You are on page 1of 89

fuysk ;ks- ik>kjs 09766134400

1
Arithmetic Mean:-

Index

or

(ii) Weighted Arithmetic Mean

(i) Simple Arithmetic Mean

b) For Discrete and Continuous Series


fx1+fx2+fx3+.......+ xn
fx
X =
=
N
N
(Note:- In continuous Series x is the mid-value of the class interval)

dividing the sum of the values by the number of items. Algebraically we can have the
formula as under:
a) For individual observations
x +x +x +.......+ xn
x
X = 1 2 3 N
=
N

P A Z A R E

P A

P A

N I L E S H

P A Z A R E

Ex:- Find out the Simple Arithmetic Mean by direct method


Ex (1) :- 21, 8, 31, 9, 18, 25
(Tip: write the values in increasing (ascending) order)
Ans :- 8 , 9 , 18 , 21 , 25 , 31
x
1 2
3
4
5
6
N

X =

x1+x2+x3+ x4+ x5+ x6


N

8+9+18+21+25+31
6

x
N

= 112

= 18.6666

X =

1. Notes under development, so some calculation mistakes present. Student can


solve all problem again for verfied the answers.
2. Missing frequency problem see the page number 5 & 13
3. See page number 25 & 26 for how the 5 types of problem can solved from one
example like mean, median, quartile deviation, mean deviation &
standard deviation.
4. See page number 74 & 75 for direct method to solve the NWM, LCM & VAM.
5. LPP : Assignment Problem - see page number 80 to 82

N I LImportant
ETip S H

Arithmetic Mean is the most widely used measurement which represents the
entire data. Generally it is temed as an Average to a layman. It is the quantity obtained by
dividing the sum of the values of the items in a variable by their number. It is denoted by a
symbol X. Arithmetic mean by be either:

(i) Simple Arithmetic Mean :- The simple arithmetic mean is the quotient obtained by

-- 01
-- 10
-- 15
-- 16
-- 19
-- 21
-- 27
-- 33
-- 35
-- 40
-- 48
-- 61
-- 76

Mean
Median
Mode
Mean Deviation
Quartile Deviation
Standard Devaition
Coefficient of Correlation
Rank Correlation Coefficient
Regression
Trend Value
Linear Programming : Graphic method
LPP : Transportation Method (NWM, LCM, VAM)
LPP : Assignment Problem

01)
02)
03)
04)
05)
06)
07)
08)
09)
10)
11)
12)
13)

E-mail :- nilesh_pazare@rediffmail.com

Simple Arithmetic Mean (X) = 18.67

x
N

X = 1+2+3+6+8+9+12+14+16
9

x
N

= 71 =
9

x1+x2+x3+ x4+ x5+ x6 + x7 + x8 + x9


N

X =

(Tip: write the values in ascending order)

7.8888

Simple Arithmetic Mean (X) = 7.89

QDM notes for MBA

Ex (2) :- 3, 8, 2, 9, 6, 1, 12, 14, 16


Ans:1 2 3 6 8 9 12 14 16
1 2 3 4 5 6 7 8 9

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

Ex : Find out the Simple Arithmetic Mean For Discrete Series by direct method

Income
No. of Families

10
5

20
7

30
2

N = f
40
3

50
1

60
6

70
9

fx
10x5 = 50
20x7 = 140
30x2 = 60
40x3 = 120
50x1 = 50
60x6 = 360
70x9 = 630
fx = 1410

............. for discrete & continous series

P A Z A R E

P A

(Short cut method)

d=x - A
27-37= -10
32-37 = -5
37-37= 0
42-37= 5
47-37 = 10
52 - 37 = 15
d = 15

Assumed Mean (A) = 37


X = A + d
N
X = 37 + 15
6
= 37 + 2.5
X = 39.5

Since A = 32
X = A + d
N
X = 32 + 45
6
= 32 + 7.5
X = 39.5

d=x - A
27-42= -15
32-42= -10
37-42 = -5
42-42= 0
47-42= 5
52-42= 10
d = -15

Since A = 42
X = A + d
N
X = A + (-15)
6
X = 42 - 2.5
X = 39.5

d=x - A
27-32= -5
32-32 = -0
37-32= 5
42-32= 10
47-32 = 15
52 - 32 = 20
d = 45

(Tip:- From above example, you observed that any value of assumed mean taken the
arithmetic mean answer is comes same. So did not confuse and assume any value as
assumed mean (A), i.e. from given example and solve the example.)

X =

QDM notes for MBA

x
27
32
37
42
47
52

f.Xm
82.5+58+50+84+42.5+26+9
352
=
= 32
= 11
N
5+4+4+8+5+4+2
Arithmetic Mean for Continous series by direct method (X) =11

f . Xm
16.5 x 5 = 82.5
14.5 x 4 = 58
12.5 x 4 = 50
10.5 x 8 = 84
8.5 x 5 = 42.5
6.5 x 4 = 26
4.5 x 2 = 9
f.Xm = 82.5+58+50+84+42.5+26+9 = 352

N I L E S H

Ex (1):- 52, 47, 37, 32, 42, 27


Ans:x
direct method
x
27
27
32
32
X = x
37
N
37
42
237
42
X =
47
6
47
52
X = 39.5
52
x = 237

Xm
16.5
14.5
12.5
10.5
8.5
6.5
4.5

P A

P A Z A R E

Ex:- Find out the Simple Arithmetic Mean For Continous Series by direct method
f . Xm
X =
N
Here,
f = Frequency,
Xm = mid value,
N = f
f
5
4
4
8
5
4
2
N=32

fd
N

= 42.7272

Arithmetic Mean for discrete series by direct method (X) = 42.73

C.I.
16 - 17
14 - 15
12 - 13
10 - 11
8-9
6-7
4-5

50+140+60+120+50+360+630
= 1410
5+7+2+3+1+6+9
33

A +

(Note:- fd is the product of frequency and deviation)

N I L E S H
X = fx =

X =

No. of Families
f
5
7
2
3
1
6
9
N = f = 33

Income
x
10
20
30
40
50
60
70

Ans :-

Ex:-

x = variable,

If the number of items is large and values of variable big in size, a short cut
method of computing x is adopted. This method is based on the following property of the
arithmetic average, The algebric sum of the devations of values of variable from their
mean is always to Zero.
Let us assume the difference figure A as assumed mean. Take deviations of
values of variable from the assumed mean denoted as d. Obtain the sum of these
devations denote as d. Substitute the values of these symbols in the short-cut formula
as under.
X =
A + d
............. for individual observations
N

f = Frequency,

Here,

fx
N

Simple Arithmetic Mean by short cut method :-

X =

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400


f.d
7 * -30= -210
11 * -20= -220
31 * -10= -310
17 * 0= 0
16 * 10= 160
5 * 20= 100
3 * 30= 90
fd = -210-220-310+0+160+100+90 = -390
(-390) = 40 + (-4.3333) = 40 - 4.3333 = 35.6667
90

N I L E S H
=

30

510
90

30 + 5.6666 = 35.6666 = 35.67

N I L E S H

X = A + fd x
c
N
(Note:- c the common factor or width of the class interval is used for dividing and
multiplying)

P A Z A R E

Ex (1):- 90-99
2

Xm
94.5
84.5
74.5
64.5
54.5
44.5
34.5
24.5

d = 94.5 - 54.5 = 40
10
10

60-69
17

d= (Xm-A)/c
(94.5-54.5)/10= 4
(84.5-54.5)/10= 3
(74.5-54.5)/10= 2
(64.5-54.5)/10= 1
(54.5-54.5)/10= 0
(44.5-54.5)/10= -1
(34.5-54.5)/10= -2
(24.5-54.5)/10= -3

=4 ,

d =

50-59
20

40-49
9

fd
2*4= 8
9*3= 27
12*2= 24
17*1= 17
20*0= 0
9*-1= -9
6*-2= -12
5*-3= -15
fd = 40
84.5 - 54.5
10

30-39
6

20-29
5

Q: How to find the value C


A: Range 90-99, the number
start from 0 to 9, it means
0,1,2,3,4,5,6,7,8,9 = 10 intervals
So the common factor (c)
value is 10

f
2
9
12
17
20
9
6
5
N=80

70-79
12

30
10

= 3

= 10.5 + 0.5 = 11
Same as remaining values of d are finds.

