Quantitative Techniques for Management MBA First Year Paper No. 6 School of Distance Education Bharathiar University, Coimbatore - 641 046‘Author: PN Mishra & S Jssankar Copyright © 2007, Bharathiar University AA Rights Reserved Edited by: De Subodh Kesharvan Produced and Printed by EXCEL BOOKS PRIVATE LIMITED ‘AAS, Naraina, Phase ‘New Dethi-110028 for SCHOOL OF DISTANCE EDUCATION ‘harathiar University Coimbatore-641046Lesson 1 Lesson 2 Lesson 3 Lesson 4 Lesson § Lesson 6 Lesson 7 Lesson 8 Lesson 9 Lesson 10 Lesson 1 Lesson 12 Lesson 13 Lesson 14 Lesson 15 ‘Quantitative Techniques — Introduction ‘Measures of Central Tendency Mathematical Model Linear Programming: Graphical Method Linear Programming: Simplex Method ‘Transportation Model Assignment Modal ‘Network Model Waiting Model (Queuing Theory) Probability ‘Theoretical Probability Distributions Probability Distribution of a Random Variable Inventory Model ‘Game Theory Simulation Unit-1 Unit-IT Unit-I Unit.av Unity CONTENTS Page No. 24 110 19 143 167 209 241 272 299 389 409 449 472 495QUANTITATIVE’ ECHNIQUES FOR MANAGEMENT Number of Credit Hours : 3 (Three) Subject Description: This course presents the various mathematical models, networking, probability inventory models and simulations for managerial decisions Goals: To enable the students to learn techniques of operations research and resources management and their application in decision making in the management. Objectives: On successful completion of the course the students should have: 1. Understood the basic of the quantitative techniques 2 Learnt the feasible solution and optimum solution forthe resource management 3. Lean the time estimation and crtial path for project. 4, Learnt about the application of probability echnigues inthe decision making. 5. Learnt the various inventory models ad simulations inthe resource planning and management. vNITT QT ~ Introduction ~ Measures of Central Tendency ~ Mean, Median, Mode. Mathematical Models ~ deterministic and probabilistic ~ simple business examples ~ OR and ‘optimization models ~ Linear Programming ~ formulation ~ graphical solution -simplex ~ solution, UNITIT ‘Transportation model - Initial Basic Feasible solutions ~ optimum solution for non ~ degeneracy and degeneracy model ~ Trans-shipment Model - Assignment Model - Travelling Salesmen problem UNIT Network Model ~ networking CPM ~ critical path — Time estimates ~ critical path — crashing, Resource levelling, Resources planing. Waiting Line Model ~ Structure of model - M/MII for infinite population. UNITIV Probability ~ definitions - addition and multiplication Rules (only statements) ~ simple business application problems — probability distribution - expected value concept ~ theoretical probability distributions ~ Binomial, Poison and Normal ~ Simple problems applied to business UNITY Inventory Models ~ Deterministic - BOQ — BOQ with Price Breaks ~ Probabilistic Inventory Models Probabilistic EOQ model ~ Game theory-zero sum games: Arithmetic and Graphical Method, ‘Simulation — types of simulation ~ Monte Carlo simulation ~ simulation problems Decision Theory ~ Pay off tables ~ decision criteria ~ decision trees.Unit-IQUANTITATIVE TECHNIQUES - INTRODUCTION CONTENTS 1.0 Aims and Objectives 11 Introduction 12. Historical Development 13. About Quantitative Technique 14 Methodology of Quantitative Techniques 14. Formulating the Problem 142. Defining the Decision Variables and Constraints 143 Developing a Suitable Model 144 Acquiring the Input Data 145. Solving the Model 146 Validating the Model 147 Implementing the Results 15 Advantages of Mathematical Modelling 1.6 Scope of Quantitative Technique 17. Statistics : An Introduction 17.1 Origin and Growth of Statistics 1.72. Meaning and Definition of Statistics 1.73. Statistics as Data 174 Statistics as a Science 1.75. Statistics as a Science different from Natural Sciences 1,76. Statistics as a Scientific Method 1.717 Statistics as a Science or an Art 18. Letus Sum Up 19° Lesson-end Activities 110 Keywords 1.11 Questions for Discussion 112. Terminal Questions 113 Model Answers to Questions for Discussion 114 Suggested ReadingsQuantitative Techniques {or Management 1.0 AIMS AND OBJECTIVES In this first lesson we discuss the distinguished approaches to quantitative techniques and its various applications in management, statistical analysis and other industries. Here wwe will discuss the approaches of quantitative techniques. 1.1 INTRODUCTIO! Scientific methods have been man’s outstanding asset to pursue an ample number of activities. It is analysed that whenever some national crisis, emerges due (o the impact of political, social, economic or cultural factors the talents from all walks of life amalgamate together to overcome the situation and rectify the problem. In this chapter we will see how the quantitative techniques had facilitated the organization in solving complex problems on time with greater accuracy. The historical development will facilitate in ‘managerial decision-making & resource allocation, The methodology helps us in studying the scientific methods with respect to phenomenon connected with human behaviour like formulating the problem, defining decision variable and constraints, developing a suitable model, acquiring the input data, solving the model, validating the model, implementing the results. The major advantage of mathematical model is that its facilitates in taking decision faster and more accurately. Managerial activities have become complex and it is necessary to make right decisions to avoid heavy losses. Whether it is a manufacturing unit, ot a service organization, the resources have to be utilized to its maximum in an efficient manner. The future is clouded with uncertainty and fast changing, and decision-making — a crucial activity — cannot be made on a trial-and-error basis or by using a thumb rule approach. In such situations, there is a greater need for applying scientific methods to decision-making to increase the probability of coming up with good decisions. Quantitative Technique isa scientific approach to managerial decision-making. The successful use of Quantitative Technique for ‘management would help the organization in solving complex problems on time, with greater accuracy and in the most economical way. Today, several scientific management techniques are available to solve managerial problems and use of these techniques helps managers become explicit about their objectives and provides additional information to select an optimal decision. This studly material is presented with variety of these techniques with real life problem areas. 1.2 HISTORICAL DEVELOPMENT. During the early nineteen hundreds, Fredrick W. Taylor developed the scientific ‘management principle which was the base towards the study of managerial problems, Later, during World War II, many scientific and quantitative techniques were developed {o assist in military operations. As the new developments in these techniques were found successful, they were later adopted by the industrial sector in managerial decision-making and resource allocation, The usefulness of the Quantitative Technique was evidenced by a steep growth in the application of scientific management in decision-making in various fields of engineering and management. At present, in any organization, whether a manufacturing concern or service industry, Quantitative Techniques and analysis are used by managers in making decisions scientifically. Explain with the help of example some of the important Quantitative Techniques used in modern business and in industrial unit. Cont.Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it, (©) This Chek Your Progress will help you to understand the lesson better. Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only. 1.3 ABOUT QUANTITATIVE TECHNIQUE ‘Quantitative Techniques adopt a scientific approach to decision-making. In this approach, past data is used in determining decisions that would prove most valuable in the future, ‘The use of past data in a systematic manner and constructing it into a suitable model for future use comprises a major part of scientific management. For example, consider a person investing in fixed deposit in a bank, or in shares of a company, or mutual funds, or in Life Insurance Corporation. The expected return on investments will vary depending ‘upon the interest and time period. We can use the scientific management analysis to find ‘out how much the investments made will be worth in the future, There are many scientific method software packages that have been developed to determine and analyze the problems, In case of complete non-availability of past data, quantitative factors are considered in decision-making. In cases where the scope of quantitative data is limited, qualitative factors play a major role in making decisions. Qualitative factors are important situations like sudden change in tax-structures, or the introduction of breakthrough technologies. Application of scientific management and Analysis is more appropriate when there is not much of variation in problems due to extemal factors, and where input values are steady. In such cases, a model can be developed to suit the problem which helps us to take decisions faster. In today's complex and competitive global marketplace, use of Quantitative Techniques with support of qualitative factors is necessary. Quantitative Technique is the scientific way to managerial decision-making, while emotion and ess work are not part of the scientific management approach. This approach starts with data. Like raw material for a factory, this data is manipulated or processed into information that is valuable to people making decision. This processing and manipulating of raw data into meaningful information is the heart of scientific management analysis. Do you think the day will come when all decision in a business unit are made with assistance of quantitative techniques? Give reasons for your answer. Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it, Contd. Quantiative Techniques — IntroductionQuantitative Techniques {or Management (©) This Chek Your Progress will help you to understand the lesson better. ‘Try to write answers for them, but do not submit your answers to the university for assessment, These are for your practice only. 1 METHODOLOGY OF QUANTITATIVE TECHNIQUES ‘The methodology adopted in solving problems is as follows: Ty ‘Formulating the problem y Ey Defining decision variables and ‘constraints. | Developing a suitable model y Ty Acquiring the Input Data _ceemmeee meer Solving the model ’ Validating the model Implementing the results Figure L1 1.4.1 Formulating the Problem ‘Asa first step, itis necessary to clearly understand the problem situations. Itis important o know how it is characterized and what is required to be determined. Firstly, the key decision and the objective of the problem must be identified from the problem. Then, the number of decision variables and the relationship between variables must be determined, The measurable guaranties that are represented through these variables are notified, The practical limitations or constraints are also inferred from the problem,1.4.2 Defining the Di Ina given problem situation, defining the key decision variables are important. Identifying these variables helps us to develop the model. For example, consider a manufacturer who is manufacturing three products A, B and C using two machines, I and TI, Each unit of product A takes 2 minutes on machine I and 5 minutes on machine II. Product B takes | minute on machine I and 3 minutes on machine II, Similarly, product C takes 4 ‘minutes and 6 minutes on machine I and machine II, respectively. The total available time on machine I and machine II are 100 hours and 120 hours, respectively. Each unit of A yields a profit of Rs. 3.00, B yields Rs. 4.00 and C yields Rs. 5.00, What should be level of production of products A, B and C that should be manufactured by the company 50 as to maximize the profit? ion Variables and Constraints ‘The decision variables, objective and constraints are identified from the problem, The company is manufacturing three products A, B and C. Let A be x,, B be x, and C be x,.x,, X, and x, are the three decision variables in the problem. The objective is to ‘maximize the profits. Therefore, the problem is to maximize the profit, i.c., to know how many units of x,, x, and x, are to be manufactured. ‘There are two machines available, machine I and machine II with total machine hours available as 100 hours and 120 hours, ‘The machine hours are the resource constraints, i¢., the machines cannot be used more than the given number of hours. ‘To summarize, © Key decision How many units of x,, x, and x, are to be manufactured. © Decision variables XX, and x, © Objective ‘To maximize profit © Constraint Machine hours 1.4.3 Developing a Suitable Model ‘A model is a mathematical representation of a problem situation. The mathematical ‘model isin the form of expressions and equations that replicate the problem. For example, the total profit from a given number of products sold can be determined by subtracting selling price and cost price and multiplying the number of units sold. Assuming selling price, sp as Rs. 40 and cost price, cp as Rs. 20, the following mathematical model expresses the total profit, tp eared by selling number of unit x TP = (SP-CP)x = (40-20) x TP = 20x Now, this mathematical model enables us to identify the real situation by understanding the model. The models can be used to maximize the profits or to minimize the costs. The applications of models are wide, such as: ® Linear Programming Model © Integer Programming © Sensitivity Analysis © Goal Programming © Dynamic Programming © Non Linear Programming © Queuing Theory © Inventory Management Techniques Quantitative Techniques — IntroductionQuantitative Techniques {or Management © PERT/CPM (Network Analysis) * Decision Theory © Games Theory ‘© Transportation and Assignment Models, 1.44 Acquiring the Input Data Accurate data for input values are essential. Even though the model is well constructed, it is important that the input data is correct to get accurate results, Inaccurate data will Tead to wrong decisions, 1.4.5 Solving the Model Solving i trying for the best result by manipulating the model tothe problem. This is done by checking every equation and its diverse courses of action. A trial and error method can be used to solve the model that enables us to find good solutions to the problem. 1.4.6 Validating the Model ‘A validation is a complete test of the model to confirm that it provides an accurate representation of the real problem. This helps us in determining how good and realistic the solution is. During the model validation process, inaccuracies can be rectified by taking corrective actions, until the model is found to be fit. 1.4.7 Implementing the Results Once the model is tested and validated, itis ready for implementation. Implementation involves translation/application of solution in the company. Close administration and ‘monitoring is required after the solution is implemented, in order to address any proposed changes that call for modification, under actual working conditions, 1.5 ADVANTAGES OF MATHEMATICAL MODELL! ‘The advantages of mathematical modelling are many: (a) Models exactly represent the real problem situations, (b) Models help managers to take decisions faster and more accurately. (©) Models save valuable resources like money and time. (@)_ Large and complex problems can be solved with ease. (©) Models act as communicators to others by providing information and impact in changing conditions. ‘Quantitative Technique is a very powerful tools and analytical process that offers the presentation of an optimum solutions in spite of its limitations”. Discuss. Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it. This Chek Your Progress will help you to understand the lesson better. ‘Try to write answers for them, but do not submit your answers to the ‘university for assessment, These are for your practice only. Contd.Quantitative Techniques — Introduction Ss UE. ‘The scope and ateas of application of scientific management are very wide in engineering and management studies. Today, there are a number at quantitative software packages available to solve the problems using computers. This helps the analysts and researchers to take accurate and timely decisions. This book is brought out with computer based problem solving. A few specific areas are mentioned below. PE OF QUANTITATIVE TE¢ © Finance and Accounting: Cash flow analysis, Capital budgeting, Dividend and Portfolio management, Financial planning. © Marketing Management: Selection of product mix, Sales resources allocation and Assignments © Production Management: Facilities planning, Manufacturing, Aggregate planning, Inventory control, Quality control, Work scheduling, Job sequencing, Maintenance and Project planning and scheduling © Personnel Management: Manpower planning, Resource allocation, Staffing, Scheduling of training programmes. © General Management: Decision Support System and Management of Information Systems, MIS, Organizational design and control, Software Process Management and Knowledge Management. From the various definitions of Quantitative Technique itis clear that scientific management hen got wide scope. In general, whenever there is any problem simple or complicated the scientific management technique can be applied to find the best solutions. In this hhead we shall try (o find the scope of M.S. by secing its application in various fields of everyday lift this include define operation too. Discuss the significance and scope of Quantitative Techniques in modern business ‘management. Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it (©) This Chek Your Progress will help you to understand the lesson better. ‘Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only.Quantitative Techniques {or Management 1,7_ STATISTICS : AN INTRODUCTION 1.7.1 Origin and Growth of Statistics Statistics, asa subject, has avery long history. The origin of STATISTICS is indicated by the word itself which seems to have been derived either from the Latin word 'STATUS' or from the Italian word 'STATISTA’ or may be from the German word ‘STATISTIK.’ ‘The meaning of all these words is ‘political state’. Every State administration in the past collected and analysed data. The data regarding population gave an idea about the possible military strength and the data regarding material wealth of a country gave an idea about the possible source of finance to the State. Similarly, data were collected for other purposes also, On examining the historical records of various ancient countries, one might find that almost all the countries had a system of collection of data. In ancient Egypt, the data on population and material wealth of the country were collected as early as 3050 B.C., for the construction of pyramids. Census was conducted in idda in 2030 B.C. and the population was estimated to be 38,00,000. The first census of Rome was done as carly as 435 B.C. After the 15th century the work of publishing the statistical data was also started but the first analysis of data on scientific basis was done by Captain John Graunt in the 17th century. His first work on social statistics, ‘Observation on London Bills of Mortality’ was published in 1662. During the same period the gamblers of western countries had started using statistics, because they wanted to know the more precise estimates of odds at the gambling table. This led to the development of the "Theory of Probability’ Ancient India also had the tradition of collection of statistical data. In ancient works, such as Manusmriti, Shukraniti, ete., we find evidences of collection of data for the purpose of running the affairs of the State where population, military force and other resources have been expressed in the form of figures. The fact and figures of the Chandragupta Mauraya's regime are described in ‘Kautilya’s Arthashastra’. Statistics were also in use during the Mughal period. The data were collected regarding population, military strength, revenue, land revenue, measurements of land, etc. The system of data collection was described in Tuzuk - i - Babri and Ain-i-Akabari. During Akbar’s period, his revenue minister, Raja Todarmal, made a well organised survey of land for the collection of land revenue. During the British period too, statistics were used in various arcas of activities. Although the tradition of collection of data and its use for various purposes is very old, the development of modem statistics as a subject is of recent origin. The development of the subject took place mainly after sixteenth century. The notable mathematicians who contributed to the development of statistics are Galileo, Pascal, De-Mere, Farment and Cardeno of the 17th century. Then in later years the subject was developed by Abraham De Moivre (1667 - 1754), Marquis De Laplace (1749 - 1827), Karl Friedrich Gauss (1777 - 1855), Adolphe Quetelet (1796 - 1874), Francis Galton (1822 - 1911), etc. Karl Pearson (1857 - 1937), who is regarded as the father of moder statistics, was greatly motivated by the researches of Galton and was the first person to be appointed as Galton Professor in the University of London. William S. Gosset (1876 - 1937), a student of Karl Pearson, propounded a number of statistical formulae under the pen-name of ‘Student. R.A. Fisher is yet another notable contributor to the field of statistics. His book ‘Statistical Methods for Research Workers, published in 1925, marks the beginning of the theory of modern statistics The science of statistics also received contributions from notable economists such as Augustin Cournot (1801 - 1877), Leon Walras (1834 - 1910), Vilfredo Pareto (1848 - 1923), Alfted Marshall (1842 - 1924), Edgeworth, A.L. Bowley, etc. They gave ‘an applied form to the subject. Among the noteworthy Indian scholars who contributed to statistics are P.C, Mahalnobis, V.KR.V. Rao, R.C. Desai, PV. Sukhatme, ete.1.7.2. Meaning and Definition of Statistics ‘The meaning of the word ‘Statistics’ is implied by the pattern of development of the subject, Since the subject originated with the collection of data and then, in later years, the techniques of analysis and interpretation were developed, the word ‘statistics’ has been used in both the plural and the singular sense. Statistics, in plural sense, means a set of numerical figures or data. In the singular sense, it represents a method of study and therefore, refers (o statistical principles and methods developed for analysis and interpretation of data. Statistics has been defined in different ways by different authors. These definitions can be broadly classified into two categories. In the first category are those definitions which lay emphasis on statistics as data whereas the definitions in second category emphasise statistics as a scientific method 1.7.3 Statistics as Data Statistics used in the plural sense implies a set of numerical figures collected with reference to a certain problem under investigation. It may be noted here that any set of numerical figures cannot be regarded as statistics. There are certain characteristics which must be satisfied by a given set of numerical figures in order that they may be termed as statistics. Before giving these characteristics it will be advantageous to go through the definitions of statistics in the plural sense, given by noted scholars. 1, "Statistics are numerical facts in any department of enquity placed in relation to each other.” - A.L, Bowley The main features of the above definition are () Statistics (or Data) implies numerical facts. Gi) Numerical facts or figures are related to some enquiry or investigation, Gai) Numerical facts should be capable of being arranged in relation to each other. On the basis of the above features we can say that data are those numerical facts which have been expressed as a set of numerical figures related to each other and (o some area of enquiry or research. We may, however, note here that all the characteristics of data are not covered by the above definition. 2. "By statistics we mean quantitative data affected to a marked extent by multiplicity of causes. = Yule & Kendall This definition covers two aspects, ie., the data are quantitative and affected by a large number of causes, 3. "Statistics are classified facts respecting the conditions of the people in a state especially those facts which can be stated in numbers or in tables of numbers or in any other tabular or classified arrangement.” - Webster 4, "Acollection of noteworthy facts concerning state, both historical and descriptive.” ~ Achenwall Definitions 3 and 4, given above, are not comprehensive because these confine the scope of statistics only to facts and figures related to the conditions of the people in a state. However, as we know that data are now collected on almost all the aspects of human and natural activities, it cannot be regarded as a state-craft only. 5. "Statistics are measurements, enumerations or estimates of natural or social phenomena, systematically arranged, so as to exhibit their interrelations.” - LR. Connor This definition also covers only some but not all characteristics of data, Quantitative Techniques — IntroductionQuantitative Techniques {or Management "By statistics we mean aggregate of facts affected to a marked extent by a multiplicity of causes, numerically expressed, enumerated or estimated according to a reasonable standard of accuracy, collected in a systematic manner for a predetermined purpose and placed in relation to each other.” = H, Secrist This definition can be taken as a comprehensive definition of statistics since most. of the characteristics of statistics are covered by it. Characteristics of Statistics as Data On the basis of the above definitions we can now state the following characteristics of statistics as data : Statistics are numerical facts: In order that any set of facts can be called as statistics or data, it must be capable of being represented numerically or quantitatively. Ordinarily, the facts can be classified into two categories : (a) Facts that are measurable and can be represented by numerical measurements. Measurement of heights of students in a college, income of persons in a locality, yield of wheat per acre in a certain district, etc., are examples of measurable facts. {b) Facts that are not measurable but we can feel the presence or absence of the characteristics. Honesty, colour of hair or eyes, beauty, intelligence, smoking habit etc., are examples of immeasurable facts. Statistics or data can be obtained in such cases also, by counting the number of individuals in different categories. For example, the population of a country can be divided into three categories on the basis of complexion of the people such as white, whitish or black. Statistics are aggregate of facts: A single numerical figure cannot be regarded as statistics. Similarly, a set of unconnected numerical figures cannot be termed as statistics. Statistics means an aggregate or a set of numerical figures which are related to one another. The number of cars sold in a particular year cannot be regarded as statistics. On the other hand, the figures of the number of cars sold in various years of the last decade is statistics because it is an aggregate of related figures. These figures can be compared and we can know whether the sale of cars has increased, decreased or remained constant during the last decade. It should also be noted here that different figures are comparable only if they are expressed in same units and represent the same characteristics under different situations. In the above example, if we have the number of Ambassador cars sold in 1981 and the number of Fiat cars sold in 1982, etc, then it cannot be regarded as statistics. Similarly, the figures of, say, measurement of weight of students should bbe expressed in the same units in order that these figures are comparable with one another: Statistics are affected to a marked extent by a multiplicity of factors: Statistical data refer to measurement of facts in a complex situation, e.g, business or economic phenomena are very complex in the sense that there are a large number of factors operating simultaneously at a given point of time. Most of these factors are even difficult to identify. We know that quantity demanded of a commodity, in a given period, depends upon its price, income of the consumer, prices of other commodities, taste and habits of the consumer. It may be mentioned here that these factors are only the main factors but not the only factors affecting the demand of a commodity. Similarly, the sale of a firm in a given period is affected by a large number of factors. Data collected under such conditions are called statistics or statistical data, Statistics are either enumerated or estimated with reasonable standard of accuracy: This characteristic is related to the collection of data, Data are collected either by counting or by measurement of units or individuals, For example, the number of smokers in a village are counted while height of soldiers is measured.We may note here that if the area of investigation is large or the cost of measurement is high, the statistics may also be collected by examining only a fraction of the total, area of investigation. When statistics are being obtained by measurement of units, it is necessary to maintain a reasonable degree or standard of accuracy in measurements, The degree of accuracy needed in an investigation depends upon its nature and objectivity on the one hand and upon time and resources on the other. For example, in weighing of gold, even milligrams may be significant where as, for weighing wheat, a few grams may not make much difference. Sometimes, a higher degree of accuracy is needed in order that the problem, to be investigated, gets highlighted by the data Suppose the diameter of bolts produced by a machine are measured as 1.546 ems, 1.549 cms, 1.548 cms, etc. If, instead, we obtain measurements only up to two places after decimal, all the measurements would be equal and as such nothing could be inferred about the working of the machine. In addition to this, the degree of accuracy also depends upon the availability of time and resources. For any investigation, a greater degree of accuracy can be achieved by devoting more time or resources or both. As will be discussed later, in statistics, generalisations about a large group (known as population) are often made on the basis of small group (known as sample). Its possible to achieve this by maintaining a reasonable degree of accuracy of measurements. Therefore, itis not necessary to always have a high degree of accuracy but whatever degree of accuracy is once decided must be ‘uniformly maintained throughout the investigation. Statistics are collected in a systematic manner and for a predetermined purpose: In order that the results obtained from statistics are free from errors, itis necessary that these should be collected in a systematic manner. Haphazardly collected figures are not desirable as they may lead to wrong conclusions. Moreover, statistics should be collected for a well defined and specific objective, otherwise it might happen that the unnecessary statistics are collected while the necessary statistics are left out. Hence, a given set of numerical figures cannot be termed as statistics if it has been collected in a haphazard manner and without proper specification of the objective. Statistics should be capable of being placed in relation to each other: This characteristic requires that the collected statistics should be comparable with reference to time or place or any other condition. In order that statistics are comparable it is essential that they are homogeneous and pertain to the same investigation. This can be achieved by collecting data in identical manner for different periods or for different places or for different conditions. Hence, any set of numerical facts possessing the above mentioned characteristics can be termed as statistics or data. Example 1: Would you regard the following information as statistics? Explain by giving reasons, The height of a person is 160 ems. Gi) The height of Ram is 165 cms and of Shyam is 155 ems. ii) Ram is taller than Shyam, (iv) Ramis taller than Shyam by 10 ems. (v) The height of Ram is 165 ems and weight of Shyam is 55 kgs. Solution: Each of the above statement should be examined with reference to the following conditions: Quantitative Techniques — IntroductionQuantitative Techniques {or Management (a) Whether information is presented as aggregate of numerical figures (b) Whether numerical figures are homogeneous or comparable (©) Whether numerical figures are affected by a multiplicity of factors (On examination of the given information in the light of these conditions we find that only the information given by statement (ii) can be regarded as statistics. It should be noted that condition (c) will be satisfied, almost invariably. In order to illustrate the circumstances in which this condition is not satisfied, we assume that a relation between quantity demanded and price of a commodity is given by the mathematical equation q = 100 - 10p and the quantity demanded at various prices, using this equation, is shown in the following table, pli[2[s[4{[s[s6[7][s [eo q_ [20 | 80 [70 [60 [50 [40 [30 [20 io 0 The above information cannot be regarded as statistics because here quantity demanded is affected by only one factor, ie., price and not by a multiplicity of factors. Contrary to this, the figures of quantity demanded obtained from a market at these very prices are to be regarded as statistics. 1.7.4 Statistics as a Science The use of the word 'STATISTICS' in singular form refers to a science which provides methods of collection, analysis and interpretation of statistical data, Thus, statistics as a science is defined on the basis of its functions and different scholars have defined it in a different way. In order to know about various aspects of statistics, we now state some of these definitions. 1, "Statistics is the science of counting. - AL. Bowley 2. "Statistics may rightly be called the science of averages.” - ALL. Bowley 3. "Statistics isthe science of measurement of social organism regarded as a whole in all its manifestations. - ALL. Bowley 4, "Statistics is the science of estimates and probabilities.” = Boddington All of the above definitions are incomplete in one sense or the other because each consider only one aspect of statistics. According to the first definition, statistics is the science of counting. However, we know that if the population or group under investigation is large, we do not count but obtain estimates. The second definition viz. statistics is the science of averages, covers only one aspect, i.¢., measures of average but, besides this, there are other measures used to describe a given set of data. The third definition limits the scope of statistics to social sciences only. Bowley himself realised this limitation and admitted that scope of statistics is not confined to this area only, The fourth definition considers yet another aspect of statistics. Although, use of estimates and probabilities have become very popular in modern statistics but there are other techniques, as well, which are also very important. The following definitions covers some more but not all aspects of statistics 5. "The science of statistics is the method of judging collective, natural or social phenomena from the results obtained by the analysis or enumeration or collection of estimates.” - WIL. King 6. "Statistics or statistical method may be defined as collection, presentation, analysis and interpretation of numerical data.” - Croxton and Cowden This is a simple and comprehensive definition of statistics which implies that statistics is a scientific method.7. "Statistics isa science which deals with collection, classification and tabulation of ‘numerical facts as the basis for the explanation, description and comparison of phenomena. - Lovitt 8, "Statistics is the science which deals with the methods of collecting, classifying, presenting, comparing and interpreting numerical data collected to throw some light on any sphere of enquiry.” - Seligman The definitions given by Lovitt and Seligman are similarto the definition of Croxton and Cowden except that they regard statistics as a science while Croxton and Cowden has termed it as a scientific method. With the development of the subject of statistics, the definitions of statisties given above have also become outdated. In the last few decades the discipline of drawing conclusions and making decisions under uncertainty has grown witich is proving to be very helpful to decision-makers, particularly in the field of business. Although, various definitions have been given which include this aspect of statistics also, we shall now give a definition of statistics, given by Spiegel, to reflect this new dimension of statistics 9. "Statistics is concemed with scientific method for collecting, organising, summarising, presenting and analysing data as well as drawing valid conclusions and making reasonable decisions on the basis of such analysis. On the basis of the above definitions we can say that statistics, in singular sense, is a science which consists of various statistical methods that can be used for collection, classification, presentation and analysis of data relating to social, political, natural, economical, business or any other phenomena. The results of the analysis can be used further to draw valid conclusions and to make reasonable decisions in the face of uncertainty. 