BUSINESS STATISTICS AND

ANALYTICS IN DECISION MAKING

MODULE 2A
MEASURES OF CENTRAL TENDENCY

Team BRMS
CMS Business School
Jain (Deemed-to-be University)
Introduction

• Central tendency is a descriptive summary of a dataset through a

single value that reflects the center of the data distribution.
• Along with the variability (dispersion) of a dataset, central tendency
is a branch of descriptive statistics.
Measures of Central Tendency

• Mean (Average): Represents the sum of all values in a dataset

divided by the total number of the values.
• Median: The middle value in a dataset that is arranged in ascending
order (from the smallest value to the largest value). If a dataset
contains an even number of values, the median of the dataset is the
mean of the two middle values.
• Mode: Defines the most frequently occurring value in a dataset.
The world of Averages

• The term average is used frequently in everyday life to express an

amount that is typical for a group of people or things.
• For example, you may read in a newspaper that on average people
watch 3 hours of television per day. We understand from the use of
the term average that not everybody watches 3 hours of television
each day, but that some watch more and some less.
• However, we realize from the use of the term average that the figure
of 3 hours per day is a good indicator of the amount of TV watched in
general.
The world of Averages

• Averages are useful because they:

• Summarizes a large amount of data into a single value; and
• Indicate that there is some variability around this single value
within the original data
• In general language arithmetic mean is same as the average of data.
It is the representative value of the group of data.
• The arithmetic mean between two numbers is defined to be the sum
of numbers divided by the quantity of numbers.
• Arithmetic mean allows us to categorize the centre of the frequency
distribution of a quantitative variable by considering all of the
observation with the same weight afforded to each (in contrast to the
weighted arithmetic mean).
The world of Averages – Arithmetic Mean
The world of Averages – Arithmetic Mean
The world of Averages – Arithmetic Mean
The world of Averages – Arithmetic Mean

The table below shows the daily high temperature in Bangalore city
during first one week in May, 2020. What was the daily average high
temperature for the week?

May 1 May 2 May 3 May 4 May 5 May 6 May 7

(Fri) (Sat) (Sun) (Mon) (Tue) (Wed) (Thurs)

340 330 340 350 350 340 320

The world of Averages – Arithmetic Mean

India has tested for the COVID 19 cases in top 6 affected states as of
April 12, 2020 by state. What was the average no of test carried out
in India in the highly affected states?
States Tests done

Maharashtra 35,668

Rajasthan 28,505

Kerala 14,989

Delhi 14,036

UP 11,855

Gujarat 11,715
The world of Averages – Arithmetic Mean
During 3 hours at Heathrow airport, London 55 aircrafts arrived late.
The number of minutes they were late is shown in the grouped
frequency table below. Calculate the average late arrival time of the
aircraft.
Minutes Late No. of Aircrafts

0 – 10 27

10 – 20 10

20 – 30 7

30 – 40 5

40 – 50 4

50 - 60 2
The world of Averages – Arithmetic Mean
The following table gives the distribution of 100 accidents in New Delhi
during seven days of a month. There were 5 Mondays, 5 Tuesday s and
only 4 each of the other days. Calculate the number of accidents per day.

Day Sun Mon Tue Wed Thu Fri Sat

Number of
26 16 12 10 8 10 18
accidents
The world of Averages – Arithmetic Mean
The table below gives the information about the percentage distribution of female
employees in a company of various branches and number of departments. Find the
mean percentage of female employees by assumed mean method.
Percentage of Number of
female employees departments

5-15 11
15-25 6
25-35 7
35-45 4
45-55 4
55-65 2
65-75 1
The world of Averages – Arithmetic Mean
In a recent survey 200 top executives were asked how many hours they spend each
year in community service. The data are presented below. What is the estimated
mean amount of time spent by these executives in community service? Use Step
deviation method.

No of hours 0-20 20-40 40-60 60-80 80-100 100-120 120-140

No of executives 11 27 33 53 47 22 7
The world of Averages – Arithmetic Mean
According to the Ministry of health and family Welfare the total number
of people in the country infected with COVID-19 stand at 2902 as on
April 4, 2020.The Health Ministry of India informed that nothing that
old age and co-morbidity due to conditions such as hypertension and
cardiac problems are major risk factors, it highlighted that high-risk
people need to strictly follow Government’s guidelines for their own
safety.
The world of Averages – Arithmetic Mean
The age wise distribution of Covid-19 cases in India is given below. Find the mean
age of people who were affected.

Age (years) 0-20 21-40 41-60 61 and above

Percentage of cases 9 42 33 17
The world of Averages – Arithmetic Mean
A company is planning to improve plant safety. For this, accident data for the last 50
weeks was compiled. These data were grouped into the frequency distribution as
shown below. Calculate the arithmetic mean of the number of accidents per week.