QDM notes for MBA

C.I.
90-99
80-89
70-79
60-69
50-59
40-49
30-39
20-29

80-89
9

16
32

10.5 +

f.d
5 * 6 = 30
4 * 4 = 16
4*2=8
8*0=0
5 * -2 = -10
4 * -4 = -16
2 * -6 = -12
fd = 16

d=Xm- A
16.5-10.5= 6
14.5-10.5= 4
12.5-10.5= 2
10.5-10.5= 0
8.5-10.5= -2
6.5-10.5= -4
4.5-10.5= -6

X = A + fd
N

Xm
(16+17)/2= 33/2 = 16.5
(14+15)/2= 29/2 = 14.5
(12+13)/2= 25/2 = 12.5
(10+11)/2= 21/2 = 10.5
(8+9)/2= 17/2 = 8.5
(6+7)/2= 13/2 = 6.5
(4+5)/2= 9/2 = 4.5

ment to the short cut method. Under this method, the devations are devided by a single
common factor to reduce the figures to the minimum size. It is, in a way, a deliberate error
and it is compensated by multiplying the quotient. The adjusted or reduced value of d in
now termed as d so the formula stands as under.

f
5
4
4
8
5
4
2
N=32

X = A + fd = 10.5 + (-48) = 12.5 + (-1.5) = 12.5 - 1.5 = 11


N
32
(Tip :- From above example, it observed that you will solve any taking assumed mean
from given example and solve it and answer comes as same.)

The Step Deviation Method:- The step deviation method is the only additional adjust-

(Tip :- From above example, it observed that you will solve any taking assumed mean
from given example and solve it and answer comes as same.)
Ex (3) :C.I.
16-17
14-15
12-13
10-11
8-9
6-7
4-5

f.d
5 * 4 = 20
4*2=8
4*0=0
8 * -2 = -16
5 * -4 = -20
4 * -6 = -24
2 * -8 = -16
fd = -48

P A

P A Z A R E

X = A + fd
N

d=Xm- A
16.5-12.5= 4
14.5-12.5= 2
12.5-12.5= 0
10.5-12.5= -2
8.5-12.5= -4
6.5-12.5= -6
4.5-12.5= -8

f.d
7 * -20= -140
11 * -10= -110
31 * 00= 0
17 * 10= 170
16 * 20= 320
5 * 30= 150
3 * 40= 120
fd = -140-110+0+170+320+150+120 = 510

OR
Xm
(16+17)/2= 33/2 = 16.5
(14+15)/2= 29/2 = 14.5
(12+13)/2= 25/2 = 12.5
(10+11)/2= 21/2 = 10.5
(8+9)/2= 17/2 = 8.5
(6+7)/2= 13/2 = 6.5
(4+5)/2= 9/2 = 4.5

d= x-A
10-30= -20
20-30= -10
30-30= 0
40-30= 10
50-30= 20
60-30= 30
70-30= 40

P A

f
7
11
31
17
16
5
3
N=90

x
10
20
30
40
50
60
70

OR

f
5
4
4
8
5
4
2
N=32

C.I.
16-17
14-15
12-13
10-11
8-9
6-7
4-5

40

70
3

60
5

X = A + fd
N

50
16

d= x-A
10-40= -30
20-40= -20
30-40= -10
40-40= 0
50-40= 10
60-40= 20
70-40= 30

40
17

x
10
20
30
40
50
60
70

f
7
11
31
17
16
5
3
N=90

30
31

20
11

E-mail :- nilesh_pazare@rediffmail.com

Ex (2):- 10
7

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

Since, N=80, A = 54.5, fd = 40, c = 10, then put the values on formula

54.5 + 5 =

59.5

27-31
8

32-36
7

37-41
2

59.5

42-46
4

Q: How to find the value C


A: Range 42-46, the number
start from 2 to 6, it means
2,3,4,5,6 = 5 intervals

Xm
14.5
12.5
10.5
8.5
6.5
4.5

d= (Xm-A)/c
(14.5-8.5)/2= 3
(12.5-8.5)/2= 2
(10.5-8.5)/2= 1
(8.5-8.5)/2= 0
(6.5-8.5)/2= -1
(4.5-8.5)/2= -2

fd
3*3=9
8 * 2 = 16
15 * 1 = 15
20 * 0 = 0
10 * -1 = -10
4 * -2 = -8
fd = 22

A: Range 14-15, the number


start from 4 to 5, it means
4, 5 = 2 intervals
So the common factor (c)
value is 2

P A Z A R E
22
60

x 2

= 8.5 + (0.3666 * 2) = 8.5 + 0.7333 = 9.2333 = 9.23


OR

C.I.
14-15
12-13
10-11
8-9
6-7
4-5

f
3
8
15
20
10
4
N=60

Xm
14.5
12.5
10.5
8.5
6.5
4.5

d= (Xm-A)/c
(14.5-10.5)/2= 2
(12.5-10.5)/2= 1
(10.5-10.5)/2= 0
(8.5-10.5)/2= -1
(6.5-10.5)/2= -2
(4.5-10.5)/2= -3

X = 10.5 + (-38) x 2
60

fd
3*2=6
8*1=8
15 * 0 = 0
20 * -1 = -20
10 * -2 = -20
4 * -3 = -12
fd = -38

14-15
3
Q: How to find the value C

(-8) x 5
35

X = 29 +

fd
x c
N
= 29 + (-0.2286 * 5) = 29 - 1.1429 = 27.8571

12-13
8

-8

Since, N=35, A = 29, fd = -8, c = 5, then put the values on formula


X = A+

f
3
8
15
20
10
4
N=60

X = 8.5 +
So the common factor (c)
value is 5

fd = 12 + 4 + 7 + 0 -4 - 10 - 9 - 8 =

fd
4 * 3 = 12
2*2=4
7*1=7
8*0=0
4 * -1 = -4
5 * -2 = -10
3 * -3 = -9
2 * -4 = -8
fd = -8

10-11
15

d= (Xm-A)/c
(44-29)/5= 3
(39-29)/5= 2
(34-29)/5= 1
(29-29)/5= 0
(24-29)/5= -1
(19-29)/5= -2
(14-29)/5= -3
(9-29)/5= -4

Xm
44
39
34
29
24
19
14
9

8-9
20

N I L E S H

f
4
2
7
8
4
5
3
2
N=35

C.I.
14-15
12-13
10-11
8-9
6-7
4-5

6-7
10

= 10.5 + (-0.6333 * 2) = 10.5 - 1.2666 = 9.2334

(Tip :- From above example, it observed that you will solve any taking assumed mean
from given example and solve it and answer comes as same.)