1.7.5 Statistics as a Science different from Natural Sciences Science is a body of systematised knowledge developed by generalisations of relations based on the study of cause and effect. These generalised relations are also called the laws of science. For example, there are laws in physics, chemistry, statistics, mathematics, etc. It is obvious from this that statistics is also a science like any other natural science. The basic difference between statistics and other natural sciences lies in the difference in conditions under which its experiments are conducted. Where as the experiments in natural sciences are done in laboratory, under more or less controlled conditions, the experiments in statistics are conducted under uncontrolled conditions. Consider, for example, the collection of data regarding expenditure of households in a locality. There may be a large number of factors affecting expenditure and some of these factors might be different for different households. Due to these reasons, statistics is often termed as a non-experimental science while natural sciences are termed as experimental sciences. We may note here that social sciences like economics, business, sociology, geography, political science, etc., belong to the category of non-experimental science and thus, the laws and methods of statistics can be used to understand and analyse the problems of these sciences also. 1.7.6 Statistics as a Scientific Method We have seen above that, statistics as a non-experimental science can be used to study and analyse various problems of social sciences. It may, however, be pointed out that there may be situations even in natural sciences, where conducting of an experiment under hundred per cent controlled conditions is rather impossible. Statistics, under such conditions, finds its use in natural sciences, like physics, chemistry, etc. Quantitative Techniques — IntroductionQuantitative Techniques {or Management 20 In view of the uses of statistics in almost all the disciplines of natural as well as social sciences, it will be more appropriate to regard it as a scientific method rather than a science. Statistics asa scientific method can be divided into the following two categories: (a) Theoretical Statistics and (b) Applied Statistics (a) Theoretical Statistics: Theoretical statistics can be further sub-divided into the following three categories: (i) Descriptive Statistics: All those methods which are used for the collection, classification, tabulation, diagrammatic presentation of data and the methods of calculating average, dispersion, cotrelation and regression, index numbers, etc,, are included in descriptive statisties Gi) Inductive Statistics: It includes all those methods which are used to make generalisations about a population on the basis of a sample. The techniques of forecasting are also included in inductive statistics, Gi) Inferential Statistics: It includes all those methods which are used to test certain hypotheses regarding characteristics of a population. ) : Tt consists of the application of statistical methods to practical problems. Design of sample surveys, techniques of quality control, decision-making in business, etc., are included in applied statistics. 1.7.7 Statistics as a Science or an Art We have seen above that statistics is a science, Now we shall examine whether itis an art ornot. We know that science is a body of systematised knowledge. How this knowledge is to be used for solving a problem is work of an art, In addition to this, art also helps in achieving certain objectives and to identify merits and demerits of methods that could be used. Since statistics possesses all these characteristics, it may be reasonable to say that it is also an ar. ‘Thus, we conclude that since statistical methods are systematic and have general applications, therefore, statistics is a science. Further since the successful application of these methods depends, to a considerable degree, on the skill and experience of a statistician, therefore, statistics is an art also. 1.8 LET US SUM UP. ‘The changes in the structure of human organisation, perfection in various fields and introduction of decision had given birth to quantitative technique. The application of Quantitative Techniques methods helps in making decisions in such complicated situation, Evidently the primarily objective of Quantitative Techniques is to study the different components of an organisation by employing the methods of mathematical statistics in order to get the behaviour with greater degree of control on the system. In short, the objective of Quantitative Technique is to make available scientific basis to the decision. maker, for solving the problem involving the interaction of different components of the organisation by employing a team of scientists from distinguish disciplines, all working in concert for finding a solution which isin the best interest of organisation as a whole. The best solution thus obtained is known as optimal decision, 1.9 LESSON-END ACTIVITIES 1, Visit a nearby Nokia priority center as I hope it will reach your city. Analyse the functioning of the priority center and see which types of Quantitative Techniques could be more useful and applicable. For your convenience and even giving you the clue that if there are more customers in the priority center and service centers are rot able to fulfil the requirements waiting line will be the best approach2. Why there is a need of statistics. Indicate one incidence of statistics application in uantave Techies - your daily routine. How the statistics application had bring a paradigm shift. Inoduction 1.10 KEYWORDS Management science Model Analysis Decision-making Mathematical model Algorithm, Problem 11 QUESTIONS FOR DISCUSSIO. 1, Write True or False against each statement: (a) Accurate data for input values are essential (b) A factor is developed to suit the problem, (©) Key decision and objective of the problem must be identified. (4) The methodology helps us in studying the scientific method, (c) Model does not facilitates managers to take decisions. 2, Briefly comment on the following statements: (a) Scientific management has got wide scope. (b) _ Implementation involves translation/application of solutions. (©) A model is a mathematical representation of a problem situation. (@) It is necessary to clearly understand the problem situation (e) Scientific management techniques are available to solve managerial problem. Fill in the blanks: (a) Once the in tested and validated, it is ready for implementation. (b) Quantitative factors are considered in (©) Managerial science had the organisation (a) Managerial criticism had become (e) Fredrich W. Taylor developed the ‘management principle 4, Distinguish between the following: (a) Quantitative Techniques and Management. (b) Solving the model and validating the model translation, (©) Translation & Application 12 TERMINAL QUESTIONS 1, How useful are the Quantitative Techniques in decision-making? 2. Give the areas of application where Quantitative Techniques can be applied. 2Quantitative Techniques {or Management 2 10. 12. 1B. 14, Is 16. 17. 18. 19, 20. 21 22, 23, 24, 25, Explain the methodology adopted in solving problems with the help of a low chart diagram. What is a model? Explain with a suitable example. ‘What is meant by validation of model? Explain the advantages of modelling with the help of a short example. Discuss the advantages and limitations of using results from a mathematical model to make decision as out operations. What are different type of models used in management science. ‘What are some of the opportunities in management science? What is implementation and why it is important? ‘What are some of sources of input data? Briefly trace the history of management science ‘What is the Quantitative Techniques process? Give several examples of this process. Give a brief account of the origin and development of statistics. Define statistics and discuss its relationship with natural and other sciences. Distinguish between statistical methods and statistics. Discuss the scope and significance of the study of statistics. Who gave the following definitions of statistics? (i) “Statistics is the science of counting” (Bowley, Boddington, King, Saligman) Gi) “Statistics is the science of estimates and probabilities”. (Webster, Secrist, Boddington, Yule & Kendall) The science of statistics is the method of judging collective, natural or social phenomena from the results obtained by the analysis or enumeration or collection of estimates". (Achenwall, Marshall, W.1. King, Croxton & Cowden) “Statistics are numerical statements of facts, but all facts stated numerically are not statistics”. Clarify this statement and point out briefly which numerical statements of facts are statistics. Gi) Discuss briefly the utility of statistics in economic analysis and business. Which of the following statements are true? (a) Statistics is helpful in administration. (b) Statistics is helpful in business. (©) Statistics is helpful in economic analysis (4) Statistics is helpful in all of the above. “Statistics are the straws out of which I like other economists have to make bricks’ Discuss. ‘Science without statistics bear no fruit, statistics without science have no root Explain the above statement. ‘It is usually said that statistics is science and art both”, Do you agree with this statement? Discuss the scope of statistics. Define ‘Statistics’ and explain briefly the divisions of the science of statistics. “Statistics is not a science, it is a scientific method”, Discuss it critically and explain the scope of statistics.26. Explain clearly the three meanings of the word ‘Statistics’ contained in the following statement “You compute statistics from statistics by statistics” [Hint : Mean, standard deviation, etc., computed from a sample are also known as statistics.] 27. “Economics and statistics are twin sisters”. Discuss. 28. Discuss the nature and scope of statistics. What are the fields of investigation and research where statistical methods and techniques can be usefully employed? 29. Explain the following statements : (a) “Statistics is the science of counting” (b) “Statistics is the science of estimates and probabilities” (©) “Statistics is the science of averages” 30. Explain by giving reasons whether the following are data or not: (Aun is more intelligent than Avinash. Gi) Arun got 75% marks in B.Sc. and Avinash got 70% marks in B.Com. ii) Arun was bom on August 25, 1974 (iv) The consumption function of a community is C= 1,000 + 0.8Y, therefore, the levels of consumption for different levels of income are Y [0 [1008 | 2000 | 4000 | 6000 [80007 31, “Statistics are aggregates of facts, affected to a marked extent by a multiplicity of causes” Discuss the above statement and explain the main characteristics of statistics. 32. “Statistics are not merely heap of numbers”. Explain. 33. Elucidate the following statement “Not a datum, but data are the subject-matter of statistics”. 1.13 MODEL ANSWERS TO QUESTIONS FOR DISCUSSION 1. (a) True (b) False.) True (@) True) False 3. (@) model (b) decision-making (©) facilitate (@) complex. (e) scientific 1.14 SUGGESTED READINGS Bierman & Hausman, Quantitative Analysis for Business Decision. Billy E Gillert, “Introduction to OR” Franklyn A Lindsay, “New Technique for Management Decision-making’ Herbert G. Hicks, “New Management of Organisation’ Joseph L. Massie, “Essentials of Management.” R. L. Acnoff & M. W. Sasieni, “Fundamentals of OR Norbert Lloyd, Enrich, “Management OR Quantitative Techniques —LESSON 2 MEASURES OF CENTRAL TENDENCY CONTENTS 20 Aims and Objectives 21. Introduction 22. Definition of Average 23. Functions and Characterstics of an Average 24. Various Measures of Average 25. Arithmetic Mean 26 Median 27. Other Partition or Positional Measures 28 Mode 29. Relation between Mean, Median and Mode Geometric Mean Harmonic Mean Letus Sum Up Lesson-end Activity Keywords Questions for Discussion ‘Terminal Questions Model Answers to Questions for Discussion Suggested Readings AIMS AND OBJECTIVES In this lesson we would be able to measure the various measures of Central Tendency like Average, Arithematic mean, Median, Mode and the relationship between various measures of tendencies. We would also learn the Geometric and Harmonic Mean. 2.1 INTRODUCTIO! ‘Summarisation of the data is a necessary function of any statistical analysis. As a first step in this direction, the huge mass of unwieldy data are summarised in the form of tables and frequency distributions. In order to bring the characteristics of the data into sharp focus, these tables and frequency distributions need to be summarised further. A ‘measure of central tendency or an average is very essential and an important summary ‘measure in any statistical analysis. An average is a single value which can be taken as representative of the whole distribution,2.2, DEFINITION OF AVERAGE ‘The average of a distribution has been defined in various ways. Some of the important definitions are: ("An average is an attempt to find one single figure to describe the whole of figures” - Clark and Sekkade Gi) "Average is a value which is typical or representative of a set of data”. - Murray R. Spiegal Gi) "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 2.3 FUNCTIONS AND CHARACTERSTICS OF AN AVERAGE 1. 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 uused 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 ‘A good measure of average must posses the following characteristics 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 It should be easy to compute. It should be easy to understand. It should be based on all the observations. It should be capable of further algebraic treatment. It should not be unduly affected by extreme observations. It should not be much affected by the fluctuations of sampling. 2.4 VARIOUS MEASURES OF AVERAGE Various measures of average can be classified into the following three categories: (a) Mathematical Averages (Arithmetic Mean or Mean (i) Geometric Mean Gi) Harmonic Mean (iv) Quadratic Mean (b) Positional Averages: (Median (ii) Mode Measures of Central TendencyQuantitative Techniques Management 26 (©) Commercial Average (i) Moving Average Gi) Progressive Average Gi) Composite Average ‘The above measures of central tendency will be discussed in the order of their popularity. Outof these, the Arithmetic Mean, Median and Mode, being most popular, are discussed in that order. 2.5 ARITHMETIC MEAN Before the discussion of arithmetic mean, we shall introduce certain notations. It will be assumed that there are n observations whose values are denoted by X,.X,, ....X, respectively. The sum of these observations X, + X, +... + X, will be denoted in abbreviated form as )/X,, where § (called sigma) denotes summation sign. The subscript of X, ic, 'i is a positive integer, which indicates the serial number of the observation. Since there are n observations, variation in i will be from I to n, This is indicated by writing it below and above S, as written earlier. When there is no ambiguity in range of summation, this indication can be skipped and we may simply write X, +X, Foe # X= EX, ° Arithmetic Mean is defined as the sum of observations divided by the number of observations. It can be computed in two ways : (i) Simple arithmetic mean and Gi) weighted arithmetic mean. In case of simple arithmetic mean, equal importance is given toall the observations while in weighted arithmetic mean, the importance given to various observations is not same. Calculation of Simple Arithmetic Mean (a) When Individual Observations are given. Let there be n observations X,, X, .... X,. Their arithmetic mean can be calculated either by direct method or by short cut method. The arithmetic mean of these observations will be denoted by ¥ Direct Method: Under this method, X is obtained by dividing sum of observations by number of observations, ie., x% x= Short-cut Method: This method is used when the magnitude of individual observations is large. The use of short-cut method is helpful in the simplification of calculation work. Let A be any assumed mean. We subtract A from every observation. The difference between an observation and A, i. X,- A is called the deviation of ith observation from A and is denoted by d. Thus, we ean write :d=X,- Ard, =X,- Ayo d, =X, A. On aulding these devietions and dividing by n we get Ya _YOi-a)_Ex-m Ex " a or d=X-A (Where @ = ) " Jens On rearranging, we get K=A+d=A+ This result can be used for the calculation of X. Remarks: Theoretically we can select any value as assumed mean. However, for the purpose of simplification of calculation work, the selected value should be as nearer to the value of ¥ as possible.Example 1: The following figures relate to monthly output of cloth of a factory in a Measures of Cental Tendency given year: ‘Monts Jan Feb Mar Apr May Jun Jul Aug Sep Oct Noo Dec Output ” in ‘ood metres) | 90 88 92 Bf 96 92 9 100 92 94 98 86 Calculate the average monthly output, Solution: (i) Using Direct Method yz _80+88+92+84+96 +92+96-+100+92+94 +98+86 12 1.5 (000 matrs) i) Using Short Cut Method Let A=90, (®) When data are in the form of an ungrouped frequency distribution Let there be n values X,, X,, ... X, out of which X, has occurred f, times, X, has occurred f, times, ..... X, has occurred f, times. Let N be the total frequency, ie, N= DJ. Alternatively, this can be written as follows Values |X, [Xz |---| ¥, | Total Frequency Frequengy |i hh [7 1 ts W Direct Method : The arithmetic mean of these observations using direct method is given by XS EX $A X) AX; ttit Xp toch Xy tat Xp mer ine m7 fit ht Since X, + X,+..... +X, added f, times can also be written f,X,. Similarly, by writing other observation in same manner, we have gy 3) Short-Cut Method: As before, we take the deviations of observations from an arbitrary value A. The deviation of i sh observation from A is d, A Multiplying both sides by fi we have /, d,=f, (X,— A) ‘Taking sum over all the observations Sfd,= Sf(X,-A)=$ £X,-ASf,Quantitative Techniques Management 28 Dividing both sides by N we have Thids _ TAX NN Shi “Az X-A or =A+ SAed Example 2: The following is the frequency distribution of age of 670 students of a school. Compute the arithmetic mean of the data. x 2 tinykrsy| 5) 6) 7] 8 | 9 fro far] [a3 faa Frequency| 25 | 45 | 90 | 165 | 112 | 96 | 81 | 26 | 18 | 12 Solution: Direct method: The computations are shown in the following table : X[s[e][7]8 [9 [@[ up] Bafa] Total F | 25 | 45 | 90 | 165 | 112 | 96 | 81 | 26 | 18 | 12 | EF-670 PX [125 [270 [630 | 1320 [1008 | 960 [BT | 312 | 234 | 68 | F X= 5918 Z/K _ 5018 Fama ~ 883 yeas Short-Cut Method: The method of computations are shown in the following table 6 7 8 9 10 11 12 13 14] Total 45 90 165 112 96 81 26 18 12| 670 2-10 12 3 45 6 90-90 0 112 192 243 104 90 72 58 (c) When data are in the form of a grouped frequency distribution In a grouped frequency distribution, there are classes along with their respective frequencies. Let I,be the lower limit and ube the upper limit of ith class. Further, let the number of classes be n, so that i= 1,2,....n. Also let f, be the frequency of ith class. This distribution can written in tabular form, as shown. Note: Here u, may or may not be equal to 1, ie., the upper limit of a class may or may not be equal to the lower limit of its following class. It may be recalled here that, in a grouped frequency distribution, we only know the number of observations in a particular class interval and not their individual magnitudes Therefore, to calculate mean, we have to make a fundamental assumption thatthe observations in aclass are uniformly distributed, lass | Frequency Under this assumption, the mid-value of a class will be equal tothe Intervals | (f) ‘mean of observations in that class and hence can be taken as their if representative. Therefore, if X, is the mid-value of i th class with —,-u, fi frequency f,, the above assumption implies that there are f, observations each with magnitude X, (i = 1 to n). Thus, the arithmetic mean of a grouped frequency distribution can also be calculated by the use of the formula, given in § 9.5.1(b). 4 f Tout Ty Frequency Remarks: The accuracy of arithmetic mean calculated for a grouped frequency distribution depends upon the validity of the fundamental assumption. This assumption is rarely met in practice. Therefore, we can only get an approximate value of the arithmetic mean of a grouped frequency distribution,Example 3: Calculate arithmetic mean of the following distribution ling + 0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 Frequency: 3-8) DIS HS Solution: Here only short-cut method will be used (o calculate arithmetic mean but it can also be calculated by the use of direct-method, Class Mid YFreqenes yy a5] yg Intervals | Values 0 |) 0-10 5 3 =30 | -90 10-20 15 8 -20 |-160 2030 | 25 2 =10 |-120 30-40 | 35 15 0 0 40-50 | 45 18 10 | 180 so-6o | 55 16 20 | 320 60-70 | 65 " 30 | 330 70-80 | 75 5 40 | 200 Toral_| 88 660 2A LF 55, 600 aos N 88 Example 4: The following table gives the distribution of weekly wages of workers in a factory. Calculate the arithmetic mean of the distribution. Wag? + 240-269 270-299 300-329 330-359 360-389 390-419 420-449 No. of Wes 7 9 7 8 2 2 8 Solution: It may be noted here that the given class intervals are inclusive. However, for the computation of mean, they need not be converted into exclusive class interval. ‘Mid Class Intervals | Values (X) Frequency a 240-269, asa | 7 630 270-299 | 2845 19 1140 300-329 | 3145 20 -810 si0-3s9 | 3445 15 ° 360-389 | 3745 2 360 90-419 | 4045 2 70 40-449 | ass | 8 70 Total xa LM au45— 7 3967 N 100 Step deviation method or coding method In a grouped frequency distribution, if all the classes are of equal width, say ‘h’, the successive mid-values of various classes will differ from each other by this width. This fact can be utilised for reducing the work of computations. Mukiplying both sides by f, and taking sum over all the observations weave, Df =7 3 (8 A) ot iy Se, y 1X, ~ay (= ex-aw Measures of Central TendencyQuantitative Techniques Management Dividing both sides by N, we have X=Ath © N Using this relation we can simplify the computations of Example 4, as shown below. w= XMAS) yp 0 12 3] Total 30 7 19 27:15 2 12 8| 100 fa [21 -38 -27_0 12 24 24] -26 Using formula (5), we have 30x26 X=3445- = 336.7 100 Example 5: Following table gives the distribution of companies according to size of capital. Find the mean size of the capital of a company Capital (Lacs Rs) [<5 | <10 | <15 [ <20 [<25 | <30 No.of Companies [20 | 27 | 29 | 38 | 48 | 53 Solution: This is a'less than’ cumulative frequency distribution. This will first be converted into class intervals. ‘Class | Frequency | Mid-values | x —125 Intervals | _(f) eo 3M 0-5 | 20 25 2-40 5-10) 7 15 1 7 ots 2 Is 0 0 15-209 17s 1 9 20-25 10 2s 2 w 25-30 | 5 215 3s oral | 33 3 5x3 ¥=125-"< =Rs Lacs ay 7 RS 12.221 Example 6: A charitable organisation decided to give old age pension to people over sixty years of age. The scale of pension were fixed as follows Age Group 60-65 65-70 70-75 75-80 80-85 85-90 90-95 Pension/Month(Rs) : 100 120° 140 160 180-200-220 If the total pension paid per month in various age groups are Age Group 60-65 65-70 70-75 75-80 80-85 85-90 90-95 Total Pensioni Month + 700 600 840 800--720««600 440) Calculate the average amount of pension paid per month per head and the average age of the group of old persons, Solution: The computations of pension per head and the average age are shown in the 30 following table,we eT pkg | neo | Group | monti: | per month) | PE="S | Intros fu in Rs) (inks) P= (x) 100 700 7 [as 20 éo0 5 | os | 2 | 40 io 6 | ms fos 160 00 s | 7 o | 0 180 720 a | 925 1 | 4 200 600 3 | ars 2 | 6 20 | 440 2 | 25 a | 6 700 | 32 21 < 5x(-21) average age F=7754 C70) 99.5 528 = 7422 Yours Total pension paid _ 4700 _ No.of persons 32 ‘The average pension per head = Rs 146.88 Charlier's Check of Accuracy When the arithmetic mean of a frequency distribution is calculated by short-cut of step- deviation method, the accuracy of the calculations can be checked by using the following formulae, given by Charlier. For short-cut method LAa+l= Esa +L or Veh = EKG )- Lh =D +1) Similarly, for step-deviation method Lit )=L iat DS or Va = Diu V-Ei = LAW AYN Checking the accuracy of calculations of Example 5, we have LA (w+ 1)=20 x (= 1) + (7 x0) + (2x 1) + (9% 2) + (10x 3) + (5 x4) = 50. Since YP) f(u+1)-N= 50-5 Y fis, the calculations are correct. ‘Weighted Arithmetic Mean In the computation of simple arithmetic mean, equal importance is given to all the items. But this may not be so in all situations. If all the items are not of equal importance, then simple arithmetic mean will not be a good representative of the given data. Hence, weighing of different items becomes necessary. The weights are assigned to different items depending upon their importance, i.c., more important items are assigned more weight. For example, to calculate mean wage of the workers of a factory, it would be wrong to compute simple arithmetic mean if there are a few workers (say managers) with very high wages while majority of the workers are at low level of wages. The simple arithmetic mean, in such a situation, will give a higher value that cannot be regarded as representative wage for the group. In order that the mean wage gives a realistic picture of the distribution, the wages of managers should be given less importance in its computation. The mean calculated in this manner is called weighted arithmetic mean, ‘The computation of weighted arithmetic is useful in many situations where different items are of unequal importance, e.g., the construction index numbers, computation of standardised death and birth rates, et Measures of Central Tendency 31Quantitative Techniques Management 32 Formulae for Weighted Arithmetic Mean Let X,, X, .. weighted arithmetic mean denoted as X,, is given by, . X, be n values ith their respective weights W,, W, wn... W,. Their (Using direct method), (where d,=X,- A) (Using short-cut method), Gi) X= At APA (where = ) (Using step-deviation method) Example 7: Ram purchased equity shares of a company in 4 successive months, as given below. Find the average price per share. ‘Month No.of Shares Price per share (in Rs.) Dec-91 100 200 Jan-92 150 250 Feb-92 200 280 Mar-92 125 300 Solution: The average price is given by the weighted average of prices, taking the number of shares purchased as weights. non [PRS OTN ORT x 30] di Dies¢ fon za 5 jms | 180 20 0 ft rose | 200 mo 50 | a0 rsa] as so -2s_| “ra Tou i 2300 = 3,500 X, =150-— Ls _ Toso = Rs 146.60 Example 8: From the following results of two colleges A and B, find out which of the ‘ovo is better amination College A College B Appeared Passed Appeared — Passed M.Sc 60 40 200 160 MA 100 60 240 200 BSc 200 150 200 140 BA 120 B 160 100 Solution: Performance of the two colleges can be compared by taking weighted arithmetic ‘mean of the pass percentage in various classes. The calculation of weighted arithmetic ‘mean is shown in the following table. College A College B Class} Pass Percs | Appenred| Pass Percy Apparel passed prtage eke [APPER A Passed ne ge] % M.Sc. 60, 40 | 6667 | 4000.2) 200 160 | 80.00 | 16000.0 MA) 100 60 | 60.00 | 6000.0) 240 200 | 83.33 |19999.2 B.Sc, 200 150 | 75.00 |15000.0) 200 140 | 70.00 |14000.0 BA. 120 7 | 6250 | 75000) 160 too | 62.50 |10000.0 Total| 480 325, 1$2500.2] 800. 600 59999.22500.2 X, for College A = = 67.71% , for College Fao 7 67 71% LX, _ $999.2 ym, 800 Since the weighted average of pass percentage is higher for college B, hence college B is better, X, for College B 5% Remarks: If X denotes simple mean and X,, denotes the weighted mean of the same data, then (@ ¥ =¥X,, when equal weights are assigned to all the items. Gi) >, when items of small magnitude are assigned greater weights and items of large magnitude are assigned lesser weights (il) ¥ 0 Measures of Central TendencyQuantitative Techniques Management 34 Differentiating (1) wart. A we have Ay p(x,-A)= aA » for minima. Q) On dividing both sides by - 2, we have Ys (X-A)=0 or Epx,-Na=o Le N or ~A=0 (on dividing both sides by N) Thus, ¥-A=0 or A=X. as > Further, to show that § is minimum, it will be shown that 777 > Oat A= X Differentiating (2) further w.rt. A, we have a 29. f,(0-1)=2)) f, =2N , which is always positive. Hence $ is minimum when A = X. Arithmetic mean is capable of being treated algebraically. This property of arithmetic mean highlights the relationship between X, -X, and N. According to this property, if any two of the three values are known, the third can be easily computed. This property is obvious and requires no proof. If X, and, are the mean and number of observations ofa series and X,, and N, are the corresponding magnitudes of another series, then the mean X of the NX, tN,X, N,+N, combined series of N, observations is given by X= Proof: To find mean of the combined series, we have to find sum of its observations. Now, the sum of observations of the first series, ic., )° f.X, =N,X, and the sum of observations of the second series, ie., J f,X,= 2X, -. The sum of observations of the combined series, ie., N,X,+N,X, NX, +N, X, N, +N. Thus, the combined mean X This result can be generalised: If there are k series each with mean X, and number of observations equal to N, , where i= 1,2... k, the mean of the combined series of N +N, + un. +N, observations is given by NAME MR, or NaN tN in, If a constant B is added (subtracted) from every observation, the mean of these observations also gets added (subtracted) by it.> Measures of Central Tendene Proof : Let X be the mean of the observations X,, X,....X, with respective > frequencies as f, f, ... f,, When B is added to every observations, let u,= X, +B Mukiply both sides by f, and take sum over all the observations, we get Efu, = Ef(X, + B) = EfX, + NB Dividing both sides by N we get Dit IK yo a= 4B, WOON i.e,, The mean of u = , + B is obtained by adding B to the mean of X, values. Similarly, it can be shown that if vi =X, - B, then p= —B, If every observation is multiplied (divided) by a constant b, the mean of these observations also gets multiplied (divided) by it Proof: Letus define w, = BX, . Multiplying both sides by f, and taking sum over all the observations, we get Efw, = BEFX, x 5X Similarly, it can be shown that if D, = —* , then D=— B B ‘Using properties 5 and 6, we can derive the following results IY, = a+ bX, , then BEY, = Ef(a + bX) or EY, = abf, + BEAX, Dividing both sides by Ni f ), we have IX. op Faa+b® This shows that relationship between the means of two variables is same as the relationship between the variables themselves If some observations of a series are replaced by some other observations, then the ‘mean of original observations will change by the average change in magnitude of the changed observations Proof: Let mean of n observations be X X,, X, are replaced by the respective observations Y,, Y,, Y,. Therefore, change in magnitude of the changed observations = (Y, + Y, + ¥,) - (X +X, + Jnange in magnitude — (71 ¥2*¥3)=%y + Xq+X3) Thus, new X = old X + average change in magnitude. Example 9: There are 130 teachers and 100 non-teaching employees in a college. The respective distributions of their monthly salaries are given in the following table 3Quantitative Techniques for Management 36 Teachers ‘Non-Teaching Employees 8 Monthy 8 Caf “* | Prmeay| Ming SY Puy 400-5000 | 10 1000 - 2000 2 5000-6000 | 16 2000 - 3000 6 {6000 - 7000 22 3000 - £000 28 7oo0-#000 | 67 | 4a0d-5000 | 06 goo0-so00 | _15 Total 130 Total 100 From the above data find (Average monthly salary of a teacher. Gi) Average monthly salary of a non-teaching employee. Gii) Average monthly salary of a college employee (teaching and non-teaching) Solution. (@ Average monthly salary of a teacher Monthy Salary] Frepuency | Md Values i Gens | ee oo f 00 - 5000 10 4500 2 20 5000-009 | 1g Soo | ot | ag 6000 - 7000 22 6500 Q a 9000-8009 | 67 0) i @ soo0-s000 | 3 5500 2 | % Total 130 él , = 6500 + 469.23 = Rs 6969.23 Gi) Average monthly salary of a non-teaching employee Monthly Salary] Trequency [Mad Values], X—2500] — fy (RS) J 0 7600 1000 - 2000 21 1500 a “2 2000 - 3000 6 2500 0 0 3000 - 4000 2B 3500 1 2B ‘4000 - 5000 6 4500, 2 12 Tatal Too 9 500 + 190 = Rs 2690 Gi) Combined average monthly salary is Xan. N,+Nz Xo Here N, = 130, X, = 6969.23, N,= 100 and X, = 2690 x ~ 130% 6969.234+ 1002690 230 =Rs 5108.70 Example 10: The average rainfall for a week, excluding Sunday, was 10 ems. Due to heavy rainfall on Sunday, the average for the week rose to 15 cms. How much rainfall was on Sunday? Solution: A week can be treated as composed of two groups: First group consisting of 6 da 6 and X, only Sunday for which N, = 1. Also, mean of this group will be equal to the observation itself. Let this be X. We have to determine the value of X, 0; the second group consisting of 's excluding Sunday for which N,Measures of Central Tendency and X, _ 6x1041xX 7 We are also given N 15 (for the whole week). 15 or 60+X=15x7 => X= 105 - 60=45 cms. Thus, the rainfall on Sunday was 45 cms, Example 11: The mean age of the combined group of men and women is 30.5 years. If the mean age of the sub-group of men is 35 years and that of the sub-group of women is 25 years, find out percentage of men and women in the group. Solution: Let x be the percentage of men in the combined group. Therefore, percentage ‘of women = 100 - x. We are given that ¥,(men) = 35 years and X, (women) = 25 years Also X (combined) = 30.5 +25 (100-2) _35x-+2500—25 305 = 3944 25 (U00 Ta) _ 35x + 2500-255 45 3950 = 10x +254 Prey’ 700 or 3050 = 10x + 2500 550 x= FE = 55%, Thus there ate 55% men and 45% women in the group. To find missing frequency or a missing value Example 12: The following is the distribution of weights (in Ibs.) of 60 students of a class: Weights 93-97 98-102 108-107 108-112 113-117 No. of 2 5 12 ? 4 Students Weights 18-122 123-127 128-132 Total No. 9 > students 3 1 If the mean weight of the students is 110.917, find the missing frequencies. Solution: Let f, be the frequency of the class 108-112. Then, the frequency of the class 118-122 is given by 60 -(2+5+ 12+ 144341+4f)=23-f, Writing this information in tabular form we have Weights Mid-Values ow) f 93.97 95 6 98-102 100 -10 103107 10s 12 108-112 110 ° 1a417 us 14 lis2z 120 46-25, 123.127 Ls 9 128.132 130 4 2h Using the foul fr AM, we can we 110917 =110425= 2438 or 11,004 = 45 - 2f, or 2f, = 33.996 = 34 (approximately) Thus, f, = 17 is the frequency of the class 108 - 112 and 23 - 1 the class 118 - 122. is the frequency of Example 13: Find out the missing item (x) of the following frequency distribution whose arithmetic mean is 11.37. a7Quansitaive Tecnigues x: 57 @ 13 6 20 Management fo 24 9 So 8 4 z 5x2) + (7x 4) + 29x-+ (1154) + (1311) + (168) + (20% 4) 12 1 29x+594-+143-+128+80 TOR RB A SOSA TB 80 or 11.837 x112= 983 + 29% 112 2088 ~ 10.015 = 10 > = = 10 (approximately) Example 14: The arithmetic mean of 50 items of a series was calculated by a student as 20, However, it was later discovered that an item 25 was misread as 35. Find the correct value of mean. Solution: N= 50 and = EX, = 50x 20 = 1000 Thus EX, y= 1000 + 25 - 35 = 990 and X, = 2 50 Alternatively, using property 7 10 Koou = Xay + average change in magnitude = 20-7 = 20-0.2= 19.8 Example 15: The sales of a balloon seller on seven days of a week are as given below: Days [Mon Tue Wed Thu Fri_Sat_Sun Sales (in Rs) | 100 125140160200 250 Ifthe profit is 20% of sales, find his average profit per day. 20 Solution: Let P denote profit and $ denote sales, 2. P = 55 *S 20 1 i y 6, we can write P="—xS or P=—xS Using property 6, we can write P= +55 5 Now §- 100+150+125-+140+160+200+250 _ 165.9) 7 p='607l ps 39.14 Hence, the average profit of the balloon seller is Rs 32.14 per day Alternatively, we can find profit of each day and take mean of these values. Days [Mon Tue Wed Tha _Fri_Sat Simi Profit (in Rs)| 20 3025 28 324050 52043 28432440450 pa = Rs 32.14 7 Merits and Demerits of Arithmetic Mean Merits Out of all averages arithmetic mean is the most popular average in statistics because of 38 its merits given below:8 Arithmetic mean is rigidly defined by an algebraic formula, Calculation of arithmetic mean requires simple knowledge of addition, multiplication and division of numbers and hence, is easy to calculate. tis also simple to understand the meaning of arithmetic mean, e.g., the value per item or per unit, etc, Calculation of arithmetic mean is based on all the observations and hence, it can be regarded as representative of the given data Itis capable of being treated mathematically and hence, is widely used in statistical analysis. Arithmetic mean can be computed even if the detailed distribution is not known but sum of observations and number of observations are known, Itis least affected by the fluctuations of sampling. It represents the centre of gravity of the distribution because it balances the magnitudes of observations which are greater and less than it. It provides a good basis for the comparison of two or more distributions. Demerits Although, arithmetic mean satisfies most of the properties of an ideal average, it has certain drawbacks and should be used with care. Some demerits of arithmetic mean are: 1 Itcan neither be determined by inspection nor by graphical location. 