Tendency
&
Dispersion.
By
Twino Ivan
Ivan Twino
Session Content
Explain Measures of Central Tendency
as used in quantitative methods.
State the commonly used measures of
central tendency
Compute some measures of central
tendency using standard formulae.
Discuss their application in
management.
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Measures of Central
tendency
Measures of Central tendency or location
Measures of Central
tendency
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NOTE:
To clearly get the whole story of Measures of
Central tendency and dispersion as
descriptive statistics, the investigator needs to
organize and present the raw data collected
into a frequency distribution table from which
some descriptive statistic can then be
computed or derived to simplify data analysis,
interpretation and decision making
/conclusion in relation to the problem being
researched on. Refer to the case study in the next slide.
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QM Case Study
The ministry of works is planning to construct a
dual carriage road from Kampala to Entebbe
International Airport. In their pilot survey, it was
found out that many people are to be
compensated if the project is implemented. To
get the levels of compensation estimates, the
ministry then collected information from a
sample of 50 households on amounts of their
property values (in000 $) for compensation as
in the table 1 below:
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Table 1:
Group/organize this data and construct the
frequency distribution table
70 41 34
55
45 66 73 77
80
30
50 45 72
50
27 70 55 70
85
70
30 50 60
53
40 45 35 55
20
81
25 51 35
62
60 30 45 35
50
89
53 23 28
65
68 50 65 34
35
76
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Class Work
Using table 1 above and starting with the
class of 2029 and constant class width,
construct a cumulative frequency distribution
table and:
(a)Determine the mean, median and mode of
the given raw data and comment on nature of
distribution of compensation.
(b) Determine the range, quartile deviation,
the standard deviation and variance of the
given raw data.
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Class
boundary
Class MidMark
Tally
Bars
(x)

Frequency
Cumulative
frequency
(f)
(cf)
fX
Total
f =
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fx
=
fX2
fX2
=
9
10
11
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Arithmetic Mean
Grouped data
Mean(average) for Grouped data
is given by the formula:
= fX
x
f
Alternatively(see next slide),
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Mean
x
i 1
n
i 1
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f i xi
fi
14
mean
Simple or arithmetic average of a range of values
or quantities, computed by dividing the total of all
values by the number of values. For example, the
mean of 1, 2, 3, 4, and 5 is (15 divided by 5) = 3.
It is the most common and best general purpose
measure of the midpoint (around which all other
values cluster) of a set of values, but is prone to
distortion by the presence of extreme values and
may require use of a measure of distortion (such
as mean deviation or standard deviation). Also
called arithmetic mean. See also median and
mode.
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Application/uses of mean
THE MEDIAN
It is another measure of the central tendency,
which corresponds to the half of the total
frequency of the distribution of organized data.
The median is the middle value of a set of
observation arranged in an increasing or
decreasing order of magnitude when the number
of orderly arranged discrete observations is odd.
Or the Arithmetic mean of the two middle values
when the number of observation is even in case
of discrete data.
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18
N
( ) cf
2
Median L
C
f
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Contd.
Where :
L = Lower class boundary of the median class
f = frequency of the median class
cf = Cumulative frequency of the previous class
C = class width of the median class or group
N/2= Middle item.
(N/2) cf shows the position of median in the
median class.
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MedianGrouped data
Media
Lm +
N/2 Cfbm cm
fm
Where
Lm is the lower class boundary of the median
class
N is the total number of observations
CFbm is the cumulative frequency of the class
before the median class
Cm is the class interval of the median class
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THE MODE
Mode is any value in the distribution/data that occurs
most frequently (Most frequently occurring
number or item in the data set).
The mode of a set of observations is that value
which occurs most often or one with greater
frequency than others .
The mode can be estimated from the class with the
highest frequency.
It is used as a tool for answering some research
questions in relation to Common Responses or
occurrences or observations.
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Estimation of Mode
.
fa
Mode L
C
fa f b
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fa
Contd.
Where:
L = Lower class boundary of the modal
group
f a = frequency of postmodal class (after
the modal group)
f b = Frequency of the premodal (class)
(before the modal group)
C = Class width
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Estimation of Mode
Alternatively; mode can also be given
as:
1
Mode L
C
1 2
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Contd
Where :
L = Lower class boundary of the modal class or
group
fm = frequency of the modal class
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27
28
Mode= 3(Median)2(Mean)
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30
skewness
.
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Session II
Measures of
Dispersion
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Measures of Dispersion
They are descriptive statistics/ measures that
explain or describe the nature of variation
(deviation) or degree of scatterdness of data
around some measures of central tendency(mainly
the mean) that exists in the distribution of data.
The mean, median and mode only estimate the
location(value) where data tend to concentrate
(the centre of data distribution), but do not
describe how data is spread or distributed about
them.
Hence need for use of measures of dispersion for
this purpose.
