Statistics For Management

Assignment Set- 1

1. Why it is necessary to summarize data? Explain the approaches available to

summarize the data distributions?

Graphical representation is a good way to represent summarized data. However, graphs

provide us only an overview and thus may not be used for further analysis. Hence, we use
summary statistics like computing averages. To analyze the data. Mass data, which is
collected, classified, tabulated and presented systematically, is analyzed further to bring its
size to a single representative figure. This single figure is the measure which can be found at
central part of the range of all values. It is the one which represents the entire data set. Hence,
this is called the measure of central tendency.

In other words, the tendency of data to cluster around a figure which is in central location is
known as central tendency. Measure of central tendency or average of first order describes
the concentration of large numbers around a particular value. It is a single value which
represents all units. Statistical Averages: The commonly used statistical averages are
arithmetic mean, geometric mean, harmonic mean.

Arithmetic mean is defined as the sum of all values divided by number of values and is
represented by X.
Before we study how to compute arithmetic mean, we have to be familiar with the terms such
as discrete data, frequency and frequency distribution, which are used in this unit.
If the number of values is finite, then the data is said to be discrete data. The number of
occurrences of each value of the data set is called frequency of that value. A systematic
presentation of the values taken by variable together with corresponding frequencies is called
a frequency distribution of the variable.
Median: Median of a set of values is the value which is the middle most value when they are
arranged in the ascending order of magnitude. Median is denoted by ‘M’.

Mode: Mode is the value which has the highest frequency and is denoted by Z.
Modal value is most useful for business people. For example, shoe and readymade garment
manufacturers will like to know the modal size of the people to plan their operations. For
discrete data with or without frequency, it is that value corresponding to highest frequency.
Appropriate Situations for the use of Various Averages:

1. Arithmetic mean is used when:

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a. In depth study of the variable is needed

b. The variable is continuous and additive in nature

c. The data are in the interval or ratio scale

d. When the distribution is symmetrical

2. Median is used when:

a. The variable is discrete

b. There exists abnormal values

c. The distribution is skewed

d. The extreme values are missing

e. The characteristics studied are qualitative

f. The data are on the ordinal scale

3. Mode is used when:

a. The variable is discrete

b. There exists abnormal values

c. The distribution is skewed

d. The extreme values are missing

e. The characteristics studied are qualitative

4. Geometric mean is used when:

a. The rate of growth, ratios and percentages are to be studied

b. The variable is of multiplicative nature

5. Harmonic mean is used when:

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a. The study is related to speed, time

b. Average of rates which produce equal effects has to be found

Positional Averages
Median is the mid-value of series of data. It divides the distribution into two equal portions.
Similarly, we can divide a given distribution into four, ten or hundred or any other number of
equal portions.

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2. Explain the purpose of tabular presentation of statistical data. Draft a form of

tabulation to show the distribution of population according to
a. Community by age,

b. Literacy ,

c. sex , and

d. marital status.

Tabulation is an orderly arrangement of data in columns and rows systematically in a tabular

form. It is the logical listing of related quantitative data in vertical columns and horizontal
rows. The presentation of data in tables should be simple, systematic and unambiguous.
The purpose of tabular presentation of statistical data is to:

 Simplify complex data: Tabulation simplifies the complex data by presenting them
systematically in columns and rows in a condensed form. It avoids all the unnecessary data
that is found in a narrative form.

 Highlight important characteristics: It also helps to highlight the important characteristics of

the data. As it avoids all the unnecessary data that is usually found in a narrative form.

 Present data in minimum space: Tabulation achieves economy in using the space for
presenting the data. The textual matter is presented neatly in a short form without sacrificing
utility of the data.

 Facilitate comparison: The data presented in a tabular form is helpful for a comparative
study. The relationship among the various items can be easily understood.

 Bring out trends and tendencies: Tabulation depicts the data and their significance at first in
the form of figures, which cannot be understood when the same data are in a narrative form.

 Facilitate further analysis: The Tabulation is analytical in nature and hence it helps in further
analysis.

Marital
Sex Educated Non-Educated
Status

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20- Above Below 20- Above

Age: Below
40 40 20yrs 40 40
20yrs

Male

Married
Femal
e

Male

Unmarried
Femal
e

3. Give a brief note of the measures of central tendency together with their merits
& Demerits. Which is the best measure of central tendency and why?
Condensation of data is necessary for a proper statistical analysis. A large number of big
numbers are not only confusing to mind but also difficult to analyse.After a thorough
scrutiny of collected data, classification which is a process of arranging data into different
homogenous classes according to resemblances and similarities is carried out first.Then of
course tabulation of data is resorted to. The classification and tabulation of the collected data
besides removing the complexity render condensation and comparison.

An average is defined as a value which should represent the whole mass of data. It is a
typical or central value summarizing the whole data. It is also called a measure of central
tendency for the reason that the individual values in the data show some tendency to centre
about this average. It will be located in between the minimum and the maximum of the
values in the data.

