Scribd
Upload
17 views20 pages

EMBA Day5

Uploaded by

Abdullah Mohammed Arif
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
17 views20 pages

EMBA Day5

Uploaded by

Abdullah Mohammed Arif
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 20

EMBA-502: Business Mathematics and Statistics

Dr. M. Amir Hossain


October 5, 2019
Measures of Dispersion

It deals with spread of the data


A small value of the measure of dispersion
indicates that data are clustered closely
A large value of dispersion indicates the
estimate of central tendency is not reliable
Measures of Dispersion
Absolute measures: Range
Mean Deviation
Variance
Standard Deviation

Relative measures: Coefficient of Variation


Measures of Dispersion (Range)
Range indicates the difference between the
highest and lowest value of the data set
Range = Highest value – Lowest value

Example : 93, 103, 105, 110, 104, 112, 105, 90


Range = 112 – 90 = 22

Properties
 It depends only on two values
 It can be influenced by extreme values
Measures of Dispersion (Mean Deviation)
Mean Deviation: The arithmetic mean of the
absolute values of the deviations of the
observations from the arithmetic mean.

 X  X
MD 
n

Properties
 MD uses all the values in the sample
 Absolute values are difficult to work with
Measures of Dispersion (Mean Deviation)
Example : 93, 103, 105, 110, 104, 112, 105, 90
X = ∑X/n = 822/8 = 102.75
X X-X |X−X|
93 -9.75 9.75
103 0.25 0.25
105 2.25 2.25
110 7.25 7.25
104 1.25 1.25
112 9.25 9.25
105 2.25 2.25
90 -12.75 12.75
∑| X − X |= 45
MD = ∑| X − X |/n = 45/8 = 5.62
Measures of Dispersion (Variance)
Variance is the arithmetic mean of the squared
deviations of observations from the mean
( X   ) 2
Population variance:   2
N
( X  X ) 2
Sample Variance: S 
2

n 1
σ2 is a Parameter and S2 is a Statistic
Measures of Dispersion (Variance)
Example : 93, 103, 105, 110, 104, 112, 105, 90
X = ∑X/n = 822/8 = 102.75
X X-X (X − X)2
93 -9.75 95.06
103 0.25 0.06
105 2.25 5.06
110 7.25 52.56
104 1.25 1.56
112 9.25 85.56
105 2.25 5.06
90 -12.75 162.56
∑(X − X)2 = 407.48

 Population Variance = ∑(X − µ)2/N = 407.48/8 = 50.935


 Sample Variance = ∑(X − X)2/(n-1) = 407.48/7 = 58.21
Measures of Dispersion (Variance)
Working formula for population variance is :

X X 2 2
 2
( )
N N
Working formula for sample variance is :
( X ) 2
X  2

S 
2 n
n 1
Measures of Dispersion (Variance)
Example : 93, 103, 105, 110, 104, 112, 105, 90
X X2 Population Variance
93 8649 X 2 X 2 84868 822 2
 ( )  ( )
103 10609 N N 8 8
105 11025  10608.5  10557.6  50.9

110 12100
104 10816 Sample Variance
112 12544 ( X ) 2 (822) 2
X 2
84868 
105 11025  n  8
n 1 8 1
90 8100 84868  84460.5 407.5
   58.2
∑X=822 ∑X2=84868 7 7
Measures of Dispersion (Standard Deviation)
Standard Deviation (SD) is the positive
square root of the variance
 ( X   ) 2

Population SD:     
2

 N 

 ( X  X ) 2

Sample SD: S  S   
2

 n 1 
σ is a Parameter and S is a Statistic
Measures of Dispersion (Variance)

Example : 93, 103, 105, 110, 104, 112, 105, 90

Population SD =
    50.935  7.14
2

Sample SD
S  S  58.21  7.63
2
Measures of Dispersion (Group Data)

Range: The difference between the upper limit


of the highest class and the lower limit of the
lowest class
Mean Deviation:

f |XX|
MD 
f
Measures of Dispersion (Group Data)
Variance: The formula for the calculation of
variance from a grouped data is:
(fX ) 2
fX 
2

 f X  X 
2
f
S 2
 
f f
Where, f is class frequency,
X is class midpoint and
X is arithmetic mean.
Standard Deviation: S = √Variance
Exercise (Measures of Dispersion)
A sample of 50 antique dealers in Southeast USA
revealed the following sales last year:

Sales (in 000 $) Number of dealers


100 – 120 5
120 – 140 7
140 – 160 9
160 – 180 16
180 – 200 10
200 – 220 3
Find range, mean deviation, variance, and standard
deviation.
Relative Dispersion

 The usual measures of dispersion cannot be


used to compare the dispersion if the units are
different, even if the units are same but means
are different
 It reports variation relative to the mean
 It is useful for comparing distributions with
different units
Relative Dispersion

Coefficient of Variation (CV):


The CV is the ratio of the standard deviation to
the arithmetic mean, expressed as a percentage:

s
CV   100
X
Relative Dispersion (CV)
Example: The variation in the monthly income of
executives is to be compared with the variation in
incomes of unskilled employees. For a sample of
executives, X = TK 50, 000 and s = TK 5, 000.
For a sample of unskilled employees, X = TK 2,
200 and s = TK 220.
Solution:
For executives,
CV =(s/X) × 100 = (Tk. 5000/TK 50, 000) × 100
= 10 percent
For unskilled employees,
CV = (s/X) × 100 = (Tk. 220 /TK 2, 200) × 100
= 10 percent
Interpretation and Uses of the Standard Deviation

Empirical Rule:
For any symmetrical, bell-shaped distribution,
 approximately 68% of the observations will lie
within  1 of the mean ( ) 
 approximately 95% of the observations will lie
within  2ofthe mean ( ) 
 approximately 99.7% within  3 of the mean (
). 
Bell - Shaped Curve showing the relationship between  and .

      


 

You might also like