No. of Accidents 0-4 5-9 10-14 15-19 20-24

No. of weeks 5 22 13 8 2
The world of Averages – Arithmetic Mean

CI F X FX
-0.5 - 4.5 5 2 10
4.5 - 9.5 22 7 154
9.5 - 14.5 13 12 156
14.5 - 19.5 8 17 136
19.5 - 24.5 2 22 44

TOTAL 50 500
The world of Averages – Arithmetic Mean
In an examination of 675 candidates, the examiner supplied the following
information. Calculate the mean percentage of marks obtained.
Marks obtained No. of
(%) candidates

Less than 10 7
Less than 20 39
Less than 30 95
Less than 40 201
Less than 50 381
Less than 60 545
Less than 70 631
Less than 80 675
The world of Averages – Arithmetic Mean
Marks obtained No. of
Class Interval F X FX
(%) candidates
Less than 10 7 0 – 10 7 5 35
Less than 20 39 10 – 20 32 15 480
Less than 30 95 20 – 30 56 25 1400
Less than 40 201 30 – 40 106 35 3710
Less than 50 381 40 – 50 180 45 8100
Less than 60 545 50 – 60 164 55 9020
Less than 70 631 60 – 70 86 65 5590
Less than 80 675 70 - 80 44 75 3300
TOTAL 675 31635
Weighted Mean
• Weighted average is a calculation that takes into account the varying
degrees of importance of the numbers in a data set.
• The weighted mean is calculated by multiplying the weight (or
probability) associated with a particular event or outcome with its
associated quantitative outcome and then summing all the products
together.
• It is very useful when calculating a theoretically expected outcome
where each outcome shows a different probability of occurring,
which is the key feature that distinguishes the weighted mean from
the arithmetic mean.
Weighted Mean
• A weighted average can be more accurate than a simple average in
which all numbers in a data set are assigned an identical weight.
• In calculating a simple average, or arithmetic mean, all numbers are
treated equally and assigned equal weight.
• But a weighted average assigns weights that determine in advance
the relative importance of each data point.
• Eg: Stock investors use a weighted average to track the cost basis of
shares bought at varying times.
Weighted Mean
• Another example, a survey may gather enough responses from every
age group to be considered statistically valid, but the 18-34 age
group may have fewer respondents than all others relative to their
share of the population. The survey team may weight the results of
the 18-34 age group so that their views are represented
proportionately.
Weighted Mean
• Here is how a teacher may decide to grade his class. 10% for
homework assignments, 15% for quizzes, 25% for a midterm, and
50% for the final exam. Notice that 10% + 15% + 25% + 50% =
100%. Suppose the maximum score is 100 and a student gets the
following scores throughout the year: What is the weighted mean?

Homework assignments 40, 50, 60, 50, 40, 30

Quizzes 50, 60, 20, 50, 40, 80, 30, 70
Midterm 65
Final exam 95
Weighted Mean
Weighted Mean

Assessment Score (X) Weightage (W) WX

Homework Assignments 45 10% = 0.1 4.5

Quizzes 50 15% = 0.15 7.5

Mid-Term 65 25% = 0.25 16.25

Final Exam 95 50% = 0.5 47.5

TOTAL 100% = 1 75.75

Weighted Mean
• The Medplus medicine retail chain has recorded the sales of various
drugs (Quantity sold per quarter). The cost of the medicine for 1000
tablets is given. Find the weighted average sales of the medicine and
also find the normal average and give the reason why to trust
weighted average.
Brand name Price for 1000’s tablets (₹) Quantity sold in a quarter (numbers)
Dolo650 800 25
PARACIP 900 15
Calpol 960 15
Crocin 1230 3
Cipmol 1290 10
Weighted Mean

Price for 1000’s Quantity sold in a quarter

Brand name WX
tablets (₹) – X (numbers) – W

Dolo 650 800 25 20000

PARACIP 900 15 13500

Calpol 960 15 14400

Crocin 1230 3 3690

Cipmol 1290 10 12900

TOTAL 5180 68 64490

Weighted Mean
Weighted Mean
• Suppose that a marketing firm conducts a survey of 1,000
households to determine the average number of TVs each household
owns. The data show a large number of households with two or three
TVs and a smaller number with one or four. Every household in the
sample has at least one TV and no household has more than four.
Here’s the sample data for the survey. Calculate the weighted
arithmetic mean.
Number of TVs per Household Number of Households

1 73

2 378

3 459

4 90
Weighted Mean
Number of TVs per Household (X) Number of Households (W) WX

1 73 73

2 378 756

3 459 1377

4 90 360

TOTAL 1000 2566

The mean number of TVs per household in this sample is 2.566.