There are five types of average which are

Arithmetic Mean, Median, Mode, Geometric and Harmonic Mean

Arithmetic Mean

The Arithmetic mean or simply the mean is the best known easily understood and most
frequently used average in any statistical analysis. It is defined as the sum of all the values in
the data.
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Median : Median is another widely known and frequently used average.It is defined as the
most central or the middle most value of the data given in the form of an array. By an array,
we mean an arrangement of the data either in ascending order or descending order of
magnitude. In the case of ungrouped data one has to form an array first and then locate the
middle most value which is the median. For ungrouped data the median is fixed by using,

Median = [n+1/2] the value in the array.

Mode:The word mode seems to have been derived French 'a la mode' which means 'that
which is in fashion'. It is defined as the value in the data which occurs most frequently. In
other words, it is the most frequently occurring value in the data. For ungrouped data we
form the array and then fix the mode as the value which occurs most frequently. If all the
values are distinct from each other, mode cannot be fixed. For a frequency distribution with
just one highest frequency such data are called unimodal or two highest frequencies [such
data are called bimodal],mode is found by using the formula,

Mode=l+cf2/f1+f2
Where l is the lower limit of the model class, c is its class interval f1 is the frequency
preceding the highest frequency and f2 is the frequency succeeding the highest frequency.

Relative merits and demerits of Mean, Median and Mode

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Mean: The mean is the most commonly and frequently used average. It is a simple average,
understandable even to a layman. It is based on all the values in a given data. It is easy to
calculate and is basic to the calculation of further statistical measures of dispersion,
correlation etc. Of all the averages, it is the most stable one. However it has some demerits. It
gives undue weightages to extreme value. In other words it is greatly influenced by extreme
values.Moreover; it cannot be calculated for data with open - ended classes at the extreme. It
cannot be fixed graphically unlike the median or the mode. It is the most useful average of
analysis when the analysis is made with full reference to the nature of individual values of
the data.Inspite of a few shortcomings; it is the most satisfactory average.

Median: The median is another well-known and widely used average. It is well-defined
formula and is easily understood. It is advantageously used as a representative value of such
factors or qualities which cannot be measured. Unlike the mean, median can be located
graphically. It is also possible to find the median for data with open ended classes at the
extreme. It is amenable for further algebraic processes.However,it is an average, not based on
all the values of the given data. It is not as stable as the mean. It has only a limited use in
practice.

Mode: It is a useful measure of central tendency, as a representative of the majority of values

in the data. It is a practical average, easily understood by even laymen. Its calculations are
not difficult. It can be ascertained even for data with open-ended classes at the extreme. It
can be located by graphical means using a frequency curve. The mode is not based on all the
values in the data. It become less useful when the data distribution is not uni-model.Of all the
averages, it is the most unstable average.

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4. Machines are used to pack sugar into packets supposedly containing 1.20 kg
each. On testing a large number of packets over a long period of time, it was
found that the mean weight of the packets was 1.24 kg and the standard
deviation was 0.04 Kg. A particular machine is selected to check the total
weight of each of the 25 packets filled consecutively by the machine. Calculate
the limits within which the weight of the packets should lie assuming that the
machine is not been classified as faulty.

 Mean weight of the packets = 1.24 kg

 Standard Deviation,SD = 0.04kg

 Variance = 0.04^2 = 0.0016

 Standard Error, SE = 0.04/sqrt(25)

• = 0.04/5 = 0.008

 Considering 99.7% confidence level

The means will lie between (1.2+3SE) and (1.2-3SE)

 Upper limit is 1.224kg

 Lower Limit is 1.176kg

5. A packaging device is set to fill detergent power packets with a mean weight of
5 Kg. The standard deviation is known to be 0.01 Kg. These are known to drift
upwards over a period of time due to machine fault, which is not tolerable. A
random sample of 100 packets is taken and weighed. This sample has a mean
weight of 5.03 Kg and a standard deviation of 0.21 Kg. Can we calculate that
the mean weight produced by the machine has increased? Use 5% level of
significance.

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 Mean weight of packages, X1 = 5kg

 SD1 = 0.01kg

 Sample size, N= 100

 Sample mean weight, X2 = 5.03kg

 SD2 = 0.21kg

 Using 95% confidence level

 Z = 1.96

 1.96 = [(X-X2)/SD1]/sqrt N

 1.96 =[(X-5.03)/0.01]/sqrt (100)

 Mean Weight X = 5.226kg

6. Find the probability that at most 5 defective bolts will be found in a box of 200
bolts. If it is known that 2 per cent of such bolts are expected to be defective.
(You may take the distribution to be Poisson; e-4= 0.0183).

Poisson distribution

A Poisson random variable is the number of successes that result from a Poisson experiment.
The probability distribution of a Poisson random variable is called a Poisson distribution.

Given the mean number of successes (μ) that occur in a specified region, we can compute the
Poisson probability based on the following formula:

Poisson Formula. Suppose we conduct a Poisson experiment, in which the average number of
successes within a given region is μ. Then, the Poisson probability is:

P(x; μ) = (e-μ) (μx) / x!

where x is the actual number of successes that result from the experiment, and e is
approximately equal to 2.71828.

The Poisson distribution has the following properties:

The mean of the distribution is equal to μ .

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The variance is also equal to μ .

M=5

PX = 0.0183*4/5

=0.01464

Thus, the probability that at most 5 defective bolts will be found in a box of 200 bolts is
0.01464

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