27.86

QDM notes for MBA

P A

P A Z A R E

Ex (3): - 4-5
4

22-26
4

27 x 5
= 24 + (0.7714 * 5) = 24 + 3.8571 = 27.8571= 27.86
35
(Tip :- From above example, it observed that you will solve any taking assumed mean
from given example and solve it and answer comes as same.)
X = 24 +

17-21
5

44.5 + 15 =

P A

C.I.
42-46
37-41
32-36
27-31
22-26
17-21
12-16
7-11

12-16
3

fd
4 * 4 = 16
2*3=6
7 * 2 = 14
8*1=8
4*0=0
5 * -1 = -5
3 * -2 = -6
2 * -3 = -6
fd = 27

Ex (2): - 7-11
2

= 44.5 + 1.5 * 10

N I L E S H

X = 44.5 + 120 x 10
80

d= (Xm-A)/c
(44-24)/5= 4
(39-24)/5= 3
(34-24)/5= 2
(29-24)/5= 1
(24-24)/5= 0
(19-24)/5= -1
(14-24)/5= -2
(9-24)/5= -3

fd
2 * 5 = 10
9 * 4 = 36
12 * 3 = 36
17 * 2 = 34
20 * 1 = 20
9*0=0
6 * -1 = -6
5 * -2 = -10
fd = 120

5
4
3
2
1
0
-1
-2

Xm
44
39
34
29
24
19
14
9

d= (Xm-A)/c
(94.5-44.5)/10=
(84.5-44.5)/10=
(74.5-44.5)/10=
(64.5-44.5)/10=
(54.5-44.5)/10=
(44.5-44.5)/10=
(34.5-44.5)/10=
(24.5-44.5)/10=

Xm
94.5
84.5
74.5
64.5
54.5
44.5
34.5
24.5

f
2
9
12
17
20
9
6
5
N=80

f
4
2
7
8
4
5
3
2
N=35

C.I.
90-99
80-89
70-79
60-69
50-59
40-49
30-39
20-29

C.I.
42-46
37-41
32-36
27-31
22-26
17-21
12-16
7-11

fd
X = A+
x c
N
X = 54.5 + 40 x 10 = 54.5 + 0.5 * 10
80
OR

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

79.60

Ex (7):- You are given the following incomplete information and its mean 25. find out the
missing frequencies.
Class interval (x):
0-10
10-20 20-30 30-40 40-50
Total
Frequencies (f):
5
15
5
= 45
Soln:So,

Assume that the frequencies are A and B. Total frequencies are 45.
x
00-10
10-20
20-30
30-40
40-50

f
5
A
15
20-A
5
N=45

Xm
(10+0)/2=10/2=5
(10+20)/2=30/2=15
(20+30)/2=50/2=25
(30+40)/2=70/2=35
(40+50)/2=90/2=45

fx
5 * 5 = 25
A * 15 = 15A
15 * 25 = 375
(20-A)*35 = 700-35 A
5 * 45 = 225
fx = 1325 - 20 A

fx =25+15A+375+700-20A+225=1325-35A+15A = 1325-20A

fx = 50+180+70A + 960 - 80A + 540+200+100 = 2040 - 80 A + 70 A = 2040 - 10A

QDM notes for MBA

Second Edition 2013 - 2014

5+A+15+B+5= 45
A + B + 25 = 45
A + B = 45 - 25
A + B = 20
B = 20 - A

79.60 * 25
1990
10A
10A
A = 50/10
A=5

2040 - 10A
25
= 2040 - 10A
= 2040 - 10A
= 2040 - 1990
= 50
= 5
=

fx
50*1 = 50
60*3 = 180
70*A = 70 A
80*(12-A) = 960-80 A
90*6 = 540
100*2 = 200
110*1 = 110
fx = 2040 - 10 A

f
1
3
(A)
12-A
6
2
1
N=25

P A Z A R E

9906 - 14A
100
115.86*100 = 9906 - 14A
11586 = 9906 - 14A
14A = 11586 - 9906
14A = 1680
A = 1680 = 120
14
A = 120
115.86

x
50
60
70
80
90
100
110

fx
N

N I L E S H

f
fx
25
110*25 = 2750
17
112*17 = 1904
13
113*13= 1469
15
117*15 = 1755
14
A*14 = 14A
8
125*8 = 1000
6
128*6 = 768
2
130*2 = 260
N=100
fx = 9906 + 14A
So, missing value is 120.

Assume that the missing frequencies are A and B . Total frequencies are 25.
1 + 3 + A + B + 6 + 2 + 1 = 25
13 + A + B = 25
fx
A + B = 25 - 13
X =
N
A + B = 12,
B = 12 - A

X =

P A

P A

Soln:So,

x
110
112
113
117
A
125
128
130

Let us assume the missing value a A.

P A Z A R E

Ex (5):- If the average wages paid to 25 workers is Rs. 79.60, find the missing frequencies.
Wages(Rs.) (x):
50
60
70
80
90
100
110
No.of workers (f):
1
3
(?)
(?)
6
2
1

Soln:-

N I L E S H

Ex (6):- From the following data calcuate the missing value when the mean is 115.86.
Wages(Rs.) (x): 110
112
113
117
(?)
125
128
130
No.of workers (f): 25
17
13
15
14
8
6
2

678 + 14A
43 + A
(43+A)* 15.25 =
678 + 14A
655.75 + 15.25A =
678 + 14A
15.25A - 14A =
678 - 655.75
1.25A =
22.25
22.25
A =
= 17.8
1.25
Therefore, the missing frequency equal to 17.8 or 18 approximately.
15.25 =

Now put the value A = 5


79.60 * 25
1990
A + B = 12
10A
5 + B = 12
10A
B = 12 - 5
A = 50/10
B=7
A=5
So, missing frequencies are A = 5 and B = 7

Since X = 15.25, N = 43+A, fx = 678+14A, put the values on formula

2040 - 10A
25
= 2040 - 10A
= 2040 - 10A
= 2040 - 1990
= 50
= 5
=

fx
N

79.60

X =

fx
10*3 = 30
12*7 = 84
14*A = 14A
16*20 = 320
16*8 = 144
20*5 = 100
fx = 678+14A

f
3
7
(A)
20
8
5
N=43+A

x
10
12
14
16
18
20

Since X = 79.60, N = 25, fx = 2040 - 10A, put the values on formula

Ex (4): - Find the missing frequency from the following distribution if its mean is 15.25.
x:
10
12
14
16
18
20
f:
3
7
(?)
20
8
5
Soln:Let us assume the missing frequency as A

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

Since, put the values on formula i.e. N=45, X = 25, fx = 1325 - 20 A


,

OR

N=5+A+15+B+5
45 = 25 + A + B
45 - 25 = A + B
A + B = 20 ----- (1)

(1)
A + B = 20
multiply by 35 to eqn (1)
(2) 15A +35B = 500

fx =305+1152+67A+70B+584=2041+67A+70B

2041+67A+70B
100
67.45 * 100 = 2041+67A+70B
6745
= 2041+67A+70B
6745 -2041 = 67A + 70 B
67A+70B = 4704 ------ (2)

70A + 70 B
_ 67A
70 B
3A
A = 126 / 3

=
=
=
=

4830
4704
126
42

P A Z A R E

Now, substituting the value of A = 42 on eqn (1)


A + B = 69,

42 + B = 69,

B = 69 - 42,

B = 27

So, missing frequncies are A = 42 and B = 27

Ex (9):- Find mean for the following data.


Class interval (x): 60-69 50-59 40-49
Frequency (f):
2
4
5
Soln:C.I.
60-69
50-59
40-49
30-39
20-29
10-19
0-9

f
2
4
5
10
6
9
7
N=43

QDM notes for MBA

Xm
64.5
54.5
44.5
34.5
24.5
14.5
4.5

d= (Xm-A)/c
(64.5-34.5)/10= 3
(54.5-34.5)/10= 2
(44.5-34.5)/10= 1
(34.5-34.5)/10= 0
(24.5-34.5)/10= -1
(14.5-34.5)/10= -2
(4.5-34.5)/10= -3

30-39
10

20-29
6

fd
2*3=6
4*2=8
5*1=5
10 * 0 = 0
6 * -1 = -6
9 * -2 = -18
7 * -3 = -21
fd = -26

10-19
9

0-9
7

Total
= 43

Q: How to find the value C


A: Range 60-69, the number
start from 0 to 9, it means
0,1,2,3,4,5,6,7,8,9 = 10 intervals
So the common factor (c)
value is 10

Second Edition 2013 - 2014

N I L E S H

(Tip :- From above example, it observed that you will solve the example both method
and answer comes as same, so student can deside which method is easy to solve.)

