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BUSINESS STATISTICS

MEAN , MEDIAN AND MODE

Submitted to:- Mrs. Ruchika FMS Dept. NIFT, Jodhpur

Submitted By:- Ram Deo Bharti MFM 1st SEMESTER NIFT, JODHPUR

MEAN
Mean is a value obtained by adding together all the observation and by dividing this total by the number of observation. The mean is the mathematical average of a set of numbers. The mean is calculated by adding up two or more scores and dividing the total by the number of scores.

FORMULA OF MEAN
A.M = X1+X2+X3+X4+X5++Xn N

Formula of Mean for ungrouped data=


X= Elements. N= Total no. of observation.

Indirect method for grouped Data


A-Mid point of entry of middle class. f- Frequency N- Total Observation d- Deviation C- Size of equal interval.
d= X-A c

OBJECTIVE Of MEAN
To get single value that describes the characteristics of whole data. To facilitate comparison of point of time or over period of time.

CHARACTERISTICS OF MEAN
It is for understanding. It is simple for computing. It is based on all observation. Capable of further algebraic treatment. It have sampling stability. It is rigidly defined. It is unduly affected by the presence of extreme values.

MERIT OF MEAN
Arithmetic mean rigidly defined by algebric formula. It is easy to calculate and simple to understand. It is based on all observations and it can be regarded as representative of the given data. It is capable of being treated mathematically and hence it is widely used in statistical analysis.

CONTINUED
Arithmetic mean can be computed even if the detailed distribution is not known but some of the observation and number of the observation are known. It is least affected by the fluctuation of sampling.

DEMERITS OF MEAN
It can neither be determined by inspection or by graphical location. Arithmetic mean cannot be computed for qualitative data like data on intelligence honesty and smoking habit etc. It is too much affected by extreme observations and hence it is not adequately represent data consisting of some extreme point. Arithmetic mean cannot be computed when class intervals have open ends

MEDIAN
The median is the measure of central tendency which appears in the middle of an ordered sequence of values. The numerical value separating the higher half of a sample, a population, or a probability distribution, from the lower half.

Formula of Median

FORMULA OF MEDIAN
MEDIAN IS ALWAYS IN SIZE OF n+1/2th TERM.

L = Lower limit of median class. F = Preceding cumulative frequency of median class. N = Total no. of elements. I = Class interval. f = Frequency of median class.

GRAPHICAL PRESENTATION OF MEDIAN


Axis X represents no of marks obtained by students and Axis Y represents no of students..Less than Curve and more than curve intersects each others at A, hence perpendicular drawn from A cuts X axis at A, so Median is approx 443.5..

It is easy understand and to easy to calculate It can easy to find out by inspection Median can be determined even when class intervals have open ends It is not much affected by extreme observations and also interdependent of range or dispersion of the data Median can also be located graphically It is only suitable average when the data are qualitative & it is possible to rank various items according to qualitative characteristics.

MERITS OF MEDIAN

DEMERITS OF MEDIAN
In case of individual observations the process of locations of median requires their arrangement in order of the magnitude which may be cumbersome task It is being a positional average it is not capable treated algebraically It not based on the magnitude of all the observations in comparison to arithmetic mean it much affected by the fluctuations of sampling

MODE
The modal value of a set of data is the most frequently occurring value.

MERITSOF MODE
It is easy to understand and easy to calculate. In many cases it can be located just by inspection Like mean or median it is not affected by extreme observations It can be determined even if distribution has open end classes It is value around which more concentrations of observations and hence the best representative of data.

DEMERITSOF MODE
It is not based on all observations It is not capable of further mathematical treatment It is much affected by fluctuations of sampling It is not suitable when different items of data are unequal importance.

GRAPHICAL PRESENTATION OF MODE

Profits (in Rs.Lakhs) 0-100 100-200 200-300 300-400 400-500 500-600

No.Of Shops

15 23 34 25 21 8

1.Draw a histogram of the given data. 2. Draw two lines diagonally inside of the modal class bar. 3. Draw a perpendicular line from the intersection of the two diagonal lines to the X-axis, which gives us the modal value.

RELATIONSHIP AMONG MEAN, MEDIAN AND MODE


Empirical relation between Mean, Median and Mode: The relationship between mean, median and mode depends upon the nature of the distribution. A distribution may be symmetrical or asymmetrical. In asymmetrical distribution the mean, median and mode are equal i.e. Mean(AM) = Median(M) = Mode(Mo)

In a highly asymmetrical distribution it is not possible to find a relation ship among the averages. But in a moderately asymmetric distribution the difference between the mean and mode is three times the difference between the mean and median. i.e. Mean-Mode = 3(Mean-Median)

Mean-Median = 1 (Mean- Mode) 3 Or, Mode = 3 Median 2 Mean

THANKS