2, Arithmetic mean cannot be computed for a qualitative data; like data on intelligence, honesty, smoking habit, etc. 3. It is too much affected by extreme observations and hence, it does not adequately represent data consisting of some extreme observations, 4, The value of mean obtained for a data may not be an observation of the data and as such it is called a fictitious average. 5. Arithmetic mean cannot be computed when class intervals have open ends. To compute mean, some assumption regarding the width of class intervals is to be made. 6. Inthe absence of a complete distribution of observations the arithmetic mean may lead to fallacious conclusions. For example, there may be two entirely different distributions with same value of arithmetic mean 7, Simple arithmetic mean gives greater importance to larger values and lesser importance to smaller values. Exercise with Hints 1 The frequency distribution of weights in grams of mangoes of a given variety is given below, Calculate the arithmetic mean. Weights No. of Weights No. of (in gms) Mangoes (in gms) Mangoes 410-419 14450-45945 420-429 20460-46918 430-439 42470-4797 440-449 52 Hint : Take the mid-value of a class as the mean of its limits and find arithmetic 2, mean by the step-deviation method, The following table gives the monthly income (in rupees) of families in a certain locality. By stating the necessary assumptions, calculate arithmetic mean of the distribution, Measures of Centra, 39Quantitative Techniques Management Income : 1000 1000-2000 2000-3000 3000-4000 4000- S000 S000 Hint : This distribution is with open end classes. To calculate mean, itis to be assumed that the width of first class is same as the width of second class. On this assumption the lower limit ofthe first class will be 0. Similarly itis assumed that the width of last class is equal to the width of last but one class. Therefore, the upper limit of the last class can be taken as 6,000. 3. Compute arithmetic mean of the following distribution of marks in Economics of 50 students. Marks more than No. of Students Marks more than No. of Students 0 50 50 15 10 46 60 8 20 40 70 3 30 33 80 ° 40 25 Hint: First convert the distribution into class intervals and then calculate X. 4, The monthly profits, in ‘000 rupees, of 100 shops ate distributed as follows: Profit per Shop > 0-100 0-200 0-300 0-400 0-500 0-600 No. of Shops 2 9% 57) 7794100 Find average profit per shop. Hint: This isa less than type cumulative frequency distribution. 5. Typist A can type a letter in five minutes, typist B in ten minutes and typist C in fifteen minutes. What is the average number of letters typed per hour per typist? Hint: In one hour, A will type 12 letters, B will type 6 letters and C will type 4 letters, 6. A taxi ride in Delhi costs Rs 5 for the first kilometre and Rs 3 for every additional kilometre travelled. The cost of each kilometre is incurred at the beginning of the kilometre so that the rider pays for the whole kilometre. What is the average cost otavling 22 kilometres? 3 Hint: Total cost of travelling 2, kilometres = Rs 5 +343 =Rs 11 7. A company gave bonus to its employees. The rates of bonus in various salary ‘groups are’ Monthly Salary (in Rs) 1900-2000 2000-3000 3000-4000 4000-5000 Rate of Bonus (in Rs) 2000 2500 3000 3500 The actual salaries of staff members are as given below : 1120, 1200, 1500, 4500, 4250, 3900, 3700, 3950, 3750, 2900, 2500, 1650, 1350, 4800, 3300, 3500, 1100, 1800, 2450, 2700, 3550, 2400, 2900, 2600, 2750, 2900, 2100, 2600, 2350, 2450, 2500, 2700, 3200, 3800, 3100. Determine (i) Total amount of bonus paid and (ii) Average bonus paid per employee. Hint: Find the frequencies of the classes from the given information. 8. Calculate arithmetic mean from the following distribution of weights of 100 students of acollege. Itis given that there is no student having weight below 90 Ibs. and the ‘0 total weight of persons in the highest class interval is 350 Ibs.Weights; <100 <110 <120 <130 <140 <1S0 <160 <170 1702 Frequency: 3 5 2% 45 66 «85S BD Hint: Rearrange this in the form of frequency distribution by taking class inter- vals as 90 - 100, 100 - 110, ete. 9. By arranging the following information in the form of a frequency distribution, find arithmetic mean, “Ina group of companies 15%, 25%, 40% and 75% of them get profits less than Rs 6 lakhs, 10 lakhs, 14 lakhs and 20 lakhs respectively and 10% get Rs 30 lakhs or ‘more but less than 40 lakhs." Hint: Take class intervals as 0 - 6, 6 - 10, 10 - 14, 14 - 20, ete. 10. Find class intervals if the arithmetic mean of the following distribution is 38.2 and the assumed mean is equal to 40. Step deviations 392 10 123 Frequency 8 14 18 28 17 10 5 Life + xh to find the class width h. Hint: Use the formula x. 11. From the following data, calculate the mean rate of dividend obtainable to an investor holding shares of various companies as shown Percentage Dividend 30-40 20-30 10-20 0-10 No. of Companies 4 8 1 6 Average no, ofshares ofeach 954159200300 ‘company held by the investor Hint: The no. of shates of each type = no. of companies x average no. of shares. 12. The mean weight of 150 students in a certain class is 60 kgs. The mean weight of boys in the class is 70 kgs and that of girls is 55 kgs. Find the number of girls and boys in the class, Hint: Take n, as the no, of boys and 150 - n, as the no, of girls 13. ‘The mean wage of 100 labourers working in a factory, running two shifts of 60 and 40 workers respectively, is Rs 38. The mean wage of 60 labourers working in the ‘morning shift is Rs 40. Find the mean wage of 40 laboures working in the evening shift Hint: See example 10. 14, The mean of 25 items was calculated by a student as 20. If an item 13 is replaced by 30, find the changed value of mean. Hint: See example 14 15. The average daily price of share of a company from Monday to Friday was Rs 130. If the highest and lowest price during the week were Rs 200 and Rs 100 respectively, find average daily price when the highest and lowest price are not included Hint: See example 10. 16. ‘The mean salary paid to 1000 employees of an establishment was found to be Rs 180.40. Later on, after disbursement of the salary, it was discovered that the salaries, of two employees were wrongly recorded as Rs 297 and Rs 165 instead of Rs 197 and Rs 185, Find the correct arithmetic mean, Hint: See example 14 17. Find the missing frequencies of the following frequency distribution Measures of Central Tendency 1Quantitative Techniques Management a2 glassy, + 60-65 65-70 70-75 75-80 80-85 85-90 90-95 95-100 Frequency: S10 2% 35? MS Hint: See example 12. 18. Marks obtained by students who passed a given examination are given below Maris obtained. 49.50 50-60 60-70 70-80 80-90 90-100 in percent ) No. of 5 Studer 1 12 2% 095 4 If 100 students took the examination and their mean marks were 51, calculate the mean marks of students who failed. Hint: See example 9. 19. A appeared in three tests of the value of 20, 50 and 30 marks respectively. He obtained 75% marks in the first and 60% marks in the second test. What should be huis percentage of marks in the third test in order that his aggregate is 60%? Hint: Let x be the percentage of marks in third test. Then the weighted average of 75, 60 and x should be 60, where weights are 20, 50 and 30 respectively. 20. Price of a banana is 80 paise and the price of an orange is Rs 1.20. If a person purchases two dozens of bananas and one dozen of oranges, show by stating reasons that the average price per piece of fruit is 93 paise and not one rupee. Hint: Correct average is weighted arithmetic average. 21. The average marks of 39 students of a class is 50. The marks obtained by 40th student are 39 more than the average marks of all the 40 students. Find mean marks of all the 40 students. Hint: X +39 +39 x 50 = 40X. 22. The means calculated for frequency distributions I and II were 36 and 32 respectively. Find the missing frequencies of the two distributions Frequency of Frequency of Class Intervals Distribution I Distribution TL 5-15 4 10 15-25 10 14 25-35 4 3y 35-45 16 3 45-55 2x 10 55-65 y x 40+ 200 +420+640+100x+60y Hint; 36 = and 444 2x+y Solve these equations simultaneously for the values of x andy. 23. The following table gives the number of workers and total wages paid in three departments of a manufacturing unit Department No. of Workers Ts 705 68000" B goa 4,25,600 ¢ 24 5,08,800 If a bonus of Rs 200 is given to each worker, what is the average percentage increase in wages of the workers of each department and of the total workers?Measures of Central Tendency Hint: (i) depts, A = 2800 fint: (i) Average wage in deptt. Tos 200 v1 Percentage increase in wages = 7 gq9 *100 = 12.5% Similarly, find for deptt. B and C. 1,68,000 +4,25,600+5,08,800 105+304-+424 Gi) Average wage for total workers = Then, find percentage increase as before. 24. The following table gives the distribution of the number of kilometres travelled per salesman, of a pharmaceutical company, per day and their rates of conveyance allowance: No, offilometre yy, yy Rate of conveyance travelled per N° & allowance per Kilo~ salesman Salesman metre (in RS) 10-20 3 2.50 20-30 8 2.60 30-40 15 270 40 4 2.80. Calculate the average rate of conveyance allowance given to each salesman per kilometre by the company. Hint: Obtain total number of kilometre travelled for each rate of conveyance allowance by multiplying mid-values of column 1 with column 2. Treat this as frequency 'f and third column as 'X’ and find 25. The details of monthly income and expenditure of a group of five families are given in the following table: Taminy come Expenditure per No. of members Family” (ruRts)_member in Rs) the family A 1100 220 4 B 1200 190 5 © 1300 230 4 D 1400 260 3 E1500 250 4 Find: () Average income per member for the entre group of families. Gi) Average expenditure per family. Gi) The difference between actual and average expenditure for each family. Total income of the group of families Hint: (i) Average income per member = int: () Average income per member = “T1279, of members in the group Total expenditure of the group (ii) Average expenditure per family ‘No-af Families 26. The following table gives distribution of monthly incomes of 200 employees of a fim: Income (in Rs 00) + 10-15 15-20 20-25 25-30 30-35 No. of employees 305055820 Estimate: (@ Mean income of an employee per month Gi) Monthly contribution to welfare fund if every employee belonging to the top 80% of the earners is supposed to contribute 2% of his income to this fund. Hint: The distribution of top 80% of the wage earners can be written asQuantitative Techniques Management “4 Income(in Rs 00) : 16-20 20-25 25-30 30-35 35-40 Frequency 40 55 2 «20 OB By taking mid-values of class intervals find Sfx, ie., total salary and take 2% of this, 27. The number of patients visiting diabetic clinic and protein urea clinic in a hospital during April 1991, are given below : No. of No. of days of anending Patients | Diabetic Clinie | Protein Urea Clinic 0-10 10-20 20-30 30-40 40-50 50-60 2 8 7 7 4 2 Which of these two diseases has more incidence in April 1991? Justify your conclusion. Hint: The more incidence of disease is given by higher average number of patients. 28. A company has three categories of workers A, B and C. During 1994, the number of workers in respective category were 40, 240 and 120 with monthly wages Rs 1,000, Rs 1,300 and Rs 1,500. During the following year, the monthly wages of all the workers were increased by 15% and their number, in each category, were 130, 150 and 20, respectively. (a) Compute the average monthly wages of workers for the two years. (b) Compute the percentage change of average wage in 1995 as compared with 1994. Is it equal to 15%? Explain, Hint: Since the weight of the largest wage is less in 1995, the increase in average wage will be less than 15%. 29. (a) The average cost of producing 10 units is Rs 6 and the average cost of producing 11 units is Rs 6.5, Find the marginal cost of the 1th unit. (b) A salesman is entitled to bonus in a year if his average quarterly sales are at Teast Rs 40,000. If his average sales of the first three quarters is Rs 35,000, find his minimum level of sales in the fourth quarter so that he becomes eligible forbonus. Hint: See example 10. 30. (a) The monthly salaries of five persons were Rs 5,000, Rs 5,500, Rs 6,000, Rs. 7,000 and Rs 20,000. Compute their mean salary, Would you regard this mean as typical of the salaries? Explain, (b) There are 100 workers in a company out of which 70 are males and 30 females. If a male worker ears Rs 100 per day and a female worker earns Rs. 70 per day, find average wage. Would you regard this as a typical wage? Explain Hint: An average that is representative of most of the observations is said to be a typical average. 2. MEDIAN Median of distribution is that value of the variate which divides it into two equal parts. In terms of frequency curve, the ordinate drawn at median divides the area under the curve into two equal parts. Median is a positional average because its value depends upon theposition of an item and not on its magnitude. Measures of Central Tendeney Determination of Median (a) When individual observations are given ‘The following steps are involved in the determination of median (@ The given observations are arranged in either ascending or descending order of magnitude. (ii) Given that there are n observations, the median is given by: ntl 1 aes (22!) een wen sia n (ne 2. The mean of the sizes of 5th and (Fa observations, when n is even, Example 16: Find median of the following observations 20, 15, 25, 28, 18, 16, 30. Solution: Writing the observations in ascending order, we get 15, 16, 18, 20, 25, 28, 30. 7+1) , ie., odd, the median is the size of e jth ie,, 4th observation, Since n= Hence, median, denoted by M, = 20. Note: The same value of M, will be obtained by arranging the observations in descending order of magnitude. Example 17: Find median of the data : 245, 230, 265, 236, 220, 250, Solution: Arranging these observations in ascending order of magnitude, we get 220, 230, 236, 245, 250, 265. Here n= 6, ie, even. 6 (84 Median willbe arithmetic mean of the size of th, ie. 3rd and ($41) in, 2364245 sans ice, 4th observations. Hence M, = ——>—=240.5 Remarks: Consider the observations: 13, 16, 16, 17, 17, 18, 19, 21, 23. On the basis of the method given above, their median is 17. ‘According to the above definition of median, "half (i.e., 50%) of the observations should be below 17 and half of the observations should be above 17". Here we may note that only 3 observations are below 17 and 4 observations are above it and hence, the definition of median given above is some what ambiguous. In order to avoid this ambiguity, the ‘median of a distribution may also be defined in the following way ‘Median of a distribution is that value of the variate such that at least half of the observations are less than or equal to it and at least half of the observations are greater than or equal twit Based on this definition, we find that there are 5 observations which are less than or equal to 17 and there are 6 observations which are greater than or equal to 17. Since n= 9, the numbers 5 and 6 are both more than half, ic., 4.5. Thus, median of the distribtion is 17. Further, ifthe number of observations is even and the two middle most observations are not equal, ¢.g,, if the observations are 2, 2, 5, 6, 7, 8, then there are 3 observations 45Quantitative Techniques Management 46 2 which are greater than or equal to 5. Further, there are 4 observations which are less than or equal to 6 and there are 3 observations which are greater than or equal to 6 Hence, both 5 and 6 satisfy the conditions of the new definition of median. In such a case, any value lying in the closed interval [5, 6] can be taken as median, By convention n ( 3) which are less than or equal to 5 and there are 4 (i.e., more than half) observations 5+6 we take the middle value of the interval as median. Thus, median is 5S (b) When ungrouped frequency distribution is given In this case, the data are already arranged in the order of magnitude, Here, cumulative frequency is computed and the median is determined in a manner similar to that of individual observations, Example 18: Locate median of the following frequency distribution Variable(X) : 10 11 12 13 14 15 16 Frequency (f) + 8 15 25 20 12 10 5 Solution. X 210 112 13 4 1S 16 fo: 8 15 25 20 12 0 5 cf + 8 2B 48 68 80 90 95 gsi)" Here N = 95, which is odd. Thus, median is size of | i.e., 48th observation, From the table 48th observation is 12, -. M,= 12. N95 Allternative Method: 5 = > 7.5 Looking at the frequency distribution we note that there are 48 observations which are less than or equal to 12 and there are 72 (i.e, 95 - 23) observations which are greater than or equal to 12. Hence, median is 12 Example 19: Locate median of the following frequency distribution Xo: 0 1 2 3 4 5 6 7 fo: 7 Wh WW 36 SI 54 52 20 Solution: x fo. 7 fi7 4 1 3% SI 54 52 20 cf. [7 21 39 75 126 180 232252 Here N = 252, ic,, even. 126 and S41 2127 = 126 and —+1= 2 ‘Median is the mean of the size of 126th and 127th observation. From the table we note that 126th observation is 4 and 127th observation is 5. 4s 2 Alternative Method: Looking at the frequency distribution we note that there are 126 observations which are less than or equal to 4 and there are 252 - 75 = 177 observations Which are greater than or equal to 4. Similarly, observation 5 also satisfies this criterion, Therefore, median = 4*5 = 45 2(©) When grouped frequency distribution is given (Interpolation formula) ‘The determination of median, in this case, will be explained with the help of the following example. Example 20: Suppose we wish to find the median of the following frequency distribution, Classes: 0-10 10-20 20-30 30-40 40-50 50-60 Frequency s 2 4 B® 3 8 Solution: The median of a distribution is that value of the variate which divides the distribution into two equal parts. In case of a grouped frequency distribution, this implies that the ordinate drawn at the median divides the area under the histogram into two equal parts. Writing the given data in a tabular form, we have : Classes Frequency (f) ‘Less than’ | Frequency a Q) type c.f. (3) | Density (4) 0-10 5 s 0.5 10-20 12 7 12 20-30 4 31 La 30-40 18 49 18 40-50 B 2 13 50-60 8 0 08 ( frequency [Note strequency density in class = frequency of the class _ ) Width of the class ht For the location of median, we make a histogram with heights of different rectangles equal to frequency density of the corresponding class. Such a histogram is shown below: Histogram 2.0. A 15 Frequency Density ® 10 20 30M, 40 50 60 Class Intervals Figure :2.1 Since the ordinate at median divides the total area under the histogram into two equal parts, therefore we have to find a point (like M, as shown in the figure) on X - axis such that an ordinate (AM,) drawn at it divides the total area under the histogram into two equal parts ‘We may note here that area under each rectangle is equal to the frequency of the corresponding class. Since area = length x breadth = frequency densityx width of class = i hee. Thus, the total area under the histogram is equal to total frequency N. In the given example N = 70, therefore Re 35. We note that area of first three rectangles is 5+ 12+ 14 =31 and the area of first four rectangles is 5 + 12 + 14 + 18 = 49. Thus, ‘median lies in the fourth class interval which is also termed as median class. Let the point, in median class, at which median lies be denoted by M,. The position of this point Measures of Central Tendency 7Quantitative Techniques Management 48 should be such that the ordinate AM, (in the above histogram) divides the area of median rectangle so that there are only 35 - 31 = 4 observations to its left. From the histogram, wwe can also say that the position of M, should be such that M,-30_ 4 40-3018, o 40 us, M, =“2430=322 Thus, M, = Writing the above equation in general notations, we have Ne 2 2 a Where, Lis lower limit, his the width and f. is frequency of the median class and C is the cumulative frequency of classes preceding median class. Equation (2) gives the required formula for the computation of median, Remarks: 1. Since the variable, in a grouped frequency distribution, is assumed to be continuous ways kext vale of neg igus afr dina, when Nis 2. The above formula is also applicable when classes are of unequal width, ‘Median can be computed even if there are open end classes because here we ced to know only the frequencies of classes preceding or following the median class. Determination of Median When ‘greater than’ type cumulative frequencies are given By looking at the histogram, we note that one has to find a point denoted by M, such that area to the right of the ordinate at M, is 35. The area of the last two rectangles is 13 +8 = 21. Therefore, we have to get 35 - 21 = 14 units of area from the median rectangle towards right of the ordinate. Let U,, be the upper limit of the median class. Then the formula for median in this case can be written as 8) h toe Note that C denotes the ‘greater than type’ cumulative frequency of classes following the median class. Applying this formula to the above example, we get (5-21) M,=40- x10 = 32.2 Example 21: Calculate median of the following data Height in inches : 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 No.of saplings + 3 7 12 16 22 2 13 7Solution: Measures of Central Tendency Calculation of Median Class Intervals | Frequency (f) | Less than’ typ 3-4 3 3 45 7 10 5-6 12 2 6-7 16 38 7-8 2 60 8-9 20 80 9-10 3 93 10-11 7 100 nN _ 100 7 Since = —- =50, the median clas is 7-8. Further, 50-38 ‘Thus, M,=7 + XI = 7,55 inches. Example 22: The following table gives the distribution of marks by 500 students in an examination. Obtain median of the given data Marks 0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 No.of Students: 30 40 50 48 2416213214 Solution: Since the class intervals are inclusive, therefore, it is necessary to convert them into class boundaries. Class Interoals | Class Boundaries | Frequency | Less than’ type ef. 0-9 05-95 30 30 10-19 9.5-19.5 40 70 20-29 50 120 30-39 48 168 40-49 24 192 50-59 162 354 60-69 132 486 70-79 4 500 since = 250, the median class ip 495-595 and, efor, L, £, = 162, C= 192 5+ 01 10. = 53.08 mark + SRS x10 = 53.08 marks, ‘Thus, M, Example 23: The weekly wages of 1,000 workers of a factory are shown in the following table. Calculate median, Weekly Wages (less than) : 425 475 528 S7S 625 675 725 775 825 875 No, of Workers 2 10 43 123 293 506 719 864 955 1000 Solution: The above isa'less than’ type frequency distribution. This will first be converted into class intervals. lass Intervals | Frequency | Less than ef less than 425 2 2 425-475, 8 10 475-525 33 4B 525-575, 80 123 575-625, 170 293 625-675, 213, 506 675-725, 213, n9 75-715 145 864 775-825, 91 955 825-875, 45 1000 ”Quantitative Techniques Management Since Y= 500, the median class is 625 - 675. On substituting various values in the formula for median, we get 500-293 M, = 625 + 5X50 =Rs 673.59 Example 24: Find the median of the following data Age greater than(in yrs) = 0 10 20 30 40 50 60 70 No. of Persons: 230 218 200 165 123 73 28 8 Solution: Note that itis ‘greater than’ type frequency distribution Class Intervals | Greater than c.f. | Frequency 0-10 230 12 10-12 218 18 20-30 200 35 30-40 165 42 40-50 123 50 50-60 B 45 60-70 28 20 10 and above 8 8 N_ 230 Since >= —- = 115, the median class is 40 - 50. X10=41.6 years Example 25: The following table gives the daily profits (in Rs) of 195 shops of a town, Calculate mean and median, Profits: 50-60 60-70 70-80 80-90 90 - 100 100-110 110-120 120-130 130- 140 No.ofshps: 1S 20 2 3 3% 2 2 10 8 Solution: The calculations of ¥ and M, are shown below: Mid-value] x —9% Tessthan Class Inervals | f |" wn soso fis | ss 4 (80) is 6070 | 20| 6s 3 |-60) 3s oxo |x| 1s 2 |-64) 67 sooo [as] ss <1 |-as) 12 soo | 33| 9s ° | 138 tooro | 22] 108 1 | a2) ast 10120 | 20] 11s 2 | 40) a7 reno [10] as 3 | a0] a7 roo | s | ss 4 | 2) ws Toit [195 ~35 Kea bf 95 =A EM -95- 99 x10=Rs 90.13, N 15. 195 's 90. N_ 19s J = 19 =975, the median class is 80 - 90. so Since 2Measures of Cetral Tendency 7.5-67 ae =80 X10= Rs 88.71 Example 26: Find median of the following distribution Mid-Values + 1500 2500 3500 4500 5500 6500 7500 Frequency re Solution: Since the mid-values are equally spaced, the difference between their two successive values will be the width of each class interval. This width is 1,000. On subtracting and adding half of this, i¢., 500 to each of the mid-values, we get the lower and the upper limits of the respective class intervals, After this, the calculation of median can be done in the usual way. Mid-Values | Class Intervals _ Frequency |. f-(less than) 1500 1000-2000 2 2 2500 2000-3000 32 59 3500 3000-4000 65 124 4500 4000 - 5000 8 202 5500 5000-6000 58 260 6500 6000-7000 32 292 7500 7000-8000 8 300 since © 150 the metan cassis 4000-500 150-124 Hence M, = 4,000 + ——x1,000= 4,333.33, Determination of Missing Frequencies If the frequencies of some classes are missing, however, the median of the distribution is known, then these frequencies can be determined by the use of median formula. Example 27: The following table gives the distribution of daily wages of 900 workers, However, the frequencies of the classes 40 - 50 and 60 - 70 are missing. If the median of the distribution is Rs 59.25, find the missing frequencies. Wages (Rs): 30-40 40-50 50-60 60-70 70-80 No. of Workers : 120 200 ? 185 Solution: Let f, and f, be the frequencies of the classes 40 - 50 and 60 - 70 respectively. Class of Intervals Frequency (less than) 30-40 | 120 120 aoso | f, 120+, 50-40 | 200 | w0+f, 60-70 3204 ht fe oso | 4 00 ‘Since median is given as 59.25, the median class is 50 - 60. Therefore, we can write 330_f x10 = 10 =504+- > 450-(120+ 59.25 = 50+ #5070204 f) 00 or 9.25 x 20=330-f, or f,=330- 185 = 145 Further, f, = 900 - (120 + 145 + 200 + 185) = 250, nQuantitative Techniques Management 52 Graphical location of Median So far we have calculated median by the use of a formula, Alternatively, it can be determined graphically, as illustrated in the following example. Example 28: The following table shows the daily sales of 230 footpath sellers of Chandni Chowk Sales (in Rs) 0-500 500-1000 1000-1500 1500-2000, No. of Sellers : 12 18 3 42 Sales (in Rs) : 2000-2500 2500-3000 3000-3500 3500-4000 No. of Sellers 50 45 20 8 Locate the median of the above data using (only the less than type ogive, and Gi) both, the less than and the greater than type ogives. Solution: To draw ogives, we need to have a cumulative frequency distribution. Glass Intervals | Frequency Less than cf. | More than ¢.f. 0-50) 12 2 230 500-1000 18 30 218 1000-1500 35 65 200 1500-2000 | 42 107 165 2000-2500 50 1st 13 2500-3000 45 202 B 3000-3500 | 20 22 28 3500-4008 230 8 (0) Using the less than ype ogive 256 > 1 E © 128 g 3 3 5 64 5 Median = 2080 O° 00 1000 1390 2000 2500 3000 3500 4000 Figure 2.2 Values The value x = 115 is marked on the vertical axis and a horizontal line is drawn from this point to meet the ogive at point S. Drop a perpendicular from S. The point at which this meets X- axis is the median. (ii) Using both types of ogives 286 Cumulative Frequency g = 2080 ‘500 1000 1800 20002500 3000 3500, 4000 Figure 2.3 ValuesA perpendicular is dropped from the point of intersection of the two ogives. The point at which it intersects the X-axis gives median, It is obvious from Fig. 2.2 and 2.3 that median = 2080. Properties of Median 1. Itis a positional average. 2, Itcan be shown that the sum of absolute deviations is minimum when taken from median. This property implies that median is centrally located. Merits and Demerits of Median (a) Merits 1. Tris easy to understand and easy to calculate, especially in series of individual observations and ungrouped frequency distributions. In such cases it can even be located by inspection. 2, Median can be determined even when class intervals have open ends or not of equal width. Itis not much affected by extreme observations. Itis also independent of range or dispersion of the data. 4, Median can also be located graphically. It is centrally located measure of average since the sum of absolute deviation is minimum when taken from median. 6. Itis the only suitable average when data are qualitative and it is possible to rank various items according to qualitative characteristics. 7. Median conveys the idea of a typical observation. (b) Demerits 1. Incase of individual observations, the process of location of median requires their arrangement in the order of magnitude which may be a cumbersome task particularly when the number of observations is very large. 2. It, being a positional average, is not capable of being treated algebraically. In case of individual observations, when the number of observations is even, the median is estimated by taking mean of the two middle-most observations, which is not an actual observation of the given data. 4, Ibis not based on the magnitudes of all the observations. There may be a situation where different sets of observations give same value of median. For example, the following two different sets of observations, have median equal to 30. Set I: 10, 20, 30, 40, 50 and Set II: 15, 25, 30, 60, 90. Incomparison to arithmetic mean, itis much affected by the fluctuations of sampling. The formula for the computation of median, in case of grouped frequency distribution, is based on the assumption that the observations in the median class are uniformly distributed. This assumption is rarely met in practice. 7. Since it is not possible to define weighted median like weighted arithmetic mean, this average is not suitable when different items are of unequal importance. 1, Itis an appropriate measure of central tendency when the characteristics are not measurable but different items are capable of being ranked, 2, Median is used to convey the idea of a typical observation of the given data 3. Median is the most suitable measure of central tendency when the frequency distribution is skewed. For example, income distribution of the people is generally positively skewed and median is the most suitable measure of average in this case. 4, Median is often computed when quick estimates of average are desired. 5, When the given data has class intervals with open ends, median is preferred as a measure of central tendency since itis not possible to calculate mean in this case Measures of Central TendencyQuantitative Techniques Management sa 1 What are the merits and demerits of Mean and Median? 2. Find Arithmetic mean of first ten prime numbers Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it (©) This Chek Your Progress will help you to understand the lesson better. ‘Try to write answers for them, but do not submit your answers (othe university for assessment, These are for your practice only. 2.7 OTHER PARTITION OR POSITIONAL MEASURES Median of a distribution divides it into two equal parts. Itis also possible to divide it into ‘more than two equal parts. The values that divide a distribution into more than two equal parts are commonly known as partition values or fractiles. Some important partition values are discussed in the following sections. Quartiles ‘The values of a variable that divide a distribution into four equal parts are called quartiles. Since three values are needed to divide a distribution into four parts, there are three quartiles, viz. Q,, Q, and Q,, known as the first, second and the third quartile respectively. For a discrete distribution, the first quartile (Q,) is defined as that value of the variate such that at least 25% of the observations are less than or equal to it and at least 75% of the observations are greater than or equal to it For a continuous or grouped frequency distribution, Q, is that value of the variate such that the area under the histogram to the left of the ordinate at Q, is 25% and the area to its right is 75%. The formula for the computation of Q, can be written by making suitable changes in the formula of median. After locating the first quartile class, the formula for Q, can be written as follows: = Ly + xh = Ly y, Here, Lo, is lower limit of the first quartile class, his its width, fp, is its frequency and C is cumulative frequency of classes preceding the first quartile class. By definition, the second quartile is median of the distribution. The third quartile (Q,) of a distribution can also be defined in a similar manner. For a discrete distribution, Q,is that value of the variate such that at least 75% of the observations are less than or equal to it and at least 25% of the observations are greater than or equal to it. Fora grouped frequency distribution, Q, is that value of the variate such that area under the histogram to the left of the ordinate at Q, is 75% and the area to its right is 25%. The formula for computation of Q, can be written as -c) 2p, where the symbols have their usual meaning.Deciles Deciles divide a distribution into 10 equal parts and there are, in all, 9 deciles denoted as D,, D,, .... D, respectively. For a discrete distribution, the i th decile D, is that value of the variate such that at least (10i)% of the observation are less than or equal to it and at least (100 - 10i)% of the observations are greater than or equal to it (i= 1, 2, ....9) For a continuous or grouped frequency distribution, D, is that value of the variate such that the area under the histogram to the left of the ordinate at D, is (10i)% and the area to its right is (100 - 10i)%, The formula for the i th decile can be written as, (%-c} Dw by cy FEB 2 oe 9D ln Percentiles Percentiles divide a distribution into 100 equal parts and there are, in all, 99 percentiles denoted a8 P,, Poy ce Pay ns Puy noe Pay nn Pyy Tespectively. For a discrete distribution, the kth percentile P, is that value of the variate such that at least k% of the observations are less than or equal to it and at least (100 - k)% of the observations are greater than or equal to it For a grouped frequency distribution, P, is that value of the variate such that the area under the histogram to the left of the ordinate at P, is k% and the area to its right is (100 - k)% . The formula for the kth percentile can be written as (#-<} 00h, = 1, 2 cee 99) fr, Remarks : (We may note here that P,, = Q,, P,, =D, = Q, = M, P,, = Q,, P,, =D, et. Gi)_Incontinuation of the above, the partition values are known as Quintiles (Octiles) if a distribution is divided in to 5 (8) equal parts. Gi) ‘The formulae for various partition values of a grouped frequency distribution, given so far, are based on ‘less than’ type cumulative frequencies. The corresponding formulae based on ‘greater than’ type cumulative frequencies can be written in a similar manner, as given below: 4) fo Xhs Q,=Ug, - Here Up, Up, Up, Up, are the upper limits of the corresponding classes and C denotes the greater than type cumulative frequencies. Example 29: Locate Median, Q,, Q, Dy, D,, P,, Py, and P,, from the following data Daily Profit (in Rs) : 75 76 77 78 79 80 81 82 83 84 85 No. of Shops 15 20 32 35 33 22 20 10 8 3 2 Solution: First we calculate the cumulative frequencies, as in the following table Measures of Central Tendency ssQuantitative Techniques Management 56 Daily Profit (in Rs) 7% 77 7% 79 8 8i_ 2 83 84 85 ‘No. of Shops (f) 2 35_33_ 2220 832 Tess than c.f. | 15 38 67 102 135 157 177 187 195 198 200 1, Determination of Median (00. From the cumulative frequency column, we note that there are 102 (greater than 50% of the total) observations that are Jess than or equal to 78 and there are 133 observations that are greater than of equal (o 78, Therefore, M, = Rs 78 2. Determination of Q, and Q,; Fist we determine * wiich is equal to 50. From the cumulative frequency column, we note that there are 67 (which is greater than 256 of the total) observations that are less than or equal to 77 and there are 165 (hich is greater than 75% of the total) observations tha are greater than or equal (077. Therefore, Q, = Rs 77. Similarly, Q, = Rs 80. 