Prepared by: Meetesh Jha, Core Business School For: Mastishka Advanced Computing School

PERCENTAGES & AVERAGES SUMMARY SHEET

PERCENTAGES:
Decisions in real world are based on our observation of huge chunk of data. For ex. I want to compare two candidates from different universities following different number of subjects. Student 1 has studied 10 subjects of 200 marks each and got 1225 out of 2000. While other student has studied 15 subjects of 100 marks each and secured 925 marks. I want to select a better candidate who has scored better. What is the criterion of being better when the bases are different? To give decision makers a common base is introduced that is called PER (every) CENT (100), i. e. value of my data out of every 100 values. It is closely related to Proportions. Considering the example above it is 1225:2000 :: x:100 and 925:1500 :: y: 100. What are the values of x and y?

APPLICATIONS:
1. Expenditure and Saving: If a person spends x% of the monthly salary His saving is (100 x) % 2. Price and Expenditure: If price of commodity is P and a family consumes Q quantity, then total expenditure is P*Q But if the price of commodity is increased by x%, i.e. new price, P1 = P + P*x/100. By how much percent should the family cut the consumption if they want to keep expenditure constant, i.e. P*Q = P1*Q1 P(1+x/100)*Q1 = P*Q Q1 = Q/(1+x/100) Change in consumption = Q1 Q = Q/(1+x/100) Q Change = - Q * x/(x+100) What if the price of the commodity has decreased? 3. Population Increase: If P is the current population of a town and it is known that it increases @ x% per year. What can be said about the population 2 years from now? Population next year, P1 = P + P*x/100 P1 = P (100 + x)/100 Now Population after 2 years, P2 = P1 + P1*x/100 P2 = P1 (100 + x)/100 P2 = P {(100+x)/100} * {(100+x)/100} P2 = P {(100+x)/100}2 What could be the population n years from today and what were the population k years ago? In the similar manner, Percentage provides a whole range of application whenever one needs to compare things with different bases or needs to analyze the trend.

Prepared by: Meetesh Jha, Core Business School For: Mastishka Advanced Computing School

AVERAGES:
Any data set in practical situation comprises of large number of data points. Along with the large number the data set is also scattered and hence there arises a need to identify such a data point about which the maximum density of data is expected. Identifying such a point helps the decision maker to take a call based on the tendencies displayed by the identified (central) data point or data points in vicinity of that central point. Based on their meanings and applications in business decision making, Central Tendency can be categorized into three kinds: 1. Averages or Mean: The most widely used measure to find central tendency tries to divide the data set into two equal parts based on the WEIGHT/BULK/STRENGTH. Suppose you have a 10 cm long wooden rod. At the both ends there are two weights placed 5 kg and 10 kg respectively. We need to support the rod at that point where it gets balanced and both ends remain in air. The point that balances is nothing but mean. How far would it be from the end having 10 kg end? Have you ever imagined why the SeeSaw never balances when you and your sibling were at the opposite ends? The division of data set could be based on SUM, PRODUCT or SUM OF INVERSES of data points: When the division is based on equal sum on both sides, the measure is called SIMPLE AVERAGE or AIRTHMATIC MEAN or MEAN (as widely used): MEAN = [SUM OF ALL THE DATA POINTS] / NUMBER OF DATA POINTS For a discrete data set like: x1, x2, x3, x4.....xn where there are n data points, the Average = [x1+ x2+ x3+ x4.....xn] / n For a grouped data where a particular data point is repeated... Xi Fi Xi*Fi FREQUENCY or SUM = [{x1 added f1 times} + {x2 added f2 times} + X1 F1 X1* F1 REPETITION added f3 times} + ...... {xn added fn times}] X2 F2 X2* F2 TOTAL DATA POINTS = F1 +F2 + F3....Fn X3 F3 X3* F3 DATA AVERAGE = SUM / TOTAL DATA POINTS . . . AVERAGE = Fi*Xi / Fi . . . Xn Fn Xn* Fn
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Fi Fi*Xi If the division is based on equality of product on both sides, the measure is called GEOMETRIC MEAN: GM = [PRODUCT OF ALL DATA POINTS][1/n] What could the formula for GM of a grouped data set be as mentioned above? There is another measure of central tendency called HARMONIC MEAN that finds the average of the sum of inverses of the data points. Generally used when the actual data set is

2. Another measure of central tendency tries to divide the data set into two equal parts based on the number of data points on each side. Assume that we have removed the weights from the rod in above example. Now, where would the point of balance shift? For ungrouped data set: x1, x2, x3, x4.....xn (arranged in ascending order) let us assume that n is an odd number (1,3, 5, 7...) then the data point that divides the set into two equal parts

Prepared by: Meetesh Jha, Core Business School For: Mastishka Advanced Computing School would be [(n+1)/2]th point in the set. What could be the median if there is an even number of data points? For a grouped data: Median= L + h/f (n/2 - c) where: L is the lower class boundary of median class h is the size of median class i.e. difference between upper and lower class boundaries of median class f is the frequency of median class c is previous cumulative frequency of the median class n/2 is total no. of observations divided by 2...OR...summation of F divided by 2 The median is not affected by the extreme values but at the same time algebraic operations are not applicable on median. It is useful when some qualitative analysis is to be done. Mode is the value of that observation that occur maximum number of times in the data set. With its application in large manufacturers, consumer behaviour etc. mode also have a few disadvantages like it doesnt provide accurate characteristic of data set if frequently occurring value is not nearer to the centre of data set. Also, mode need not be a unique value.