Combined Mean
• A combined mean is simply a weighted mean, where the weights are
the size of each group.
• Combined arithmetic mean can be computed if we know the mean
and number of items in each group of the data.
Combined Mean
• The average base salary of factory workers in the United States were
reported as $12.57. Top companies for factory workers average
salary is given. Find the combined mean of the salary of the factory
workers in USA.

Number of workers Average Salary($)

Companies
(salary reported) per hour
Unilever 567 47.60
American Crystal Sugar Company 118 16.28
Red wing Shoe 58 15.94
Factory Plaza 286 15.19
Kraft Heinz company 392 15.12
 Combined Mean
Number of workers
Companies (salary reported)
(ni)
Unilever 567 47.60 26989.20
American Crystal Sugar
118 16.28 1921.04
Company
Red wing Shoe 58 15.94 924.52
Factory Plaza 286 15.19 4344.34
Kraft Heinz company 392 15.12 5927.04
TOTAL 1421 40106.14
𝐂𝐨𝐦𝐛𝐢𝐧𝐞𝐝 𝐦𝐞𝐚𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐬𝐚𝐥𝐚𝐫𝐲 𝐨𝐟
𝐭𝐡𝐞 𝐟𝐚𝐜𝐭𝐨𝐫𝐲 𝐰𝐨𝐫𝐤𝐞𝐫𝐬 𝐢𝐧
𝐔𝐒𝐀=$𝟐𝟖.𝟐𝟐
Combined Mean
• There are two units of an automobile company in two different cities
employing 760 and 800 employees respectively. The arithmetic
mean of monthly salaries paid to employees in these two units is
₹18750/- and ₹16950/- respectively. Find the combined arithmetic
mean of salaries of the employees in both the units.
Missing Frequency
• The following distribution shows the daily pocket allowance of
children of a locality. The mean pocket allowance is ₹18. Find the
missing frequency.
Daily pocket allowance (₹) Number of children
11 – 13 7
13 – 15 6
15 – 17 9
17 – 19 13
19 – 21 f
21 – 23 5
23 - 25 4
Missing Frequency

Class Interval F X FX
11 – 13 7 12 84
13 – 15 6 14 84
15 – 17 9 16 144
17 – 19 13 18 234
19 – 21 f 20 20f
21 – 23 5 22 110
23 - 25 4 24 96
TOTAL 44+f 752+20f
Exact Partition - Median
• Median is defined as the measure of the central term, when the given
terms (i.e., values of the variate) are arranged in the ascending or
descending order of magnitudes.
• In other words the median is value of the variate for which total of
the frequencies above this value is equal to the total of the
frequencies below this value.
Exact Partition - Median
Exact Partition - Median
Exact Partition - Median
Exact Partition - Median
• According to the census of 2011, following are the population figure,
in 10 thousands, of 10 states. Find the median population.
States Population(‘00000)
Uttar Pradesh 1995
Maharashtra 1123
Bihar 1038
West Bengal 913
Andra Pradesh 846
Madhya Pradesh 725
Tamilnadu 721
Rajasthan 686
Karnataka 611
Gujarat 603
Exact Partition - Median
States Population(‘00000)
Uttar Pradesh 1995
Maharashtra 1123
Bihar 1038
West Bengal 913
Andra Pradesh 846
Madhya Pradesh 725
Tamilnadu 721
Rajasthan 686
Karnataka 611
Gujarat 603
Exact Partition - Median
• The monthly consumption of electricity of 68 consumers of 68
locality. Find the median.
Monthly consumption Number of
(in units) consumers
65 - 85 4
85 - 105 5
105 - 125 13
125 - 145 20
145 - 165 14
165 - 185 8
185 - 205 4
Exact Partition - Median

Monthly consumption Number of Cumulative

(in units) consumers (F) Frequency (CF)
65 - 85 4 4
85 - 105 5 9
105 - 125 13 22
125 - 145 20 42
145 - 165 14 56
165 - 185 8 64
185 - 205 4 68
TOTAL 68
Exact Partition - Median
Exact Partition - Median
• The median of the runs scored by 60 top batsmen of the world in one
day international cricket matches is 5000. Find the missing
frequencies x and y.
Runs Scored Number of Batsmen

2500 - 3500 5

3500 - 4500 x

4500 - 5500 y

5500 - 6500 12

6500 - 7500 6

7500 - 8500 2
Exact Partition - Median

Runs Scored Number of Batsmen CF

2500 - 3500 5 5

3500 - 4500 x 5+x

4500 - 5500 y 40

5500 - 6500 12 52

6500 - 7500 6 58

7500 - 8500 2 60
Exact Partition - Median

1 2
Data Segmentation
• If the values of the variate are arranged in ascending or descending
order of magnitudes then we have seen above that median is that
value of the variate which divides the total frequencies in two equal
parts.
• Similarly the given series can be divided into four, ten and hundred
equal parts.
• The values of the variate dividing into four equal parts are called
Quartile, into ten equal parts are called Decile and into hundred
equal parts are called Percentile.
Data Segmentation - Quartiles
Data Segmentation - Deciles
Data Segmentation - Percentiles
Data Segmentation

First Quartile Q1 = P25 First Decile D1 = P10

Second Quartile Q2 = P50 Second Decile D2 = P20

Third Quartile Q3 = P75 Fifth Decile D5 = P50 = Median

 Data Segmentation
• Listed below are the commissions earned in dollars last month by a
sample of 15 brokers at Salomon Smith Barney’s Oakland, California,
office. Salomon Smith Barney is an investment company with offices
located throughout the United States. Locate the median, the first
quartile, and the third quartile for the commissions earned.