3. Determination of D, and D,; From the cumulative frequency column, we note that there are 102 (greater than 40% of the total) observations that are less than or equal to 78 and there are 133 (greater than 60% of the total) observations that are greater than or equal to 78. Therefore, D,= Rs 78. Similarly, D,= Rs 80. 4. Determination of P,, P,, and P,,: From the cumulative frequency column, we note that there are 35 (greater than 15% of the total) observations that are less than or equal to 76 and there are 185 (greater than 85% of the total) observations that ate greater than or equal to 76. Therefore, P,, = Rs 76. Similarly, P,, = Rs 79 and P,, = Rs 82. Example 30: Calculate median, quartiles, 3rd and 6th deciles and 40th and 70th percentiles, from the following data: Wages per Week (in Rs) : 50-100 100-150 150-200 200-250 250-300 No. of Workers 16 40 35 60 125 Wages per Week (in Rs) : 300-350 350-400 400-450 450-500 No. of Workers 100 70 40 15 ‘Also determine (i) The percentage of workers getting weekly wages between Rs 125 and Rs 260 and (ii) percentage of worker getting wages greater than Rs 340. Solution: First we make a cumulative frequency distribution table : Class Intervals | Frequency Ff (less than) 50-100 15 15 100-150 40 55 150-200 35 90 200-250 60 150 250-300 125 275 300-350 100 375 350-400 70 445 400-450 40 485 450-500, 15 500 (© Caleutation of median: Here N = 500 so that © = 250. Tous, median class is 250 - 300 and hence L,, = 250, f, 0 and C = 150. Substituting these values in the formula for median, we get Ma =250 + 221050 = Rs 290 MES * 135 osi) Gi) @) ow) Calculation of Quartiles: (2) For Q,, we first find “ which is equal to 125. The frst quartile class is 200 - 250 and hence Ly, = 200, fy, = 60, h = 50 and C = 90, 125-90 60 Q, = 200+ X50 =Rs 229.17 (&) For Q, we firs find = which is equal to 375. The third quartile class is 300 - 350 and hen ¢ Lo, = 300, fy, = 100, h = 50 and C-=275 300 + 75=275 5 50- Rs 350 = 300+ Tog OE RS Calculation of Deciles: @) For D, we first find = which is equal to 150. The third decile clas is 200 - 250 and hence Lp, = 200, fp, = 60, h = 50, C=90. 150-90 100 + x50 = Rs 250 (b) For D, we first find ~ which is equal to 300. The sixth decile class is 300 - 350 and hence fp, = 300, fp, = 100, h = 50 and C = 275. 300-275 300 + ————" x50 =Rs 312.51 D,=300+ Rs 312.50 Calculation of percentiles: 40 100 (a) For P,, we first find <7 which is equal to 200. The 40th percentile class is 50, fn, = 125, 50. = 50 and C 250+ M10 50 - Rs 270 ~ * Ds * (&) ForP,, we first find 72% which is equal to 350, The 70th percentile class is 300 - 350 and hence L,,, = 300, f,, = 100, h = 50 and C = 275. P,, = 300 350-275 50) Rs 337.5 9 = 300 + SO=ZTE50 = Rs Determination of percentage of workers getting wages between Rs 125 and Rs 260: Let x be the percentage of workers getting wage less than 125, Since 125 lies in the class 100- 150, this is xth percentiles class. Using the formula for xth percentile we have 50015 125=100+ 100" sq or Sx-15=20 = x=7 40 Further, let y be the percentage of workers getting wages less then 260. Since 260 lies in the class 250 - 300, this is yth percentile class. Using the relevant formula, we have Measures of Central Tendency stQuantitative Techniques Management 260 = 250+ X50 or Sy ~150=25 or y=35 Hence percentage of workers getting wages between Rs 125 and Rs 260 is given by 35-7 = 28% Alternative Method The number of workers getting wages between 125 and 260 can be written directly 150-125 260-250 By M0 + 35 + 60+ FH X125 = 20.4 35 + 60.4 25 = 140. 140 Percentage of workers = <5 100 = 28%. (vi) Determination of percentage of workers getting wages greater than Rs 340: Since we have already computed ‘less than’ type cumulative frequencies, in the above table, we shall first find percentage of workers getting wages less than 340, Let x be this percentage, Also xth percentiles class is 300 - 350. Sx-275 . 340 = 300+ x50. or Sx-279=80 or x=71 Hence, percentage of workers getting wages greater than Rs 340 is (100 - 71) 29%, Alternative Method This percentage can also be obtained directly as shown below. The percentage of workers getting wages greater than Rs 340 350-340 x100 = 145 0 +70+40 +15 = 145 145 ercentage = ——*100= Percentage = 5 29% Example 31: From the following table, showing the wage distribution of workers, find (the range of incomes earned by middle 50% of the workers, Gi) the range of incomes earned by middle 80% of the workers, Gi) the percentage of workers earning between Rs 550 and Rs 880. ‘Monthly Income (Rs) No. of Workers 0-200 0-400 0-600 0-800 0-100 Solution: The above table gives a ‘less than’ type cumulative frequency distribution, Therefore, we can rewrite the above table as : Monthly Income (Rs) | ef (less than) | Frequency (f) 0-200 150 150 200-400 250 100 400-600 330 80 600-800 380 50 se 800-1000 400 20(The range of incomes eamed by middle 50% of the workers is given by Q,- Q, 100 0 150 Now Q,=04 x 200 = Rs 133.33 300-250 and Q, = 400+ =" 200 = Rs 525, , 80 Thus, Q,-Q,= 525 - 133.33 = Rs. 391.67. «i ¢ of incomes of middle 80% of the workers is given by P,.- P,q 10400 100 low =0+ 1% __x200 = Rs N Py=0+ Tp Rs 53.33 20400 330 and P= 6004 200 = Rs 720, 50 Thus, —_P,,- P,, = 720 - 53.33 = Rs 666.67. The No. of workers earning between Rs 550 and Rs 880 is given by 600-550 880-800 —— x80 ——— x20 = 350 +504 78. 8 . Percentage of workers = 77x 100 = 19.5% Example 32: The following incomplete table gives the number of students in different age groups of a town. If the median of the distribution is 11 years, find out the missing frequencies. ‘Age Group 0-5 5-10 10-15 15-20 20-25 25-30 Toral No. ofStudents : 15 125 7 66 74300 Solution: Let x be the frequency of age group 10 - 15. Then the frequency of the age group 20 - 25 will be 300 - (15 + 125 +x +66 +4) =90- x. Making a cumulative frequency table we have “Age Groups | No. of Students | — ef (ess fam) 0-5 15 15 5-10 5 40 10-15 x woes 15-20 66 2061 20-25 90-x 296 25-30 4 300 Nn Here $= "= 150, Since median is given as 11, the median class is 10 -15. Hence, 11 =10+ 22-05 ox =50, Also, frequency of the age group 20 - 25 is 90 - 50 = 40. Exercise with Hints 1. The following table gives weekly income of 24 families in a certain locality S.No. of family 1 2 3 4 5 6 78 9 WM 12 Weekly Income : 60 400 86 95 100 150 110 74 90 92 280 180 S.No. of family + 13 14 1S 16 17 18 19 20 21 22 23 24 Weekly Income : 96 98 104 75 80 94 100 75 600 82 200 84 Calculate M,, Q,, Q,, Dy Dy, Pay Py, and P,, Measures of Central Tendency 59Quantitative Techniques Management ‘Hint: Arrange the data in ascending or descending order of magnitude and then calculate various values. For calculation of Q, there are two values satisfying the definition, These two values are 82 and 84. Thus, Q, can be any value in the closed interval [82, 84]. By convention, the mid-value of the interval is taken as Q, 2. Calculate the value of M,, Q,, Q,, Dy, Dy, Pyy. Py and P,,, from the following data: Classes: Below 10 10-15 15-20 20-25 25-30 30-39 35-40 40-45. 45-50 Frequency 12 5 7 W 7 S$ 2 1 Hint: See example 30. 3. Find median from the following data: Wages/Week (Rs) : 50-59 60-69 70-79 80-89 90-99 100-109 110-119 No. of Workers 15 40506050 15 Hint: This is a distribution with inclusive class intervals. ‘To compute median, these are to be converted into exclusive intervals like 49.5 - 59.5, 59.5 - 69.5, etc. 4, The following table gives the distribution of wages of 65 employees in a factory Wages (2) 50 60 70 80 90 100 110 120 No. of employees : 65 57 47 3117 7 2 0 Draw a ‘less than type’ ogive from the above data and estimate the number of employees earning at least Rs 63 but less than Rs 75. Hint: To draw a less than’ type ogive, the distribution is to be converted into ‘less than’ type cumulative frequencies, 5. The following table shows the age distribution of persons in a particular region: ‘Age (years) No. of Persons (’ 000) Below 10 2 Below 20 5 Below 30 9 Below 40 2 Below SO u Below 60 IS Below 70 15.5 70 and above 15.6 (Find median age. (ii) Why is the median a more suitable measure of central tendency than mean in this case? Hint: Median is suitable here because the upper limit of the last class is not known and therefore, mean cannot be satisfactorily calculated. 6. A number of particular articles have been classified according to their weights, After drying fortwo weeks the same articles have again been weighed and similarly classified. It is known that median weight in the first weighing was 20.83 02. while in second weighing it was 17.35 oz. Some frequencies a and b in the first weighing and x and y in the second weighing, are missing. It is known that 1 x and =1), Find the missing frequencies. Classes 0-5 5-10 10-15 15-20 20-25 25-30 jeweighing ab M82 SD 2ndweighng xy 40 S008 Frequency 60Measures of Central Tendency (160+a (S22) -(o+0+8)| Hint: 2 x5 poxed) B (48+2+4) (49, . )| sess 2 Ore) and 17.35 = 15+ 2 50 Put x= 3a and y = 2b in equation (2) and solve (1) and (2) simultaneously 7. The percentage distribution of regularly employed workers who commute between home and work place by foot and those who use cycles, according to the distance is given below. How will you find the mean distance and the median distance of the walkers and cyclists? State your assumptions carefully. Distance inkms Walkers Cyclists Tess than Vf il 4-12 260 2-1 15296 1-2 98179 23 53205 3-4 22 192 45 06 192 above 5 os 10s Hint: The given percentage of walkers and cyclists can be taken as frequencies. For calculation of mean, the necessary assumption is that the width of the first class is 1 equal tothe width ofthe following cass, ie... On this assumption, the ower limit of the first class can be taken as 0. Similarly, on the assumption that width of the last class is equal to the width of last but one class, the upper limit of last class can be taken as 6. No assumption is needed for the calculation of median. 8, Ina factory employing 3,000 persons, 5 percent earn less than Rs 3 per hour, 580 carn Rs 3.01 to 4.50 per hour, 30 percent earn from Rs 4.51 to Rs 6.00 per hour, 500 earn from 6.01 to Rs 7.5 per hour, 20 percent earn from Rs 7.51 to Rs 9.00 per hour and the rest earn Rs 9.01 or more per hour. What is the median wage? Hint: Write down the above information in the form of a frequency distribution. The class intervals given above are inclusive type. These should be converted into exclusive type for the calculation of median, 9. The distribution of 2,000 houses of a new locality according to their distance from amilk booth is given in the following table Distance No. of Distance No. of Cin metres) Houses (in metres) Houses 20 400 27 50-100 30 400-450-400 100-150 35 450-500, 325 150-200 46 0-550 205, 200-250 50 550-600 184 250-300 105 600-650 75 300-350 200 © 650-700 50 (Calculate the median distance of a house from milk booth. ii) In second phase of the construction of the locality, 500 additional houses were constructed out of which the distances of 200, 150 and 150 houses from the milk booth were in the intervals 450 - 500, 550 - 600 and 650 - 700 meters respectively. Calculate the median distance, taking all the 2500 houses into account. 61Quantitative Techniques Hint: Add 200, 150 and 150 to the respective frequencies of the class intervals Management 450 - $00, 550 - 600 and 650 - 700. 10. The monthly salary distribution of 250 families in a certain locality of Agrais given below. Monthly Salary No. of Families. Monthly Salary No. of Families ‘more than 0 2507 ‘more than 2000 5 ‘more than 500 200 ‘more than 2500 30 ‘more than 1000 120 ‘more than 3000 Is ‘more than 1500 80 more than 3500 5 Draw a ‘less than’ ogive for the data given above and hence find out () The limits of the income of the middle 50% of the families. (ji) If income tax is, (o be levied on families whose income exceeds Rs 1800 p.m., calculate the percentage of families which will be paying income tax, Hint: See example 23, 11. The following table gives the frequency distribution of marks of 800 candidates in an examination Marks 0-10 10-20 20-30 30-40 40-50 No. of candidates 10 4080140170 Marks 50-60 60-70 70-80 80-90 90-100 No. of candidates 130 100 «74020 Draw ‘less than’ and ‘more than’ type ogives for the above data and answer the following from the graph (If the minimum marks required for passing are 35, what percentage of candidates pass the examination? Gi) tis decided to allow 80% of the candidate to pass, what should be the minimum marks for passing? Gii) Find the median of the distribution, Hint: See example 28. 12. Following are the marks obtained by a batch of 10 students in a certain class test in statistics (X) and accountancy (¥), RollNo. : 1 2 3 4 5 6 7 8 9 10 x 63 64 62 32 30 60 47 46 35 28 y 68 66 35 42 26 85 44 80 33 72 In which subject the level of knowledge of student is higher? Hint: Compare median of the two series. 13, The mean and median marks of the students of a class are 50% and 60% respectively. Is it correct to say that majority of the students have secured more than 50% marks? Explain. Hint: Its given that at least 50% of the students have got 60% or more marks 14. The monthly wages of 7 workers of a factory are : Rs 1,000, Rs 1,500, Rs 1,700, Rs 1,800, Rs 1,900, Rs 2,000 and Rs 3,000. Compute mean and median. Which measure is more appropriate? Which measure would you use to describe the situation if you were (i) a trade union leader, (ii) an employer? Hint: (i) median, (i) mean. 15. A boy saves Re. I on the first day, Rs 2 on the second day, ... Rs 31 on the 31st day of a particular month. Compute the mean and median of his savings per day. If his father contributes Rs 10 and Rs 100 on the 32nd and 33rd day respectively, compute mean and median of his savings per day. Comment upon the results. oo Hint: Mean is too much affected by extreme observations.2.8 MODE ‘Mode is that value of the variate which occurs maximum number of times in a distribution and around which other items are densely distributed. In the words of Croxton and Cowden, “The mode of a distribution is the value at the point around which the items tend to be most heavily concentrated. It may be regarded the most typical of a series of values.” Further, according to A.M. Tuttle, “Mode is the value which has the greatest frequency density in its immediate neighbourhood.” Ifthe frequency distribution is regular, then mode is determined by the value corresponding to maximum frequency. There may be a situation where concentration of observations around a value having maximum frequency is less than the concentration of observations around some other value. In such a situation, mode cannot be determined by the use of ‘maximum frequency criterion. Further, there may be concentration of observations around ‘more than one value of the variable and, accordingly, the distribution is said to be bi- ‘modal or multi-modal depending upon whether itis around two or more than two values The concept of mode, as a measure of central tendency, is preferable to mean and ‘median when it is desired to know the most typical value, e.g., the most common size of shoes, the most common size of a ready-made garment, the most common size of income, the most common size of pocket expenditure of a college student, the most common size of a family in a locality, the most common duration of cure of viral-fever, the most popular candidate in an election, ete Determination of Mode (a) When data are either in the form of individual observations or in the form of ungrouped Srequency distribution Given individual observations, these are first transformed into an ungrouped frequency distribution, The mode of an ungrouped frequency distribution can be determined in two ways, as given below : (@ By inspection or Gi) By method of Grouping (By inspection: When a frequency distribution is fairly regular, then mode is often determined by inspection. It is that value of the variate for which frequency is ‘maximum. By a faitly regular frequency distribution we mean that as the values of the variable increase the corresponding frequencies of these values first increase in a gradual manner and reach a peak at certain value and, finally, start declining gradually in, approximately, the same manner as in case of increase. Example 33: Compute mode of the following data 3,4,5, 10, 15,3, 6,7,9, 12, 10, 16, 18, 20, 10,9,8, 19, 11, 14, 10, 13, 17,9, 11 Solution: Writing this in the form of a frequency distribution, we get Values : 3 4 5 67 8 9 10 11 12 13 14 15 16 17 18 19 20 Fremenys 2111113 42 1109221 a1 Mode = 10 Remarks : (@ If the frequency of each possible value of the variable is same, there is no mode. Gi) there are two values having maximum frequency, the distribution is said to be bi- modal. Measures of Central TendencyQuantitative Techniques Management 64 Example 34: Compute mode of the following distribution: X: 5 W 15 2 25 30 35 40 fo2 4 6 WI 9 5 4 Solution: The given distribution is fairly regular. ‘Therefore, the mode can be deter- mined just by inspection, Since for X = 25 the frequency is maximum, mode = 25 Gi) By method of Grouping: This method is used when the frequency distribution is not regular. Let us consider the following example to illustrate this method. Example 35: Determine the mode of the following distribution xX: 1 UM 2 B 4 Is 6 17 18 19 f 8 15 20 100 98 95 9% 75 50 30 Solution: This distribution is not regular because there is sudden increase in frequency from 20 to 100. Therefore, mode cannot be located by inspection and hence the method of grouping is used. Various steps involved in this method are as follows (i) Prepare a table consisting of 6 columns in addition to a column for various values of X. Gi) In the first column, write the frequencies against various values of X as given in the question, Gii) In second column, the sum of frequencies, starting from the top and grouped in wos, are written. (iv) In third column, the sum of frequencies, starting from the second and grouped in twos, are written. (v) In fourth column, the sum of frequencies, starting from the top and grouped in threes are written. (vi)_In fifth column, the sum of frequencies, starting from the second and grouped in threes are written, (vii) In the sixth column, the sum of frequencies, starting from the third and grouped in threes are written. ‘The highest frequency total in each of the six columns is identified and analysed to determine mode. We apply this method for determining mode of the above example. x f QM} @/|@| @ @ @ i 15 12] 20 13] GoD] 28 48 90 | 2 18) 50 19] 7 Columns 10 17 19 : FjSince the value 14 and 15 are both repeated maximum number of times in the analysis Measures of Cental Tendeney table, therefore, mode is ill defined. Mode in this case can be approximately located by the use of the following formula, which will be discussed later, in this chapter. Mode = 3 Median - 2 mean Calculation of Medianand Mean x [0 1 2 1 MM 1s 16 17 18 19 [Toa f 8 15 2 100 98 95 90 75 S030 S8L f) 8 23 4 143 241 356 426 SOL S518 JX 80 165 240 1300 1372 1425 1480 1275 900 570 8767 S841 8767 Median = Size of | J — Jth, i¢., 291st observation = 15. Mean = “Z57-= 15.09 Mode 3x15 -2x15.09= 45 30,18 = 14.82 Remarks: If the most repeated values, in the above analysis table, were not adjacent, the distribution would have been bi-modal, ic., having two modes Example 36: From the following data regarding weights of 60 students of a class, find modal weight Weight 50 51 52 53 54 55 56 57 58 59 60 No.ofStudnts : 2 4 5 6 8 S$ 4 7 I S 3 Solution: Since the distribution is not regular, method of grouping will be used for determination of mode, Grouping Table Prequency| @|@|/@|@/] © te | ] ] ] I J ouBinnconnn |’ @s 2 @w © Analysis Table WET?TGAtT s Columns | 59 51 52 53 54 55 56 57 58 59 60 ; 1 3 1 ; 1 : road 5 tod é rid tid Total 0) 110 6 3 1 Since the value 58 has occurred maximum number of times, therefore, mode of the distribution is 58 kgs. (®) When data are in the form of a grouped frequency distribution The following steps are involved in the computation of mode from a grouped frequency distribution, (Determination of modal class: It is the class in which mode of the distribution lies. Ifthe distribution is regular, the modal class can be determined by inspection, otherwise, by method of grouping. 6Quantitative Techniques Management 66 (i) Exact location of mode in a modal class (interpolation formula): The exact location of mode, in a modal class, will depend upon the frequencies of the classes immediately preceding and following it. If these frequencies are equal, the mode ‘would lie at the middle of the modal class interval. However, the position of mode ‘would be to the left or to the right of the middle point depending upon whether the frequency of preceding class is greater or less than the frequency of the class following it. The / exact location of mode can be done by the use of A | interpolation formula, developed below : g Let the modal class be denoted by L_ - U,, where % L, and U,, denote its lower and the upper limits respectively. Further, let, be its frequency and h its width. Also let f, and f, be the respective frequencies of the immediately preceding and ° EMlln Oreses following classes. Figure 2.4 }as We assume that the width of all the class intervals of the distribution are equal. If these are not equal, make them so by regrouping under the assumption that frequencies in a class are uniformly distributed. Make a histogram of the frequency distribution with height of each rectangle equal to the frequency of the corresponding class. Only three rectangles, out of the complete histogram, that are necessary for the purpose are shown in the above figure. Let A, f and a, £,, Then the mode, denoted by } A, modal class interval in the ratio J. The graphical location of mode is shown ,, will divide the in Fig. 24 To derive a formula for mode, the point M, in the figure, should be such that Mi-b, Ay a, MA (A, +A)M, =L.A, +U_A,= L.A, +L, +h)A, (where U = (A+ ADL. + A Dividing both sides by A, + A,, we have = Ay M, = bg ooh a By slight adjustment, the above formula can also be written in terms of the upper limit (U,.) of the modal class. xh = M,=U,-h+ Za *# =U, - Ia, U,-|aaa, 2 Replacing A, by f, - f, and A, by f,, - f,, the above equations can be written as 8Measures of Central Tendency and M,= a Note: The above formulae are applicable only to a unimodal freque cy distribution, Example 37: The monthly profits (in Rs) of 100 shops are distributed as follows Profit per Shop + 0-100 100-200 200-300 300-400 400-500 500-600 No.of Shops: 12 18 27 20 "7 6 Determine the ‘modal value’ of the distribution graphically and verify the result by calculation. Solution: Since the distribution is regular, the modal class would be a class having the highest frequency. The modal class, of the given distribution, is 200 - 300, 30 Graphical Location of Mode ot M258 Tolocate moe we draw aistogram of the given frequency distribution. The mode is % 18 located as shown in Fig. 9.5. Fromthe figure, ¢ 12 mode = Rs 256. 2. Determination of Mode by interpolation formula 100,200, , 0 400,800, «a0 Figure 2 ‘Case Intervals Since the modal class is 200 - 300, L, = 200, 4, =27-18=9, A, =27-20=7 and h= 100. 9 = 200 + > 100= Rs 256.25 M, = 200+ 55 5 256, Example 38: The frequency distribution of marks obtained by 60 students of a class in acollege is given below Marks; 30-34 35-39 40-44 45-49 50-54 55-59 60-64 Frequency 3 5 2 B mw 6 2 Find mode of the distribution Solution: The given class intervals are first converted into class boundaries, as given in the following table Marks: 29,5-34.5 34.5-39.5 39.5-44.5 44.5-49.5 Frequency 3 5 2 18 Marks; 49.5-54.5 54.5-59.5 59.5-64.5 Frequency 14 6 2 We note that the distribution is regular. Thus, the modal class, by inspection, is 44.5 - 49.5 Further, L,, = 44.5, A,=18-12=6, A, 8-14=4andh=5 Mode = 44.5 + —2-%5=475 mark ode = 44 5 + 797x547 5 marks Example 39: Calculate mode of the following data Weekly Wages (Rs) + 290-250 250-300 300-350 350-400 No. of Workers 4 6 20 2 Weekly Wages (Rs) : 400-450 450-500 500-550 550-600 No. of Workers 33 7 8 2 Solution: Since the frequency distribution is not regular, the modal class will be determined by the method of grouping. ooQuantitative Techniques for Management 68 Grouping Table Weekly wages| f mR) |) |@|@|@ | O|@ 200 - 250 4 3058 | é [Je Je 8 (2 lle 7 \J® 8 2 Analysis Table Columns | 300-350 | 350-400 | 400-450 | 450-500 [ 300-550, 1 T 2 1 1 3 1 1 4 1 1 1 5 1 1 1 6 1 L 1 Total) 1 3 6 3 T ‘The modal class, from analysis table, is 400 - 500. Thus, L,=400, A, =33-12=21, A,=33-17= 16 andh=50 21 Hence, mode = 400 + 35X50 = Rs 428,38 Example 40: Calculate mode of the following distribution Weights (Ubs.) > below 100 below 110 below 120 below 130 below 140 No. of Students 4 6 24 46 67 Weights lbs.) > below 150 below 160 below 170 below 180 No. of Students 86 96 99 100 Solution: Rewriting the above distribution in the form of a frequency distribution with class limits, we get Weights ibs.) + Lessthan 100 100-110 110-120 120-130 130-140 Frequency 4 2 18 22 au Weights (lbs.) 140-150 150-160 160-170 170-180 Frequency 19 10 3 1 We note that there is a concentration of observations in classes 120 - 130 and 130 - 140, therefore, modal class can be determined by the method of grouping Grouping Table Weights | f ts) |olelela|e| less than 100| 4 | 6 mci | 6 bi@ |” “\]e 120-130 ee Tielelena\° 50-160 | 10 Js 12 | 2 160-170 | 3 | 4 |« 170-180 1Analysis Table Measures of Central Tendency Columns | 110-120 120-130 130-140 | 140-150 | 150-160 1 1 2 1 1 1 1 3 1 1 4 1 1 1 5 1 1 1 6 1 1 1 Total 2 5 5 3 1 Since the two classes, 120 - 130 and 130 - 140, are repeated maximum number of times in the above table, itis not possible to locate modal class even by the method of grouping. However, an approximate value of mode is given by the empirical formula Mode = 3 Median - 2 Mean (See § 2.9) Looking at the cumulative frequet 130 - 140. Thus, L, column, given in the question, the median class is 130, C= 46, f, =21,h= 10, 50-46 M,= 130+ 10 = 131.9 Ibs. 21 ‘Assuming that the width of the first class is equal to the width of second, we can write 95105 115 125 135 143 155 168 175 42 8 2 7 9 0 3 7 4°32 10 123 4 fi 6 6 % RD 0 OD DT < 28x10 us, ¥ =135- Thus, ¥ =1 100 = 135 - 2.8 = 132.2 Ibs. Using the values of mean and median, we get M, x 131.9- 2x 132.2 = 131.3 Ibs. Remarks: Another situation, in which we can use the empirical formula, rather than the interpolation formula, is when there is maximum frequency either in the first or in the last class. Calculation of Mode when either A, or A, is negative ‘The interpolation formula, for the calculation of mode, is applicable only if both A, and A, are positive, If either A, or A, is negative, we use an alternative formula that gives only an approximate value of the mode. ‘We recall that the position of mode, in a modal class, depends upon the frequencies of its preceding and following classes, denoted by f, and f, respectively. If f, = f,, the mode willbe at the middle point which can be obtained by adding 7, */ tothe lower limit fr of the modal class or, equivalently, it can be obtained by subtracting 7 * 1 from its fi fr 1 FoR TTR 2 enh Further, if f, > f,, the mode will lie to the right of the mid-value of modal class and, ‘upper limit. We may note that A 1 therefore, the ratio ¢ "will be greater than 9 . Similarly, iff, 7 18 18 30 31 4 3 1 Solution: The mid-values with equal gaps are given, therefore, the corresponding class intervals would be 0 - 10, 10 - 20, 20 - 30, ete. Since the given frequency distribution is not regular, the modal class will be determined by the method of grouping. Analysis Table Columns. From the analysis table, the modal class is 30 - 40, Therefore, L, = 30, A, =30-18=12, A, We note that the interpolation formula is not applicable. 10 - 31 =~ 1 (negative) and h = 10. 6.33 Example 42: The rate of sales tax as a percentage of sales, paid by 400 shopkeepers of a market during an assessment year ranged from 0 to 25%. The sales tax paid by 18% of them was not greater than 5%. The median rate of sales tax was 10% and 75th percentile rate of sales tax was 15%. If only 8% of the shopkeepers paid sales tax at a rate greater than 20% but not greater than 25%, summarise the information in the form ofa frequency distribution taking intervals of 5%. Also find the modal rate of sales tax. Solution: The above information can be written in the form of the following distributionClass Intervals No.of Measures of Cnt Tendency (in percentage) Shopkeepers 05 8 400 =72 100 5-10 (200-72 =128 10-15 300-200 =100 15-20 400-72 -128-100-32=68 20-25 x 400 =32 100 By inspection, the modal class is 5 - 10. 8-2 128-72-+ 128-100 M=5+ = 8.33% Example 43: The following table gives the incomplete income distribution of 300 workers of a firm, where the frequencies of the classes 3000 - 4000 and 5000 - 6000 are missing. If the mode of the distribution is Rs 4428.57, find the missing frequencies. Monthly Income (Rs) No. of Workers 7000-2000 30 2000-3000 35 3000-4000 2 4000-5000 8 5000-6000 2 ‘6000-7000 30 7000-8000 15 Solution: Let the frequency of the class 3000 - 4000 be f,. Then the frequency of the class 5000 - 6000 will be equal to 300 - 30 - 35 - f,-75 - 30- 15= 115 -f. Itis given that mode = 4428.57, therefore, modal class is 4000 - 5000. Thus, L, = 4000, A,=75-f, A, =75- (115 -f,) =f, - 40 and h = 1000, Using the interpolation formula, we have 4428.57 = 4000 + 1000 f+ f,—40 or 42857= St 1000 or 14.999 =75 - f, or f,= 75-15 = 60 (taking 14.999 = 15). Also f, = 115 - 60 = 55 Merits and Demerits of Mode Merits 1, Itis easy to understand and easy to calculate. In many cases it can be located just by inspection. 2. Itcan be located in situations where the variable is not measurable but categorisation or ranking of observations is possible. 3. Like mean or median, itis not affected by extreme observations. Itcan be calculated even if these extreme observations are not known, 4, It can be determined even if the distribution has open end classes. 5. It can be located even when the class intervals are of unequal width provided that the width of modal and that of its preceding and following classes are equal. nQuantitative Techniques Management n 6. It is a value around which there is more concentration of observations and hence the best representative of the data. Demerits 1. Itis not based on all the observations. 2. Itis not capable of further mathematical treatment. 3. Incertain cases mode is not rigidly defined and hence, the important requisite of a good measure of central tendency is not satisfied. 4, Itis much affected by the fluctuations of sampling. 5, It is not easy to calculate unless the number of observations is sufficiently large and reveal a marked tendency of concentration around a particular value. 6. Itis not suitable when different items of the data are of unequal importance, 7. Itis an unstable average because, mode of a distribution, depends upon the choice of width of class intervals. 2.9 RELATI: BETWEEN MEAN, MEDIAN 1D MODI Therelaionship between the above measures >. of central tendency will be interpreted in @ terms of a continuous frequency curve. ‘neque Ifthe number of observations of a frequency ;& distribution are increased gradually, then — | accordingly, we need to have more number © of classes, for approximately the same range of values of the variable, and simultaneously, the width of the corresponding classes would dectease, Consequently, the histogram of the frequency distribution will get transformed into a smooth frequency curve, as shown in Fig. 2.6. For a given distribution, the mean is the value of the variable which is the point of balance or centre of gravity of the ‘cal Di distribution. The median is the value such Symmetrical Distribution that half of the observations are below it and remaining half are above it. In terms of the frequency curve, the total area under the § curve is divided into two equal parts by the i ordinate at median. Mode of a distribution is —| a value around which there is maximum concentration of observations and is given Fig.2.7 by the point at which peak of the curve occurs. >a M, x For a symmetrical distribution, all the three measures of central tendency are equal ic. ¥ Mi, = M,, as shown in Fig. 2.7. Imagine a situation in which the symmetrical distribution is made asymmetrical ot positively (or negatively) skewed by adding some observations of very high (or very low) magnitudes, so that the right hand (or the left hand) tail of the frequency curve gets elongated, Consequently, the three measures will depart from each other. Since mean takes into account the magnitudes of observations, it would be highly affected. Further, since the {otal number of observations will also increase, the median would also be affected but to a lesser extent than mean, Finally, there would be no change in the position of mode, More specifically, we shall have M, 0 for each i, their geometric mean (GM) is defined as product of observations, To evaluate GM, we have to use logarithms. Taking log of both sides we have Tog (GM) = 2 og (XXX) 1 flog 2, Hog Xq-+---og X,] = D/28% ‘Taking antilog of both sides, we have Le x, GM = antilog | [> This result shows that the GM of a set of observations is the antilog of the arithmetic mean of their logarithms. Example 47: Calculate geometric mean of the following data 1,7,29, 92, 115 and 375 Solution: Caleulation of Geometric Mean x 1 7 2 92S 75 | dog log X [0.0000 0.8451 1.4624 1.9638 2.0607 2.5740 | 8.9060 Be GM =antilog (b) Ungrouped Frequency Distribution If the data consists of observations X,, X,, ..... X, with respective frequencies f, f,, f, where LF =, the geometric mean is given by=Taking log of both sides, we have Measures of Central Tendeney Jog (GM) = [log Xi 10g XP +--s0g X44] ¥ flog x, = yiiton Xs +flog Xe flow] = le or GM=antilog ( DY flog x, ) Which is again equal to the antilog of the arithmetic mean of the logarithm of observations Example 48: Calculate geometric mean of the following distribution x 5 10 1S 2 25 30 f 1318 50 40 10 6 Solution: X | f | eX | flogX 3 0.6990 9.0870 10 1.0000 | 18.0000 18 1.1761 | 58.8050 20 1.3010 | 52.0400 2s | 10 | 1.3979 | 13.9790 30_| 6 | 14771 | 8.8626 Toral [137 160.7736 160.7736, 137 ©. GM=antilog [: | antilog 1.1735 = 14.91 (©) Continuous Frequency Distribution In case of a continuous frequency distribution, the class intervals are given. Let X,, X,, X, denote the mid-values of the first, second ..... nth class interval respectively with corresponding frequencies f,f,,....,, such that 5 f, = N. The formula for calculation. of GM is same as the formula used for an ungrouped frequency distribution Dfilog X, ive,, GM =antilog | Fy Example 49: Calculate geometric mean of the following distribution : Class Intervals: 5-15 15-25 25-35 35-45 45-55 Frequencies 0 2 08M Solution: Calculation of GM Class_[ fF] Mid-Value(X) | log [flow 5-15 | 10 10 1.0000 | 10.0000 15-25 | 22 20 1.3010 | 28.6227 25-35 | 25 30 Lam | 36.9280 35-45 | 20 40 1.6020 | 32.0412 as. so. 16990 | 13 so1a Toral_[ 85 121.1837 121.1837 ee 85 intilog 1.4257 = 26.65 +9oan Tenis Weighted Geometric Mean If various observations, X,, X,, ...X,, are not of equal importance in the data, weighted geometric mean is calculated. Weighted GM of the observations X,, X,, ....X, with respective weights as wy, W, ....W, is given by : Sw log X, | OM = antilog | “57, |+ be» weighted geometric mean of observations is equal to the antilog of weighted arithmetic mean of their logarithms. Example 50: Calculate weighted geometric mean of the following data Variable (KX): 5 8 44 160 S00 Weighs(w) > 10 9 3 2 1 How does it differ from simple geometric mean?” Solution Calculation of weighted and simple GM “K] Weights | TowX | whee 10 | 0.6990 | 6.9900 9 | 090s | 8.1278 3 | esas | 4.9304 2 | 2.2081 | 4.4082 1 | 2.6990 | 2.6990 35 | 8.1487 | 27.1358 Weighted GM = antilog 715 ~ antilog 1.0862 = 12.20 Simple GM =antilog #82 (q = 5) = antilog 1.6297 = 42.63 Note that the simple GM is greater than the weighted GM because the given system of ‘weights assigns more importance to values having smaller magnitude. Geometric Mean of the Combined Group 1fG,,G,,..... G, are the geometric means of k groups having n,,n,,....n, observations respectively, the geometric mean G of the combined group consisting of n, +1, +... 