Running head: MEASURE OF LOCATION

An assignment on

Measure of location

Nabeena Khatri

LC00016000035

Third semester

Nepal Business College

Biratnagar-15, Nepal

Author Note

This assignment was prepared for Quantitative method, BBA-2523 department of

Quantitative method taught by Mr. Ram Babu Kafle

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Running head: MEASURE OF LOCATION

Abstract

A measure of central tendency is a single value that attempts to describe a set of data by
identifying the central position within that set of data. As such, measures of central tendency are
sometimes called measures of central location. They are also classed as summary statistics. The
mean (often called the average) is most likely the measure of central tendency that you are most
familiar with, but there are others, such as the median and the mode. The mean, median and
mode are all valid measures of central tendency, but under different conditions, some measures
of central tendency become more appropriate to use than others. In the following sections, we
will look at the mean, mode and median, and learn how to calculate them and under what
conditions they are most appropriate to be used. In statistics, a central tendency (or measure of
central tendency) is a central or typical value for a probability distribution. It may also be called
a center or location of the distribution. Colloquially, measures of central tendency are often
called averages. The term central tendency dates from the late 1920s. The most common
measures of central tendency are the arithmetic mean, the median and the mode. A central
tendency can be calculated for either a finite set of values or for a theoretical distribution, such as
the normal distribution. Occasionally authors use central tendency to denote "the tendency of
quantitative data to cluster around some central value." The central tendency of a distribution is
typically contrasted with its dispersion or variability; dispersion and central tendency are the
often characterized properties of distributions. Analysts may judge whether data has a strong or a
weak central tendency based on its dispersion.

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Running head: MEASURE OF LOCATION

Acknowledgement

This assignment is a wonderful experience for me because it gives us knowledge of different

conceptual and practicable curriculum of our study. There is very vast in saying and doing. Every
study has curiosity about their conceptual studies.

I would like to express my special thanks to my subject teacher Mr. Ramesh Babu
Kafley who gave me such a golden opportunity to do this wonderful assignment on the topic of
Measure of location which also helps me in doing lots of research and I come to know about so
many things. I am really thanks to them from my inner heart that helps in this assignment. Im
making this assignment not only for the marks but also for increasing my knowledge.

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Running head: MEASURE OF LOCATION

Introduction

Measures of central tendency are sometimes called measures of central location. They are
also classed as summary statistics. Averages are a statistical constant which tells about the
significance of whole data in a single effort. Averages give the concentration of whole data in the
central part of the distribution

The measures of central tendency or measure of location are:-

Arithmetic mean or mean

Median
Mode
Geometric Mean
Harmonic Mean
Requirement of an Ideal measure of central location:
It should be rigidly defined.
It should be based on all the observations
It should be suitable for further mathematical treatment
It should not be affected by fluctuation of sampling

Arithmetic Mean

What is the 'Arithmetic Mean'

The arithmetic mean is a mathematical representation of the typical value of a series of numbers,
computed as the sum of all the numbers in the series divided by the count of all numbers in the
series. The arithmetic mean is sometimes referred to as the average or simply as the mean. Some
mathematicians and scientists prefer to use the term "arithmetic mean" to distinguish it from
other measures of averaging, such as the geometric mean and the harmonic mean.

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Running head: MEASURE OF LOCATION

BREAKING DOWN 'Arithmetic Mean'

Nearly every field in mathematics and science uses the arithmetic mean. Many of the most
common metrics in economics, such as per capita income and per capita gross domestic product
(GDP), are calculated using arithmetic mean.

Suppose you wanted to know what the arithmetic mean of a stock's closing price was over the
past week. If the stock closed at $14.50, $14.80, $15.20, $15.50 and then $14, its arithmetic
mean closing price would be equal to the sum of the five numbers, $74, divided by 5, or $14.80.