2038 1758 1721 1637 2097 2047 2205 1787 2287 1940 2311 2054 2406 1471 1460

Median = 2038, Q1 = 1721; Q3 = 2205

 Data Segmentation

1460 1471 1637 1721 1758 1787 1940 2038 2047 2054 2097 2205 2287 2311 2406

Median = 2038, Q1 = 1721; Q3 = 2205

Data Segmentation
• In a work study investigation, the times taken by 20 men in a firm to
do a particular job were tabulated as follows. Prove that: Q 2 = D5 =
P50
Time taken(minutes) Number of men

8-10 2

11-13 4

14-16 6

17-19 4

20-22 3

23-25 1
Data Segmentation
Time Number of men Cumulative
taken(minutes) Frequency
7.5-10.5 2 2

10.5-13.5 4 6

13.5-16.5 6 12

16.5-19.5 4 16

19.5-22.5 3 19

22.5-25.5 1 20

TOTAL 20
Data Segmentation
Time Number of men Cumulative
taken(minutes) Frequency
7.5-10.5 2 2

10.5-13.5 4 6

13.5-16.5 6 12

16.5-19.5 4 16

19.5-22.5 3 19

22.5-25.5 1 20

TOTAL 20
Data Segmentation
Time Number of men Cumulative
taken(minutes) Frequency
7.5-10.5 2 2

10.5-13.5 4 6

13.5-16.5 6 12

16.5-19.5 4 16

19.5-22.5 3 19

22.5-25.5 1 20

TOTAL 20
Data Segmentation
• The test scores of 50 students in the subject Mathematics are
grouped based on their scores. Calculate 65th percentile and 32nd
percentile of test score of mathematics.

Scores in Number of
Mathematics students
46 – 50 4
41 – 45 8
36 - 40 11
31 - 35 9
26 - 30 12
21 - 25 6
Data Segmentation

Scores in Number of Cumulative

Mathematics students (f) Frequency
20.5 – 25.5 6 6
25.5 – 30.5 12 18
30.5 – 35.5 9 27
35.5 – 40.5 11 38
40.5 – 45.5 8 46
45.5 – 50.5 4 50
Data Segmentation

Scores in Number of Cumulative

Mathematics students (f) Frequency
20.5 – 50.5 6 6
25.5 – 45.5 12 18
30.5 – 40.5 9 27
35.5 – 35.5 11 38
40.5 – 30.5 8 46
45.5 – 25.5 4 50
Modal Statistics
• The mode is the most frequently occurring value.
• When scientists or statisticians talk about the modal observation,
they are referring to the most common observation.
• There is an empirical relationship between the three measures of
central tendency:
Mode = 3 Median - 2 Mean

• For Ungrouped Data:

Mode = Observation with maximum occurrences

• For Discrete Data:

Mode = Observation with the highest frequency
Modal Statistics
Modal Statistics
• Find the Mode of the following model size number of shoes. Model
size no. of shoes : 3, 4, 2, 1, 7, 6, 6, 7, 5, 6, 8, 9, 5.

1, 2, 3, 4, 5, 5, 6, 6, 6, 7, 7, 8, 9
Modal Statistics
• The following table shows the distribution of 105 families according
to their expenditure per day. Find the mode of the expenditure

Expenditure No. of Families

0 – 10 14

10 – 20 25

20 – 30 27

30 – 40 24

40 – 50 15
Modal Statistics

Expenditure No. of Families

0 – 10 14

10 – 20 25

20 – 30 27

30 – 40 24

40 – 50 15
Modal Statistics
• The ages of the 100 inhabitants of a village were grouped and
recorded as follows. Estimate the modal age correct to the nearest six
months. Age (years) Number of inhibitants
0-9 15
10-19 18
20-29 20
30-39 15
40-49 12
50-59 9
60-69 5
70-79 4
80-89 2
Modal Statistics
Age (years) Number of inhabitants (f)
-0.5-9.5 15
9.5-19.5 18
19.5-29.5 20
29.5-39.5 15
39.5-49.5 12
49.5-59.5 9
59.5-69.5 5
69.5-79.5 4
79.5-89.5 2