1, observations is given by log Gy +1, log Gy +--+ 6] [dn ra) G=antilos antilog | ~> ® el La, htm bem Example 51: If the geometric means of two groups consisting of 10 and 25 observations are 90.4 and 125.5 respectively, find the geometric mean of all the 35 observations combined into a single group. Solution: Combined GM = antilog [ Here n, = 10, G, = 90.4 and n, ¢ GM = antilog [1ox1.9562 +2: = antilog | 3 5x 2.0986 antilog 2.0879 = 114.27 so‘To determine the average rate of change of price for the entire period when Mewsures of Cental Tendency the rate of change of prices for different periods are given Let P, be the price of a commodity in the beginning of the first year. If it increases by k, e in the first year, the price at the end of Ist year (or beginning of second year) is given by k) ky = %ro9 = PI+T 5] = 1), where 1, = 795 denotes the rate of Peay + ages = R[MGEG] = PC + 1) where r= 75 denotes the rate of increase per rupee in first year. Similarly, if the price changes by k,% in second year, the price at the end of second year is given by p pli) =P agg = AU am) =P en Replacing the value of P, as P,(I + 1,) we can write P= Pil +4) +1) Proceeding in this way, if 100r, % is the rate of change of price in the i th year, the price at the end of nth period, P,, is given by (+n) on Further, let 100r, % per year be the average rate of increase of price that gives the price P. at the end of n years. Therefore, we can write PL=P,L +r) +4 PL=P(L #11 $1) oe =P FD, ® juating (1) and (2), we can write (le n)=( 4rd +n) on tn) or (144) = [lent tn) +n) @) This shows that (1 + 1) is geometric mean of (1 + 1,), (I+ 1,), oo. and (I +1). From (3), we get @ Note: Here r denotes the per unit rate of change. This rate is termed as the rate of increase or the rate of growth if positive and the rate of decrease or the rate of decay if negative. Example 52: The price of a commodity went up by 5%, 8% and 77% respectively in the last three years. The annual average rise of price is 26% and not 30%. Comment. Solution: The correct average in this case is given by equation (4), given above. Let r,, r, and r, be the increase in price per rupee in the respective years. 5 k 05,7, =-% =0.08and , = =0.77 * Foo 100 100 ‘The average rate of rise of price, denoted by r, is given by (ea\end(rn)p - (1.05%1.08x1.77)5 — = [(0-+0.05)(1+0.08)(1+0.77) - 8Quantitative Techniques Management 82 Now log(1.05%1,08x1.77)5 =—(log.05 + log.08 + logl.77) [0.0212 + 0.0334 + 0.2480) 5 0.3026 0109 (1.05 1,08 x 1.77)* = antilog 0.1009 = 1.26 Thus, r= 1.26 ‘Also, the percentage rise of price is 100% = 26%. 26 Note: 30% is the arithmetic mean of 5%, 8% and 77%, which is not a correct average. This can be verified as below If we take the average rise of price as 30% per year, then the price at the end of first year, taking it to be 100 in the beginning of the year, becomes 130. 130x130 a d 69 Price at the end of 2nd year = 75 169130 rice at the end of 3rd year = ——— = 219.7 Price at the end of 3rd y 700 Similarly, taking the average as 26%, the price at the end of 3rd year 226 126 _ 500.08 100” 100 126 100 ‘Also, the actual price at the end of 3rd year 105 108177 105 108 177 100 ~ 100” 100 geometric average and hence, it is the most suitable average in this case. 107 . This price is correctly given by the Average Rate of Growth of Population The average rate of growth of price, denoted by r in the above section, can also be interpreted as the average rate of growth of population. If P, denotes the population in the beginning of the period and P, the population after n years, using Equation (2), we can write the expression for the average rate of change of population per annum as Ay By ok r=|4) fo) Similarly, Equation (4), given above, can be used to find the average rate of growth of population when its rates of growth in various years are given. Remarks: The formulae of price and population changes, considered above, can also be extended to various other situations like growth of money, capital, output, etc Example 53: The population of a country increased from 2,00,000 to 2,40,000 within a period of 10 years. Find the average rate of growth of population per year. Solution: Let r be the average rate of growth of population per year for the period of 10 years Let P, be initial and P,, be the final population for this period. 2,00,000 and P,, = 2,40,000. We are given P, 2,40,000 Y® 2,00,000Measures of Central Tendency Now (zy antiog | (tog24 woe20)| anil] (3902-1 s019} antilog (0.0079) =1.018 Thus, r= 1,018 - 1 = 0.018, Hence, the percentage rate of growth = 0.018 xx100 = 1.8% p. a. Example $4: The gross national product of a country was Rs 20,000 crores before 5 years. If it is Rs 30,000 crores now, find the annual rate of growth of G.N-P. Solution: Here P, = 30,000, P, = 20,000 and n= 5 (om). (yt Now G = ang [eves ~ log?) = antilog (0.0352) 084 - 1 = 0.084 084 Hence ‘Thus, the percentage rate of growth of G.N.P. is 84% pa Example 5: Find the average rate of increase of population per decade, which increased by 20% in first, 30% in second and 40% in the third decade. Solution: Let r denote the average rate of growth of population per decade, then / 1 r= ion ton tan) 1=(1.2x13x14)? =1 100“ 100 * 100 1 r=1297 297 Hence, the percentage rate of growth of population per decade is 29.7%. Suitability of Geometric Mean for Averaging Ratios Ie will be shown here that the geometric mean is more appropriate than arithmetic mean while averaging ratios. Let there be two values of each of the variables x and y, as given below : so Roof") a(2) & 40 60 wa 2 20 80 v4 4 Now AM of (xy) ratiosQuantitative Techniques Management st We note that their product is not equal to unity. 1 However, the product of ther respective geometric means, ie, Jf and V6, is equal to any Since itis desirable that a mod of average should he independent ofthe way in which a ratio is expressed, it seems reasonable to regard geometric mean as more appropriate than arithmetic mean while averaging ratios. Properties of Geometric Mean 1. Asin case of arithmetic mean, the sum of deviations of logarithms of values from the log GM is equal to zero. This property implies that the product of the ratios of GM (o each observation, that is less than it, is equal to the product the ratios of each observation to GM that is greater than it, For example, if the observations are 5, 25, 125 and 625, their GM = 55.9. The above property implies that 55.9 559 _ 125. 625 x Ty 5° 25 559° 559 2. Similar to the arithmetic mean, where the sum of observations remains unaltered if each observation is replaced by their AM, the product of observations remains unaltered if each observation is replaced by their GM. Merits, Demerits and Uses of Geometric Mean Merits 1. Itisa rigidly defined average. 2. It is based on all the observations. 3. Itis capable of mathematical treatment. If any two out of the three values, i-., (i) product of observations, (ii) GM of observations and (iii) number of observations, are known, the third can be calculated. 4, In contrast to AM, itis less affected by extreme observations. 5, _ It gives more weights to smaller observations and vice-versa Demerits 1, Iris not very easy to calculate and hence is not very popular. 2. Like AM, it may be a value which does not exist in the set of given observations. 3. Iteannot be calculated if any observation is zero or negative. Uses 1, Itis most suitable for averaging ratios and exponential rates of changes. 2. This used in the construction of index numbers. 3. Itis often used to study certain social or economic phenomena. Exercise with Hints 1. A sum of money was invested for 4 years. The respective rates of interest per annum were 4%, 5%, 6% and 8%. Determine the average rate of interest pa. (104, 105. 106 108 xox Hint: r=|——x (00 * 100 * 100 * i00 y 1, average rate of interest = 100r %.2, The number of bacteria in a certain culture was found to be 4 x 108 at noon of one day. At noon of the next day, the number was 9 x 10*. If the number increased at a constant rate per hour, how many bacteria were there atthe intervening midnight? Hint: The number of bacteria at midnight is GM of 4 x L0® and 9 x 10°, 3. If the price of a commodity doubles in a period of 4 years, what is the average percentage increase per year? yo 7) Ua) 4. A machine is assumed to depreciate by 40% in value in the first year, by 25% in second year and by 10% paa. for the next three years, each percentage being calculated on the diminishing value. Find the percentage depreciation p.a. for the entire period, rine = t-n)-a)(i-n) 5. A certain store made profits of Rs 5,000, Rs 10,000 and Rs 80,000 in 1965, 1966 and 1967 respectively. Determine the average rate of growth of its profits 5,000, Hint: |r 6. Aneconomy grows at the rate of 2% in the first year, 2.5% in the second, 3% in the third, 4% in the fourth .... and 10% in the tenth year. What is the average rate of growth of the economy? Hint: y= (1,02x1,025x11,03x1.04x1.05x 1.06x 1.07% 1.08%1,09%1.10) =1 7, The export of a commodity increased by 30% in 1988, decreased by 22% in 1989 and then increased by 45% in the following year. The increase/decrease, in each year, being measured in comparison to its previous year. Calculate the average rate of change of the exports per annum, 1,30%0.78x1.45) 8, Show that the arithmetic mean of two positive numbers a and b is at least as large as their geometric mean Hint: We know that the square of the difference of two numbers is always positive, ic., (a - by? 20. Make adjustments to get the inequality (a + by'24ab and then get the desired result, ie., AM > GM. 9. If population has doubled itself in 20 years, is it correct to say that the rate of growth has been 5% per annum’? Hint: The anmual rate of growth is given by sors 2 -] 3.53%, which is not equal to 5% 10. The weighted geometric mean of 5 numbers 10, 15, 25, 12 and 20 is 17.15. If the weights of the first four numbers are 2, 3, 5, and 2 respectively, find weight of the fifth number, Hint: Let x be the weight of the Sth number, then [10?.15%.25*.12"20" J? =17.15, Measures of Central Tendency 85Quantitative Techniques Management 86 2.11 HARMONIC MEAN The harmonic mean of n observations, none of which is zero, is defined as the reciprocal of the arithmetic mean of their reciprocals. Calculation of Harmonic Mean (a) Individual series If there are n observations X,, X,, ....X,, their harmonic mean is defined as HM = T Example 56: Obtain harmonic mean of 15, 18, 23, 25 and 30, 5 5 Solution: HM = ag 72092 08 +t tot Is "18" 23" 25°30 (b) Ungrouped Frequency Distribution For ungrouped data, ic., each X,, X,, ..... X,, occur with respective frequency f,,f, f,, where Ef, = Nis total frequency, the arithmetic mean of the reciprocals of observations 18 fi isgivenby ya. Ny Thus, HM ys x, Example 57: Calculate harmonic mean of the following data : x 0 uo oR B41 r 5 8 0 9 6 Solution: Calculation of Harmonic Mean x ed Toad Frequency (f) 5 8 10, 9 6 38. f | 0.so00 0.7273 0.8333 0.6923 0.4286 | 3.1815 38 HM = 78 = 1194 (©) Continuous Frequency Distribution In case of a continuous frequency distribution, the class intervals are given. The mid- values of the first, second ..... nth classes are denoted by X,, X,, ..... X,. The formula for the harmonic mean is same, as given in (b) above Example 58: Find the harmonic mean of the following distribution Class Intervals : 0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 Frequency 5s 8 HW wm 3% % 2 WBSolution: Calculation of Harmonic Mean, Class Intervals 0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80, Toral 150 M 4.4751 Weighted Harmonic Mean weighted harmonic mean is defined as follows Example 59: A train travels 50 kms at a speed of 40 kms/hour, 60 kms at a speed of 50 kms/hour and 40 kms at a speed of 60 kms/hour. Calculate the weighted harmonic ‘mean of the speed of the train taking distances travelled as weights. Verify that this harmonic mean represents an appropriate average of the speed of train, yw, 150 150 ye 50, AO" 1.2541.20+067 X, 40°50" 60 = 48.13 kms/hour Solution: HM a Verification © 4 = Telaldistance travelled frification ; Average speed) = Tt smne taken We note that the numerator of Equation (1) gives the total distance travelled by train, Further, its denominator represents total time taken by the train in travelling 150 kms, since $i ime tke by he win in tae 50 ks a seed of 40 kshour 0 60 speeds of 50 kms,/hour and 60 kms/hour respectively. Hence, weighted harmonic mean is most appropriate average in this case. Simitry 2 and 2 ar me ake ye tain in waving 60 san 40k he Example 60: Ram goes from his house to office on a cycle at a speed of 12 kms/hour and returns at a speed of 14 kms/hour. Find his average speed. Solution: Since the distances of travel at various speeds are equal, the average speed of Ram will be given by the simple harmonic mean of the given speeds. A seed = werage speed= TT” 9.1547 R14 = 12.92 kms/hour Choice between Harmonic Mean and Arithmetic Mean ‘The harmonic mean, like arithmetic mean, is also used in averaging of rates like price per unit, kms per hour, work done per hour, etc., under certain conditions. To explain the method of choosing an appropriate average, consider the following illustration Measures of Central Tendency 87Quantitative Techniques for Management se Let the price of a commodity be Rs 3, 4 and 5 per unit in three successive years. If we 34445, take AM. of these prices, ie, 4, then it will denote average price when equal quantities of the commodity are purchased in each year. To verify this, let us assume that 10 units of commodity are purchased in each year. ‘Total expenditure on the commodity in 3 years = 10x3 + 10x4 + 10xS. Total expenditure 10x3+10x4+10x5 34445 Also, Average price = Terai quantity purchased 10+10+10 3 which is arithmetic mean of the prices in three years Further, if we take harmonic mean of the given prices, i, -—F}—- twill denote the ty 31 4's average price when equal amounts of money are spent on the commodity in three years. To verify this let us assume that Rs 100 is spent in each year on the purchase of the commodity. Total expenditure 300 3 Total quantity purchased ~ TOO, 100 TOO TT, 7 34s 34's Average price Next, we consider a situation where different quantities are purchased in the three years, Let us assume that 10, 15 and 20 units of the commodity are purchased at prices of Rs 3, 4 and 5 respectively. Total expenditure 3x 10+4x15+5x20 Total quantity purchased 10+15+20 arithmetic mean of the prices taking respective quantities as weights. Average pric which is weighted Further, if Rs 150, 200 and 250 are spent on the purchase of the commodity at prices of Rs 3, 4 and 5 respectively, then 150+200 +250 150 200 |, 250 T0200, 250° Where “y-. “> and °° are the quantities 3° 40S purchased in respective situations. Average pric The above average price is equal to the weighted harmonic mean of prices taking money spent as weights. Therefore, to decide about the type of average to be used in a given situation, the first step is to examine the rate to be averaged. It may be noted here that a rate represents money distance cd hour = Work done quantity “Peed ==. work done per hour= To yakeg > ratio, e.g., pric We have seen above that arithmetic mean is appropriate average of prices money quantity ) en quantities, that appear in the denominator of the rate to be averaged, purchased in different situations are given. Similarly, harmonic mean will be appropriate ‘when sums of money, that appear in the numerator of the rate to be averaged, spent in different situations are given To conclude, we can say that the average of a rate, defined by the ratio p/q, is given by the arithmetic mean of its values in different situations if the conditions are given in terms of q and by the harmonic mean if the conditions are given in terms of p. Further, if the conditions are same in different situations, use simple AM or HM and otherwise use weighted AM or HM.Example 61: An individual purchases three qualities of pencils. The relevant data are Measures of Cental Tendency given below Quality Price per pencil (Rs) Money Spent (Rs) A 100 50 B 130 30 c 2.00 20 Calculate average price per pencil Solution: Since different sums of money spent in various situations are given, we shall calculate weighted harmonic mean to calculate average price. 50+30+20 100 5 =; =Rs 1.25 Weighted HM = 50, 30 | 20 ~50+20+10 1.00" 1.50" 2.00 Example 62: In a 400 metre athlete competition, a participant covers the distance as given below. Find his average speed, Speed (Metres per second) First 80 metres 10 Next 240 metres 18 Last 80 metres 10 distance Solutio : Since Speed and the conditions are given in terms of distance ‘ime travelled at various speeds, HM will be the appropriate average. 804240480 400 80, 240 80° 843248 10" 7.5710 33 metres/second, Example 63: Peter travelled by a car for four days. He drove 10 hours each day. He drove first day at the rate of 45 kms/hour, second day at the rate of 40 kms/hour, third day at the rate of 38 kms/hour and fourth day at the rate of 37 kms/hour. What was his average speed. ( ai \ Solution: Since the rate to be averaged is speed= { “Snee and the conditions are (“time given in terms of time, therefore AM will be appropriate, Further, since Peter travelled for equal number of hours on each of the four days, simple AM will be calculated, 45+40+38+37 Aver = 40 kms/hour speed = Example 64: In a certain factory, a unit of work is completed by A in 4 minutes, by B in 5 minutes, by C in 6 minutes, by D in 10 minutes and by Ein 12 minutes. What is their average rate of working? What is the average number of units of work completed per ‘minute? At this rate, how many units of work each of them, on the average, will complete in a six hour day? Also find the total units of work completed, Solution: Here the rate to be averaged is time taken to complete a unit of work, time ie, - Since we have to determine the average with reference to a units of work done (six hours) day, therefore, HM of the rates will give us appropriate average. 89Quantitative Techniques Management 90 5 Thus, the average rate of working = ]——-—]— = 6.25 minutes/unit etal ty 4°5*6 71012 The average number of units of work completed per minute = ghz = 0.16. ‘The average number of units of work completed by each person = 0.16 x 360 = 57.6. Total units of work completed by all the five persons = 57.6 x 5 = 288.0. Example 65: A scooterist purchased petrol at the rate of Rs 14, 15.50 and 16 per litre during three successive years. Calculate the average price of petrol (i) if he purchased 150, 160 and 170 litres of petrol in the respective years and (ii) if he spent Rs 2,200, 2,500 and 2,600 in the three years. money litre (Since the condition is given in terms of different lies of petrol in three years, therefore, weighted AM will be appropriate. Solution: The rate to be averaged is expressed as 150x14 +160 x15.5-+170%16 1. Average price == Rs 15.21. Gi) ‘The weighted HM will be appropriate in this case. “2200+ 2500+ 2600 _ 7300 Average price = 3209 | 2500 | 2600 ~ 157.14+161.29+ 162.50 4 iss” 16 =Rs 15.18/litre Merits and Demerits of Harmonic Mean Merits 1, Itisa rigidly defined average. 2, It is based on all the observations. 3. It gives less weight to large items and vice-versa 4, — It is capable of further mathematical treatment, 5. Ttis suitable in computing average rate under certain conditions. Demerits 1. Itis not easy to compute and is difficult to understand, 2. Temay not be an actual item of the given observations. 3. It cannot be calculated if one or more observations are equal to zero. 4, It may not be representative of the data if small observations are given correspondingly small weights. Relationship among AM, GM and HM fall the observations of a variable are same, all the three measures of central tendency coincide, ic., AM = GM = HM, Otherwise, we have AM > GM > HM. Example 66: Show that for any two positive numbers a and b, AM > GM > HM. Solution: The three averages of a and b are: am =2*2. GM =Jab and HM =? = 206 2 a+b 1 6Since the square of the difference between a and b is always a non-negative number, we can write (a-b¥> 0 or a? +-bY-2ab30 ora? +b? 2 2ab. ‘Adding 2ab to both sides, we have a? + bE 2ab 2 4ab or (a+b) 2 dab (a+b a+b or >ab or ab r 7 or Seva @ >» AM2>GM Q) 2Vab Divide both sides of inequality (1) by “=, to get 12 ab 2ab ‘Multiply both sides by Vab, to get Vab > ss => GM2>HM @) Combining (2) and (3), we ean write AM > GM > HM Note: The equality sign will hold when a=b Example 67: For any two positive numbers, show that GM = JAM x HM Solution: It a and b are two positive numbers, then am =2*° Gu =Jab and HM ah a Now AMM = 222.246 ay = au ow M = Dae =o = GM) or GM = JAM x HM - Hence the result. Example 64 (a) If AM of two observations is 15 and their GM is 9, find their HM and the two observations. (b) Comment on the following The AM of 20 observations is 25, GM = 20 and HM = 21 Solution: (a) JAM x HM =GM ~ JI5xHM =9 or 15 x HM=81. Thus, HM Let the two observations be X, and X,, We are given that 5-2 =15 or X, +X, =30. a Also /X.X, 9 or X,X,=81 We can write (X, - X,)? = (X, + X,)? = 4X,X, = 900-4x81 = 576 or X,-X,=24 » Q) Adding (1) and (2), we get 2X, =54, 2. X,=27. Also X, =3 (b) The statement is wrong because HM cannot be greater than GM. Measures of Central Tendency 91Quantitative Techniques Management 92 Exercise with Hints 1. A train runs 25 miles at a speed of 30 m.ph., another 50 miles at a speed of 40 mph, then due to repairs of the track, 6 miles at a speed of 10 m.p.h. What should be the speed of the train to cover additional distance of 24 miles so that the average speed of the whole run of 105 miles is 35 m.p.h? Hint: Let x be the speed to cover a distance of 24 miles, 2545046424 5,50, 6, 24° ee ey 30°40 10° x 3 find x 2. Prices per share of a company during first five days of a month were Rs 100, 120, 150, 140 and 50. (Find the average daily price per share. (ii) Find the average price paid by an investor who purchased Rs 20,000 worth of shares on each day. (Gi) Find the average price paid by an investor who purchased 100, 110, 120, 130 and 150 shares on respective days. Hint: Find simple HM in (ji) and weighted AM in (ii. 3. Typist A can type a letter in five minutes, B in ten minutes and C in fifteen minutes, ‘What is the average number of letters typed per hour per typist? Hint: Since we are given conditions in terms of per hour, therefore, simple HM of speed will give the average time taken to type one letter. From this we can obtain the average number of letters typed in one hour by each typist. 3 T1,1 +o 5710015 Simple HM = 8.18 minutes per letter 60 433 No, of leters typed in 60 minutes = 37 5=7:33 4. Ram paid Rs 15 for wo dozens of bananas in one shop, another Rs 15 for three dozens of bananas in second shop and Rs 15 for four dozens of bananas in third shop. Find the average price per dozen paid by him. Hint: First find the prices per dozen in three situations and since equal money is spent, HM is the appropriate average. 5. A country accumula es Rs 100 crores of capital stock at the rate of Rs 10 crores! year, another Rs 100 crores at the rate of Rs 20 crores/year and Rs 100 crores at the rate of Rs 25 crores/year. What is the average rate of accumulation? Hint: Since Rs 100 crores, each, is accumulated at the rates of Rs 10, 20 and 25 crores/year, simple HM of these rates would be most appropriate. 6. A motor car covered a distance of 50 miles 4 times. The first time at 50 m.p-h., the second at 20 m.ph,, the third at 40 m p.h. and the fourth at 25 m.p.h. Calculate the average speed. Hint: Use HM. 7. The interest paid on each of the three different sums of money yielding 10%, 12% and 15% simple interest p.a. is the same. What is the average yield percent on the sum invested? Hint: Use HM.Quadratic Mean Measures of Central Tendeney Quadratic mean is the square root of the arithmetic mean of squares of observations. IFX,, X, we n observations, their quadratic mean is given by PRES Ares om ees Similarly, the QM of observations X,, X, ..... X, with their respective frequencies as f,, f, cow f, is given by QM | » where N = Ef, Moving Average This is a special type of average used to eliminate periodic fluctuations from the time series data, Progressive Average A progressive average is a cumulative average which is computed by taking all the available figures in each succeeding years. The average for different periods are obtained as shown below Xi +X, Xi +X, +Xs 4) EERE, SEES coset, 2 3 ‘This average is often used in the early years of a business. Composite Average A composite average is an average of various other averages. If for example, K,/Xp,.X, ae the arithmetic means of k series, their composite average 1 Establish the relation between AM, GM and HM. 2. What is Empirical relation among mean, median and mode. Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it (c) This Chek Your Progress will help you to understand the lesson better. ‘Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only.Quantitative Techniques for Management 94 2.12 LET US SUM. Thus we can say that Mean, Median, Mode is the essential phenomena in any statistical analysis. Thus the measure central tendency helps in summarising the data and classify itinto simple form. DX, N @ (Simple AM) “i (Short-cut method) i (Step-deviation method) wy (Weighted AM) o ee (Mean of combined series) wi (Median) Wil) Q Lo, a where i= 1,3 (Quartiles) fo (vii) (kth Percentile) Le (iy OM = an] (Simple GM) (Weighted GM) tn, toe, | j (GM of the combined series) log, ny log = Antilo 6s) 6A se Gai) r= [rege jt en )ooca(Lbn))e 1 is average annual rate of growth per unit where fy. f, un f, are the rates of growth in various years (xiii) (Simple HM) (xiv) (Weighted HM) 2.13 LESSON-END ACTIVITY ‘The harmonic mean, like arithmetic mean, is also used in averaging of rates like price per unit, kms per hour etc., under certain conditions. Explain the method of choosing an appropriate average between arithmetic mean and harmonic mean.2.14 KEYWORDS Mean Median Mode Average Central Tendency 2.15 QUESTIONS FOR DISCUSSION 3. Write True or False against each of the statement: (a) Incomputation of single arithematic mean equal importance is given to all the items, (b) Median divides the value of variate into two equal parts (©) The value that divides distribution into four equal parts are called Median (d) Mode is that value of the variate which occurs maximum no. of times. (€) Harmonic mean is reciprocal of arithematic mean of their reciprocals. Fill in the blanks : (@) june i8 a Value which is typical representative of a set of data (b) A measure of ons iS a typical value around which other figures congregate. (©) Th coos given observations are arranged in ascending or descending order of magnitude. (a) Decile divides distribution into equal parts, (©) Mode can be determined in two Way bY .ocssuu and by Distinguish betwee (a) Median and Mode (b) Percentile and Decile (©) Harmonic Mean and Geometric Mean (d) Progressive Average and Composite Average (e) Inclusive and Exclusive series Comment on the following: (a) Summarisation of data is necessary for any statistical analysis (b) Arithematic mean is the most popular average in statistics. (©) Median is a positional average (d) An average is a substitute for complex group of variables, ‘What is a statistical average? Describe the characteristics of a good statistical average. ‘What are the functions of an average? Discuss the relative merits and demerits of various types of statistical averages. Give the essential requisites of a measure of ‘Central Tendency’. Under what circumstances would a geometric mean or a harmonic mean be more appropriate than arithmetic mean? Measures of Central Tendency 9sQuantitative Techniques Management 96 15, 16. 18, 20. 21 What do you mean by ‘Central Tendency"? Describe the advantages and the disadvantages of arithmetic mean and mode. What are the characteristics of an ideal average? How far these are satisfied by the mode and median? Distinguish between a mathematical average and a positional average. Give advantages and disadvantages of each type of average. What do you understand by partition values? Give the definitions of quartiles, deciles and percentiles. "Bach average has its own special features and its difficult to say which one is the best". Explain this statement. Discuss the considerations that determine the selection of a suitable average. Explain by giving one example of each case. Explain the empirical relation between mean, median and mode. What are its uses? Under what circumstances it is expected to hold true? Distinguish between a simple average and a weighted average. Explain with an example the circumstances in which the latter is more appropriate than the former. "An average is a substitute for a complex group of variables but it is not always safe to depend on the substitute alone to the exclusion of individual measurements of groups”. Discuss. Show that if all observations of a series are added, subtracted, multiplied or divided bby a constant B, the mean is also added, subtracted, multiplied or divided by the same constant. Prove that the algebric sum of deviations of a given set of observations from their Prove that the sum of squared deviations is least when taken from the mean. The heights of 15 students of a class were noted as shown below. Compute arithmetic mean by using (i) Direct Method and (ii) Short-Cut Method. SM 2123 4 678 FONnR Bw H(ens) + 160 167 17k 158 155 171 162 182 156 1 17% IT 177 12 153 Compute arithmetic mean of the following series : Marks 0-10 10-20 20-30 30-40 40-50 50-60 No.of Students 2 18 7 0 6 Calculate arithmetic mean of the following data Mid-Values + 10 12 14 16 18 20 Frequency : 3 7 12 18 10 5 Calculate mean from the following data Wages (in Rs) : 8-12 14-18 20-24 26-30 32-36 38-42 NoofWorers : 6 1 17 13 3 1 Calculate mean marks from the following table Marks,lessthn > 10 20 30 40 50 No. of Students 25 40 60 75 100 The weights (in gms) of 30 articles are given below : 14 16 16 14 22 13 15 24 12 23 14 20 17 21 18 18 19 2017 16 15 11 12 21 2017 18 19 22 23.22, 23, 24, 28, 26. 27. 28. Construct a grouped frequency distribution by taking equal class intervals in which Measures of Cental Tendency the first interval should be 11 - 13 (exclusive). Also find the arithmetic mean, The following information relates to wages of workers in a factory, their total working hours and the average working hours per worker. Calculate the wage per worker and the total wage Wages (Rs) -70 70-90 90-110 110-130 130-150 150-170 Total hours worked 72 200 255 78 38 Average No. of hours worked per worker o 8 8S 7 78 76 The monthly salaries of 30 employees of a firm are given below 69 148 132 118 142 116 139 126 114 100 88 62 77 99 103 144 148 63 104 123 95 80 85 106 123 133 140 134 108 129 The firm gave bonus of Rs 10, 15, 20, 25, 30 and 35 for individuals in the respective salary group; exceeding Rs 60 but not exceeding Rs 75, exceeding Rs 75 but not exceeding Rs 90 and so on up to exceeding Rs 135 but not exceeding Rs 150. Find out the average bonus paid per employee. Find out the missing frequency in the following distribution with mean equal to 30. Class 0-10 10-20 20-30 30-40 40-50 Frequency 5 6 10 2 B (a) The following table gives the monthly salary of academic staff of a college. Calculate the simple and weighted arithmetic means of their monthly salary. Which of these averages is most appropriate and why? Designation Monthly Salary No. of Teachers () Principat 00 T Gi) Reader 3700 5 Gili) Senior - Lecturer 3000 1s (iv) Lecturer 200 25 (b) The sum of deviations of a certain number of observations from 12 is 166 and the sum of deviations of these observations from 16 is 54. Find the number of observations and their mean. ‘Twelve persons gambled on a certain night, Seven of them lost at an average rate of Rs 10,50 while remaining five gained at an average of Rs 13.00. Is the information given above is correct? If not, why? The incomes of employees in an industrial concer are given below. The total income of ten employees in the class over Rs 250 is Rs 3,000. Compute mean income. Every employee belonging to the top 25% of the earners is required to pay 1% of his income to workers’ relief fund. Estimate the contribution to this fund Income (Rs): 0-50 50-100 100-150 150-200 200-250 250 and above Frequency: 90 150 100 80 70 10 Comment on the performance of the students of three universities given below: Courses | Bombay University | Caleutta University Madras University of Study | Pass% No.of Students | Pass‘| No.of Students Pass% No.of Students MAS OT 300 82 200 81 200 M.Com.| 83 400 16 300 76 350 MSc. | 66 300 60 700 200 BA B 500 B 600 4 450 B.Com.| 74 200 16 700 58 200 BSc | 65 300 65 300 70700 7Quantitative Techniques Management 98 29, 30, 31 32, 33, 35 36. 37, (a) Compute the weighted arithmetic mean of the indices of various groups as given below: Group Index Weight Food 120004 Clothing 130 2 Housing 102 Education of Children 100 1 Miscellaneous 160 1 (>) A cumulative frequency distribution has 65 as the mid-value of its last class interval. The cumulative frequencies of the first, second ..... seventh classes are 5, 21, 45, 72, 85, 94 and 100 respectively. If all the class intervals are of ‘equal width of 10 units, write down the relevant frequency distribution. Also calculate its mean and median. A distribution consists of three components each with total frequency of 200, 250 and 300 and with means of 25, 10 and 15 respectively. Find out the mean of the combined distribution, Find the average number of children per family for the sub-groups separately as well as combined as a whole Sub-group 1 Sub- group 11 No.of Children No.of families | No.of Children No. of families ° io 4-5 20 1 50 6-7 2 2 0 8-9 4 3 40 10-11 4 (a) The mean of a certain number of items is 20, If an observation 25 is added to the data, the mean becomes 21. Find the number of items in the original data, (b) The mean age of a combined group of men and women is 30 years. If the ‘mean age of the men’s group is 32 years and that for the women’s group is 27 years, find the percentage of men and women in the combined group. The average age of 40 students entering B.A. (Honours) Economics first year in. a college was 19 years. Out of this only 25 students passed the third year examination, If the average age of these 25 students is 22.5 years, find the average age of the remaining students, Fifty students took a test. The result of those who passed the testis given below: Marks 45 6789 No.of Students > 8 10 9 6 4 3 If the average marks for all the 50 students was 5.16, find the average marks of those who failed A person had 7 children. The average age of the children was 14 years when one of the child died at the age of 8 years. What will be the average age of the remaining children after five years of this death? The mean marks of 100 students was calculated as 40, Later on it was discovered that a score 53 was misread as 83. Find the correct mean. An examination was held to decide the award of a scholarship. The weights given to various subjects were different. Only three applicants for the scholarship obtained over 50% marks in aggregate. The marks were as follows Subjects Weights | % Marks of A | % Marks of B | % Marks of C Cost Accounting 5 70 65 90 Statisties 4 6 80 78 Business Law 2 so 40 65 Economics 3 58 50 40 Insurance 1 60 40 3838, 39, 40. 41 Of the candidates, the one getting the highest average marks is to be awarded the scholarship. Determine, who will get it? ‘The number of fully formed tomatoes on 100 plants were counted with the following results : 2 plants had 0 tomatoes 5s" 1 7 2 uo" 300" Boo” 4 24 5 mo" 6 so 7° 6" 8" 40" 9” 300" lo" (i) How many tomatoes were there in all? Gi) What was the average number of tomatoes per plant? (a) The average income of 300 employees of a company is Rs 1,800 p.m. Due to rise in prices the company owner decided to give ad-hoc increase of 25% of the average income to each of the 25% lowest paid employees, 10% of the average income to each of the 10% highest paid employees and 15% to each of the remaining employees. Find out the amount of money required for ‘ad hoc increase and also the average income of an employee after this increase. (b) The frequency distribution of the number of casual leave taken by the employees of a firm in a particular year is given below in which one entry e number marked as '? is missing. Determine the missing value if the averag: of casual leave taken by an employee is 8.5 No. of Casual lewvetakn =: 0 4 5 7 9 1 12 No. of Employees 8 35 40 65 7 91 82 The mean salary paid to 1,000 employees of an establishment was found to be Rs 180.40, Later on, after disbursement of salary, it was discovered that the salaries of two employees were wrongly entered as Rs 297 and Rs 165 instead of Rs 197 and 185 respectively. Find the correct mean salary. The following variations were recorded in the measurements of parts by a machine: Variations from the Standard (mm.) No. of parts 1010 T 51010 3 010s 20 S100 25 Oto 5 2 1810 10 7 2010 15 13 2510 20 10 3010 25 7 3510 30 2 (Find average variations. Gi) What proportion fell within a range of 5 mm. either way of the standard? Measures of Central Tendency 99Quantitative Techniques Management 100 42, 4B. 45 46. 47, 48, 49, 50. 