Methods for calculating Arithmetic mean

I. Individual Series
Let x1, x2, x3 Xn be the items of a data. Then their arithmetic mean (A.M)

i.e.
Where n is the number of items or observations
II. Discrete series
In case of discrete series,
Let f1, f2, f3 fn are the frequencies of x1, x2, x3 X n respectively. Then their
arithmetic mean (A.M)
A.M. (X) = f1x1+f2x2+f3x3+...+f n x n
f1+f2+f3+. + f n
Or, X = fx/N
Where, N=f
III. Continuous series
Let M be the middle point of the class interval, then the A.M. is given by,
A.M. (X) = fm/N
Where m= middle value of the class interval
N= f
Merits of Arithmetic mean
Arithmetic mean rigidly defined by algebraic formula
It is easy to calculate and simple to understand
It based on all observations and it can be regarded as representative of the given data

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Running head: MEASURE OF LOCATION

It is capable of being treated mathematically and hence it is widely used in statistical

analysis.
Arithmetic mean can be computed even if the detailed distribution is not known but some
of the observation and number of the observation are known.
It is least affected by the fluctuation of sampling

Demerits of Arithmetic mean

It can neither be determined by inspection or by graphical location
Arithmetic mean cannot be computed for qualitative data like data on intelligence
honesty and smoking habit etc
It is too much affected by extreme observations and hence it is not adequately represent
data consisting of some extreme point
Arithmetic mean cannot be computed when class intervals have open ends

Median

What is a 'Median'

A median is the middle number in a sorted list of numbers. To determine the median value in a
sequence of numbers, the numbers must first be arranged in value order from lowest to highest.
If there is an odd amount of numbers, the median value is the number that is in the middle, with
the same amount of numbers below and above. If there is an even amount of numbers in the list,
the middle pair must be determined, added together and divided by two to find the median value.
The median can be used to determine an approximate average.

BREAKING DOWN 'Median'

To find the median value in a list with an odd amount of numbers, one would find the number
that is in the middle with an equal amount of numbers on either side of the median. To find the
median, first arrange the numbers in order from lowest to highest:

List: 3, 13, 2, 34, 11, 26, 47

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Running head: MEASURE OF LOCATION

Arranged in order, the list becomes: 2, 3, 11, 13, 26, 34, 47

The median is the number in the middle: 2, 3, 11, 13, 26, 34, 47

13 is the median in the list of numbers since there are 3 numbers on either side.

To find the median value in a list with an even amount of numbers, first arrange the numbers in
order from lowest to highest:

List: 3, 13, 2, 34, 11, 26, 47, 17

Arranged in order, the list becomes: 2, 3, 11, 13, 17, 26, 34, 47

The median is the average of the two numbers in the middle: 2, 3, 11, 13, 17, 26, 34, 47

13 + 17 = 30 30/ 2 = 15. Fifteen is the median value in this list of numbers.

COMPUTATION OF MEDIAN

I. Individual series: - If the number of observations is odd, the median is the middle value,
after the observations have been arranged in increasing or decreasing order of magnitude.
The formula is,

Median (Md) = Size of (N+1/2) Th item

In case of number of observations is even, the median is the AM of two middle terms.

Median (Md) = sum of two middle terms/2

II. Discrete series: To compare the median of the discrete series, the following formula
is used,
Median (Md) = size of (N+1/2) Th item
To find the actual median we have to look cumulative frequency (c.f.). The c.f. just
Th
greater than (N+1/2) is related with median. The actual median is calculated by using
formula.
Median (Md) = value of corresponding to the frequency just greater than n+1/2.

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Running head: MEASURE OF LOCATION

III. Continuous series: For continuous series, the median is calculated from the
following formula,

Median (Md) = size of (N/2) Th item

This gives the median class. For actual median we use the following formula,

Median (Md) = L+ N/2-C.F/f *h

Where,

L= Lower limit of the median class

F= frequency of the median class

h= magnitude or width of the class

C= cumulative frequency of class succeeding the median class

Properties of median

The median divides a histogram or a frequency curve into two parts with equal areas.
It remains unaffected by the magnitude of extreme deviation from the average.
It can be applied in ordinal level.

Merits of Median

Simplicity:- It is very simple measure of the central tendency of the series. I the case of
simple statistical series, just a glance at the data is enough to locate the median value.
Free from the effect of extreme values: - Unlike arithmetic mean, median value is not
destroyed by the extreme values of the series.
Certainty: - Certainty is another merits is the median. Median values are always a certain
specific value in the series.

