Business Applications of Measure of Central Tendency
1 Measures of Central Tendency “Measures of central tendency (averages) are statistical constants which enable us to figure out in a single effort the significance of the whole.” (Prof Bowley)
The main objectives of measure of central tendency are
To reduce data in a single value.
To make easy comparisons between data.
There are different types of averages; each has its own business applications.
1. Arithmetic Mean
2. Median
3. Mode
4. Geometric Mean
5. Harmonic Mean
1.1 Arithmetic Mean
1.1.1 Definition
Most important measure of location is the mean or average 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 population, the mean is denoted by the Greek letter μ. (David R. Anderson et al)
1.1.2 Business Applications of Mean
Arithmetic mean is considered a deal average. It is frequently used in all the aspects of business i.e. number of items produced per day on a large assembly line, number of orders received per month for a firm. further In economic analysis 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 Example
Say we want to find the average annual 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 earn $.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 Median
1.2.1 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
The main objectives of measure of central tendency are
To reduce data in a single value.
To make easy comparisons between data.
There are different types of averages; each has its own business applications.
1. Arithmetic Mean
2. Median
3. Mode
4. Geometric Mean
5. Harmonic Mean
1.1 Arithmetic Mean
1.1.1 Definition
Most important measure of location is the mean or average 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 population, the mean is denoted by the Greek letter μ. (David R. Anderson et al)
1.1.2 Business Applications of Mean
Arithmetic mean is considered a deal average. It is frequently used in all the aspects of business i.e. number of items produced per day on a large assembly line, number of orders received per month for a firm. further In economic analysis 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 Example
Say we want to find the average annual 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 earn $.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 Median
1.2.1 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