(1)
A + B = 69
multiply by 70 to eqn (1)
(2) 67A +70B = 4704

So, missing frequncies are A = 10 and B = 10

N=5+18+A+B+8
100 = 31 + A + B
100 - 31 = A + B
A + B = 69 ----- (1)

A + B = 20,
10 + B = 20,
B = 20 - 10,
B = 10

= 700
= 500
= 200
= 10

Now, substituting the value of A = 10 on eqn (1)

35A + 35 B
_ 15A 35 B
20 A
A = 200 / 20

fx
5 * 61 = 305
18 * 64 = 1152
A * 67 = 67A
B * 70 = 70B
8 * 73 = 584
fx = 2041+67A+70B

P A

P A

fx =25+15A+375+35B+225=625+15A+35B

P A Z A R E

25 = 625+15A+35B
45
25 * 45 = 625+15A+35B
1125
= 625+15A+35B
15A+35B = 1125-625
15A+35B = 500 ------ (2)

A + B = 69 ------ (1)

67.45 =

fx
5 * 5 = 25
A * 15 = 15A
15 * 25 = 375
B*35 = 35 B
5 * 45 = 225
fx = 625+15A+35B

N I L E S H

A + B = 20 ------ (1)

Xm
(60+62)/2=122/2=61
(63+65)/2=128/2=64
(66+68)/2=134/2=67
(69+71)/2=140/2=70
(72+74)/2=146/2=73

Xm
(10+0)/2=10/2=5
(10+20)/2=30/2=15
(20+30)/2=50/2=25
(30+40)/2=70/2=35
(40+50)/2=90/2=45

f
5
18
A
B
8
N=100

f
5
A
15
B
5
N=45

C.I.
00-10
10-20
20-30
30-40
40-50

Lets assume the frequencies as A and B

C.I.
60-62
63-65
66-68
69-71
72-74

Assume that the frequencies are A and B. Total frequencies are 100.

So, missing frequncies are A = 10 and B = 10

Soln:-

Put A = 10 on eqn A + B = 20
A + B = 20
10 + B = 20
B = 20 - 10
B = 10

25 * 45
1125
20 A
20 A

1325 - 20A
45
= 1325 - 20 A
= 1325 - 20 A
= 1325 - 1125
= 200
200
=
= 10
20
= 10

25 =

fx
N

Ex (8):- Find out the missing frequencies from the following data, if the Mean of it 67.45.
Height (x):
60-62 63-65 66-68 69-71 72-74
Total
No of Student (f):
5
18
8
= 100

X =

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

Since, N=43, A = 34.5, fd = -26, c = 10, then put the values on formula

90-99
1

21-40
5

f.d
4* -15= -60
5* -10= -50
9* -5= -45
15* 0=0
10* 5=50
7* 10=70
fd = -35

P A Z A R E
fx
N
965
X =
50
X = 19.3

fd
N
-35
X = 20 +
50
X = 20 - 0.7 = 19.3

X =

X = A +

(Tip:- Observe the above example, by using both the method i.e. Direct as will as
Short cut method, the answer will be same i.e. 19.3 , So student can be solve the
example any method.)
c) x:
f:
Ans:-

80-84
2

75-79
0

70-74
10

65-59
17

60-64
24

55-59
19

50-54
7

45-49
4

40-44
1

Above example solve by both the methods i.e. direct as will as short cut method.

QDM notes for MBA

Second Edition 2013 - 2014

Since, N=50, A = 70.5, fd = -12, c = 20, then put the values on formula
fd
X = A+
x c
N
(-12)
X = 70.5 +
x 20 = 70.5 + (-0.24 * 20) = 70.5 - 4.8 = 65.70
50

Short cut Method


f
d= x-A
4
5-20=-15
5
10-20=-10
9
15-20=-5
15
20-20=0
10
25-20=5
7
30-20=10
N=50

fd
4 * -3 = -12
5 * -2 = -10
8 * -1 = -8
20 * 0 = 0
9*1=9
3*2=6
1*3=3
fd = -12

1-20
4

x
5
10
15
20
25
30

d= (Xm-A)/c
(10.5-70.5)/20= -3
(30.5-70.5)/20= -2
(50.5-70.5)/20= -1
(70.5-70.5)/20= 0
(90.5-70.5)/20= 1
(110.5-70.5)/20= 2
(130.5-70.5)/20= 3

41-60
8

30
7

Xm
10.5
30.5
50.5
70.5
90.5
110.5
130.5

61-80
20

25
10

P A

f
4
5
8
20
9
3
1
N=50

81-100
9

C.I.
1-20
21-40
41-60
61-80
81-100
101-120
121-140

101-120
3

121-140
1

20
15

N I L E S H

Direct Method
f
fx
4
5*4=20
5
10*5=50
9
15*9=135
15
20*15=300
10
25*10=250
7
30*7=210
N=f =50
fx = 965

Ex (11): -

15
9

P A Z A R E

x
5
10
15
20
25
30

10
5

N I L E S H

5
4

(Tip:- Observe the above example, by using both the method i.e. Direct as will as
Short cut method, the answer will be same i.e. 89.33 , So student can be solve the
example any method.)
b) x:
f:
Ans:-

Since, N=50, A = 54.5, fd = -36, c = 10, then put the values on formula
fd
X = A+
x c
N
(-36)
X = 54.5 +
x 10 = 54.5 + (-0.72 * 10) = 54.5 - 7.2 = 47.30
50

fd
5 * -4 = -20
6 * -3 = -18
7 * -2 = -14
8 * -1 = -8
11 * 0 = 0
6*1=6
4*2=8
2*3=6
1*4=4
fd = -36

80-89
2

70-79
4

P A

-4
-3
-2
-1
0
1
2
3
4

60-69
6

Ex (12):- Find the Simple Arithmetic Mean by using different methods


a)
86, 70, 96, 93, 97, 94
Ans:Short cut Method
x
direct method
x
d=x - A
Assumed Mean (A) = 93
70
70
70-93 = -23
d
X = A +
86
x
86
86-93 = -7
N
X =
93
N
93
93-93 = 0
-22
X = 93 +
94
536
94
94-93 = 1
6
X =
96
6
96
96-93 = 3
= 93 - 3.6667
97
X = 89.33
97
97-93 = 4
X = 89.33
x = 536
d = 22

d= (Xm-A)/c
(14.5-54.5)/10=
(24.5-54.5)/10=
(34.5-54.5)/10=
(44.5-54.5)/10=
(54.5-54.5)/10=
(64.5-54.5)/10=
(74.5-54.5)/10=
(84.5-54.5)/10=
(94.5-54.5)/10=

50-59
11

Xm
14.5
24.5
34.5
44.5
54.5
64.5
74.5
84.5
94.5

40-49
8

f
5
6
7
8
11
6
4
2
1
N=50

30-39
7

C.I.
10-19
20-29
30-39
40-49
50-59
60-69
70-79
80-89
90-99

20-29
6

Ex (10): -10-19
5

fd
X = A+
x c
N
X = 34.5 + (-26) x 10 = 34.5 + (-0.6046 * 10) = 34.5 - 6.0465 =28.4534 = 28.45
43

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

Direct Method

X =

P A Z A R E
Formula
fd
x c
N

Xm d=Xm- A
18.5
6
16.5
4
14.5
2
12.5 0
10.5
-2
8.5
-4

f.d
3*6 = 18
8*4 = 32
15*2 = 30
20*0 = 0
10* -2= -20
4 * -4 = -16
fd = 44

X =

X =
X =

fXm
N
794
60
13.2333
13.23

fd
N
44
X = 12.5 +
60
X
= 12.5 + 0.7333 = 13.2333
X
= 13.23
X = A+

P A Z A R E

By Using Step Deviation Method


C.I
18-19
16-17
14-15
12-13
10-11
8-9

f
3
8
15
20
10
4
N=60

d= (Xm-A)/c
(18.5-14.5)/2 = 2
(16.5-14.5)/2 = 1
(14.5-14.5)/2 = 0
(12.5-14.5)/2 = -1
(10.5-14.5)/2 = -2
(8.5-14.5)/2 = -3

fd
3*2=6
8*1=8
15 * 0 = 0
20 * -1 = -20
10 * -2 = -20
4 * -3 = -12
fd = -38

Formula
X = A+

fd
x c
N

(-38)
x 2 = 14.5 + (-0.6333 * 2) = 14.5 - 1.2666 = 13.2333 = 13.23
60

(Tip:- Observe the above example, by using Direct , Short cut as will as The Step
Deviation method, the answer will be same i.e. 61.76 , So student can be solve the
example any method.)