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Running head: MEASURE OF LOCATION

Real value: - Median value is real value and is a better representative value of the series
compared to arithmetic mean average, the value of which may not exist in the series at
all.
Graphic presentation: - Besides algebraic approach, the median value can be estimated
also through the graphic presentation of data.
Possible even when data is incomplete: - Median can be estimated even in the case of
certain incomplete series. It is enough if one knows the number of items and the middle
item of the series.
Demerits of Median
Lack of representative character: - Median fails to be a representative measure in
case of such series the different values of which are wide apart from each other. Also,
median is of limited representative character as it is not based on all the items in the
series.
Unrealistic:- When the median is located somewhere between the two middle values,
it remains only an approximate measure, not a precise value.
Lack of algebraic treatment: - Arithmetic mean is capable of further algebraic
treatment, but median is not. For example, multiplying the median with the number of
items in the series will not give us the sum total of the values of the series.

However, median is quite a simple method finding an average of a series. It is quite a

commonly used measure in the case of such series which are related to qualitative
observation as and health of the student.

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Running head: MEASURE OF LOCATION

MODE
The value of the variable which occurs most frequently in a distribution is called the
mode. The mode is the value that appears most often in a set data. The mode of a discrete
probability distribution is the value x at which its probability mass function takes its
maximum value. In other words, it is the value that is most likely to be sampled. The
mode of a continuous probability distribution is the value x at which its probability
density function has its maximum value, so the mode is at the peak. If the variable is
discrete, the mode is that value of the variable which occurs most frequently. This value
can be found by ordering the observations or inspecting the simple frequency distribution
or its histogram. If the variable is continuous, the mode is located in the class interval
with the largest frequency and its value must be estimated. As it is possible for several
values of the variable or several class intervals to have the same
Frequency, a set of data may have several modes.
A set of observations with one mode is called unimodal.
A set of observations with two modes is called bimodal.
A set of observations with more than two modes is called multimodal.

COMPUTATION OF MODE
I. Mode of discrete data: - In the case of discrete data, mode can be found just by
inspection i.e. just by taking an item with highest frequency.
The following is an ordered list of the number of complaints received by a telephone
Supervisor per day over a period of a fortnight:
3, 4, 4, 5, 5, 6, 6, 6, 6, 7, 8, 9, 10, 12
The value which occurs most frequently is 6, therefore:
Mode 6

II. Mode of grouped and continuous data: - In the case of grouped and continuous data, the
class with highest frequency is observed and it is taken as model class. Then by using the
following formula, mode can be computed.

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Mode (Mo) = L + f1-f 0 / 2f1-f0-f2* C

Where,
L= the lower limit of the modal class
f0 = the frequency of the class preceding the model class
f1= the frequency of the model class
f2= the frequency of the class succeeding the model class
C= the width of the class interval
Alternatively, mode can also be computed by following empirical relation.
Mode= 3 Median-2 Mean

Merits of mode
(1) Simple and popular: - Mode is very simple measure of central tendency. Sometimes, just at
the series is enough to locate the model value. Because of its simplicity, it s a very popular
measure of the central tendency.

(2) Less effect of marginal values: - Compared top mean, mode is less affected by marginal
values in the series. Mode is determined only by the value with highest frequencies.

(3) Graphic presentation:- Mode can be located graphically, with the help of histogram.

(4) Best representative: - Mode is that value which occurs most frequently in the series.
Accordingly, mode is the best representative value of the series.

(5) No need of knowing all the items or frequencies: - The calculation of mode does not
require knowledge of all the items and frequencies of a distribution. In simple series, it is enough
if one knows the items with highest frequencies in the distribution.

Demerits of mode

Following are the various demerits of mode:

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(1) Uncertain and vague: - Mode is an uncertain and vague measure of the central tendency.

(2) Not capable of algebraic treatment: - Unlike mean, mode is not capable of further algebraic
treatment.

(3) Difficult: - With frequencies of all items are identical, it is difficult to identify the modal
value.

(4) Complex procedure of grouping:- Calculation of mode involves cumbersome procedure of

grouping the data. If the extent of grouping changes there will be a change in the model value.

(5) Ignores extreme marginal frequencies:- It ignores extreme marginal frequencies. To that
extent model value is not a representative value of all the items in a series.

Besides, one can question the representative character of the model value as its calculation does
not involve all items of the series

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