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STATICTICS
The word statistics refers to quantitative information or to
a method of dealing with quantitative information.

The methods by which statistical data are analyzed are

called STATISTICAL METHODS.

STATISTICAL METHODS are applicable to a very large

number of fields-
economics,sociology,antropology,business,agriculture,psyc
hology,medicines,education.
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One of the powerful tools of analysis is to calculate a single
average value that represents the entire mass of the data. The
word average is very commonly used in day to day
conversation. An “Average” is a single value which is considered
as the most representative or typical value for a given set of
data. Such value lies somewhere in the middle of the group. For
this reason an average is frequently referred to as a measure of
central tendency or central value.

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Objectives of Averaging
To get single value that describes the characteristics of the entire
data.
 Useful to extract and summarize the characteristics of the entire data set.
To facilitate comparison.
Since average represents the entire data set, it is possible to make
comparison between two or more data sets. E.g. performance of a
sales person based on average sales over two month or two years.
It becomes the base for computing other measures such as
dispersion, skewness, kurtosis etc.

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Characteristics of a good average
It should be easy to understand.
It should be simple to compute.
It should be based on all the observations.
It should be rigidly defined.
It should have sampling stability.
It should be capable of further algebraic treatment.
It should not be unduly affected by the presence of
extreme values.

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Measures of Central Tendency

Mathematical Averages
Arithmetic mean (simple or weighted)
Geometric mean
Harmonic mean
Averages of Position
Median
Quartiles
Deciles
Percentiles
Mode
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 ARITHMETIC MEAN
 The arithmetic mean (AM) of a set of observations is their sum,
divided by the number of observations.
 It is generally denoted by x or AM. Population mean is denoted by μ.

Arithmetic mean is of two types:

 Simple arithmetic mean

 Weighted arithmetic mean

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Bilal Textiles (Pvt.) Ltd

BTL was registered as a Pvt ltd co. with authorized capital of RS.100000 million in 1975.operations officially started in sept
1976.its products & services are categorized as Yarn Manufacturing & Weaving Garments etc.It now exports to countries in
europe,america,africa,asia,mid-east,asia.it has won “Best Textile Export award in 2003” for “sustained growth” for 2000-03. Lets
Take the Sales data Of this for Statistcal Analysis.

Mean= 8631.138889

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Computing the Mean from a
Frequency Distribution
Consider the following distribution:

X f
30 2
29 3
28 5
27 3
26 2
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Computing the Mean from a
Frequency Distribution
How would you compute the mean?

X f
i i
X  i 1
N

f
i 1
i

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Merits and Demerits of
Arithmetic Mean
Merits
Calculation of AM is simple
Calculation is based on all observations and hence it
can be regarded as representative of the given data
It is capable of being treated mathematically and
hence, is widely used in statistical analysis
It represents center of gravity of the distribution
because it balances the magnitudes of observations
which are greater and less than it
It gives good basis of comparison of two or more
distributions

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Merits and Demerits of
Arithmetic Mean
Demerits
It can neither be determined by inspection nor by
graphical location
Arithmetic mean cannot be computed for a qualitative
data
It is affected too much by extreme observations and
hence does not adequately represent data consisting of
some extreme observations
AM cannot be computed when class intervals have
open ends
Simple arithmetic mean gives greater importance to
larger values and lesser importance to smaller values
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Weighted Arithmetic Mean

 The weighted mean enables us to calculate an average that takes into

account the importance of each value to the overall total.

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Weighted Arithmetic Mean
Example 1: An examination was held to decide the award of a scholarship
The weights of various subjects are different. The marks obtained by 3 students are
given below:
Subject Weight Students

A B C

Mathematics 4 60 57 62

Physics 3 62 61 67
Chemistry 2 55 53 60

English 1 67 77 49

Calculate the weighted AM to award the scholarship

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Solution to the exercise
Subject Weight Students

Student A Student B Student C

Marks xiwi Marks xiwi Marks xiwi

(xi) (xi) (xi)

Mathematics 4 60 240 57 228 62 248

Physics 3 62 186 61 183 67 201

Chemistry 2 55 110 53 106 60 120

English 1 67 67 77 77 49 49
244 603 248 594 238 618

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GEOMETRIC MEAN
 Geometric mean (GM) is the nth root of the product of n items of a series.

 Commonly used in the calculation of average rate of growth.