51 i) If those which fall more than 10 mm. apart from the standard are classified as bad, what percentage of the parts are bad? (iv) Which stretch of 15 mm. contains the greatest number of parts and what fraction of the total fall inside this stretch? (a) The average monthly production of a certain factory for the first ten months of a year was 3,500 units. Due to workers’ unrest in the last (wo months, the average monthly production for the whole year came down to 3,200 units Find the average monthly production of the last two months. (b) The average sales of a balloon seller on the first five days (i.c., Monday to Friday) of a particular week was Rs 50 and his average sales for the entire week was Rs 70. If his sales on Sunday were 40% higher than his sales on Saturday, find his sales on each of the last two days, i.e, on Saturday and Sunday. Determine median from the following data 30, 37, 54, 58, 61, 64, 31,34, 52, 55, 62, 28, 47, 55, 60 Locate median of the following data: 65, 85, 55, 75, 96, 76, 65, 60, 40, 85, 80, 125, 115, 40 Locate Md, Q,, Qy, Dy, Dy, Pay, Py» Pgs and P,, from the following data S.No. Marks $.No. Marks $.No. Marks 1 7 1 4 13 u 2 32 8 32 4 15 3 35 9 10 1s 35 4 33 100 «18GB 5 1s u 20 17 38 6 au 2 22 18 12 In aclass of 16 students, the following are the marks obtained by them in statistics Find out the lower quartile, upper quartile, seventh decile and thirty-fifth percentile. S.No: 12 3 4 5 6 7 8 9 1 IL 12 13 14 15 16 Marks: 5 12 17 23 28 31 37 41 42 49 54 58 65 68 17 77 Locate My, Q,, Qy, Dy Dy Pay P, 4: Pry Pxyand P,, from the following data Age of Children (in years) > 6 7 8 9 10 11 12 13 14 15 No. of Children 32 33 39 43 58 59 52 38 33 13 Find median from the series given below : Marks (less than) : S$ 10 15 20 25 30 35 40 45 50 No. of Students 5 13 28 53 83 105 123 135 142 145 Calculate median from the following table Wages (more than) 30 4 50 60 70 80 90 No. of Workers 58 46 40 31 16 5 0 Calculate median from the following data Class: 0-5 $-10 10-15 15-20 20-25 25-30 30-35 35-40 40-45 45-50 Frequency: S 8 5 2 0 2% 19 8 6 S Compute median from the following data : Class 10-20 20-30 30-40 40-50 50-60 60-70 Frequency 15 8 7 29 7 453, 34, 58. 56. 37, 58, 59, 60. 61 62, Find out median from the following Measures of Central Tendency No. of Workers © 1-5 6-10 11-15 16-20 21-25 No. of factories 308 BO 5 Calculate median income for the following distribution, Income (Rs): 40-44 45-49 50-54 55-59 60-64 65-69 70-74 No.ofPersoms : 2 7 10 12 8 3 3 With the help of the following figures, prepare a cumulative frequency curve and locate the median and quartiles: Marks Obtained : 0-10 10-20 20-30 30-40 40-50 No, of Students 10 120 18 10 Draw a cumulative frequency curve from the following data and find out the median and both quartiles: Class 1-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 Frequency: 7 10 16 32 8S Calculate median and both quartiles from the following data Age 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 No. of Persons: 50 70 100 180 150 120 70 60 Calculate the quartiles, D, and P,, from the following data Class Less than 100 100-250 250-400 400-500 S00-550 Frequency 85 100 175 14 66 Class 550-600 600-800 800-900 900-1000 Frequency 35 5 18 2 Calculate arithmetic mean and median from the data given below Income in Rs (less than) : 80 70 60 50 40 30 20 10 No. of Workers 100 90 80 60 32 20 13 5 Calculate mean and median from the following series Class Intervals. > 0-10 10-20 20-30 30-40 40-50 Frequency 1820 18 21 20 Calculate mean and median from the following table : Price (Rs) + 10-20 10-30 10-40 10-50 10-60 10-70 10-80 10-90 Frequency : 4 16 56 97 124 137 146 150 Compute mean and median from the following data Marks obtained : 0-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 No. fStudents: 0 5 10 17 18 30 10 8 2 Calculate mean and median of the following distribution : Size 0-4 4-8 8-12 12-16 16-20 20-24 24-28 28-32 Frequency so7 9 7 i 14 6 0 Following is the distribution of marks obtained by 50 students in ‘mercantile law Calculate median marks. If 60% of the students pass this test, find the minimum marks obtained by a passed candidate, Marks (more than) 0 10 2 3 40 so No. of Students 50 46 40 20 10 3 01Quantitative Techniques Management 102 65. 66. 67. 68. 69. 70, 1 Estimate the number of first, second and third divisioners and the number of failures, from the following data, First division is awarded at 60 or more marks, second division at 50 and above but less than 60, third division at 36 or more but less than 50 and those securing less than 36 are failures. Marks (out of 100) : 0-20 20-40 40-60 60-80 80 and above No. of Students 183065 25 12 Following relate to the weekly wages (in Rs) of workers of a factory 100, 75, 79, 80, 110, 93, 109, 84, 95,77, 100, 89, 84, 81, 106, 96, 94, 83, 95, 78, 101, 99, 83, 89, 102, 97, 93, 82, 97, 80, 102, 96, 87, 99, 107, 99, 97, 80, 98, 93, 106, 94, 88, 104, 103, 100, 98, 84, 100, 96, 86, 93, 89, 100, 101, 106, 92, 86, 105, 97, 82, 92,75, 103, 101, 103, 100, 88, 106, 98, 87, 90, 76, 104, 101, 107, 97, 91, 103, 98, 109, 86,76, 107, 88, 107, 88, 93, 85, 98, 104, 78, 79, 110, 94, 108, 86, 95, 84, 87, Prepare a frequency distribution by taking class intervals as 75 - 80, 80 - 85, etc. and locate its median and the two quartiles. Find an appropriate average for the following distribution : Weekly Income (in Rs) No. of families Below 100 50 100-200 500 200-300 555 300-400 100 400 -500 3 500 and above 2 In the frequency distribution of 100 families given below, the number of families corresponding to weekly expenditure groups 200 - 400 and 600 - 800 are missing. However, the median of the distribution is known to be Rs 500. Find the missing frequencies. Expenditure 0-200 200-400 400-600 600-800 800-1000 No. of fanilies 4 2 21 1 15 Find median from the following distribution x 192 3 4 5-9 10-14 15-19 20-25 f 5 10 16 2 3% 15 8 6 The following is the monthly wage distribution of a certain factory : Wages (Rs) 50-80 80-100 100-110 110-120 120-130 No. of Workers: 50 120-200-250 170 Wages (Rs) 130-150. 150-170 170-200 No. of Workers : 130 60 20 (a) Find the median wage. (b) A fund is to be raised and it is decided that the workers getting less than Rs 120 should contribute 5% of their wages and those getting Rs 120 or more should contribute 10% of their wages, What sum should be collected? Determine the mode of the following data 58, 60, 31,62, 48, 37,78, 43, 65, 48 Locate mode of the following series SNo > 123 4 5 6 7 8 9 1 M12 Age 9749 0 8 4 0 5 8 I 872. TB. 74, 18, 16. 71: 78. 79, 80. 81 82, 83, Determine whether there is any mode in the following series Measures of Cental Tendency S.No. 12 3 4 5 67 8 Size 10 10 10 10 10 10 10 10 The number of calls received in 240 successive one minute intervals at an exchange are shown in the following frequency distribution. Calculate mode: No, of calls o 12 3 4 5 6 7 Frequency 14 21 25 43 S135 39 12 Calculate mode from the following data : Midponts > 12 3 4 5 678 Frequency : 5 50 48 30 20 10 15 5 Calculate mode from the following series ‘ass Intervals 10-19 20-29 30-39 40-49 Frequency 4 6 8 5 Calculate mode of the following frequency distribution Marks 0-6 6-12 12-18 18-24 24-30 30-36 No. of Students 12 2436 38 37 6 Calculate mode from the following distribution Marks (less than) 7 14 21 28 35 42 49 No. of Students 2 25 33 41 45 50 52 Calculate median and mode from the following data Sice 10-20 10-30 10-40 10-0 10-60 10-70 10-80 10-90 Freuncy 4 16 «569728146150 Calculate % and M, from the following distribution Class Intervals. > 6-10 11-15 16-20 21-25 26-30 Frequency 2 30504. 10 Find out mode of the following data graphically and check the result by calculation: Size O-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 Frequency: 3-7 «9 IS 2% 2 MW 12 8 6 2 (a) Construct a frequency distribution of the marks obtained by 50 students in economics as given below : 42, 53, 65, 63, 61,47, 58, 60, 64, 45, 55,57, 82, 42, 39, 51, 65, 55, 33, 70, $0, 52, 53,45, 45,25, 36, 59, 63, 39, 65, 30, 45, 35, 49, 15, 54,48, 64, 26,75, 20,42, 40, . 18. (Take the first class interval as 10 - 20). (b) Calculate mode of the above distribution. The monthly profits (in Rs) of 100 shops are distributed as follows Profits 0-100 100-200 200-300 300-500 500-600 600-800 No. ofShops = 19 21 30 40 10 2 Calculate mode of the distribution. The mode of the following incomplete distribution of weights of 160 students is 56. Find the missing frequencies. Weights (kgs): 30-40 40-50 50-60 60-70 70-80 80-90 No. of Students : 20 36 2 6Quantitative Techniques Management 84, Calculate mean, median and mode from the following table Wages (Rs) No. of Persons Less than 8 5 Less than 16 R 8-24 29 24 and above 31 32-40 8 40 and above 19 48-56 5 85. (a) Inamoderately skewed distribution, the arithmetic mean is 10 and mode is 7. Find median, (b) Ina moderately asymmetrical distribution, the mean is 25 and the median is, 23.5. Find mode. 86. Find geometric mean from the following daily income (in Rs) of 10 families: 85,70, 15, 75, 500, 8, 45, 250, 40 and 36. 87. Calculate geometric mean of the following distribution Marks (lessthan) : 10 20 30 40 50 No. of Students 1227 72 93 100 88. The value of a machine depreciates at a constant rate from the cost price of Rs 1,000 to the scrap value of Rs 100 in ten years. Find the annual rate of depreciation, and the value of the machine at the end of one, two, three years. 89. Calculate weighted GM from the following data Weights Wheat 135 Milk 140 Sugar 160 Eggs 120 90. The price of a commodity increased by 12% in 1986, by 30% in 1987 and by 15% in 1988. Calculate the average increase of price per year. 91. The population of a city was 30 lakh in 1981 which increased to 45 lakh in 1991 Determine the rate of growth of population per annum, Ifthe same growth continues, what will be the population of the city in 1995 92. The value of a machine depreciated by 30% in Ist year, 13% in 2nd year and by 5% in each of the following three years. Determine the average rate of depreciation for the entire period 93. The following table gives the diameters of screws obtained in a sample enquiry. Calculate mean diameter by using geometric average. Diameter (mm) > 130 135 140 145 146 148 149 150 157 No. of Screws 304 6 6 3 5 2 1 1 94. (a) The price of a commodity doubles in a period of 5 years. What will be the average rate of increase per annum, (b) _Ifa.sum of Rs 1,500 is invested at 15% rate of interest compounded annually, determine the amount after 5 years. 10495. 96. 97. 98. 99, 101 102, 103, 108. 106. (a) Find the average rate of increase per decade in the population which increased Measures of Cental Tendeney by 10% in the first decade, by 20% in the second and by 40% in the third, (b) The price of a commodity increased by 10% in Ist year, by 15% in 2nd year and decreased by 10% in 3rd year. Determine the average change of price after 3 years The following table gives the marks obtained by 70 students in mathematics. Calculate arithmetic and geometric means Marks (morethan) : 80 70 60 50 40 30 20 No, of Students 0 7 18 4 40 63 70 The population of a city has grown in the following manner Years 1951 1961 1971 1981 1991 Population (lacs) 10 13 15.5 20,8 30.5 Find the average growth per decade. The geometric means of thre 145, 30.2 and 28.8 respectively. F ¢ groups consisting of 15, 20 and 23 observations are \d geometric mean of the combined group. A sum of money was invested for 3 years. The rates of interest in the first, second and third year were 10%, 12% and 14% respectively. Determine the average rate of interest per annum. ‘The weighted geometric mean of four numbers 8, 25, 17 and 30 is 15.3. If the weights of first three numbers are 5,3 and 4 respectively, find the weight of the fourth number. The annual rates of growth of output of a factory in five years are 5.0, 6.5, 4.5, 8.5 and 7.5 percent respectively. What is the compound rate of growth of output per annum for the period? (a) A man invested Rs 1,000, Rs 12,000 and Rs 15,000 at the respective rates of return of 5%, 14% and 13% paa. respectively. Determine his average rate of return per annum. (b) The arithmetic and the geometric means of two numbers are 20.5 and 20 respectively. Find the numbers (a) Calculate the harmonic mean of the following data 9,5,2, 10, 15,35, 20, 24, 21 (b) Calculate HIM of the following items 1.0, 15, 15.0, 250, 0.5, 0.05, 0.095, 1245, 0.009 Calculate 37, GM and HM and verify that 7 > GM > HM. 15-25 25-35 35-45 45-55 9 15 8 4 Class Intervals Frequency Four typists take 15, 10, 8, 7 minutes respectively to type a letter. Determine the average time required to type a letter if (a) Four letters are to be typed by each typist (b) Bach typist works for two hours. (a) A person spends Rs 60 for oranges costing Rs 10 per dozen and another Rs 70 for oranges costing Rs 14 per dozen, What is the average price per dozen paid by him? (b) Three mechanics take 10, 8, and 6 hours respectively to assemble a machine. Determine the average number of hours required to assemble one machine 105Quantitative Techniques Management 106 107, 108. 109. Ho. ul. 112, 113. 114. At harvesting time, a farmer employed 10 men, 20 women and 16 boys to lift potatoes. A woman's work was three quarters as effective as that of a man, while ‘boy's work was only half. Find the daily wage bill if a man’s rate was Rs 24 per day and the rates for the women and boys were in proportion to their effectiveness. Calculate the avera daily rate for the 46 workers. Saddam takes a trip which entails travelling 1,350 kms by train at a speed of 60 km/hr, 630 kms by aeroplane at 350 km/hr, 4,500 kms by ship at 25 kms/hr and 20 kms by car at 30 kms/hr. What is the average speed for the entire journey? (a) A man travels from Lucknow to Kanpur, a distance of 80 kms, at a speed of 45 kms/hr. From Kanpur he goes to Etawah, a distance of 165 kms, at a speed of 65 kms/hr and from Etawah he comes back to Lucknow, along the same route, at a speed of 60 kms/hr. What is his average speed for the entire joumey? (b) _Ifrefills for S rupees are purchased at 40 paise each and for another 5 rupees are purchased at 60 paise each, the average price would be 48 paise and not 50 paise. Explain and verity (a) An acroplane travels distances of 2,500, 1,200, and 500 kms at the speeds of 500, 400 and 250 kms/hour respectively. Find the average speed for the entire trip, commenting upon the choice of your average, (b) A train goes from Delhi to Agra in four hours at speeds of 25, 60, 80 and 40 kms/hour in each successive hour respectively. Find the average speed of the ‘rain and verify your answer, ‘Acan do a unit of work in 10 minutes, B in 18 minutes and C in 20 minutes. Find their average rate of working when : (A works for 8 hours, B for 9 hours and C for 10 hours per day. Gi) Each of them have to complete 40 units of work per day Also determine the total units of work done per day in each of the above situations and verify your answer, Choose an appropriate average to find the average price per kg., for the following data: ‘Articles Oy Purchased Rate (in gms. rupee) Wheat Big. 2 Rice 3 kg. 150 Sugar 1 kg. 100 Pulses 2g. 90 Calculate the weighted harmonic mean of the following data X : 3 1 25 40 wo: 6 3 4 1 Now change the weights as 12, 6, 8 and 2 respectively and recalculate the weighted harmonic mean, What do you conclude? (a) The speeds of various buses of a company plying on the same route was found to be as given below Speed (in miles/hour) : 12 15 18 No. of Buses 35 2 Find the average speed of the 10 buses.11s. 16. 47, 18. (b) Find mean daily earnings from the following data : Measures of Central Tendency 50 men get at the rate of Rs 50 per man per day 35 . 60 " 25 . 18 " 10 . 100 . A college canteen sells tea for 75 paise per cup, coffee for Rs 1.50 per cup and bread pakora for Rs 2 per plate. If on a particular day, it sold tea worth Rs 150, coffee worth Rs 165 and bread pakora worth Rs 200, what is the average rice per item sold? A firm of readymade garments makes both men's and women's shirts. Its profit average 6% of sales ; its profit in men’s shirts average 8% of sales. If the share of women's shirts in total sales is 60%, find the average profit as a percentage of the sales of women’s shirts Which of the averages will be most suitable in the following circumstances? () Average rate of growth of population in a given period, (ii) Average number of children in a family. Gi) Average size of oranges on a tree. (iv) Average speed of work. (v) Average marks of students in a class. (vi) Average intelligence of students in a class (vil) Average size of collars. (iii) Average income of a lawyer. (ix) Average size of readymade garments. (x) Average size of agricultural holdings. (xi) Average change in prices. (xii) Average level of health Select the correct alternative. (a) Relationship between mean (m), geometric mean (g) and harmonic mean (h) is: mh mth (i) B= Gi g=vih (ii) 8=—Z— (iv) None of the these. (b) Ina moderately skewed distribution, mode (M,) can be calculated by: 3X -2M, (i) M.= + (i) M, 3X -2M, (iii) M, =3X -3M, , (iv) M, =3M,-2¥ (©) Which of the following would be an appropriate average for determining the average size of readymade garments (i) Arithmetic mean (ji) Median (iii) Mode (iv) Geometric mean (d) Most appropriate average to determine the size of oranges on a tree is: (Mode (ii) Median (ii) Mean (iv) None of the these. (c) Most appropriate measure for qualitative measurements is (i) Mode (ji) Median (iii) Mean (iv) None of the these, 107Quantitative Techniques Management 108 119. 120, 121 (© The most unstable measure of central tendency is (i) Mean (ii) Median (iii) Mode (iv) None of the these (g) The sum of deviations of observations is zero when measured from (i) Median (ii) GM (iii) Mode (iv) Mean (h) The average, most affected by the extreme observations, is () Mode (ii) Mean (iii) GM (iv) Median (The most stable average is (i) Mode (ii) Mean (iii) Median (iv) GM State whether the following statements are true or false (i) ¥ can be calculated for a distribution with open ends. (ii) M, is not affected by the extreme observations Gii) is based on all the observations (iv) ¥ = M, = M, fora symmetrical distribution, (v) M, can be calculated if class intervals are of unequal width, (vi) The class limits should be exclusive for the calculation of M, and M, Fill in the blanks (is most suitable for measuring average rate of growth. Gi) ne OF ww ate used for averaging rates under certain conditions. Gli). OF wou. are the averages which can be calculated for a distribution with, ‘open ends. Gv) sos OF sons ate the averages used to study the pattern of a distribution, (W) sn: OF nou are the averages which can be calculated when the characteristics are not measurable. (Vi) OF as OF nn. averages depend upon all the observations. (vii) The sum of squares of deviations is ..... when taken from mean. (viii) The average which divides a distribution into two equal parts is (ix)_M, of a distribution is also equal to its... quartile, (x) The point of intersection of the ‘less than type’ and ‘more than type! ogives corresponds to (xi) ‘The algebric sum of deviations of 30 observations from a value 14 is 3. The mean of these observations is Examine the validity of the following statements giving necessary proofs and reasons for your answer (i) For a set of 50 observations X, = 1,2 on 50, $(X,-10)=90, when ¥ 10. ii) Geometric mean of a given number of observations cannot be obtained if one of them is zero. Gii) The mean depth of water of a river is 130 cms, therefore, a man with a height of 165 cms can cross the river safely. (iv) For a wholesale manufacturer, interested in the type which is usually in demand, median is the most suitable average.(vy) IfAM=25 and HM = 9, then GM = 15 for two positive values of a variable, Measures of Cental Tendeney (vi) Fora set of 8 observations AM, GM and HM are 5.2, 6.3 and 7.1 respectively. (vil) If 2y - 6x = 6 and mode of y is 66, then mode of x is 21 2.17 MODEL ANSWERS TO QUESTIONS FOR DISCUSSI 1. (@) True (6) True) False (d) True. (@) True 2. (a) Average (b) Central Tendency (¢) Median (d) Ten (e) Inspection, grouping [8 SUGGESTED READINGS Mario F. Triola, Elementary Statistics, Addison-Wesley January 2006. David & Moae, Introduction to the Practice of Statistics, W.H. Freeman & Co. ebruary 2005, Allan & Blumon, Elementary Statistics : A Step by Step Approach. McGraw-Hill College, June 2003. James T. McClave Terry Sincich, William Mendenhall, Statistics, Prentice Hall February 2005 Mark L. Berenson, David M. Revine, Tineothy C. Krehbiel, Basie Business Statistics Concepts & Applications, Prentice Hall, May 200. 109LESSON 3 MATHEMATICAL MODEL CONTENTS Aims and Objectives Introduction Mathematics — The Language of Modelling Building a Mathematical Model ‘Verifying and Refining a Model Variables and Parameters ‘Continous-in-Time vs, Discrete-in-Time Models Deterministic Model Example Probabilistic Models Letus Sum Up Lesson-end Activity Keywords Questions for Discussion Model Answers to Questions for Discussion 314 Suggested Readings 3.0 AIMS AND OBJECTIVE: Inthe previous and preceding previous lessons we had an elaborative view on quantitative techniques and distinguishable statistical approaches. In this lesson we are going to discuss various models or rather we can say mathematical models which are extremely powerful because they usually enable predictions to be made about the system. 3.1 INTRODUCTION Models in science come in different forms. A physical model that you probably are familiar with is an anatomically detailed model of the human body. Mathematical models, are less commonly found in science classes, but they form the core of modem cosmology. Mathematical models are extremely powerful because they usually enable predictions to be made about a system. The predictions then provide a road map for further experimentation. Consequently, itis important for you to develop an appreciation for this type of model as you lear more about cosmology. Two sections of the activity develop ‘mathematical models of direct relevance to cosmology and astronomy. The math skills required in the activity increase with each section, but nothing terribly advanced is required, ‘Avery common approach to the mathematical modeling of a physical system is to collecta set of experimental data and then figure out a way to graph the data so that one gets a straight line. Once a straight line is obtained, itis possible to generalize the information contained in the straight line in terms of the powerful algebraic equation: You probably are familiar with this equation. In it y represents a value on the y-axis, x represents value on the x-axis, m represents the slope of the straight line, and b represents the value of the intercept of the line on the y-axis. In all sections of this activity, your goal will be to analyze and then graph a set of data so that you obtain a straight line. Then you will derive the equation that describes the line, and use the equation to make predictions about the system, So relax and have fun with math! yome+b ‘Mathematical modeling is the process of creating a mathematical representation of some phenomenon in order to gain a better understanding of that phenomenon. It is a process that attempts to match observation with symbolic statement. During the process of building a mathematical model, the model will decide what factors are relevant to the problem and ‘what factors can be de-emphasized. Once a model has been developed and used to answer questions, it should be critically examined and often modified to obtain a more accurate reflection of the observed reality of that phenomenon. In this way, mathematical modeling is an evolving process; as new insight is gained, the process begins again as additional factors are considered. “Generally the success of a model depends on how easily itcan be used and how accurate are its predictions.” (Edwards & Hamson, 1994, p. 3) 3.2, MATHEMATICS — THE LANGUAGE OF MODELLING Like other languages, the essence of mathematics is the way it enables us to express, communicate, and reason about ideas and, especially, ideas about our world. The word “ted” in English is important because it describes the color below. Without seeing this color one misses a great deal about the word “red.” We are interested in using mathematics to talk about meaningful problems. For this reason, laboratory equipment like the Texas Instrument CBL that allows us (o collect and record quantitative information about the real world, and sources like the United States Census are especially important to us ‘Working with real problems requires the full power of mathematics — the ability to work with symbols, with graphics, and with numerical calculations. For this reason computer algebra systems like MathCad, Maple, Mathematica, and the CAS built into the TI-92 are an integral part of our tool kit. They give us powerful environments for doing ‘mathematics. And together with a browser, like Netscape, some cables, and equipment like the TI-CBL they give us the ability to use the full power of mathematics with real data from the real world. 3.3 BUILDING A MATHEMATICAL MODEL Building a mathematical model for your project can be challenging, yet interesting, task, A thorough understanding of the underlying scientific concepts is necessary and a mentor with expertise in your project topic is invaluable. It is also best to work as part of a team to provide more brainstorming power. In industry and engineering, itis common practice for a team of people to work together in building a model, with the individual team members bringing different areas of expertise to the project. Although problems may require very different methods of solution, the following steps outline a general approach to the mathematical modeling process: 1, Identify the problem, define the terms in your problem, and draw diagrams where appropriate, Mathematical Modet Mm{or Management na 2. Begin with a simple model, stating the assumptions that you make as you focus on particular aspects of the phenomenon. 3. Identify important variables and constants and determine how they relate to each other. 4, Develop the equation(s) that express the relationships between the variables and constants. 1 What is the difference between physical model and mathematical model? 2. What are the different steps of mathematical modelling process? Notes: (a) Write your answer in the space given below (b) Please go through the lesson sub-head thoroughly you will get your answers in it (©) This Chek Your Progress will help you to understand the lesson better. ‘Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only. 3.4 VERIFYING AND REFINING A MODEL Once the model has been developed and applied to the problem, your resulting model solution must be analyzed and interpreted with respect to the problem. The interpretations and conclusions should be checked for accuracy by answering the following questions: Is the information produced reasonable? Are the assumptions made while developing the model reasonable? Are there any factors that were not considered that could affect the outcome? eee How do the results compare with real data, if available? In answering these questions, you may need to modify your model. This refining process should continue until you obtain a model that agrees as closely as possible with the real world observations of the phenomenon that you have set out to model 3.5 VARIABLES AND PARAMETERS Mathematical models typically contain three distinct types of quantities: output variables, input variables, and parameters (constants). Output variables give the model solution, ‘The choice of what to specify as input variables and what to specify as parameters is somewhat arbitrary and often model dependent. Input variables characterize a single physical problem while parameters determine the context or setting ofthe physical problem. For example, in modeling the decay of a single radioactive material, the initial amount of ‘material and the time interval allowed for decay could be input variables, while the decay constant for the material could be a parameter. The output variable for this model is the amount of material remaining after the specified time interval3.6 CONTINUOUS- MODELS |-TIME VS. DISCRETE-IN-TIME Mathematical models of time dependent processes can be split into two categories depending on how the time variable is to be treated. A continuous-in-time mathematical model is based on a set of equations that are valid for any value of the time variable, A discrete-in-time mathematical model is designed to provide information about the state of the physical system only at a selected set of distinct times, ‘The solution of a continuous-in-time mathematical model provides information about the physical phenomenon at every time value. The solution of adiscrete-in-time mathematical model provides information about the physical system at only a flnite number of time values. Continuous-in-time models have two advantages over discrete-in-time models: (1) they provide information at all times and (2) they more clearly show the qualitative effects that can be expected when a parameter or an input variable is changed. On the other hand, discrete in time models have two advantages over continuous in time models (1) they are less demanding with respect to skill level in algebra, trigonometry, calculus, differential equations, etc. and (2) they are better suited for implementation on a computer. Some Examples of Mathematical Models Population Growth A Mass System A Rock Heat Flow Problem 1 Rotating all or part of a space station can create artificial gravity in the station. The resulting centrifugal force will be indistinguishable from gravitational force. Develop a ‘mathematical model that will determine the rotational rate of the station as a function of the radius of the station (distance from the center of rotation) and the desired artificial gravitational force, Use this model to answer the question: What rotational rate is needed if the radius of the station is 150 m and Barth surface gravity is desired, Problem 2 A stretch of Interstate 25 is being widened to accommodate increasing traffle going north and south, Unfortunately, the Department of Transportation is going to have to bring out the orange barrels and close all but one lane at the “big I” intersection ‘The department would like to have traffle move along as quickly as possible without additional accidents. What speed limit would provide for maximum, but safe, traffic flow? 3.7 DETERMINISTIC MODEL EXAMPLE ‘An example of a deterministic model is a calculation to determine the return on a S-year investment with an annual interest rate of 7%, compounded monthly. The model is just, the equation below: P (1 + rim) ‘The inputs are the initial investment (P= $1000), annual interest rate (r= 7% = 0.07), the compounding period (m = 12 months), and the number of years (¥ = 5). Mathematical Modet{or Management ns | ‘Compound Interest Model Present value, P | 1000.00 | = Annual rate, r 0.07 Periods/Year, m | Future value, F | One of the purposes of a model such as this is to make predictions and try “What If?” scenarios. You can change the inputs and recalculate the model and you'll get a new answer. You might even want to plot a graph of the future value (F) vs. years (Y). In some cases, you may have a fixed interest rate, but what do you do if the interest rate is allowed to change? For this simple equation, you might only care to know a worst/best case scenario, where you calculate the future value based upon the lowest and highest interest rates that you might expect. 3.8 PROBABILISTIC MODELS The toy roulette at the left is a pale model of a real roulette wheel. Real roulette wheels are usually found in casinos, surrounded by glitter and glitz. But this toy captures the essentials of roulette, Both the toy and real roulette wheels have 38 slots, numbered | through 36, 0, and 00. Two of the slots are colored green; 18 are colored red and 18 are colored black. Betters often bet on red. If they wager $1.00 on red then if the roulette ball lands in a red slot they win $1.00 but if it lands in either a green slot or a black slot they lose $1.00, Because there are 18 red slots out of a (otal of 38 slots the chances of winning this bet are 18/38 — considerably less than even. The casinos make up the rules and they make them up so that they make huge profits. Gambling games like roulette are good models for many phenomena involving chance for example, investing in the stock market. It is easier to analyze games involving a roulette wheel than investments involving the stock market but the same ideas are involved, In this section we will consider and compare two different strategies that a gamber might use playing roulette. The same kinds of strategies and considerations are involved with investments. The same tools that we develop here for roulette can be used by investors Suppose that you have $10,00 and that you want to win an additional $10.00. We will consider two different strategies. ‘© The Flamboyant Strategy: You stride purposefully up to the wheel with a devil-may-care smile on your face. You bet your entire fortune of $10.00 on one spin of the wheel. Ifthe ball lands in aed slot then you win, pocket your winnings, and leave with $20.00 and a genuine happy smile on your face. If the ball lands in a slot of a different color then yousmile bravely at everyone as if $10.00 is mere chickenfeed and leave with empty pockets and feeling gloomy. With the flamboyant strategy your chances of winning are 18/38 or roughly 0.4737. © The Timid Strategy: With this strategy you approach the roulette table with obvious trepidation, After watching for a while and working up your courage, you bet $1.00, When the ball falls in a slot you either win or lose $1.00. Now you have either $9.00 ot $11.00. ‘You continue betting one dollar on each spin of the wheel until you either go broke or reach your goal of $20.00. Before continuing pause and think about these two strategies. Which of the two do you think gives you the best chance of winning? — or are your chances of winning the same whichever strategy you use? ‘One way to study the questions raised above is by trying the two strategies in real casinos, wagering your own real money. This approach has several advantages and several disadvantages. One advantage is that this approach is realistic. Real casinos are run by people who know how to make a profit. They are skilled at creating an atmosphere that is likely to encourage customers to bet and lose more than they might like. The lessons that you learn in a real casino ate more likely to be real lessons than the ones you learn in a simulated casino like the one we use below. One disadvantage is that this approach can be very costly both in terms of money and time We take a different approach — using the CAS window to simulate playing with the second, or timid, strategy. We already know the chances of winning with the first, or flamboyant, strategy — 18/38, or roughly 0.4737. ‘Computer algebra systems like Maple, MathCad, Mathematica, or the CAS system in the TI-92 have a procedure that generates random numbers. For example, on the TI-92 the command randO, produces a random number between zero and one. The screen below shows the results of executing this command seven times. Notice that it produced seven different random numbers Using the random number generator in your CAS window, you can easily simulate one spin of a roulette with a procedure like the one shown below. Mathematical Modet user ES irra eel | ise din at HIE teas, 91.00 ‘Your CAS window has a program that is built on this basic idea and will simulate playing roulette using the timid strategy. Use this program to answer the questions below. © Compare the timid strategy to the flamboyant strategy. © Consider an intermediate strategy — betting $2.00 on each spin of the wheel. © Consider another, intermediate strategy — betting $5.00 on each spin of the wheel ‘© Some people enjoy gambling. If you play the flamboyant strategy then you spin the wheel just once. On the average how often would you spin the wheel with each of © What conclusion can you draw from our work in this module regarding the advisability of diversifying your investments? Be careful. Your answer depends on your investment goals and your beliefs about whether stock prices are more likely to rise or to fall. 1 What is the difference between Variables and Parameters? 2. Give two applications of computer algebra system. Notes: (a) Write your answer in the space given below (b) Please go through the lesson sub-head thoroughly you will get your answers in it (c)_ This Chek Your Progress will help you to understand the lesson better. Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only. 3.9 LET US SUM UP This course is about the essence of science — understanding the world in which we live, ‘We use mathematics as a language to help us describe and understand our world, Because the purpose of Mathematical Modeling is to “talk about” our world, the most important 116 part ofthis course are the applications — our mathematical discussions about real worldphenomena. In this first chapter we have looked at the following applications. Everything we have discussed above — the content of the course — the tools and the technology — would be useless without you, Indeed, without you there would be no purpose, ‘The purpose of mathematical modeling is to enable people like you and me to learn about our world, to form mental pictures of how it works and how we can make it a bit better. Mathematical modeling requires your active participation — thinking, working with your computer algebra system, with old-fashioned paper and pencil, exploring the world with the TECBL, rubber bands, and TinkerToys, and exchanging ideas with friends and colleagues. 