is determined by the
the given grouped data. following formula:
2. Draw ‘less than’ and ‘more than’ cumulative frequency
f1 − f 0
curves, or ‘ogives’ Mode = l 1 + ( f − f ) + ( f − f ) × i
1 0 1 2
3. From the intersecting point of two ogives, draw a
perpendicular on X-axis.
4. The point where perpendicular touches X-axis is the median Where, l1 = the lower value of the class in which the mode lies
value. f1= the frequency of the class in which the mode lies
We will understand it with the help of following example. f 0 = the frequency of the class preceding the modal class
Example f 2 = the frequency of the class succeeding the modal class
Determine median graphically from the following data. i = the class- interval of the modal class
Marks No. of Students While applying the above formula, we should ensure that the
0-5 7 class-intervals are uniform throughout. If the class-intervals are
5-10 10 not uniform, then they should be made uniform on the
10-15 20 assumption that the frequencies are evenly distributed through-
15-20 13 out the class. In the case of inequal class-intervals, the
20-25 17 application of the above formula will give misleading results.
25-30 10 Example
30-35 14 Let us take the following frequency distribution:
35-40 9
Solution Class intervals (1) Frequency (2)
First we obtain ‘less than’ and ‘more than’ cumulative frequen- 30-40 4
cies as shown in the table.
40-50 6
50-60 8
60-70 12
70-80 9
80-90 7
90-100 4

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QUANTITATIVE TECHNIQUES FOR BUSINESS

We have to calculate the mode in respect of this series.

Solution
We can see from Column (2) of the table that the maximum
frequency of 12 lies in the class-interval of 60-70. This suggests
that the mode lies in this class-interval. Applying the formula
given earlier, we get:
12 − 8
Mode = 60 + (12 − 8 ) + 12 − 9 ) × 10

4 A Positively Skewed Distribution

= 60 + × 10
4 +3
= 65.7 approx.
In several cases, just by inspection one can identify the class-
interval in which the mode lies. One should see which is the
highest frequency and then identify to which class-interval this
frequency belongs. Having done this, the formula given for
calculating the mode in a grouped frequency distribution can be
applied
Comparison of the Mean, Median and
Mode A Negatively Skewed Distribution
Having discussed mean, median and mode, we now turn to the Given the mean and median of a unimodal distribution, we
relationship amongst these three measures of central tendency. can determine whether it is skewed to the right or left. When
We shall discuss the relationship assuming that there is an mean >median, it is skewed to the right; when median >mean,
unimodal frequency distribution. it is skewed to the left. It may be noted that the median is
When a distribution is symmetrical, the mean, median and always in the middle between mean and mode.
mode are the same, as is shown below in figure
Which of the Three Measures is the Best?
At this stage, one may ask as to which of these three measure
of central tendency is the best. There is no simple answer to this
question. It is because these three measures are based upon
different concepts. The arithmetic mean is the sum of the
values divided by the total number of observations in the
series. The median is the value of the value of the middle
observations tend to concentrate, As such, the use of a
particular measure will largely depend on the purpose of the
study and the nature of the data. For example, when we are
interested in knowing the consumers’ preferences for different
brands of television sets or kinds of advertising, the choice
should go in favour of mode. The use of mean and median
would not be proper. However, the median can sometimes be
A Symmetrical Distribution used in the case of qualitative data when such data can be
arranged in an ascending or descending order. Let us take
In case, a distribution is skewed to the right, then
another example. Suppose we invite applications for a certain
mean>median >mode. Generally, income distribution is
vacancy in our company. A large number of candidates apply for
skewed to the right where a large number of families have
that post. We are now interested to know as to which age or age
relatively low income and a small number of families have
group has the largest concentration of applicants. Her, obvi-
extremely high income. In such a case, the mean is pulled up by
ously the mode will be the most appropriate choice. The
the extreme high incomes and the relation among these three
arithmetic mean may not be appropriate as it may be influenced
measures is as shown in figure. Here, we find that mean >
by some extreme values.
median >mode.
When a distribution is skewed to the left, then mode > median
>mean. This is because here mean is pulled down below the
median by extremely low values. This is shown in figure

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