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Geometric Mean
In many business and economic problems we deal
with quantities that change over a period of time. In
such cases if we aim to know the average rate of
change, we consider geometric mean rather than
arithmetic mean
Example 01: If the population of the country has been
growing at a rate of 3%, 2.5%, 2.8%, 2% and 1.9%
respectively over the last five years, what has been the
average growth rate for the period.
In this case, we need to calculate the geometric mean
rather than the arithmetic mean

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Geometric Mean
Example 2: The following table gives the annual rate
of growth of sales of a company in the last five years.
Calculate the average growth rate over these five
years.
Year Growth rate Sales at the end
of the year

2003 5.0 105

2004 7.5 112.87
2005 2.5 115.69
2006 5.0 121.47
2007 10.0 133.61

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Solution to the example
The average annual growth rate =
GM =
= (X1 x X2 x X3 x X4 x X5)1/5
=
= 5.9 percent
Simplified solution:
Log (G.M.) =

GM = antilog{ }

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Geometric Mean

Exercise 1: The rate of increase in population of a

country during the last three decades is 5 percent, 8
percent and 12 percent. Find the average rate of
growth during the last three decades.

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Uses, Merits and Demerits of
GM
Uses
GM is highly useful in averaging, ratios, percentages,
and rate of increase between two periods
GM is important for construction of index numbers
Merits
The value of GM is not much affected by extreme
observations and is computed by taking all observations
Useful in studying economic and social data
Demerits
GM cannot be computed if any item in the series is
negative or zero
Difficult to calculate
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HARMONIC MEAN
 Based on the reciprocal of the numbers averaged.
 Defined as the reciprocal of the arithmetic mean of the reciprocal of the
individual observation.

 It can be written as

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Applications of Harmonic Mean
Useful for computing average rates
e.g. Average rate of increase of profits or average
speed at which any journey has been performed.

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Bilal Textiles (Pvt.) Ltd
Sales turnover for year 1989-2006
YEAR SALES 1/X
(In million Rs.) (x)

1989 971.2 0.0010297

1990 928.9 0.0010765
1991 1236.4 0.0008088
1992 1514 0.0006605
1993 1990.3 0.0005024
1994 2454.7 0.0004074
1995 2987.1 0.0003348
1996 3623.6 0.000276
1997 4525.8 0.000221
1998 5170.8 0.0001934
1999 6255.4 0.0001599
2000 7721.4 0.000129
2001 10643.1 0.000093
2002 14008.1 0.000071
2003 15730.2 0.000063
2004 20554.2 0.000048
2005 24008.9 0.000041
2006 31036.2 0.000032 26
n=18
∑ 1/x=0.0061473

Harmonic Mean = n
∑ 1/x

= 18/0.0061473
= 2928.1148

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Merits and Demerits of
Harmonic Mean
Merits
It is based on all observations of the series
It is suitable in case of series having wide dispersion
Demerits
Difficult to calculate
It is not often used for analyzing business problems

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Relationship between AM, GM
and HM
If all values are equal then AM = GM = HM
If values are different then AM > GM > HM
If the values of an observation takes the values a, ar,
ar2, ar3, …., arn, then (GM)2 = AM x HM

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 Median
 The median may be defined as the middle or central value of
the variable when values are arranged in the order of
magnitude.
 In other words, median is defined as that value of the variable
that divides the group into two equal parts, one part comprising
all values greater and the other all values lesser than the
median.
 To measure the qualitative characteristics of data, other
measures of central tendency, namely median and mode are
used.
 Positional averages, as the name indicates, mainly focus on the
position of the value of an observation in the data set. 30
Averages of Position - Median
Median – Median may be defined as the middle
value in the data set when the elements are arranged
in sequential order (either ascending or descending)
Median for ungrouped data:
If number of observations (n) is odd, then
Median = Size or value of { } th observation
If the number of observations are odd, then

Median = observation in the data set

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Bilal Textiles (Pvt.) Ltd
BTL was registered as a Pvt ltd co. with authorized capital of RS.100000 million in 1995.operations officially
started in sept 1999.its products & services are categorized as Yarn Manufacturing & Weaving Garments etc.It
now exports to countries in europe,america,africa,asia,mid-east,asia.it has won “Best Textile Export award in
2003” for “sustained growth” for 2000-03. Lets Take the Sales data Of this for Statistcal Analysis.
SALES TURNOVER FROM 1989-2006

MEDIAN :
total observations(n)=18

n/2th term=9th term=4525.8

(n/2+1)th term=10th term=5170.8

median=(4525.8+5170.8)/2
=4848.3

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Averages of Position - Median
Median for grouped data

l = lower class limit of the median class interval

cf = cumulative frequency of the class prior to the
median class interval
f = frequency of the median class
h = width of the median class interval
n = total number of observations in the distribution

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Averages of Position - Median
Exercise 2 A survey was conducted to determine the
age in years of 120 automobiles. The result of such a
survey is given in the table below. What is the median
age
Age of the autos?
of auto 0–4 4–8 8 – 12 12 – 16 16 – 20

