CSD102

Data Science

SESSION 4

MEASURES OF CENTRAL TENDENCY

 DESCRIPTIVE ANALYSIS
• CENTRAL TENDENCY

The central tendency is the extent to which the data values group around a typical or
central value.

• VARIATION

The variation is the amount of dispersion, or scattering, of values away from a central
value.

• SHAPE

The shape is the pattern of the distribution of values from the lowest value to the highest
value.
 CENTRAL TENDENCY
• A central value within the range of a data set that represent all the values in the
data set.

• The central tendency of a distribution is an estimate of the “center” of a

distribution value.

• It is the most typical representative measure of the group and is capable to

describe characteristics of a data set.

• It is used to facilitate comparison within one group or between groups of data.

 Measures of central tendency

• Arithmetic Mean

• Weighted Mean

• Geometric Mean

• Median

• Mode
 Arithmetic Mean
• The Mean or average is probably the most commonly used measure for describing a central
tendency.
• The mean is the average of all values in a distribution.
• Each data in a distribution contributes in the determination of mean.
• It is also known as arithmetic average as it is the arithmetic average of the data set.
• To compute the mean, all the values are added and divided by the total number of values. It is the
ratio of summation of all scores to the total numbers of scores.
• Using mean, one can compare different groups.
• It has mathematical properties that make it attractive to use in inferential statistics analysis.
• It is the best measure of central tendency in the case of symmetrical and moderately skewed data
sets.
• The mean is affected by each and every value, which is an advantage. The mean uses all the data,
and each data item influences the mean. It is also a disadvantage because extremely large or
small values can cause the mean to be pulled toward the extreme value.
 Computation of Arithmetic Mean
(Individual Observation)
• The arithmetic mean can be computed by using the following
statistical formula:

Where
 EXAMPLE

The following data represents test scores. Find the arithmetic mean of
the following data set:
16, 18, 19, 21, 23, 23, 27, 29, 29, 35
Solution:
=

Thus, the mean test scores is 24.

 EXAMPLE
• Nutritional data about a sample of seven breakfast cereals includes the number
of calories per serving:

• Compute the mean number of calories in these breakfast cereals.

SOLUTION
 EXAMPLES
• Compute the mean for the following numbers:
213 345 609 073 167 243 444 524 199 682

• Compute the mean for the following numbers:

17.3 44.5 31.6 40.0 52.8 38.8 30.1 78.5.

• Compute the mean for the following numbers:

7 -2 5 9 0 -3 -6 -7 -4 -5 2 -8.
 Computation of Arithmetic Mean
(Discrete series)
• The arithmetic mean can be computed by using the following
statistical formula:

Where
 EXAMPLE

• The following data represents test scores. Find the arithmetic mean of
the following data set:
Test score Frequency
12 8
20 16
27 48
33 90
42 30
54 8
 EXAMPLE

Solution:
Test score (x) Frequency (f) fx
12 8
20 16
27 48
33 90
42 30
54 8
∑
 EXAMPLE
Test score (x) Frequency (f) fx
12 8 96
20 16 320
27 48 1296
33 90 2970
42 30 1260
54 8 432
200 6374

Thus, the mean test scores is 31.87.

 Weighted Mean

• The weighted mean enables us to calculate an average

that takes into account the importance of each value to
the overall total.

• Weighted mean is calculated when there are several

observation having same value but different weights.
 Computation of Weighted Mean

• The weighted mean can be computed by using the following statistical

formula:

Where
 Example
• A candidate obtains the following marks in an examination: English –
46 ; Mathematics – 67 ; Management – 72 ; Economics – 58 ; Political
Science – 53. It is agreed to give double weights to marks in English
and Mathematics as compared to other subjects. What is the
weighted mean?
 EXAMPLE

Solution:

Subjects Marks (x) Weights (w) wx

∑
 EXAMPLE

Solution:

Subjects Marks (x) Weights (w) wx

English 46 2 92
Mathematics 67 2 134
Management 72 1 72
Economics 58 1 58
Political Science 53 1 53
∑ 7 409
 EXAMPLE
• The weighted mean can be computed by using the following statistical
formula:

= 58.43
 Example
• The Carter Construction Company pays its hourly employees $16.50, $19.00, or $25.00 per hour.
There are 26 hourly employees, 14 of which are paid at the $16.50 rate, 10 at the $19.00 rate,
and 2 at the $25.00 rate. What is the mean hourly rate paid the 26 employees?

• Solution: To find the mean hourly rate, we multiply each of the hourly rates by the number of
employees earning that rate. The mean hourly rate is

The weighted mean hourly wage is $18.1154.

Compute weighted mean wage of labor for product 1 and product 2.
 Solution

For product 1:

Hourly wage (x) weight (w) wx

Unskilled

Semiskilled

Skilled

∑
 Solution

Hourly wage (x) weight (w) wx

Unskilled 5 1/8

Semiskilled 7 2/8

Skilled 9 5/8

∑
Solution
 Examples
1. Andrews and Associates specialize in corporate law. They charge $100 an hour for researching a
case, $75 an hour for consultations, and $200 an hour for writing a brief. Last week one of the
associates spent 10 hours consulting with her client, 10 hours researching the case, and 20
hours writing the brief. What was the weighted mean hourly charge for her legal services?