QDM notes for MBA

Second Edition 2013 - 2014

(Tip:- Observe the above example, by using Direct , Short cut as will as The Step
Deviation method, the answer will be same i.e. 13.23 , So student can be solve the
example any method.)

X = 14.5 +

Xm
18.5
16.5
14.5
12.5
10.5
8.5

= 62 + (-0.0476 * 5) = 62 - 0.2380 =61.7619 = 61.76

f
3
8
15
20
10
4
N=60

X = A+

x
18-19
16-17
14-15
12-13
10-11
8-9

fd
2*4=8
0*3=0
10 * 2 = 20
17 * 1 = 17
24 * 0 = 0
19 * -1 = -19
7 * -2 = -14
4 * -3 = -12
1 * -4 = -4
fd = -4

f . Xm
55.5
132
217.5
250
105
34
fX m=794

N I L E S H

(-4)
x 5
84

d= (Xm-A)/c
(82-62)/5 = 4
(77-62)/5 = 3
(72-62)/5 = 2
(67-62)/5 = 1
(62-62)/5 = 0
(57-62)/5 = -1
(52-62)/5 = -2
(47-62)/5 = -3
(42-62)/5 = -4

X = 62 +

Xm
82
77
72
67
62
57
52
47
42

f
2
0
10
17
24
19
7
4
1
N=84

Xm
18.5
16.5
14.5
12.5
10.5
8.5

(Note: Above table the value of Xm, f.Xm and d = Xm- A are directly calculate due to compare
the both method. If any doubt to how the values are calculate, then see the before example
to check.)

X =

By Using Step Deviation Method


C.I.
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44

f
3
8
15
20
10
4
N=60

P A

X
X
X

fd
N
(-20)
= 62 + 84
= 62 - 0.2380 = 61.7619
= 61.76

=A+

P A

X =
X =

fXm
N
5188
84
61.76
61.76

C.I.
18-19
16-17
14-15
12-13
10-11
8-9

Short cut Method

X =

8-9
4

Direct Method

N I L E S H

10-11
10

(Note: Above table the value of Xm, f.Xm and d = Xm- A are directly calculate due to compare
the both method. If any doubt to how the values are calculate, then see the before example
to check.)

12-13
20

f.d
2*20=40
0*15=0
10*10=100
17*5=85
24*0=0
19 * -5= -95
7 * -10= -70
4 * -15= -60
1 * -20= -20
fd = -20

14-15
15

Xm d=Xm- A
82
20
77
15
72
10
67
5
62 0
57
-5
52
-10
47
-15
42
-20

16-17
8

f
2
0
10
17
24
19
7
4
1
N=84

18-19
3

x
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44

f . Xm
164
0
720
1139
1488
1083
364
188
42
fX m=5188

Xm
82
77
72
67
62
57
52
47
42

f
2
0
10
17
24
19
7
4
1
N=84

d) x:
f:
Ans:-

C.I.
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44

Short cut Method

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

Ex (13): - From the follwoing information relating to a certain industry consisting of 32


firms, calculate the average salary paid in the whole industry.

5.5

P A Z A R E

Y average marks is
Wx
Xw =
W
616
Xw =
10
Xw = 61.60
Xw = 61.60

X average marks is
Wx
Xw =
W
626
Xw =
10
Xw = 62.60
Xw = 62.60

WY
1 * 80 = 80
2 * 64 = 128
3 * 56 = 168
4 * 60 = 240
WY = 616

The W eighted arithmetic mean for X Candidate is 62.60 and The W eighted arithmetic
mean for Y Candidate is 61.60

QDM notes for MBA

Ex (2) :- The following table gives the marks of two candidated:


Subject
W eights
Marks of Candidates
X
Y
A
1
70
80
B
2
65
64
C
3
58
56
D
4
63
60
Find the Weighted average marks of each candidate.
Ans:Marks by
Subjects Weights(W)
X
Y
WX
A
1
70
80
1 * 70 = 70
B
2
65
64
2 * 65 = 130
C
3
58
56
3 * 58 = 174
D
4
63
60
4 * 63 = 252
W = 10
WX =626

Weight are numbers or percentages which stand for the relative importance of
items. Such a relative importance may be real or estimated, or actual or approximated.
These weights are assigned to each item under the following circumstance:
(i) When the results of the series are studied comparatively,
(ii) When the computation involves ratios or percentages i.e. Death Rates and Birth Rates.
(iii) When we compute the Index Numbers involving prices of essential commodities
having different importance to each one.
Thus weight of a variate is numerical multiplier assigned to it in order to indicate its
relative importance.

N I L E S H

P A

P A

P A Z A R E

In computing simple arithmetic mean, it is assumed that all the items are of
equal importance. This may not always be the case. When items vary in importance they
must be assigned some weights in proportion to their importance. The value of each item
is then multiplied by its weight. The products are summated and divided by the number of
weights, and not by the number of items. the quotient is the weighted arithmetic mean or
average.
Symbolically,
WX
XW =
,
WX = X * W
,
Where W = Weight
W

The Weighted Arithmetic average price of coal purchased is 50.36

(ii) Weighted Arithmetic Mean:

N I L E S H

So, the average salary paid in the whole industry is Rs. 113.15

113.1458

Wx
W
10072.50
Xw =
200
Xw = 50.3625
Xw = 50.36

Xw =

74450
=
658

f . Xm
160*62.5 = 10000
208*87.5 = 18200
132*125 = 16500
130*175 = 22750
28*250 = 7000
f.Xm= 74450

Xm
(50+75)/2=125/2=62.5
(75+100)/2=175/2=87.5
(100+150)/2=250/2=125
(150+200)/2=350/2=175
(200+300)/2=500/2=250

f.Xm
N

f
160
208
132
130
28
N=658

6.5

30*5
26*8
24*5.5
24*6.5
28*1

200-300
28

by an industry.
May
June
44.25 54.00
10
45

150-200
24

Ex (1) :- Calculate Weighted average price of coal purchased


Month:
Jan
Feb
March April
Price per Ton (Rs)
42.50 51.25 50.00 52.00
Tons Purchased
25
30
40
50
Ans :Prices Per Tons
Ton (Rs)
Purchased
C.I.
W
Wx
42.50
25
42.50 * 25 = 1062.50
51.25
30
51.25 * 30 = 1537.50
50.00
40
50.00 * 40 = 2000.00
52.00
50
52.00 * 50 = 2600.00
44.25
10
44.25 * 10 = 0442.50
54.00
45
54.00 * 45 = 2430.00
W = 200
Wx = 10072.50

100-150
24

X =

75-100
26

Income
Group
C.I.
50-75
75-100
100-150
150-200
200-300

50-75
30

Income Group:
No. of Firms:
Average No. of
Workers :

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

10

Median :- Median is the value of that item in a series which divides the array into two

In above example Me = 42.5th item, it means that find such c.f. value which is greater than
find th item i.e. c.f. value. Here, we find 42.5th item and from our table value 59 is greater
than value 42.5. So, it mean that the Median value is from 59 c.f. and thats value x = 75.
Therefor, the Median value is 75
71,
66,
78,
74,
60,
63,
69,
61,
75
4
5
6
7
4
3
2
3
1
the data in an array form with serial numbers (ascending order).
cf
4
N+1
Median is the size of th item
2
3+4 = 7
35 + 1 th = 18 th item
Me = )
3+7 = 10
2
5+10 = 15
It lies in 21 c.f.
2+15 = 17
Against 21 c.f. the value is 71
4+17 = 21
So, Median Marks is 71
7+21 = 28
(Note: Median value is identified by locating
1+28 = 29
N + 1 th item falls.)
the respective c.f. in which )
6+29 = 35
2

In above example Me = 18th item, it means that find such c.f. value which is greater than
find th item i.e. c.f. value. Here, we find 18th item and from our table value 21 is greater
than value 18. So, it mean that the Median value is from 21 c.f. and thats value x = 71.
Therefor, the Median value is 71
QDM notes for MBA

Ex (2) x :
f:
Ans: - Arrange
x
f
60
4
61
3
63
3
66
5
69
2
71 4
74
7
75
1
78
6
N=35

10

P A Z A R E

In discrete series, the value are already in the form of array and the frequencies
are recorded against each value.

