Business Applications of Measure of Central Tendency

Measures of Central Tendency Measures of cardinal tendency ( middlings) atomic number 18 statistical constants which enable us to figure out in a item-by-item effort the significance of the whole. (Prof Bowley) The main objectives of measure of central tendency beTo reduce entropy in a single value. To make low-cal comparisons between data. There atomic number 18 different types of median(prenominal)(a)(a)s each has its own craft applications.1. Arithmetic Mean 2. Median 3. Mode 4. Geometric Mean 5. harmonised Mean 1.1 Arithmetic Mean 1.1.1 commentaryMost important measure of location is the soaked or honest value, for a variable. The mean provides a measure of central location for the data. If the data are for a sample, the mean is denoted by if the data are for a universe, the mean is denoted by the Greek letter . (David R. Anderson et al) 1.1.2 barter Applications of MeanArithmetic mean is considered a deal modal(a). It is oft utilize in wholly the aspects of b usiness i.e. number of items produced per day on a large fiction line, number of launchs received per month for a firm. further In scotch summary arithmetic mean is used extensively to calculate average production, average wage, average cost, per capital income exports, imports, consumption, prices, etc. (www.publishyourarticles.net)1.1.2.1 ExampleSay we want to find the average one-year salary of all secretaries. We believe we can do this on the basis of our knowledge of annual salaries of 6 particular secretaries, who each lay down $.10400, $34000, $14000, $25800 respectively.Our result is a sample mean because we are interested in finding the mean annual income of all secretaries on the basis of the annual income of a smaller sample consisting of only 6 secretaries. (Cheng F. Lee et al, 1993)1.2 Median1.2.1 Definition The median is another measure of central location. The median is the value in the middle when the data are arranged in ascending order .With an odd number of observations, the median is the middle value. An even number of observations has no single middle value. In this case, we follow convention and define the median as the average of the determine for the middle two observations. (David R. Anderson et al) 1.2.2 rail line Applications of MedianMedian is positional measures of central tendency. The median salary gives a value close to the average salary commonly gainful, without taking the extreme values into consideration. There are mainly used in the qualitative cases like honesty, intelligence, ability, etc. These are alike suitable for the problems of distribution of income, wealth, investment, etc. (www.publishyourarticles.net)1.2.2.1 ExampleThe U.S. Census Bureau finds the median household income. According to the U.S. Census Bureau, median household income is defined as the amount which divides the income distribution into two equal groups, half(a) having income above that amount, and half having income below that amount. (ww w.ehow.com) 1.3 Mode1.3.1 DefinitionThe mode is defined as the element that appears just about frequently in a given set of elements. Mode can also be defined as the element with the largest frequency in a given data set. (www.wyzant.com) 1.3.2 Business Applications of ModeThe mode is the most important when an analysis is looking for what happens most often. In analyzing prices, most of the gross revenue occur at a particular list price or possibly at a reduced, sale price. While there may have been sales at other prices, genuinely few customers will have paid an average or amean price. Those values are thusly less important when setting pricing in terms of what most customers paid. (www.publishyourarticles.net)1.3.2.1 ExampleMode is used to calculate the modal coat of a collar, modal size of raiment, or modal size of ready-made garments etc.The mode may be beneficial for a manager of a fit out store. For example, you would not suppose size 17 shoes stocked on the floor. Why? Because very few people have a size 17 shoe size. Therefore, store managers may look at data and determine which shoe size is sold the most. Managers would want to stock the floor with the best interchange shoe size. (www.ehow.com)1.4 Geometric Mean1.4.1 DefinitionGeometric mean is well defined only for sets of compulsory real meter. This is calculated by multiplying all the numbers (call the number of numbers n), and taking the nth root of the total. (ww.easycalculation.com)1.4.2 Business Applications of Geometric MeanGeometric Mean is used in the construction of index number. The averages of proportions, percentages and compound rates are computed by geometric mean. The growth of population is measured in it as population increases in geometric progression.1.5 Harmonic Mean1.5.1 DefinitionHarmonic mean is used to calculate the average of a set of numbers. Here the number of elements will be averaged and split up by the sum of the reciprocals of the elements. The Harmonic mean is always the lowest mean. (ww.easycalculation.com)1.5.2 Business Applications of Harmonic MeanHarmonic mean is applied in the problems where small items must enamor more relative importance than the large ones. It is useful in cases where time, speed, values given in quantities, rate and prices are involved. But in practice, it has minute applicability.