The degree to which numerical data tend to
spread about an average value (mean) is called
the variation or dispersion of data.
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Measures of Dispersion
They show how the observations/data are
spread about(out) from the average or
mean in the entire data set in the sample
or population.
For instance how wage payments and
household incomes are spread around the
average wage rate and average income
respectively ( depict the degree/nature of
distribution or inequality or variability within the
set of data in considaration)
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Measures of Dispersion
They enable the investigator know the extent to
which the values in the distribution are dispersed
around the measure of central tendency for
management, monitoring, evaluation, policy and
decision making purposes.
Such measures help in comparison of distributions
of certain different phenomena or two sets of data
for two communities whose SD values are given
(Note: one with lower SD is often preferred to the
other with higher disparities and risks).
The larger the measures of dispersion, the greater the
degree of deviations of values about the mean.
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RANGE
It is the difference between the highest value
and the lowest value in a given set of distribution
of observations or data (ungrouped data).
The range R of the set of data is the difference
between the largest and the smallest numbers in
the set. R = H  L
Where R = Range
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40
Variance
Variance is the arithmetic mean of the squares of
the deviations(X)2 of individual values of
observations from their arithmetic mean().
Its denoted by S2 for a sample distribution and 2
for a population.
Variance is the average of sum of square of
deviations of values from the mean() and is
given as Variance 2 = (X)2/n.
Or Variance 2 = f(X)2/f .
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Variance
.
Variance =
2
f xx
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f
42
STANDARD DEVIATION
Standard Deviation () is the positive square root of
variance.
Also known as Rootmean square deviation and is
described as the square root of the average of the
sum of the square of the deviations. The square
root of the mean squared deviation from mean of
distribution.
It is the Square root of the mean of the squared
deviations.
And this gives how far above or below the mean the
observations are in the data distribution.
It indicates the spread/ variability of the data around
the mean.
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fx
fx
f
2
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SD
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Importance of SD
47
Quartiles
For n observations, arranged in order of size, the lower
quartile,Q1,is the value at the position of 25% of the way
through the distribution of ordered data.
The upper quartile, Q3, is the value at the position of 75%
of the way through the distribution.
The quartiles together with the median divide the
distribution into 4 equal parts.
For instance, given the ungrouped data:
3,3,5,6,8,9,12,14,19,20,24,30
Q1 (lower quartile) =5
Q2(median) =9
Q3(upper quartile)=19
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Cq3
f
Q1 =
and
Lq1 + 1N/4 Cfbq1 Cq1
f
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Example
The table 2 below shows the scores of 30
applicants for secretarial positions in a
large project obtained in aptitude test
marked out of 50 designed to measure
clerical skills. Complete the table and
compute the descriptive statistics:
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Illustration(Table 2)
Class interval Midpoint (x) Frequency(f)
fx
20 24
22
44
25 29
27
81
30 34
32
192
35 39
37
185
40 44
42
10
420
45  49
47
188
f=30
fx=1110
Total
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Group Work
Using table 2:
(a) Determine the mean, median and the
mode scores and state managerial
implication of each where possible.
(b) Estimate the values of range ,
variance, the standard deviation, quartile
deviation and coefficient of variation, the
degree of skewness and state their
managerial implication of each.
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Conclusion
Since todays decisions are driven by data,
therefore measures of central tendency and
dispersion are generally vital for statistical
thinking for managerial business decisions.
Such statistical models help Managers and
professionals to solve problems in diversity of
context, add substance to decisions, reduce
guess work and decisions based entirely on
personal opinions or beliefs.
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Cont
Help to measure effects/impacts of change in one
variable(IV) on the other(DV) & rates of changes.
Applied for comparison purposes that are vital for
policy formulation , policy/ project evaluation and
monitoring ,mgt purpose and comparative studies
of different distributions or communities /countries
e.g. Per capita income, SOL, inflation & exchange
rates,etc
The Regression/ Correlation techniques help the managers or
planners and firms to know the relationship between two or
more variables (e.g. sales and advertising, rewards and org
performance) from which mgt decisions and policies are based.
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Contd..
Probability Theory (as part of Management Science) is important
risk analysis for decisionmaking or management purposes.
Statistics helps a lot in Policy making. In order to form certain
policies, Statistics provide baseline information with adequate
numerical data relevant to that phenomena e.g. Policy on Education
depends on data related to Educational Issues, Policy on health is also
dependent on medical data etc.
H R management: Study of Statistical data regarding wage rates,
employment trends, COL indices, employees grievances, Labor
turnover rates, records of performance appraisal etc and proper
analysis of such data assist employers and the personnel department
in formulating the personnel policies & strategies for manpower
planning and organizational development.
Index numbers help government ,individuals and firms in analyzing
changes in certain variables ( prices, exchange rates , C OL ,poverty
levels ,etc) overtime for appropriate interventions
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