N I L E S H

P A

(B) Discrete Series

N+1

Median is the size of th item


2
84 + 1 th = 42.5 th item
Me = )
2
It lies in 59 c.f.
Against 59 c.f. the value is 75
So, Median Marks is 75
(Note: Median value is identified by locating
N + 1 th item falls.)
the respective c.f. in which )

39.5

cf
10
2+10 =12
17+12 = 29
4+29 = 33
7+33 = 40
19+40 = 59
24+59 = 83
1+83 = 84

x
f
60
10
62
2
66
17
67
4
72
7
75 19
78
24
80
1
N=84

79
2

x:
62,
60,
66,
78,
75,
72,
67,
80
f:
2
10
17
24
19
7
4
1
Ans:- Arrange the data in an array form with serial numbers (ascending order).

37 + 42
2

Median (Me) = 39.5

(3)rd item + (4)th item


2

P A

th item

2
6 + 1 th item
7
Median (Me) =
= th item
= 3.5 th item
2
2
The Item lies between 4th & 5th item. So there are two values i.i. 37 & 42.
Then the median value will be mean of these two values i.e.

P A Z A R E

Ex (1) :- Find the median value of the following data


X:
52, 47, 37, 32, 42, 27 (Note: Arrange the data in ascending order)
Ans:27 32 37 42 47 52
X
1 2 3
4 5 6
N

N I L E S H

Median (Me) =

Ex (1) :- Find the median value of the following data


X:
7, 12, 37, 32, 17, 22, 27
(Note: Arrange the data in increasing
Ans:(ascending) order)
7 12 17 22 27 32 37
X
1 2 3 4 5 6 7
N
N
+
1
Median (Me) = th item
2
7
+ 1 th item =
8 th item = 4 th item = 22
Median (Me) =
2
2
Median (Me) = 22

N+1

Ex (1)

N the number

(A) Individual Observation

Median (Me) =

N + 1 th
item where Me represents the median and

for cumulative frequencies (cf). The median size is first located with reference to the
cumulative frequency (cf) which cover the size first. Then, against that cumulative frequency (cf) , the value will be located as the median value.

Me is the size of
of items

N+1
However, for determining the size of
item, a separate column is to be prepared

equal parts, one condisting of all the values less than it and the other consisting of all the
values more than it. It means, when the values of variable are arranged in an array form (in
an ascending or descending order of their magnitude), the value of middle item of the
array is the median and it is denote as Me.

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

11

E-mail :- nilesh_pazare@rediffmail.com

(c) Continous Series

x c

50 +

Marks
No. of
C.I.
Student (f)
20-40
4
40-60
6
60-80
10
80-100
16
100-120
12
120-140
7
140-160
3

Marks
Less than 40
Less than 60
Less than 80
Less than 100
Less than 120
Less than 140
Less than 160

x 4

20 + 0.5555

x 5
= 20.5555

P A Z A R E
40-60
6

60-80
10

80-100 100-120 120-140


16
12
7

L.T. c.f.
4
4+6=10
10+10=20
16+20=36
12+36=48
7+48=55
3+55=58

Marks
More than
More than
More than
More than
More than
More than
More than

20
40
60
80
100
120
140

140-160
3

M.T. c.f
4+54=58
6+48=54
10+38=48
16+22=38
12+10=22
7+3=10
3

= 18
From above table, observe that, how the cumulative frequency (c.f) find when class interval
is in the form of Less than or More than.

11

QDM notes for MBA

Second Edition 2013 - 2014

20-40
4

19 )

17.5 + 0.5

x 5 =

18 )

- 24 )
25
9

17.5 +

Me = 20 +

P A

N I L E S H

Ex Marks C.I. :
No. of Student f:

19 - 18 x 4 =
Me = 17.5 +
8
Me = 17.5 + 0.125 x 4
=
Me = 18
Median of Class interval is 18

Here, N = 50 then N/2 = 50/2 = 25th item.


It is lies in 33 c.f. , and class interval is 20 - 25
L = 20, f = 9, c.f. = 24 and c = 5 (find it in note)
Put the values in formulas and find the Median.

Me = 20 + 0.1111 x 5
=
Me = 20.56
Median of Class interval is 20.56

Here, N = 38 then N/2 = 38/2 = 19th item.


It is lies in 26 c.f. , and class interval is 17.5 - 21.5
L = 17.5, f = 8, c.f. = 18 and c = 4 (find it in note)
Put the values in formulas and find the Median.

Lower interval (L1) = 10


Upper interval (L2) = 15
c = L2 - L1
c = 15 - 10
c=5
x c

( N/2f- c.f. )

L +

P A

P A Z A R E

N I L E S H

Median (Me) =

Note:

Ex (1) 6-9 10-13 14-17 18-21 22-25 26-29 30-33 34-37 38-41 42-45
2
9
7
8
4
5
0
1
1
1
Ans:- Since there is an inclusive class interval distribution, we shall convert it into exclusive class interval series.
Note: How to identified the exclusive class
C.I.
f
c.f.
interval series.
41.5-45.5
1
37 + 1 = 38
=> Series always start from 0. i.e. 0-5, 0-10.
37.5-41.5
1
36 + 1 = 37
means when lower class sustract from up33.5-37.5
1
35 + 1 = 36
per class then find the class interval.
29.5-33.5
0
35 + 0 = 35
Our example series start from 6-9.
25.5-29.5
5
30 + 5 = 35
means 6,7,8,9 = 4. The class interval value
21.5-25.5
4
26 + 4 = 30
is 4, but when lower class substract from
17.5-21.5
8
18 + 8 = 26
upper class then it find the value 3 (9 - 6 = 3).
13.5-17.5
7
11 + 7 = 18
then this class is an inclusive.
9.5-13.5
9
2 + 9 = 11
So, convert an inclusive class into exclusive
5.5-9.5
2
2
class interval series. That is 5.5 - 9.5.
N=38
Then 9.5 - 5.5 = 4. It is correct class interval.
N/2 - c.f.
Median (Me) = L +
x c
f

c.f.
6
6 + 18 = 24
9 + 24 = 33
10 + 33 = 43
4 + 44 = 47
3 + 48 = 50

L - Lower limit of the median class,


N - Total number of the frequencies,
c - Magnitude of the median class,
f - frequency of the median class,
c.f. - Cumulative frequency of the class precding the median class.

f
6
18
9
10
4
3
N=50

L +

C.I.
10-15
15-20
20-25
25-30
30-35
35-40

Median (Me) =

N/2 - c.f.
f

Ex (2) C.I. : 10-15 15-20 20-25 25-30 30-35 35-40


f:
6
18
9
10
4
3
Ans:- Above series is already exclusive class interval series.