2. In June, an investor purchased 300 shares of Oracle (an information technology company) stock
at $20 per share. In August, she purchased an additional 400 shares at $25 per share. In
November, she purchased an additional 400 shares, but the stock declined to $23 per share.
What is the weighted mean price per share?
 Geometric Mean

• GM is used to deal with quantities that change over a period of time to know an
average rate of change.
• Geometric mean is used to show multiplicative effects over time in compound
interest and inflation calculations.
• The geometric mean is useful in finding the average change of percentages, ratios,
indexes, or growth rates over time.
• It has a wide application in business and economics because we are often
interested in finding the percentage changes in sales, salaries, or economic figures,
such as the Gross Domestic Product, which compound or build on each other.

• The Geometric mean can be computed by using the following statistical formula:
Compute the average growth factor for the following data:
SOLUTION
 Examples
1. The percent increase in sales for the last 4 years at Combs Cosmetics were: 4.91, 5.75,
8.12, and 21.60. Find the geometric mean percent increase.
2. Compute the geometric mean of the following percent increases: 8, 12, 14, 26, and 5.
3. Compute the geometric mean of the following percent increases: 2, 8, 6, 4, 10, 6, 8,
and 4.
4. Listed below is the percent increase in sales for the MG Corporation over the last 5
years:
9.4 13.8 11.7 11.9 14.7
Determine the geometric mean percent increase in sales over the period.
 Median
• The median is the positional average that divides a distribution into two equal parts so that one half of items
falls above it and the other half below it.
• It is the midpoint of a distribution of values.
• It measures the central observation in the data.
• The median is unaffected by the magnitude of extreme values. This characteristic is an advantage, because
large and small values do not inordinately influence the median. For this reason, the median is often the best
measure of location to use in the analysis of variables such as house costs, income, and age.
• We must array the data before we calculate median.
• One way to compute the median is to list all observations in numerical order, and then locate the
observation in the center of the sample.
• The median can be computed by using the following statistical formula:

• You compute the median by following one of two rules:

Rule 1: If the data set contains an odd number of values, the median is the measurement associated with the
middle-ranked value.
Rule 2: If the data set contains an even number of values, the median is the measurement associated with the
average of the two middle-ranked values.
 Example
The following data represents test scores. Find the median:
27, 39, 49, 20, 21, 28, 38
Solution:
Arrange the data in the ascending or descending order
20, 21, 27, 28, 38, 39, 49 (n = 7)

Thus, Half of the test scores are less than 28 while other Half of the test
scores are more than 28.
 Example
The following data represents test scores. Find the median :
12, 17, 3, 14, 5, 8, 7, 15
Solution:
Arrange the data in the ascending or descending order
3, 5, 7, 8, 12, 14, 15, 17 (n = 8)

Thus, Half of the test scores are less than 10 while other Half of the test
scores are more than 10.
 Example
• The median is the average of the two
middle terms, $116,000 and $122,000, or
$119,000. This price is a reasonable
• A real estate broker wants to determine the representation of the prices of the 10
median selling price of 10 houses listed at the houses.
• Note that the house priced at $5,250,000
following prices:
did not enter into the analysis other than
to count as one of the 10 houses. If the
price of the tenth house were $200,000,
the results would be the same.
• However, if all the house prices were
averaged, the resulting average price of
the original 10 houses would be
$635,000, higher than 9 of the 10
individual prices.
 EXAMPLE
• Nutritional data about a sample of seven breakfast cereals includes the number
of calories per serving:

• Compute the median number of calories in these breakfast cereals.

 EXAMPLES
• Compute the median for the following numbers:
213 345 609 073 167 243 444 524 199 682

• Compute the median for the following numbers:

17.3 44.5 31.6 40.0 52.8 38.8 30.1 78.5.

• Compute the median for the following numbers:

7 -2 5 9 0 -3 -6 -7 -4 -5 2 -8.
 Mode
• The most frequent, repeated or common value in the data.
• In the world of business, the concept of mode is often used in determining sizes. As an
example, in determining the one size to produce, the manufacturer would most likely
produce the modal size.
• Useful measure to Large – scale manufacturers of consumable items such as ready-
made garments, shoemakers, etc. to know the consumer preferences.
• Mode can be used as for quantitative as well as qualitative data.
• It is the only way to express the central tendency of a nominal-level data.
• Mode is not affected by extreme values and can be used for open-ended data also.
• Data sets with two modes are referred to as bimodal.
• Data sets with more than two modes are referred to as multimodal.
• For a data set, sometimes there is no mode.
EXAMPLE
 EXAMPLE
The following data represents the number of rupee notes of different
denominations are given below in the table:

Denominations (Rs.) 10 20 5 50 100

No. of notes 40 30 10 25 20

Find the mode of the above data.

Solution:

Thus, most of the number of rupee notes are of 10 rupees.

EXAMPLE
 EXAMPLE
• The following lists the number of fatal accidents by scheduled commercial airlines over a 17-year
period according to the Air Transport Association of America. Using these data, compute the
mean, median, and mode.
EXAMPLE
 EXAMPLE
• The following list shows the 15 largest banks in the world by assets according to
EagleTraders.com. Compute the median and the mean assets from this group. Which of these two
measures do think is most appropriate for summarizing these data, and why?
 EXAMPLE
• The following lists the 10 largest automakers in the world and the number of vehicles produced
by each in a recent year. Compute the mean, median, and mode for the data.
Thank you