No. of autos 13 29 48 22 8

Solution -> next slide

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Averages of Position - Median
Solution:
Age of autos (years) Number of autos (fi) Cumulative
frequency (cf)

0–4 13 13
4–8 29 42 Median
Class
8 – 12 48 90
12 – 16 22 112
16 – 20 8 120
120

= 8 + 1.5 = 9.5

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Partition Values – Quartiles, Deciles,
Percentiles
Quartiles: The values of observations in a data set,
when arranged in an ordered sequence, can be
divided into four equal parts, or quarters, using three
quartiles viz. Q1, Q2 and Q3. The first quartile Q1
divides the distribution in such a way that 25 percent
of the observations have a value less than Q1 and 75
percent of the values are more than Q1.

Q1 Q2 Q3

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Partition Values – Quartiles, Deciles,
Percentiles
Deciles: The values of observations in a data set
when arranged in an ordered sequence can be divided
into then equal parts, using nine deciles (D1, D2, …..,
D9)

Percentiles: The values of observations in a data set

when arranged in an ordered sequence can be divided
into 100 equal parts using 99 percentiles (P1, P2, …..,
P99)

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Partition Values – Quartiles, Deciles,
Percentiles
Exercise 1: The following is the distribution of weekly
wages of 600 workers in a factory
Weekly No. of Weekly No. of
wages (Rs.) workers wages (Rs.) workers

Below 375 69 600 – 625 58

375 – 450 167 625 – 750 24

Find the 1st quartile and 3rd quartile
450 – 525 207 750 – 825 10
Find the 5 decile and 7 decile
th th

Find the
525 –29
600 th
percentile
65 and 95th percentile
Find the median
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Relationship Between Median ,
Quartiles, Deciles, Percentiles
Q1 = P25
Q2 = Median
P50 = D5
Q3 = p75
D2 = P20
Q4 = P100
P90 = D9
Q2 = p50
P50 = Median
D5 = Median

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Advantages & Disadvantages of
Median
Merits
Extreme values (outliers) do not affect the median as
strongly as they do the mean.
Useful when comparing sets of data.
It is unique - there is only one answer.
Demerits
Not as popular as mean.
It tell us only One value which is one is middle.
It provides not good result in Algebric type of data

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MODE

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Averages of Position - Mode
Mode: Mode is that value of an observation which
occurs most frequently in the data set, i.e. the point or
class mark with the highest frequency.

= frequency of the modal class

= frequency of the class preceding the modal class

= frequency of the class following the modal class

= width of the modal class interval

Exercise 1: Find the mode of the distribution in the
earlier example

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Bilal Textiles (Pvt.) Ltd

 BTL was registered as a Pvt ltd co. with authorized capital of RS.100000 million in 1995.operations
officially started in sept 1999.its products & services are categorized as Yarn Manufacturing &
Weaving Garments etc.It now exports to countries in europe,america,africa,asia,mid-east,asia.it has
won “Best Textile Export award in 2003” for “sustained growth” for 2000-03. Lets Take the Sales data
Of this for Statistcal Analysis
 SALES TURNOVER FROM 1989-2006 mode=0

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Advantages & Disadvantages of
Mode
Merits
Extreme values (outliers) do not affect the mode as
strongly as they do the mean & Median.
Vary simple measure of centrel tendency.
It can be located graphically , with help of histogram.
Demerits
It is Vague and uncertain centrel tendency of values.
It is not papuler as mean and median
It provides not good result in Algebric type of data
In case of more yhen one answer difficult to trace
actual Centrel tendency of values
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RELATIONSHIP BETWEEN MEAN,MEDIAN & MODE
Distribution in which values of mean,median,mode
coincide are symmetrical distribution.
Distribution in which values of mean,median,mode are
not equal are asymmetrical or skewed.
The distance between mean & median is approximately
one-third of the distance between the mean and mode.
Acc. To Karl Pearson :
Mean-median=1/3(mean-mode)
Mode=3median-2mean
Median=(2mean+mode)/3

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Relationship between Mean, Median and
Mode as Graphical Analysis

Mean=median=mode
Mode Median Mean Mean Median Mode

For positively skewed distribution, Mean>Median>Mode

For negatively skewed distribution, Mean<Median<Mode

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Choosing Measures of Central
Tendency
Measures Best Uses
Mean  Interval or ratio data
 Near normal distribution

Median  Ordinal, interval, or ratio data

 Skewed distribution

Mode  Nominal, ordinal, interval, or

ratio data
 Bimodal distribution
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