Quantitative Techniques For

Management
Lecture 11
BSPA 5th
Instructor:Nayyer Sultana
BSPA 5th Morning & Evening
Semester 5th
Session(2019-2023)
Section A
Course Code:BPA-503
Credit Hours-3(3-0)
Subject:Major
Lecture Content
 Definition Of Average
 Characteristics of a Good Average
 Functions Of An Average
 Advantages of Mean
 Disadvantages of Mean
 Advantages of Median
 Disadvantages of Median
 Advantages of Mode
 Disadvantages of Mode
Definition Of Average
 "An average is an attempt to find one single figure to
describe the whole of figures". - Clark and Sekkade
 (ii) "Average is a value which is typical or
representative of a set of data".- Murray R. Spiegal
 (iii) "An average is a single value within the range of
the data that is used to represent all the values in the
series. Since an average is somewhere within the
range of data it is sometimes called a measure of
central value".- Croxton and Cowden
 (iv) "A measure of central tendency is a typical value
around which other figures congregate". - Sipson and
Kafka
Functions Of An Average
 To present huge mass of data in a summarised form: It is very
difficult for human mind to grasp a large body of numerical
figures. A measure of average is used to summarise such data
into a single figure which makes it easier to understand and
remember.
 2. To facilitate comparison: Different sets of data can be
compared by comparing their averages. For example, the level
of wages of workers in two factories can be compared by
mean (or average) wages of workers in each of them.
 3. To help in decision-making: Most of the decisions to be
taken in research, planning, etc., are based on the average
value of certain variables. For example, if the average monthly
sales of a company are falling, the sales manager may have to
take certain decisions to improve it.
Characteristics of a Good Average
 1. It should be rigidly defined, preferably by an
algebraic formula, so that different persons obtain
the same value for a given set of data.
 2. It should be easy to compute.
 3. It should be easy to understand.
 4. It should be based on all the observations.
 5. It should be capable of further algebraic treatment.
 6. It should not be unduly affected by extreme
observations.
 7. It should not be much affected by the fluctuations
of sampling.
Advantages of Mean/Average
 It is strictly defined by a Mathematical formula.
 It is based on all the observations in the data.
 It is easy to calculate and simple to
understand.
 It is determined for almost every kind of data.
 It is relatively stable statistics with the
fluctuation of sampling. That is why it is
universally used.
 It is amenable to mathematical treatment.
 It is useful for large group of data.
Disadvantages of Mean
 It is greatly affected by extreme values in the
data.
 It gives sometimes deceptive conclusions.
 In a highly distorted distribution, the mean is

not appropriate measure of average.

 Very large or very small numbers can distort

the answer.
Advantages of Median
 It is easily calculated and understood.
 It is located even when the values are not

capable of quantitative measurement.

 It is not affected by extreme values.
 It can be computed even when a frequency

distribution involves open-end classes like

those of income and prices.
 In a highly distorted distribution, the Median

is an appropriate average to use.

Disadvantages of Median
 It is not rigorously mathematically defined.
 It is not capable of lending itself to further

statistical treatment.
 It necessitates the arrangement of data which

can be tedious and time consuming for a

large body of data.
 It takes a long time to calculate for a very

large set of data.

 It is not useful for large group of data.
Advantages of Mode
 It is simply defined and easily calculated.
In many cases, it is extremely easy to
calculate the mode.
 It is not affected by abnormally large or

small observations.
 It can be determined for both the

quantitative and the qualitative data.

 The only average we can use when the

data is not numerical.

Disadvantages of Mode
 It is not rigorously mathematically defined.
 It is not based on all the observations made.
 It is not capable of lending itself to further

statistical treatment.
 When the distribution consists of a small

number of values, the mode may not exist.

 It is often undetermined and indefinite.
 There may be no mode at all if none of the

data is the same.

 It may not accurately represent the data.
References
 Quantitative Techniques in Management by N
D Vohra 3rd Edition Tata McGraw Hill
Publishing Company Limited.
 Introduction to Statistical Theory by Prof.Sher

Muhammad Chaudhary,Prof.Dr.Shahid Kamal

Ilmi Kitab Khana.
 Statistics for Management and Economics by

Gerald Keller 7th Edition.