3.10 LESSON-END ACTIVITY ‘As we know that mathematical modelling is the process of creating a mathematical representation of some phenomenon. So constructing a mathematical model for your project can be a challenging, yet interesting task. Being a technician and a computer use ‘you have to think of a system where mathematical modelling will be used. Like use of ‘mathematical modelling in a National Stock Exchange. 3.11 KEYWORDS Model ‘Time Models Flamboyant Strategy Timid Strategy Parameters 12 QUESTIONS FOR DISCUSSIO! 1. Write True or False again t each statement: (a) Mathematical Modelling is the process of creating a mathematical rtepresentaiton (b) Mathematical models typically contain input and output variables and parameters. (©) Models only represents patterns found in graphs. (d) Mathematical Modelling is used to collect a set of experimental data and figure out to graph 2. Distinguish between: (a) Variables and Parameters (b) Continuous-in-Time and Discrete-in-Time Mathematical Model (c) The Flamboyant Strategy and The Timid Strategy (a) Probabilistic Model and Deterministic Model (e) Mathematics and Mathematical Modelling 3. Write short notes on: (a) Model (b) Building a Mathematical Model (c) Time Mathematical Model Mathematical ModetQuantitative {or Management ne (4) Compound Interest Model (e) Probabilistic Models Strategy 4, Fill in the blanks: (2) A good model should «0.0m» the essential character of the model to be analysed. (b) Building Model can be .... Yet nnn ASK. © model is based on a set of equations. (d) The best example of probabilistic model is © cow: i8 based other than flamboyant and timid strategy. 3.13 MODEL ANSWERS TO QUESTIONS FOR DISCUSSION 1, (a) True (b) True (c) False (d) True 4. (@) Capture (b) Challenging, interesting __(c) Continuous-in-Time (@ Gambling games (e) CAS window 3.14 SUGGESTED READINGS MP. Williams, Model Building in Mathematical Programming, Wiley Bruno Poizat, Moses Klein, A Course in Model Theory: An Introduction to Contemporary Mathematical Logic, Springer Verlag, May 2000 NN. Boguluboy, Jr, A.S. Shunovsly, B.I. Sadovnikoy, A.S, Shumovskii, Mathematical Methods of Statistical Mechanics of Model System CRC, Pr 1 LIC AL, Lingstone, Mathematical Logic: An Introduction to Model Theory, Kluwer ‘Academic Pub) Goran Pjordevic, J.Wess, Lyubisa Nesic, Mathematical, Theoretical and Phenomenological Challenges, World Scientific Pub Co. Inc. (March 2005)LINEAR PROGRAMMING: GRAPHICAL METHOD CONTENTS 40 Aims and Objectives 41 Introduction 42. Essentials of Linear Programming Mode! 43. Properties of Linear Programming Model 44 Formulation of Linear Programming 45° General Linear Programming Model Maximization & Minimization Models Graphical Method Solving Linear Programming Graphically Using Computer Summary of Graphical Method Unbounded LP Problem Letus Sum Up Lesson-end Activity Keywords Questions for Discussion Terminal Questions Model Answers to Questions for Discussion Suggested Readings 0 AIMS AND OBJECTIV. In this unit we have talked about Quantitative Techniques and the Measurement of ‘Mean, Median and Mode and the various Mathematical Models and now we will talk about linear programming and in this lesson we will learn the graphical method of linear programming. Linear programming is a widely used mathematical modeling technique to determine the optimum allocation of scarce resources among competing demands. Resources typically include raw materials, manpower, machinery, time, money and space. ‘The technique is very powerful and found especially useful because of its application to many different types of real business problems in areas like finance, production, sales and distribution, personnel, marketing and many more areas of management. AS its name implies, thelinear programming model consists of linear objectives and linear constraints, which ‘means that the variables in a model have a proportionate relationship. For example, an increase in manpower resource will result in an increase in work output. 4.2 ESSENTIALS OF LINEAR PROGRAMMING MODEL For a given problem situation, there are certain essential conditions that need to be solved by using linear programming. 1. Limited resources limited number of labour, material equipment and finance 2. Objective : refers to the aim to optimize (maximize the profits or minimize the costs) 3. Linearity increase in labour input will have a proportionate increase in output. 4, Homogeneity the products, workers’ efficiency, and machines are assumed to be identical 5. Divisibility it is assumed that resources and products can be divided into fractions. (in case the fractions are not possible, like production of one-third of a computer, a modification of linear programming called integer programming can bbe used). 4.3 PROPERTIES OF LINEAR PROGRAMMING MODEL ‘The following properties form the linear programming model: 1. _ Relationship among decision variables must be linear in nature. 2, A model must have an objective function. Resource constraints are essential. 4, A model must have a non-negativity constraint. 4.4 FORMULATION OF LINEAR PROGRAMMI Formulation of linear programming is the representation of problem situation in a ‘mathematical form. It involves well defined decision variables, with an objective function and set of constraints. Objective function ‘The objective of the problem is identified and converted into a suitable objective function, The objective function represents the aim or goal of the system (i.e. decision variables) which has to be determined from the problem Generally, the objective in most cases will be either to maximize resources or profits or, to minimize the cost or time For example, assume that a furniture manufacturer produces tables and chairs. If the ‘manufacturer wants to maximize his profits, he has to determine the optimal quantity of tables and chairs to be produced Let x, = —_ Optimal production of tables Profit from each table sold P,X, = Optimal production of chairs Linear Programming: 2 ‘Graphieal Method P, = Profit from each chair sold. Hence, Total profit from tables = p, x Total profit from chairs = p, x, The objective function is formulated as below, Maximize Z. of Zu =P,%, + Ps Xs Constraints When the availability of resources are in surplus, there will be no problem in making decisions. But in real life, organizations normally have scarce resources within which the job has to be performed in the most effective way. Therefore, problem situations are within confined limits in which the optimal solution to the problem must be found, Considering the previous example of furniture manufacturer, let w be the amount of wood available to produce tables and chairs. Each unit of table consumes w, unit of ‘wood and each unit of chair consumes w, units of wood, For the constraint of raw material availability, the mathematical expression is, WX) + Wx SW In addition to raw material, if other resources such as labour, machinery and time are also considered as constraint equations. Non-negativity constraint Negative values of physical quantities are impossible, like producing negative number of chairs, tables, etc., so itis necessary to include the element of non-negativity as a constraint ie, x, %, 20 4.5 GENERAL LINEAR PROGRAMMING MODEL ‘A general representation of LP model is given as follows: Maximize ot Minimize, Subject to constraints, Wht Wah + “i Wa Ky Wa % wy, i) Wak + + WX, <0r= > W, Gi) Non-negativity constraint, x, 2 0 (where i= What are the essentials of LP Model? Why linear programming is used? Contd. iaNotes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it (©) This Chek Your Progress will help you to understand the lesson better. Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only. 4.6 MAXIMIZATION & MINIMIZATION MODELS Example 1: A biscuit manufacturing company plans to produce two types of biscuits, one with a round shape and another with a square shape. The following resources are used in manufacturing the biscuits, (@ Raw material, of which daily availability is 150 kg. Gi) Machinery, of which daily availability is 25 machine hours. Gi) Labour, of which daily availability is 40 man-hours, ‘The resources used are shown in Table 1. If the unit profit of round and square biscuits is Rs 3.00 and Rs 2.00 respectively, how many round and square biscuits should be produced to maximize total profit ? Table 4.1: Resources Used Resourses RequiremenUait Daily avalabiiy Round Square Raw Material 700. Ts TS00 grams Machine 10 12 720 minutes Manpower 3 2 20 minutes Solution: Key Decision: To determine the number of round and square biscuits to be produced, Decision Variables: Let x, be the number of round biscuits to be produced daily, and x, be the number of square biscuits to be produced daily Objective function: It is given that the profit on each unit of round biscuits is Rs 3.00 and of square biscuits is Rs. 2.00. The objective is to maximize profits, therefore, the total profit will be given by the equation, Ziggg = 3K 42%, Constraints: Now, the manufacturing process is imposed by a constraint with the limited availability of raw material. For the production of round biscuits, 100x, of raw material is used daily and for the production of squate biscuits, 115x, of raw material is used daily. It is given that the total availability of raw material per day is 1500 grams, Therefore, the constraint for raw material is, 100x, + 115x, < 1500Similarly, the constraint for machine hours is, 10x,+12x, < 720 and for the manpower is, 3x, +2x, $ 240 Since the resources are to be used within ot below the daily available level, inequality sign of less than or equal sign (<) is used, Further, we cannot produce negative number of units of biscuits which is a non-negative constraint expressed as, x,2Oand x, >0 ‘Thus, the linear programming model for the given problem is, Maximize Z = 3x, + 2x, Subject to constraints, 100x,+115x, $1500 @ 10x,+12x, $720 ses Ai) 3x,42x, < 240 (aii) where x, 20, x, 20 Example 2: Rahul Ads, an advertising company is planning a promotional campaign for the client's product, ie., sunglasses. The client is willing to spend Rs. 5 lakhs. It was decided to limit the campaign media to a weekly magazine, a daily newspaper and TV advertisement. The productis targeted at middle-aged men and women, and the following data was collected (Table 4.2) Table 4.2: Data Collected Campaign media Cost per advertisement Ra) | Expected Weekly Magazine | 30.000, 115,000) Daily Newspaper_[ 45,000, 2,05,000, "TV Advetisement 25,000 7,00,000 ‘The client is interested to spend only Rs. | lakh on the ads in the weekly magazine which expecting a viewership of a minimum of 21 lakh people in the case of the television advertising. Maximize the viewers to the advertisements. Solution: Key Decision: To determine number of advertisements on weekly magazine, daily newspaper and TV. Let x, be the number of weekly magazine advertisements. x, be the number of daily newspaper advertisements X, be the number of TV advertisements, Objective function: The objective is to maximize the number of viewers through all ‘media. The total viewers will be given by the equation, Zigg = 115000x, +205000x,+700000x, Constraints: Firstly, the client is willing to spend Rs, 500000 on all media, 30000x, + 45000x, + 125000x, < 500000 30x, + 45x,+ 125x, < 500 oy Linear Programming: Graphical MethodSecondly, a minimum of 2100000 people should view the television advertising, 700000x, 2100000 (ii) Lastly, the client is interested to pay only Rs. 100000 in weekly magazine advertising, 30000x, < 100000 3x, $10 “ sevonnei) ‘Summarizing the LP model for the given problem, Maximize Z= 115000x, + 205000x, + 700000x, Subject to constraints, 30x, + 45x, + 125x, < 500 - vali) 3 sos Ai) 3x, £10 sensei) where x,, x,, x, 20 Example 3: The data given in Table 4.3 represents the shipping cost (in Rs.) per unit for shipping from each warehouse to each distribution centre. The supply and demand data of each warehouse and distribution centte is given. Determine how many units should be shipped from each warehouse to each centre in order to minimize the overall wansportation cost. ‘Table 4.3: Data Shows Shipping Cost from Warehouse to Distribution Dinuabution Contre Wachouse [1 2 3] Supply 1 > 10 [it 150 2 a 6 3 250 Demand [180 | 100 | 1s0_| 00. Solution: Decision Variables Let x, be the number of units to be shipped from warehouse i to distribution centre j x,, be the number of units to be shipped from warehouse 1 to distribution centre 1 x,, be the number of units to be shipped from warehouse 1 to distribution centre 2. X,,be the number of units to be shipped from warehouse 1 to distribution centre 3. X,, be the number of units to be shipped from warehouse 2 to distribution centre 1 X,, be the number of units to be shipped from warehouse 2 to distribution centre 2 X,, be the number of units to be shipped from warchouse 2 to distribution centre 3. Objective Function: The Table 4.3 shows the transportation cost from each warehouse to each distribution centre. Therefore 9x,, represents the total cost of shipping x, units from warehouse 1 to distribution centre 1. The objective function is to minimize the transportation cost. Therefore, the objective function is, Minimize Z = 9x,, + 10x, +11, 14%, 16%,,18X,, Constraints: The supply and demand constraints to ship the units from warehouses are, (o ship the units and distribution centres must receive the shipped units. Since the given table is a 2 x 3 matrix we have a total 5 constraints apart from the non-negativity constraint. The constraints are as follows,Xyt Xt, $150 ened) i) «iy Gv) v) where x,>0 ((=1,2, andj =1,2,3) Thus the LP model for the given transportation problem is summarized as, Minimize Z = 9x, + 10x,,+11x, 44%, #6%,,+ 8X, Subject to constraints, Xt Xyt Xj, $150 svenni) Kot Rpt Ky $250 Gi) Ky +X = 150 sneered Ky + Xq = 100 sonnei) X,, +X, = 150 w) where x,>0 (@=12, andj =1,2,3) Example 4: Sivakumar & Co., manufactures two types of T-shirts, one with collar and another without collar. Each T-shirt with collar yields a profit of Rs. 20, while each T- shirt without collar yields Rs. 30. Shirt with collar requires 15 minutes of cutting and 25 minutes of stitching. Shirt without collar requires 10 minutes of cutting and 20 minutes of stitching. The full shift time is available for cutting in an 8 hour shift, but only 6 hours are available for stitching, Formulate the problem as an LP model to maximize the profit. Solution: Key decision: To determine the number of T-shirts with collar and without collar to be manufactured. Decision variables: Let x, be the number of T-shirts with collar Xx, be the number of T-shirts without collar Objective Function Za, = 20x, + 30x, Constraints: 15x, + 10x, <8 x 60 (Cutting) i) 25x, + 20x, <6 x 60 (Stitching) se di) Non-negativity constraints: x,20.%,20 ‘The linear programming model is, Zageg = 20K, + 30%, Subject to constraints, 15x, + 10x, < 480 «i 25x, + 20x, < 360 Gi) where x,.x, 20 Linear Programming: Graphical Method LasExample 5; An agricultural urea company must daily produce 500 kg of a mixture consisting of ingredients x,, x, and x,, Ingredient x, costs Rs. 30 per kg, x, Rs. 50 per kg and x, Rs. 20 per kg. Due to raw material constraint, not more than 100 kg of x,,.70 kg of x, and 45 kg of x, must be used. Determine how much of each ingredient should be used if the company wants to minimize the cost. Solution: Let x, be the kg of ingredient x, to be used x, be the kg of ingredient x, to be used x, be the kg of ingredient x, to be used ‘The objective is to minimize the cost, Minimize 7 30x, + 50x, + 20x, Subject to constraints, Xt XX, = 500 (total production) seoseveti) x, < 100 (max. use of x,) Gi) <70 (max. use of x,) ii) x, < 45 (imax. use of x,) iv) where Ky XX, 20 (non-negativity) Example 6: Chandru Bag Company produces two types of school bags: deluxe and ordinary. If the company is producing only ordinary bags, it can make a total of 200 ordinary bags a day. Deluxe bag requires twice as much labour and time as an ordinary type. The demand for deluxe bag and ordinary bag are 75 and 100 bags per day respectively. The deluxe bag yields a profit of Rs 12.00 per bag and ordinary bag yields a profit of Rs. 7.00 per bag. Formulate the problem as LP model. Solution: Let x, be deluxe bags to be produced per day be ordinary bags to be produced per day Objective function: The objective is to maximize the profit. Deluxe bag yields a profit of Rs. 12.00 per bag and ordinary bag yields a profit of Rs. 7.00 per bag. Maximize Z = 12x, + 7x, Constraints: There are two constraints in the problem, the “number of bags" constraint and “demand” constraint. It is given that the deluxe bag takes twice as much time of ordinary bag and if only ordinary bags alone are produced, the company can make 200 bags. The constraint is, 2x, 4X, 5 200 ‘The demand for the deluxe bag is 75 bags and ordinary bag is 100 bags ‘The constraints are, x, $75 100 and the non-negativity constraint is, x,20,x,20The LP formulation is Maximize, Subject to constraints, 2x, +x, $200 “a x, $75 seven) x, $100 o s-sii) where x,.¥, 20 Example 7: Geetha Perfume Company produces both perfumes and body spray from two flower extracts F, and F, The following data is provided: Table 4.4: Data Collected ives of Exact Perfume [ Body Spray [Daily Availability (ites) Flower Extract Fi 8 4 20 Flower Extract, Fs 2 3 5 Profit Per live (Rs)_[ 7 5 ‘The maximum daily demand of body spray is 20 bottles of 100 ml each. A market survey indicates that the daily demand of body spray cannot exceed that of perfume by more than 2 litres. The company wants to find out the optimal mix of perfume and body spray that maximizes the total daily profit. Formulate the problem as a linear programming model Solution: Let x, be the litres of perfume produced daily x, be the litres of body spray produced daily Objective function: The company wants to increase the profit by optimal product mix Constraints: The total availability of flower extract F, and flower extract F, are 20 and 8 litres respectively. The sum of flower extract F, used for perfume and body spray ‘must not exceed 20 litres. Similarly, flower extract F, must not exceed 8 litres daily. ‘The constraints are, Bx,44x, $20 (Flower extract F,) 2x,43x, 8 (Flower extract F,) The daily demand of body spray x, is limited to 20 bottles of 100ml each (i.e, 20 x 100= 2000 ml =2 litres) Therefore, x, $2 Again, there is an additional restriction, that the difference between the daily production of perfume and body spray , x, —x, does not exceed 2 litres, which is expressed as Xx, $2 (on x, +x, <2. ‘The model for Geetha perfumes company is, Maximize , Z = 7x,+ 5x, Linear Programming: Graphical Method 17Subject to constraints, 8x, + 4x, £20 “a 2x, + 3x, <8 . ii) ii) iv) where Feasible Solution: Any values of x, and x, that satisfy all the constraints of the model constitute a feasible solution. For example, in the above problem if the values of x, = 2 and x, = are substituted in the constraint equation, we get @ 82)+4(1)< 20 2020 Gi) 2 #3)<8 758 Gi) -241<2 -1s2 (iv) 152 All the above constraints (including non-negativity constraint) are satisfied. The objective function for these values of x, = 2 and x, = 1, are =7(2) +5) =144+5=Rs, 19.00 As said earlier, all the values that do not violate the constraint equations are feasible solutions. But, the problem is to find out the values of x, and x, to obtain the optimum feasible solution that maximizes the profit. These optimum values of x, and x, can be found by using the Graphical Method or by Simplex Method. (The above problem is solved using graphical method shown on page number 117) 4.7 GRAPHICAL METHOD Linear programming problems with two variables can be represented and solved graphically with ease. Though in real-life, the two vatiable problems are practiced very little, the interpretation of this method will help to understand the simplex method. The solution method of solving the problem through graphical method is discussed with an example given below. Example 8: A company manufactures two types of boxes, corrugated and ordinary cartons. The boxes undergo two major processes: cutting and pinning operations. The profits per unit are Rs. 6 and Rs. 4 respectively. Each corrugated box requires 2 minutes for cutting and 3 minutes for pinning operation, whereas each carton box requires 2 minutes for cutting and I minute for pinning. The available operating time is 120 minutes and 60 minutes for cutting and pinning machines. Determine the optimum quantities of the two boxes to maximize the profits Solution: Key Decision: To determine how many (number of) corrugated and carton boxes are to be manufactured. Decision variables: Let _ x, be the number of corrugated boxes to be manufactured, x, be the number of carton boxes to be manufactured Objective Function: The objective is to maximize the profits. Given profits on corrugated box and carton box are Rs. 6 and Rs. 4 respectively.The objective function is, Z, Constraints: The available machine-hours for each machine and the time consumed by each product are given. ‘Therefore, the constraints are, 2x, + 3x, $120 seven) 2ny+ x, < 60 Gi) where X,x,20 Graphical Solution: As a first step, the inequality constraints are removed by replacing “equal to” sign to give the following equations: 2x, + 3x, = 120 sonnnneed L) 2x, +x, = 60 (2) Find the co-ordinates of the lines by substituting x, = 0 and x, = 0 in each equation. In equation (1), put x, = 0 to get x, and vice versa 2x, + 3x, = 120 2(0) + 3x, = 120, x,=40 Similarly, put x,=0, 2x, + 3x, 2x, +340) ‘The line 2x, + The line 2x, + ‘The lines are drawn on a graph with horizontal and vertical axis representing boxes x, and x, respectively. Figure 4.1 shows the first line plotted. No. of carton boxes x, 10 20 30 40 50 60 7Xg0 90 100% No. of corrugated boxe x Graph Considering First Constraint Linear Programming: Graphical Method LsThe inequality constraint of the first Line is (Less than or equal to) < type which means the feasible solution zone lies towards the origin, The no shaded portion can be seen is the feasible area shown in Figure 4.2 (Note: Ifthe constraint type is > then the solution zone area lies away from the origin in the opposite direction). Now the second constraints line is drawn, raph Showing Feasible Area When the second constraint is drawn, you may notice that a portion of feasible area is cut. This indicates that while considering both the constraints, the feasible region gets reduced further. Now any point in the shaded portion will satisfy the constraint equations, For example, let the solution point be (15,20) which lies in the feasible region If the points are substituted in all the equations, it should satisfy the conditions, 2x, + 3x, £ 120 = 30 + 60 < 120 = 90 < 120 2x, + x, £60 = 30 +20 < 60 = 50 < 60 Now, the objective is to maximize the profit. The point that lies at the furthermost point of the feasible area will give the maximum profit. To locate the point, we need to plot the objective function (profit) line. Equate the objective function for any specific profit value Z, Consider a Z-value of 60, ic, 6x, + 4x, Substituting x, = 0, we get x, = 15 and if x then x, = 10 Therefore, the co-ordinates for the objective function line are (0,15), (10,0) as indicated by dotted line L, in Figure 4.2. The objective function line contains all possible combinations of values of x, and x. The line L, does not give the maximum profit because the furthermost point of the feasible area lies above the line L,. Move the line (parallel to line L,) away from the origin to locate the furthermost point. The point P, is the furthermost point, since no area is seen further. Take the corresponding values of x, and x, from point P, which is 15 and 30 respectively, and are the optimum feasible values of x, and x,Therefore, we conclude that to maximize profit, 15 numbers of corrugated boxes and 30 numbers of carton boxes should be produced to get a maximum profit, Substituting x, = 15 and x,= 30 in objective function, we get Zig = OK, + 4x, = 6(15) +4(30) ‘Maximum profit : Rs. 210.00 4.8 SOLVING LINEAR PROGRAMMING GRAPHICALLY USING COMPUTER The above problem is solved using computer with the help of TORA. Open the TORA package and select LINEAR PROGRAMMING option. Then press Go to Input and center the input data as given in the input screen shown below, in Figure 4.3. rer ae int ‘Figure 4.3: Linear Programming, TORA Package (Input Screen) Now, go to Solve Menu and click Graphical in the ‘solve problem’ options. Then click Graphical , and then press Go to Output . The output screen is displayed with the graph grid on the right hand side and equations in the left hand side. To plot the graphs one by ‘one, click the first constraint equation. Now the line for the first constraint is drawn connecting the points (40, 60). Now, click the second equation to draw the second line on the graph. You can notice that a portion of the graph is cut while the second constraint is also taken into consideration. This means the feasible area is reduced further. Click on the objective function equation. The objective function line locates the furthermost point (maximization) in the feasible area which is (15,30) shown in Figure 4.4 below. ne COCA se Figure 4.4: Graph Showing Feasible Area Linear Programming: Graphical MethodExample 9: A soft drink manufacturing company has 300 ml and 150 ml canned cola as, its products with profit margin of Rs. 4 and Rs. 2 per unit respectively. Both the products hhave to undergo process in three types of machine, The following Table 4.5, indicates the time required on each machine and the available machine-hours per week ‘Table Requirement | Cota 300 ml ‘Available machine= hours per week Wachine T 3 z 300 ‘Machine 2 2 4 480 ‘Machine 3 5 7 560 Formulate the linear programming problem specifying the product mix which will maximize the profits within the limited resources. Also solve the problem using computer. Solution: Let x, be the number of units of 300 mi cola and x, be the number of units of 150 ml cola to be produced respectively. Formulating the given problem, we get Objective function. Ziggg = AK, + 2X, Subject to constraints, 3x, +2x, < 300 “a 2x, #4x, < 480 snsnnsnninnenlli) Sx, #7x, < 560 ii) where xx) 20 The inequalities are removed to give the following equations: 3x, +2x, = 300 (iv) 2x, +4x, = 480 sonnei) 5x, +7x, = 560 (vi) Find the co-ordinates of lines by substituting x, = 0 to find x, and x, = 0 to find x, Therefore, Line 3x, + 2x, = 300 passes through (0,150),(100,0) Line 2x, + 4x, = 480 passes through (0,120).(240,0) Line 5x, + 7x, = 650 passes through (0,80).(112,0) a ga em 132 Figure4.5: Graphical Presentation of fines (TORA, Output Sereen)For objective function, Linear Programming: ‘Graphieal Method ‘The Line 4x, + 2x, = 0 passes through (-10,20),(10,-20) Plot the lines on the graph as shown in the computer output Figure 4.5, The objective is to maximize the profit, Move the objective function line away from the origin by drawing parallel lines. The line that touches the furthermost point of the feasible area is (100, 0). Therefore, the values of x, and x, are 100 and 0 respectively. Maximum Profit, Z = 4x, +2x, = 4(100) + 2(0) =Rs, 400.00 Example 10: Solve the following LPP by graphical method Minimize Z= 18x,+ 12x, Subject to constraints, 2x, + 4x, < 60 sensei) 3x, +x, 230 Gi) 8x, + 4x, > 120 Gi) where x,.X,20 Solution: ‘The inequality constraints are removed to give the equations, 2x, + 4x, = 60 (iv) 3x, +x, =30 svsneesnseed) 8x, + 4x, = 120 soonest i) ‘The equation lines pass through the co-ordinates as follows: For constraints, 2x, + 4x, = 60 passes through (0,15), (30,0). 3x, + x, = 30 passes through (0,30), (10,0) 8x, + 4x, = 120 passes through (0,30), (15,0). ‘The objective function, 18x, + 12x, = 0 passes through (10,15), (10,-15). Plot the lines on the graph as shown in Figure 4.6, Here the objective is minimization, Move the objective function line and locate a point in the feasible region which is nearest to the origin, ic. the shortest distance from the origin, Locate the point P, which lies on the x — axis. The co-ordinates of the point P are (15,0) or x, = 15 and x, = 0. ‘The minimum value of Z, Zuy = 18, + 12, = 18.(15) + 120) = Rs. 270.00ae! 591007 Denes forme pre an URE wR Figure 4.6: Graphical Presentation (Output Screen, TORA) 4.9 SUMMARY OF GRAPHICAL METHOD Step 1: Step 2: Step 3: Step 4: Step 5: Step 6: Convert the inequality constraint as equations and find co-ordinates of the line. Plot the lines on the graph. (Note: If the constraint is > type, then the solution zone lies away from the centre, If the constraint is < type, then solution zone is towards the centre.) Obtain the feasible zone. Find the co-ordinates of the objectives function (profit line) and plot it on the graph representing it with a dotted line. Locate the solution point. (Note: Ifthe given problem is maximization, z,,, then locate the solution point at the far most point of the feasible zone from the origin and if minimization, Z.,, then locate the solution at the shortest point of the solution zone from the origin) Solution type If the solution point is a single point on the line, take the corresponding values of x, and x, Ifthe solution point lies atthe intersection of two equations, then solve for x, and x, using the two equations Ifthe solution appears as a small line, then a multiple solution exists. Ifthe solution has no confined boundary, the solution is said to be an unbound solution,Example I; Solve the Geetha perfume company (Example 1.7) graphically using Linear Programming: computer. ‘Graphieal Method ‘The formulated LP model is, Subject to constraints, 8x4 4x, $20 ssosnernernnnni) 2nyt 3x, $8 i) ant, <2 ay x,52 dv) where x X,20 Solution: The input values of the problem are given to obtain the output screen as shown in Figure 4.7. peo Ds ERTS rns Figure.7: Grapl Presentation (Output Screen, TORA) Results: Perfumes to be produced, x, = 1.75 litres or 17.5 say 18 bottles of 100 ml each Body sprays to be produced, x, = 1.50 litres or 15 bottles of 100 ml each Maximum profit, Z,,, = Rs. 19.75 Discuss the limitations of graphical method in solving LPP. Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it (©) This Chek Your Progress will help you to understand the lesson better. ‘Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only. Contd. 3s‘Quantitative Techniques Tor Management 0 UNBOUNDED LP PROBLEM Example 12: Solve the following LPP graphically Zagg = OR, 10x, Subject to constraints, x26 soonesesesnl) 10 (ai) DKA 20 ennai (aii) where x,20,x,20 Solution: ‘The inequality constraints are converted as equations x x,=10 2nyt dx, = 20 The co-ordinates of lines are x, = 6 passes through (6,0) x, = 10 passes through (0,10) 2x,+ 4x, = 20 passes through (10,0), (5,0) site TI cuca aphical Presentation (Output Sereen, TORA) ‘The given problem is maximization one. ‘The solution point should be located at the furthermost point of the feasible region,‘The feasible zone (shaded area) shown in Figure 4.8 is open-ended, ic., thas no confined boundary. This means that the maximization is not possible or the LPP has no finite solution, and hence the solution is unbounded, Example 13: Solve the given linear programming problem graphically using a computer. Maximize Z = 3x, + 2x, Subject to constraints x-%, 51 svssenernnni) x4 423 ai) x X20 Solution: The input as required is entered into the TORA input screen, the following ‘output is obtained as shown in Figure 4.9 which shows that the solution is unbounded. ea raw ‘What is unbound LP problem? Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it. (c) This Chek Your Progress will help you to understand the lesson better. Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only. Linear Programming: Graphical Method4.11 LET US SUM UP ‘Thus we can say that LP is a method of planning whereby objective function is maximised or minimised while at the same time satisfying the various restrictions placed on the potential solution. In technical words, linear programming is defined as a methodology whereby a linear function in optimized (minimised or maximised) subject to a set of linear constraints in the form of equalities or inequalities. Thus LP is a planning technique of selecting the best possible (optimal) strategy among number of alternatives. 4.12 LESSO! Al TIVITY LP is about trying to get the best result (e.g. maximum profit, least effort ete.) given some list of constraints Linear Programming allows for the ethical allocation of scarce or costly resources while still meeting all technical parameters. Explain how LP programmes are being used in self-diverse industries an sausage making, fruit juice mixing, baby cereals and milks, health foods, soups. Also facilitates in formulating receipes. 4.13 KEYWORDS Linear Programming, Graphical Method Maximisation Minimisation Constraints Profit Optimality 4.14 QUESTIONS FOR DISCUSSIO) 1, Write True or False against each statement: (a) LP is a widely used mathematical modeling technique, (b) LP consists of linear objectives and linear constraints, (©) Divisibility refers to the aim to optimize. (d) Limited resources means limited number of labour, material equipment and finance. (©) The objective function represents the aim or goal of the system, which has to be determined from the solution. 2. Briefly comment on the following statements: (a) Formulation of LP is the representation of problem situation in a mathematical form. (b) A model must have an objective function, (©) When feasible zone lies towards the origin. (d) LP techniques are used to optimize the resource for best result (e) LP techniques are used in analyzing the effect of changes.Fill in the blanks: Linear Programming ‘Graphieal Method (a) Organization normally have resources. (b) A model has a constraint. (©) In real fife, the two problems are practiced very little. @ refer to the products, workers’, efficiency, and machines ate assumed to be identical (©) The function represents the aim or goal of the system. 15 TERMINAL QUESTIO! Define Linear Programming. 2. What are the essential characteristics required for a linear programming model? 3. What is meant by objective function in LP model? 4, What is a constraint? Give a few examples of constraints in real life situations, 5. Enumerate the steps involved in solving a LPP by graphical approach. 6. What is the major limitation of the graphical method? 7. List out the various constraint types in formulating a LP model. 8. Define the feasible area 9, What are the possible solution types that can result in the graphical method? 10. What is meant by an unbounded solution? 11. How are multiple solutions interpreted in the graphical method? Exercise Problems 1. For the problem given in Example 7, formulate the constraints for the following without any change in R.H.S. (a) The flower extract F, must be used at most to 15 litres and at least 5 litres. (b) The demand for perfume cannot be less than the demand for body spray. (©) The daily demand of body spray exceeds that of perfume by at least 2 litres. 2. For the problem given in Example 1.7, determine the best feasible solution among the following values of x, and x, @) Oo) © (d) © () x,=175, %=150 3. Determine the feasible space for each of the following constraints (a) 2x, -2x, <5 (b) 5x, + 10x, < 60 © x-x,<0 (4x, 43x, 215‘Quantitative Techniques Tor Managemen 7 8 A company manufactures two types of products, A and B. Each product uses two processes, I and II. The processing time per unit of product A on process I is 6 hours and on the process Il is 5 hours. The processing time per unit of product B on process Tis 12 hours and on process IL is 4 hours. The maximum number of hours available per week on process I and Il are 75 and 55 hours respectively. The profit per unit of selling A and B are Rs.12 and Rs.10 respectively. (Formulate a linear programming model so that the profit is maximized. Gi) Solve the problem graphically and determine the optimum values of product A and B. Formulate the following data as a linear programming model, Products “Time required (minutes/unit) rosie Lathe Drilling | Cleaning 25 30 1s 25 ® 1s 5 10 30 c 20 1s 10 ED Hours Available [250 400 200 A nutrition scheme for babies is proposed by a committee of doctors. Babies can be given two types of food (I and Il) which are available in standard sized packets, weighing 50 gms. The cost per packet of these foods are Rs. 2 and Rs. 3 respectively. The vitamin availability in each type of food per packet and the minimum vitamin ‘requirement for each type of vitamin are summarized in the table given. Develop a linear programming model to determine the optimal combination of food type with the minimum cost such that the minintum requirement of vitamin is each type is satisfied, Details of food type Vitamin availablity per product Vitamin Food] Food | — Minimum Daly Typet | Type | requirement T T T 6 z 7 T 17 ComPackeriRay | > 7 Formulate the problem as a LP model Resourced Constraints Produetanit x B Budget Ry 3 7 ZO Machine Time z 7 000 Fours Assembly Tine 3 7 BO Rous Selling Price Rao | Rw Cont Price Bas 20 Solve the Chandru Bag company problem graphically. (a) Determine the values of x,, x, and Z,.,(b) If the company has increased the demand for ordinary bag from 100 to 150, what is the new Z,,,. value? (©) Ifthe demand for deluxe bags has reduced to 50 bags, determine the optimal profit value. 