A different procedure is adopted to find out the Median value under continous
series. The class intervals are already in the form of array and the frequencies are recorded against each class interval. For determining the size, we should take N/2th item
and median class is locaed accordingly with reference to the cumulative frequency, which
covers the size first. When the Median class is located, the median value is to be interpolated with the help of the following formula:

fuysk ;ks- ik>kjs 09766134400

12
Median (Me) =

x 10

P A Z A R E
= 40.8333

= 45

N I L E S H

In problem
given
below 60
under 62.50
62.50 - 95
over 95
100 & over

Monthly
wages (Rs.)
Less than 60
Less than 62.50
62.50 - 95
More than 95
100 & over

C.I.

Note :-

100 = 4 + 11 + Diff + 10 + 5 = Diff + 30


100 - 30 = Diff
Diff = 70

0 - 60
60 - 62.5
62.5 - 95
95 - 100
100 & over

s.f.

F(%)

4%
15%
Diff
15%
5%

4%
15-4=11%
100-30=70%
15-5=10%
5%

40
110
700
100
50

P A Z A R E

For Less than and More than Class interval, see the before examples
Less than 60
Less than 62.50

0-60
60-62.50

4%
15-4=11%

More than 95
100 & over

15-5=10%
5%

After converting, The actual table is given below

QDM notes for MBA

f
40
110
700
100
50
N=1000

c.f.
40
40+110=150
110+150=850
850+100=950
950+50=1000

C.I.
0-60
60-62.50
62.5-95
95-100
100 & over

E
12

40 + 5

x 10

Ex (5):- In a group of 1000 wage earners, the monthly wages of 4% are below Rs. 60 and
those of 15% are under Rs. 62.50. 15% earned Rs. 95 over, and 5% got Rs. 100 and over.
Find the median wage.
Ans: Let us prepare the table showing different types of % frequencies and then convert it
into the original frequencies.

48)

Me = 40 + 0.5 x 10
=
Me = 45
Median of Class interval is 45

40 +

Ex (4):- Calculate the Median of the following data.


Less than : 10
20
30
40
50
60
70
frequency: 50
47
41
29
21
7
2
Ans:- Let us convert the data from more than frequency distribution into normal distribution.
C.I.
c.f.
C.I.
f
c.f.
10
50
More than 10
50-47=3
50
20
47
20 - 30
47-41=6
47
30
41
30 - 40
41-29=12
41
40
29 After Converting 40 - 50
29-21=8
29
50
21
50 - 60
21-7=14
21
60
7
60 - 70
7-2=5
7
70
2
70 - 80
2
2
N=50

x 10 =

P A

P A

- 21 x 10 = 40 + 0.5
Me = 40 + 21.5

6
6
Me = 40 + 0.08333 x 10
=
40 + 0.8333
Me = 40.83
Median of Class interval is 40.83

- 21 )
25
8

N I L E S H

Here, N = 43 then N/2 = 43/2 = 21.5th item.


It is lies in 27 c.f. , and class interval is 40 - 50
L = 40, f = 6, c.f. = 21 and c = 10
Put the values in formulas and find the Median.

Me = 40 +

x c

Here, N = 50 then N/2 = 50/2 = 25th item.


It is lies in 29 c.f. , and class interval is 40 - 50
L = 40, f = 8, c.f. = 21 and c = 10
Put the values in formulas and find the Median.

( N/2f- c.f.)

x c

L +

Median (Me) =

c.f.
2
6
11
21
27
36
43

( N/2f- c.f. )

f
2
6-2=4
11-6=5
21-11=10
27-21=6
36-27=9
43-36=7
N=43

c.f.
C.I.
2
Less than 10
6
10 - 20
11
20 - 30
21 After Converting 30 - 40
27
40 - 50
36
50 - 60
43
60 - 70

C.I.
10
20
30
40
50
60
70

L +

Ex (3):- Calculate the Median of the following data.


Less than : 10
20
30
40
50
60
70
frequency:
2
6
11
21
27
36
43
Ans:- Let us convert the data from less than frequency distribution into normal distribution.

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400


Median (Me) =

L +

13

( N/2f- c.f. )

Ex (7):- From the following data find out the missing frequency if the median is 50.
Class interval: 10-20
20-30
30-40
40-50
50-60 60-70
Frequencies:
2
8
6
--15
10

x c

50 =

50 +

( 41+A
)
2

- ( 16 + A )
15

x 10

N
L E( S ) H
(
) I
41+A
- ( 16 + A )
2
x 10
15

( 410 +2 10A )

- 160 - 10A

, 0 =

41*10 + 10A
2
15

- (16*10 + 10A )

, 0 =

205 + 5A - 160 - 10A


15
0 * 15 = 205 + 5A - 160 - 10A

P A

P A Z A R E
15

0 = 45 - 5A

5A = 45 ,

A = 45 / 5

QDM notes for MBA

B.
229 = 12+30+A+65+B+25+18
229 = 150 + A + B
229 - 150 = A + B
79 = A + B
A + B = 79
---- (1)

Second Edition 2013 - 2014

13

70-80
18

= 16.995 = 17

Ans: Let us assume the missing two frequency as A &


C.I.
f
c.f.
10 - 20
12
12
20 - 30
30
30+12 = 42
30 - 40
A
A+42 = 42 + A
40 - 50
65
65+42+A = 107 + A
50 - 60
B
B+107+A = 107+A+B
60 - 70
25
25+107+A+B = 132+A+B
70-80
18
18+132+A+B = 150+A+B
N=229

60-70
25

x 5

Ex (8):- An incomplete distribution is as follows:


Class interval: 10-20
20-30
30-40
40-50
50-60
Frequencies:
12
30
--65
--Complete the distribution, if its median is 46 and Total is 229.

Me =14.995+ 500-400
x 5 = 14.995 + 150

250
250
Me = 14.995 + 0.4 x 5
=
14.995 + 2
Median of Class interval is 17

x 10

15

Missing frequency is 9

After converting, the Exclusive Class Interval is given below


C.I.
f
c.f.
4.995 - 9.995
100
100
9.995 - 14.995
300
100+300 = 400
14.995 - 19.995
250
250+400 = 650
19.995 & above
350
650+350 = 1000
N=1000
Here, N = 1000 then N/2 = 1000/2 = 500th item.
It is lies in 650 c.f. , and class interval is 14.995 - 19.995
L = 14.995, f = 250, c.f. = 400 and c = 19.995 - 14.995 = 5
Put the values in formulas and find the Median.

- ( 16 + A )

Since, Median = 50 (Given)


Class interval 50-60
L = 50, f = 15, c = 10 &
c.f. = 16 + A
Now put the values in formula
N/2 - c.f.
Median (Me) = L +
x c
f

P A Z A R E

0 =

( 41+A
)
2

c.f.
2
2+8 = 10
6+10 = 16
16+A = 16 + A
15+16+A = 31+A
10+31+A = 41+A

1000=100+300+250+Diff
1000=650+Diff
Diff=1000-650
Diff=350

f
100
300
250
(Diff)
N=1000

P A

No. of workers
10%
30%
250
(Diff)

f
2
8
6
A
15
10
N=41+A

50 +

50 - 50 =

Inclusive Class Interval

Wages Rs. (C.I.)


5 - 9.99
10 - 14.99
15 - 19.99
20 & above

Me =

N I L E S H

C.I.
- 20
- 30
- 40
- 50
- 60
- 70

Ex (6):- 10 percent of the workers in a firm, employing a total of 1000 workers, earn
between Rs. 5 and 9.99, 30 percent between Rs. 10 and Rs. 14.99, 250 workers between
Rs. 15 and Rs. 19.99 and the rest Rs. 20 and above. What is the median wage?
Ans:- Since there is an inclusive class interval distribution, we shall convert it into exclusive class interval series.

10
20
30
40
50
60

= 78.75

Ans: Let us assume the missing frequency as A

62.5 + 16.25

x 32.5

Me = 62.5 + 0.5 x 32.5


=
Me = 78.75
Median of Class interval is 78.75

350
)
700

x 32.5 = 62.5 +

500-150

)
700

Here, N = 1000 then N/2 = 1000/2 = 500th item.


