# Management 202: Descriptive measures

BUSINESS STATISTICS

DESCRIPTIVE MEASURES Measures of Location/Central Tendency

When data is collected, from a common source, the individual values are likely to vary. It’s not easy to keep in mind all the values in a set of data hence it is essential to obtain a representative figure. Such a figure is known as a measure of central tendency or an average.

The Qualities of a good measure of central tendency includes:

• Should be rigidly defined to mean it should have same interpretation for different users
• Should be easy to interpret and understand based on all observations.
• Be suitable for further mathematical treatment
• Should not be affected much by extreme observations
• Should not be affected much by fluctuations of sampling

COMMON MEASURES OF CENTRAL TENDENCY

• Arithmetic mean
• Geometric mean
• Harmonic mean
• Median mean
• Mode mean

ARITHMETIC MEAN

The Arithmetic mean of a given set of observation is their sum divided by the number of observations

GEOMETRIC MEAN

Geometric mean is defined as the nth root of the product of items of a series. Geometric mean measures average change over a period of time.

HARMONIC MEAN

Harmonic mean is an average mean of means. It is the reciprocal of the Arithmetic mean of the reciprocals of the values of items in a given series.

MEDIAN

Median is a positional average. It is a value that occurs in the middle position of a set of data. To obtain median, arrange the data in ascending order. If the number of observations is:

Odd, median = (n+1/2)th item

MODE

Most frequently occurring value in a set of observation, when there is no frequently occurring value, then there is no mode. In a frequency distribution, mode is the value that corresponds to the highest frequency.

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