9. Solve the following linear programming model graphically: Maximize Z = 30x, + 100x, Subject to constraints, 4x, + 6x, $90 8x, + 6x, < 100 5x, + 4x, < 80 where x,,x,20 10. Solve the following LP graphically: Maximize Z = 8x, + 10x, Subject to constraints, 2x, +3x, > 20 4x, +2x, > 25 where x,.%,20 11. Solve the two variable constraints using graphical method, Maximize Z = 50x, + 40x, Subject to constraints x,2 20 x, <25 2x, + x, 60 where x, 20 12. Solve the following LP graphically using TORA. Maximize Z = 1200x, + 1000x, Subject to constraints, 10x, + 4x, > 600 Tx, + 10x, > 300 2x, + 4x, < 1000 9x, + Tx, $ 2500 5x, + 4x, $ 1200 where x,,x,20 13. Solve graphically Maximize Z = 2x, + 3x, Subject to constraints, x,- x, <0 3x, + x, $25 where x.%,20 Linear Programming: Graphical Method Lanmin Tshiges 14, Solve the following LP graphically Maximize Z = 8x, + 10x, Subject to constraints, 0.5x, + 0.5x, < 150 0.6x, + 0.4%, < 145 x, 230 x,< 150 x, < 200 where x,,x,20 15. Determine the optimal values of x, and x, and hence find the maximum profits for the following LP problem: Maximize 4x, + 5x, Subject to constraints x, + 3x,52 4x, + 5x, <6 where x,,x,20 4.16 MODEL ANSWERS TO QUESTIONS FOR DISCUSSIO! 1. (@) True —(b) Tue (©) False (d) True_——_(@) False 3. (a) scarce (b) non-negative (©) variable (4) Homogeneity (©) objective 4.17 SUGGESTED READINGS William H, Model Building in Mathematical Programming, Wiley Newyork. Rohn E., "A New LP Approach to Bond Portfolio Management”, Journal of Financial & Quantitative Analysis 22 (1987): 439-467, Wagner H, Principles of OR, 2nd ed. Englewood Cliffs, N.I: Prentice Hall, 1975, Moondra $.,“An LP Model for Workforce Scheduling in Banks", Journal of Bank Research (1976). 142LINEAR PROGRAMMING: SIMPLEX METHOD CONTENTS 50 Aims and Objectives 51 Introduction 52. Additional Variables used in Solving LPP 53. Maximization Case 54 Solving LP Problems Using Computer with TORA 55° Minimization LP Problems 56 Big M Method 57 Degeneracy in LP Problems 58 Unbounded Solutions in LPP 59 Multiple Solutions in LPP 5.40 Duality in LP Problems S11. Sensitivity Analysis S12 Letus Sum Up 5.13 Lesson-end Activities 51M Keywords 5.15 Questions for Discussion 5.16 Terminal Questions 5.17 Model Answers to Questions for Discussion S18 Suggested Readings rrr 5.0 AIMS AND OBJECTIVES In the previous lesson we have learnt linear programming with the help of graphical now ‘we will learn the linear programming with the help of Simplex Method using minimization and maximization problems and the degeneracy in LP problems and also the Duality and Sensitivity Analysis. 5.1 INTRODUCTION In practice, most problems contain more than two variables and are consequently too large to be tackled by conventional means. Therefore, an algebraic technique is used to solve large problems using Simplex Method. This method is carried out through iterative process systematically step by step, and finally the maximum or minimum values of the objective function are attained.144 The basic concepts of simplex method are explained using the Example 1.8 of the packaging product mix problem illustrated in the previous chapter. The simplex method solves the linear programming problem in iterations to improve the value of the objective function. The simplex approach notonly yields the optimal solution but also other valuable information to perform economic and 'what if analysis. 5.2 ADDITIONAL VARIABLES USED IN SOLVING LPP Three types of additional variables are used in simplex method such as, (a) Slack variables (S,, S,, S,....8,): Slack variables refer to the amount of unused resources like raw materials, labour and money. (b) Surplus variables (-S,, -S,, -S,.....-S,): Surplus variable is the amount of resources by which the left hand side of the equation exceeds the minimum limit. (©) Attificial Variables (a,, a,, a. ...a,): Artificial variables ate temporary slack variables which are used for purposes of calculation, and are removed later: ‘The above variables are used to convert the inequalities into equality equations, as given in the Table 5.1 below. Table 5.1: Types of Additional Variables Constraint Type Variable added Format Tass than or equal to © | Add Slack Variable ay Dy | Greater than or equalto = | Subuact surplus variable andadd [Sra sutificial variable = | Equalto = | Rad arificial variable 7 5.3 MAXIMIZATION CASE ‘The packaging product mix problem is solved using simplex method. Maximize Z = 6x, + 4x, Subject to constraints, 2x,+3x, < 120 (Cutting machine) @ 2x,+X, $60 (Pinning machine) ee ii) where x,,x, 20 Considering the constraint for cutting machine, 2x4 3x, 120 ‘The inequality indicates that the left-hand side of the constraints equation has some amount of unused resources on cutting machine. To convert this inequality constraint into an equation, introduce a slack variable, S, which represents the unused resources, Introducing the slack variable, we have the equation 2x,t 3x, +8, = 120 Similarly for pinning machine, the equation is, 2x, x, +S, = 60 ‘The variables S, and S, are known as slack variables corresponding to the three constraints, Now we have in all four variables (which includes slack variable) and two equations. If any two variables are equated to zero, we can solve the three equations of the system in ‘two unknowns.If variables x, and x, are equated to zero, 0, then, Oand 120 S8,=60 This is the basic solution of the system, and variables S, and S, are known as Basic Variables, S, while x, and x, known as Non-Basic Variables. If all the variables are non-negative, a basic feasible solution of a linear programming problem is called a Basic Feasible Solution. Rewriting the constraints with slack variables gives us, 6x, + 4x, + 08, + 0S, Subject to constraints, i) «i) 2x, + 3x, +S, 2x, +x, + where x,,x,>0 ‘Though there are many forms of presenting Simplex Table for calculation, we represent the coefficients of variables in a tabular form as shown in Table 5.2. ‘Table 5.2: Co-efficients of Variables eration | Bi Solution | xX, Minimum | Equation Number | Variables | Value | x. | %* |S 7 % mm [2,3]. v co 8 o f2}ifo 1 30 Zz, ° 6]-4] 0 ° If the objective of the given problem is a maximization one, enter the co-efficient of the objective function Z, with opposite sign as shown in Table 5.3. Take the most negative coefficient of the objective function and that is the key column K.. In this case, itis 6. Find the ratio between the solution value and the key column coefficient and enter it in the minimum ratio column, The intersecting coefficients of the key cohumn and key row are called the pivotal element i.e. 2. The variable corresponding to the key column is the entering clement of the next iteration table and the corresponding variable of the key row is the leaving element of the next iteration table. In other words, x, replaces S, in the next iteration table, Table 5.3 indicates the key column, key row and the pivotal element. Tables3 Keration | Basic | Solution | x; Minimum Number | Variables | Value | Ke | ** | S* | S* | Ratio | Pauation 7 5 120 z]s tte wo X, = o z 0 0 o sa fe fo Linear Programming Simplex Method las146 Inthe next iteration, enter the basic variables by eliminating the leaving variable (i.c., key row) and introducing the entering variable (ie., key column). Make the pivotal element as | and enter the values of other elements in that row accordingly. In this case, convert the pivotal element value 2 as | in the next interation table. For this, divide the pivotal element by 2. Similarly divide the other elements in that row by 2. The equation is $, /2 ‘This row is called as Pivotal Equation Row Pe. The other co-efficients of the key column in iteration Table 5.4 must be made as zero in the iteration Table 5.5. For this, a solver, Q, is formed for easy calculation, Change the sign of the key column coefficient, multiply ‘with pivotal equation element and add with the corresponding variable to get the equation, Solver, Q=S,+CK_xP) The equations for the variables in the iteration number I of table 8 are, ForS, Q=S,+(K,xP) =S,+(2xP) 2P, @ For-Z, Q=S,+CK,xP) =-Z+(- 6) xP) =-Z+0P, sessed Using the equations (i) and (ii) the values of S, and -Z for the values of Table 1 are found as shown in Table 5.4 emir | Baha Sumit Fe | ss | sf Maize | ean 7 Using these equations, enter the values of basic variables S, and objective function Z. If all the values in the objective function are non-negative, the solution is optimal. Here, we have one negative value ~ 1. Repeat the steps to find the key row and pivotal equation values for the iteration 2 and check for optimality In the iteration 2 number of Table 5.5, all the values of Z, are non-negative, Z, > 0, hence optimality is reached. The corresponding values of x, and x, for the final iteration table gives the optimal values of the decision variables ic., x, = 15, x, = 30, Substituting these values in the objectives function equation, we get = 6x, + 4x, = 6(15) + 4(30) =90+120 = Rs. 210.00Table $5: Iteration Table Teeration | Basle xIlals ra a] Ss | Se uation Number | Variables Ratio 0 Ss mo f2][3 fifo o s o |2]irfo}fi 30 K | -% o |-6|-+}o]o T Ss o fo|2|ifa 30 Kl on x3 f|ilulolus ca Bl = wo Jo |-1}o]s 2 -| & wo folifsl- 5 is 1 fo} - fue -Z, ao |o | o fim] % 24, % | so The solution is, 15 corrugated boxes are to be produced and x, = 30 carton boxes are to be produced to yield a Profit, Z.., = Rs. 210.00 Summary of LPP Procedure Step 1: Formulate the LP problem. Step 2: Introduce slack /auxiliary variables. if constraint type is £ introduce +S if constraint type is > introduce ~ S +a and if constraint type is = introduce a Step 3: Find the initial basic solution. Step 4: Establish a simplex table and enter all variable coefficients. If the objective function is maximization, enter the opposite sign co-efficient and if minimization, enter without changing the sign. Step 5: Take the most negative coefficient in the objective function, Z, to identify the key column (the corresponding variable is the entering variable of the next iteration table). Step 6: Find the ratio between the solution value and the coefficient of the key column, Step Step Step 9: Step 10: Step 1; Enter the values in the minimum ratio column. Take the minimum positive value available in the minimum ratio column to identify the key row. (The corresponding variable is the leaving variable of the table), ‘The intersection element of the key column and key row is the pivotal element. Construct the next iteration table by eliminating the leaving variable and introducing the entering variable. Convert the pivotal element as | in the next iteration table and compute the other elements in that row accordingly. This is the pivotal equation row (not key row), Other elements in the key column must be made zero. For simplicity, form the equations as follows: Change the sign of the key column element, multiply with pivotal equation clement and add the corresponding variable. Linear Programming Simplex Method Lar‘Quantitative Techniques Tor Managemen Step 12: Check the values of objective function. If there are negative values, the solution is not an optimal one; go to step 5. Els, if all the values ate positive, optimality is reached, Non-negativity for objective function value is not considered. Write down the values of x,, X,.......X, and calculate the objective function for maximization or minimization Note: (@ If there are no x,, x, variables in the final iteration table, the values of x, and x, are zet0. Gi) Neglect the sign for objective function value in the final iteration table. 5.4 SOLVING LP PROBLEMS USING COMPUTER WITH TORA From the MAIN MENU, select LINEAR PROGRAMMING option, and enter the input values of the previously discussed problem as shown in the Figure 5.1 Figure 5.1: Solving LPP using Computer with TORA (input Screen) Click Solve Menu, and select Solve Problem —> Algebraic —> Iterations — All-S Starting Solution, Now, click Go To Output screen, then the first iteration table will be displayed. To select the entering variable, click a non-basic variable (if correct, the column lack turns green). Similarly, select the leaving variable (if correct, the row turns red), Figure 5.2. Figure 5.2: Selecting the Leaving Variable (TORA, Output Sereen)Then click Next Iteration button to display the next iteration table as shown in Figure 5.3. Leas Programming: Simplex Metho Figure 5.3: Next Iteration Table (TORA, Output Screen) ‘Again click next iteration button to get the third and final iteration table. A pop-up menu also indicates that the solution has reached the optimal level. Now we can notice that all the values in the objective function Z,,, row are non-negative which indicates that the solution is optimal. The final Iteration Table is shown in Figure 5.4. Figure 5.4: Final Iteration Table (TORA, Output Screen) From the final Iteration Table, the values of X,, X, and Z.,. are taken to the corresponding values in the solution column (last column) of the simplex table. ie, Zag =210.00 X, = 30.00 X,= 15.00 Example 1: Solve the LP problem using Simplex method. Determine the following (a) Whatis the optimal solution? Vhat is the value of the objective function? (b) What is the value of the objective funct us‘Quantitative Techniques Tor Managemen 150 (©) Which constraint has excess resources and how much? Zonas = 5X, + Subject to constraints, 2x, +x, $2000 @ 00 x, £200 where x,,x,20 Solution: Converting the inequality constraints by introducing the slack variables, Zigg = 5K, + 6, + 0S, + 0S, +05, 2x, +x, +S, = 2000 x, +8, = 800 x, +S, =200 Equate x, and x, to zero , to find the initial basic solution 2(0) +0 +S, =2000 0+8,=800 200 o+s ‘The initial basic solution i, 2000 S,=800 Establish a simplex table to represent the co-efficient of variables for optimal computation as shown in Table 5.6. ‘Table 5.6: Simplex Table [i200 «| Jo}vo] [-Z+6Pe | In the final table, all the values of ~Z, are > 0, hence optimality is reached. The optimum solutionis, (a) The value of xx, + 6x, = 5(800) + 6(200) = Rs. $200.00 (b) Objective function Z,,. (c) In the final iteration Table 5.2, slack variable S, represents the first constraint, therefore this constraint has excess unused resources of 200 units. 5.5 MINIMIZATION LP PROBLEMS In real life we need to minimize cost or time in certain situations. The objective now is minimization, Procedure for minimization problems is similar to maximization problems, The only difference is, enter the coefficients of the objective function in the simplex table without changing the sign. Another way to solve minimization problems is by converting the objective function as a ‘maximization problem by multiplying the equation by (1). For example, if the objective function is, Minimize Z=10x,+5x, Convert the objective function into maximization and solve Maximize Z = — 10x, 5.6 BIG M METHOD So far, we have seen the linear programming constraints with less than type. We come across problems with ‘greater than’ and ‘equal to’ type also. Each of these types must be converted as equations. In case of “greater than’ type, the constraints are rewritten witha negative surplus variable S, and by adding an artificial variable a, Artifical variables are simply used for finding the initial basic solutions and are thereafter eliminated. In case of an ‘equal to’ constraint, just add the artificial variable to the constraint. ‘The co-efficient of artificial variables a,, ,,..... are represented by a very high value M, and hence the method is known as BIG-M Method. Example 2: Solve the following LPP using Big M Method. Minimize Z ‘Subject to constraints 4x, +x, “i 3x, 438,27 i) 3x, # 2x, $6 soared where xy. 20 Solution: Introduce slack and auxiliary variables to represent in the standard form, Constraint 4x, + x, =4 is introduced by adding an artificial variable a,, i., 4x, +x, +a, =4 Constraint, 5x, variable a, 3x, > 7 is converted by subtracting a slack S, and adding an auxiliary Sx,43x,-S,+a,=7 Constraint 3x, + 2x, <6 is included with a slack variable S, 3x, + 2x, +8, =6 Linear Programming Simplex Method si‘Quantitative Techniques Tor Managemen 152 The objective must also be altered if auxiliary variables exist. Ifthe objective function is minimization, the co-efficient of auxiliary vatiable is ¥M (and -M, in case of maximization) The objective function is minimization, Minimize Z = 3x,+ x, + 0S,+ 0S,+ Ma,+ Ma, Z, +x, Ma,t Ma, ‘The initial feasible solution is (Put x,, x, S, x Establish a table as shown below and solve: Table87: Simplex Tale Pram) mans amet Po foo ss fos ft t/a, | sana " The solution is, = 5/7 or 0.71 x = 8/Tor 114 Zug =3X5/748/7 = 23/7 or 3.29 What are the different types of additional variables used in simplex method? How will you introduce/auxiliary variables in solving LPT problem?Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it, (©) This Chek Your Progress will help you to understand the lesson better. Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only. 5.7 DEGENERACY IN LP PROBLEMS In solving linear programming problem, while improving the basic solution, it may so transpire that there is no scope to generate an optimal solution, This is known as ‘degeneracy’ in linear programming. This occurs when there is a tie in the minimum ratio column. In other words, two or more values in the minimum ratio column are the same. To resolve degeneracy, the following method is used. Divide the key column values (of the tied rows) by the corresponding values of columns on the right side. This makes the values unequal and the row with minimum ratio is the key row. Example 3: Consider the following LPP, Maximize Z = 2x,+ x, Subject to constraints, 4x,+3x,<12 “i Axx, <8 Gi) 4x,-x, <8 ii) Solution: Converting the inequality constraints by introducing the slack variables, Maximize Z=2x,+ x, Subject to constraints, 4x, 3x4S, = 12 (iv) 4x+x, +8, = 8 ) 4x-xtS, = 8 (vi) Equating x, x, =0, we get 12 Table 5.8: Ilustrating Degeneracy ee me, DE Ls Ds [8 [8 [ss [eran s fos falilo of 2 s fafalo | 2 o falalo Q Linear Programming Simplex Method‘Quantitative Techniques Tor Managemen 184 ForS,; 42=2 pass ana After entering all the values in the first iteration table, the key column is -2, variable corresponding is x,. To identify the key row there is tie between row S, and row S, with same values of 2, which means degeneracy in solution, To break or to resolve this, consider the column right side and divide the values of the key column values. We shall consider column x, the values corresponding to the tie values 1, -I. Divide the key column values with these values, ic., I/4,~1/4 which is 0.25 and ~ 0.25. Now in selecting the key row, always the minimum positive value is chosen i.., row S,. Now, S, is the leaving variable and x, is an entering variable of the next iteration table. The problem is solved, Using computer and the solution is given in the Figure 5.5. Betis Ml Aieairs [v1 P Figure 5.5: LPP Solved Using Computer with TORA (Output Screen) 5.8 UNBOUNDED SOLUTIONS IN LPP Ina linear programming problem, when a situation exists that the value objective function can be increased infinitely, the problem is said to have an ‘unbounded’ solution. This can be identified when all the values of key column are negative and hence minimum ratio values cannot be found. ‘Table 5.9: Mustrating Unbounded Solution Teeration | Basie Minium Value | Variable [ss [ise [ose | Me™ | zauation 1 BS z To x 1 1] o S. 4 1 z 4 ° For S,; 12/-2 ForX,; 8/1 all values are negative For S,; 4/-45.9 MULTIPLE SOLUTIONS IN LPP In the optimal iteration table if (P, - Z.) value of one or more non-basic variable is equal to 0, then the problem is said to have multiple or alternative solutions ‘Table 5.10; Illustrating Multiple Solutions 5.10 DUALITY IN LP PROBLEMS All linear programming problems have another problem associated with them, which is known as its dual, In other words, every minimization problem is associated with a ‘maximization problem and vice-versa. The original linear programming problem is known as primal problem, and the derived problem is known as its dual problem. The optimal solutions for the primal and dual problems are equivalent. Conversion of primal to dual is done because of many reasons. The dual form of the problem, in many cases, is simple and can be solved with ease. Moreover, the variables of the dual problem contain information useful to management for analysis. Procedure Step 1: Convert the objective function if maximization in the primal into minimization in the dual and vice versa. Write the equation considering the transpose of RHS of the constraints Step 2: The number of variables in the primal will be the number of constraints in the dual and vice versa. Step 3: The co-efficient in the objective function of the primal will be the RHS constraints in the dual and vice versa. Step 4: In forming the constraints for the dual, consider the transpose of the body matrix of the primal problems. Note: Constraint inequality signs are reversed. Example 4: Construct the dual to the primal problem, Subject to constraints, 2x, + 8x, $60 sroneseseeli) 3x, + 5x, $45 ai) Sx, - 6x, < 10 so sii) av) where xy X,20 Solution: Minimize W = 60y, + 45y, + 10y, + 40y, Linear Programming Simplex Method ssSubject to constraints, 2y #3y,45y,+ OY, 2 6 8y,+ Sy, + 6y,ty, = 10 where ¥,. ¥y ¥y ¥20 Example 5: Construct a dual for the following primal Minimize Z. = 6x, — 4x,+ 4x, Subject to constraints, 6x, (i) «i ii) (iv) ww) where Solution: Convert ‘less than’ constraints into ‘greater than’ type by multiplying by 1) on both sides (ie., for e.g. ii) 6x, — 10x, + 4x, 214 6x4 2x, + 6x, > 10 5x, 220 x, — 4x, + 5x, 23 4x, + Tx, — 4x, 2 20 = Tx, + 2x, The dual for the primal problem is, Maximize W = l4y,+10y,+20y,13y,+20y, Subject to constraints, 6y,+ 6 10y,+ 2y, + 2y,—4y,47y, 5-4 Tyg yet AY, <6 Ay + 6y, at Sy, Ay, <4 where ¥u,¥ar Yq Yeand y,20 5.11 SENSITIVITY ANALYSIS Sensitivity analysis involves what if? questions. Inthe real world, the situation is constantly changing like change in raw material prices, decrease in machinery availability, increase in profit on one product, and so on. It is important to decision makers for find out how these changes affect the optimal solution. Sensitivity analysis can be used to provide information and to determine solution with these changes. Sensitivity analysis deals with making individual changes in the co-efficient ofthe objective function and the right hand sides of the constraints. Itis the study of how changes in the co-efficient of a linear programming problem affect the optimal solution. We can answer questions such as, i, How will a change in an objective function co-efficient affect the optimal solution? ii, How will a change in a right-hand side value for a constraint affect the optimal solution?For example, a company produces two products x, and x, with the use of three different Linear Programming materials 1, 2 and 3. The availability of materials 1, 2 and 3 are 175, SO and 150 respectively. Simpler Mathod The profit for selling per unit of product x, is Rs. 40 and that of x, is Rs. 30. The raw ‘material requirements for the products are shown by equations, as given below. Zag, = 40x, + 30K, Subject to constraints 4x, + 5x, 175 «a 2x, $50 ai) 6x, + 3x,< 150 sonnel) where x, x,20 The optimal solution is x, =Rs. 12.50 x, =Rs. 25.00 Zag =40 x 12.50 +30 x 25,00 =Rs. 1250.00 ‘The problem is solved using TORA software and the output screen showing sensitivity analysis is given in Table 5.11 ‘Change in objective function co-efficients and effect on optimal solution ‘Table 5.11: Sensitivity Analysis Table Output Referring to the current objective co-efficient, if the values of the objective function co- efficient decrease by 16 (Min. obj. co-efficient) and increase by 20 (Max. obj. co: efficient) there will not be any change in the optimal values of x, = 12.50 and x, = 25.00. But there will be a change in the optimal solution, ie. Z..,. 17Note: This applies only when there is a change in any one of the co-efficients of variables i.e., x, of x,. Simultaneous changes in values of the co-efficients need to apply for 100 Percent Rule for objective function co-efficients. ‘or x,, Allowable decrease = Current value - Min. Obj. co-efficient 0-24 =Rs. 16 Allowable increase = Max. Obj. co-efficient — Current value = 60-40 =Rs, 20.00 Gi Similarly, For x,, Allowable decrease = Rs. 10.00 ii) Allowable increase = Rs. 20.00 ov) For example, if co-efficient of x, is increased to 48, then the increase is 48 — 40 = Rs. 8.00. From (ii), the allowable increase is 20, thus the increase in x, co- efficient is 8/20 = 0.40 or 40%. Similarly, If co-efficient of x, is decreased to 27, then the decrease is 30 - 27 = Rs. 3.00. From (iii), the allowable decrease is 10, thus the decrease in x, co-efficient is 3/10 = 0.30 or 30%. Therefore, the percentage of increase in x, and the percentage of decrease in x, is 40 and 30 respectively. ie. 40% + 30% = 70% For all the objective function co-efficients that are changed, sum the percentage of the allowable increase and allowable decrease. If the sum of the percentages is less than or equal to 100%, the optimal solution does not change, i.c.,x, and x, Values will not change. But Z,,,, will change, i., = 48(12.50) + 27(25) = Rs. 1275.00 If the sum of the percentages of increase and decrease is greater than 100%, a different optimal solution exists. A revised problem must be solved in order to determine the new optimal values. Change in the right-hand side constraints values and effect on optimal solution Suppose an additional 40 kgs of material 3 is available, the right-hand side constraint increases from 150 to 190 kgs. Now, if the problem is solved, we get the optimal values as 3.61, x, = 16.11 and Z,,,, = 1427.78 From this, we can infer that an additional resources of 40 kgs increases the profit by = 1427.78 ~ 1250 = Rs. 177.78 Therefore, for one kg or one unit increase, the profit will increase by = 177.78 /40 = Rs. 4.44 Dual price is the improvement in the value of the optimal solution per unit increase in the right-hand side of a constraint. Hence, the dual price of material 3 is Rs 4.44 per kg,Increase in material 2 will simply increase the unused material 2 rather than increase in objective function. We cannot increase the RHS constraint values or the resources. If the limit increases, there will be a change in the optimal values. The limit values are given in Table 2.10, i.e., Min RHS and Max RHS values. Forexample, for material 3, the dual price Rs. 4.44 applies only to the limit range 150 kgs to 262.50 kgs. Where there are simultaneous changes in mote than one constraint RHS values, the 100 per cent Rule must be applied. Reduced Cost Costof consumed) (Profit per unit | Reduced cost / unit of activity = | resourcesper unit | — | of activity {of activity cm ) If the activity's reduced cost per unit is positive, then its unit cost of consumed resources is higher than its unit profit, and the activity should be discarded. This means that the value of its associated variable in the optimum solution should be zero. Alternatively, an activity that is economically attractive will have a zero reduced cost in the optimum solution signifying equilibrium between the output (unit profit) and the input (unit cost of consumed resources) In the problem, both x, and x, assume positive values in the optimum solution and hence have zero reduced cost. Considering one more variable x, with profit Rs. 50 Ziogg = 40x, + 30K, + 50, Subject to constraints, 4, + Sx, + 6x, < 175 ne) 2x, + Ix, < 50 sevseeen (ii) 6x, + 3x, + 3x, < 150 seven) where Hy XX,20 ‘The sensitivity analysis of the problem is shown in the computer output below in Table 5.12 Linear Programming Simplex Method 39160 The reduced cost indicates how much the objective function co-efficient for a particular variable would have to improve before that decision function assumes a positive value in the optimal solution. ‘The reduced cost of Rs.12.50 for decision variable x, tells us that the profit contribution would have to increase to at least 30 + 12.50 = 42.50 before x, could assume a positive value in the optimal solution, 1 What is Duality concept? 2, What is meant by degeneracy in Linear Programming? Notes: (a) Write your answer in the space given below. (b) Please go through the lesson sub-head thoroughly you will get your answers in it (©) This Chek Your Progress will help you to understand the lesson better. Try to write answers for them, but do not submit your answers to the university for assessment, These are for your practice only. 5.12 LET US SUM UP ‘Thus LP is a planning technique of selecting the best possible (optimal) strategy among number of alternatives. The chosen strategy is said to be the best because it involves minimization/maximization of source desired action e.g. maximization of profits, minimization of costs, smoothening running of the business. §.13_ LESSON-END ACTIVITIE! I, Linear Programming is a general method usable for a wide range of problems, Go to any nutrition center which sells health-food. Bring into play the applications of LP in formation and building, 2. LP is no doubt an vital problem. Not in this counters of petty problems with only a couple of variables, but is much bigger problem, Exaggerate this logic with the help of illstrations which can be matched and linked. with you real-life-situations. 5.14 KEYWORDS Slack ‘Simplex method SurplusVariable Line Popanning implex Meth Solution 5 QUESTIONS FOR DISCUSSIO! 1, Write True or False against each statement: (a) Artificial variable are imaginary and do not have any physical meaning. (b) Simplex method solve the LPP in iteration to enhance the value of the objective function. (©) Sensitivity analysis can not be used to provide information and to determine solution with these changes. 2. Briefly comment on the following statement: (a) Two or more entries in the ratio column. (b) LP isa planning techniques. (©) LP techniques are used to optimise the resources for best result. (a) LP in a part of management science (e) Algebraic techniques is used to solve large problems using simplex method, 1, Explain the procedure involved in the simplex method to determine the optimum solution, 2. What are slack, surplus and artificial variables ? 3. What is degeneracy in LP problems ? When does it occur ? How can degeneracy problem be resolved ? 4, What is a basic variable and a non-basic variable ? 5. Explain what is an unbounded solution in LPP. 6. Differentiate between primal and dual problems. 7. Why is the simplex method more advantageous than the graphical method? 8. What are the rules in selecting key column, key row and pivotal element? 9. Discuss the role of sensitivity analysis in linear programming. 10. In sensitivity analysis, explain i, The effect of change of objective function coefficients i The effect of change in the right hand side of constraints Exercise Problems 1. A company manufactures three products A, B and C, which require three raw materials I, I and TI, The table given below shows the amount of raw materials required per kg of each product. The resource availability per day and the profit contribution for each product is also given. 11162 Prodect alee ‘Availability: (ke) Raw Material T a T 6 300 tn s 8 1300 m1 2 4 1 1200 Profipruisy | 910 i, _ Formulate the problem as a linear programming problem ii, Solve the problem and determine the optimal product mix. ‘A metal fabricator manufactures three types of windows. Each of the windows needs four processes. The time taken on various machines differ due to the size of windows. The time taken and available hours are given in the table below: Window Type] Cutting | Heat Treating | Forging] Grinding * 3 7 T 7 ¥ 7 7 7 ¥ e 7 7 e z Available tne sy [20 a we a The profit contribution for windows A, B and C are Rs. 3.00, Rs. 4,00 and Rs. 5.00 respectively. a. Formulate the problem, b. Solve the problem using simplex method to maximize the profit. ©. Determine the excess time available in each processes and by how much. Solve the following LPP using simplex method. Maximize , Z=2x, +x, Subject to constraints, 4x4 3x, S12 i) 4xjtx, <8 ii) 4x,-x, $8 sensei) where xX 20 Solve the following LPP: Z.,,= 20x, + 28x, +23, Subject to constraints, 4x,+4x, $75 @ 2xjt x, + 2x, < 100 eel) Bayt 2x, +x, $50 Gi) where Xy X20 Three high precision products are manufactured by a Hi-Tech Machine Tools Company. All the products must undergo process through three machining centers A, B and C. The machine hours required per unit are,Machining Center x E € The available time in machine hours per week is Machining Center ‘Machine Hours Per Week x 150 B TOO e TH It is estimated that the unit profits of the product are Product Unit Profits (RS) T 7 7 7 1 6 a, Formulate the problem as a LPP. b. Solve the problem to determine the optimal solution. What is the number of units to be made on each product, ©. Does machining center C has any extra time to spare? If so, how much spare time is available ? d. If additional 10 machine hours are available with machining center A, then what is the optimal product mix ? What is the change in the value of profit ? Raghu Constructions is considering four projects over the next 3 years. The expected returns of each project and cash outlays for these projects are listed in the tables given, All values are in Lacs of Rupees. Projet Cash outlay (lakh Rs.) Return Yeard Year? Years T TEE Tao 350 was z Ts v5 wT Tao 7 Ts 730 as Tso 7 ToT Tost TT TE0s Available funds | 11000 000 00 (lakh Rs.) Raghu has to decide to undertake construction projects. Ignore the time value of money. As a consultant, what suggestion you would like to give Raghu in deciding about the projects to select. Determine the solution using TORA. Solve the following LP Problem using Big M Method. Minimize, Z = 2x,+ 9x, +x, Subject to constraints, xt 4x,¢-2x, 25 “i 3x, +x, +2x, 24 (ii) where Ky Xx, 20 Solve the following LPP Linear Programming Simplex Method es‘Quantitative Techniques Tor Management 164 Subject to constraints, 3x4x,53 “ 4x 43x, 26 ai) x, +2x, <3 iii) where x. %, 20 9. Solve the following LPP. Find whether multiple or alternate solution exists Maximize 7. = 2x,+ 4x, + 6x, Subject to constraints, 10x, + 4x, + 6x, < 150 i) 8x,+ 6x, + 2x, < 100 Ai) x,+2x,+x, <120 (ii) where Xp kyXH2O 10. Write the dual of the following LP problem Minimize Z = 6x, — 4x, + 4x, Subject to constraints, 3x, + 10x, + 4x, > 15 i) 12x, + 2x, + 5x,24 ii) 5x, — 4x, — 2x, £10 (iii) x,—3x, + 6x, 23 iv) 4x, +9x, —4x, 22 «) where Xp kX 20 11, Obtain the dual of the following linear programming problem Maximize Z , = 4x, + 9x, + 6x, Subject to constraints, 0x, + 10x, - 2x, <6 i) “SK, + 5K, Ox, 28 ii) 14x, 2x, - 5x, £20 iii) Sx, 4x, #7x,23 (iv) 8x,+ 10x, — 5x, =2 (vy where Xp kyX, 20 5.17 MODEL ANSWERS TO QUESTIONS FOR DISCUSSION 1. (a) True) Tue (©) False. {8 SUGGESTED READINGS Dantzig, G and M. Thapa, Linear Programming 1: Introduction, Springer, New York 1997. Simonnard M., Linear Programming. Englewood Cliffs, N.J. Prentice Hall, 1966. Bersitman, D, and J Tsitsiklin, Mntroduction to Linear Optimization, Belmont, Mass ‘Athena Publishing 1997.Unit-IITRANSPORTATION MODEL CONTENTS 60 Aims and Objectives 61 Introduction 62. Mathematical Formulation 63 Network Representation of Transportation Model 64 General Representation of Transportation Mode! 65 Use of Linear Programming to Solve Transportation Problem 66 Formulation of LP model 67. Solving Transportation Problem Using Computer 68 Balanced Transportation Problem 69. Unbalanced Transportation Problem 6.10 Procedure to Solve Transportation Problem. 6.11 Degeneracy in Transportation Problems 6.12. Maximization Transportation Problem 6.13 Prohibited Routes Problem 6.4 Transhipment Problem 615 Letus Sum Up 6.16 Lesson-end Activity 617 Keywords 6.18 Questions for Discussion 6.19 ‘Terminal Questions 620 Model Answers to Questions for Discussion 621 Suggested Readings 6.0 Al AND OBJECTIVE: In this unit we would be able to learn the Time Management Models. i.e. Transportation and Assignment Models, thus would be able to learn transportation models in this lesson and also we will talk about transhipment problems.