It is lies in 850 c.f. , and class interval is 62.5 - 95
So, L = 62.5, f = 700, c.f. = 150 and c = 95 - 62.5 = 32.5
Put the values in formulas and find the Median.
Me = 62.5 +

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

14

(Tip :- Median is given and from defination of Median the c.f. value is less than N / 2 )
Since, Median = 46 (Given).

46 =

x c

40 +
6 =

x 10
x 10

Me = 50 + 1 x 10
Me = 50 + 10
Me = 60

N I L E S H
P A Z A R E
c.f.
1+49 = 50
5+44 = 49
12+32 = 44
15+17 = 32
10+7 = 17
4+3 = 7
3

N / 2 = 50 / 2 = 25

L = 20 , f = 15, c.f. = 17, c = 5


Me = 20 +

Me = 20 +

25-17
15
8
15

x 5
x 5

Me = 20 + 0.5333 x 5
Me = 20 + 2.6666
Me = 22.6666

Median of Class interval is 22.67

Me = 8.05 +

Me = 8.05 + 0.48

( 12
)
25
,

x 1

(Note:- Above examples, class interval takes descreasing order and defination of median, the cumulative frequency (c.f.) is find from summation of frequency with increasing order of class interval. Thats why summation of frequency start from bottom of
table means increasing order of class interval.)

Me = 8.53

14

QDM notes for MBA

Second Edition 2013 - 2014

Me = 8.05 + 0.48 * 1
,
Median of Class interval is 8.53

x 1

f
1
5
12
15
10
4
3
N=50

Ans:
C.I.
35-40
30-35
25-30
20-25
15-20
10-15
5-10

5-10
3

P A

( 5025- 38 )

Me = 50 +

40-20
20
20
20

Me = 8.05 +

Me = 50 +

Ex (9):- Calculate the Median of the following data.


Height :
5.1-6.0
6.1-7.0
7.1-8.0 8.1-9.0
9.1-10
10.1-11
11.1-12
No.of Plants:
3
8
27
25
17
11
9
Ans:- Since there is an inclusive class interval distribution, we shall convert it into exclusive class interval series.
C.I.
C.I.
f
c.f.
5.1-6.0
5.05-6.05
3
3
6.1-7.0
6.05-7.05
8
8+3 = 11
7.1-8.0
7.05-8.05
27
27+11 = 38
After Converting
8.1-9.0
8.05-9.05
25
25+38 = 63
9.1-10.0
9.05-10.05
17
17+63 = 80
10.1-11.0
10.05-11.05
11
11+80 = 91
11.1-12.0
11.05-12.05
9
9+91 = 100
N=100
N / 2 = 100 / 2 = 50,
L = 8.05, f = 25, c.f. = 38 & c = 1, put th value on formula

L = 50 , f = 20, c.f. = 20, c = 10

Ex (11):- Calculate the Median of the following data.


C.I. :
35-40 30-35 25-30 20-25 15-20 10-15
f:
1
5
12
15
10
4

P A

P A Z A R E

N / 2 = 80 / 2 = 40

Median of Class interval is 60

N I L E S H

6 * 65 = 725 - 10 A
Put, A = 33.5 on equation A + B = 79
390 = 725 - 10 A
33.5 + B = 79
10A = 725 - 390
B = 79 - 33.5
10 A = 335
B = 45.5
A = 335 / 10
A = 33.5
B = 45.5
Missing frequencies are A = 33.5 and B = 45.5
As the frequencies are interger, then A = 33 and B = 46 or A = 34 and B = 45.

c.f.
2+78 = 80
9+69 = 78
12+57 = 69
17+40 = 57
20+20 = 40
9+11 = 20
6+5 = 11
5

6 =

114.5 - 42 - A x 10
65
72.5 * 10 - 10 A
65

x 10

f
2
9
12
17
20
9
6
5
N=80

65

114.5 - (42+A)
46 - 40 =
x 10
65
72.5 - A x 10
6 =
65

- ( 42 + A )

20-30
5

( 229
2 )

Ans:
C.I.
90-100
80-90
70-80
60-70
50-60
40-50
30-40
20-30

30-40
6

L+

Put these value in formula

Me =

- c.f.

( N2 )

Ex (10):- Calculate the Median of the following data.


C.I. :
90-100 80-90 70-80 60-70 50-60 40-50
f:
2
9
12
17
20
9

So, from table, class interval is (40 - 50)

L = 40, N = 229, f = 65 c.f. = 42 + A

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

15

Mode :-

20 - 9

= 50 +

= 50 + 11 x 10
14

= 50 + 7.8571,

40-50
9

30-40
6

20-30
5

The modal class is located with the help of


highest frequencies. i.e. 20 and modal class
is (50-60)

f0 = 9, f1 = 20, f2 = 17, L = 50, c = 10


Z

x 10

(20 - 9) - (17-20)

50-60
20

f1 - f0
x c
(f1 - f0) - (f2 - f1)

L +

Z = 50 +

11

x 10

(11) - (-3)

Z = 57.8571,

Z = 57.86

Ex (4):- C.I. :
f:
Ans:
C.I.
5-10
10-15
15-20
20-25
25-30
30-35
35-40

30-35
5

25-30
12

20-25
15

15-20
10

10-15
4

5-10
3

P A Z A R E
f
3
4
10 f0
15 f1
12 f2
5
1

c.f.
3
4+3 = 7
10+7 = 17
15+17 = 32
12+32 = 44
5+44 = 49
1+49 = 50

15 - 10

f0 = 10, f1 = 15, f2 = 12, L = 20, c = 5


Z

= 20 + 5
8

x 5

Z = 20 +

= 20 + 3.125

Z = 23.125

f1 - f0
x c
(f1 - f0) - (f2 - f1)

L +

Z = 20 +

5*5
8

,
,

x 5

(5) - (-3)

Z = 20 + 25
8
Z = 23.13

Mode ( Z ) = 23.13

X = Mean

15

QDM notes for MBA

Second Edition 2013 - 2014

= 20 +

(15 - 10) - (12-15)

x 5

The modal class is located with the help of


highest frequencies. i.e. 15 and modal class
is (20-25)

Z = 3 Me - 2 X

35-40
1

Z = Mode,
Me = Medain

N I L E S H

Continous Series:- Under the continous series, the modal class is located with the help of
highest frequencies or grouping or inspection (maxium concentration of frequencies).
The same procdure is adopted as it is followed in case discret series. After locating the
modal class, we have to interpolate the value of the mode within the modal class by using
the following formulas:
f1 - f0
f1 - f0
Z = L +
x c or
Z = L+
x c
2f1 - f0 - f2
(f1 - f0) - (f2 - f1)

Other also formula of Mode i.e.

Z = 50 + 110
14

P A

P A

When the number of items increase, we may convert the data into a descrete
form. Then, the value having the maximum frequency will be treated as the Mode.

Z = Mode,
L = Lower limit of the modal class interval,
f0 = Frequency of the class interval preceding the modal class interval,
f1 = Fequency of the modal class interval,
f2 = Fequency of the class interval succeeding the modal class interval,
c = magnitude of the modal class interval

Mode ( Z ) = 57.86

There are two modes i.e. 63 and 65 each occurring 2 times.

P A Z A R E

Z = 50 + 11 * 10
14

N I L E S H

Ex (2):- Find the mode from following values of variable.


65, 63, 68, 66, 61, 62, 65, 63, 67
Ans:- Arrange the values in increasing (ascending) order
61, 62, 63, 63, 65, 65, 66, 67, 68

When the number of items increase, we may convert the data into a descrete
form. Then, the value having the maximum frequency will be treated as the Mode.

c.f.
2+78 = 80
9+69 = 78
12+57 = 69
17+40 = 57
20+20 = 40
9+11 = 20
6+5 = 11
5

60-70
17

f
2
9
12
17 f2
20 f1
9 f0
6
5

70-80
12

The mode is 13 as it occurs the highest number of times (i.e. 3 times) in the
series. So the mode is clearly defined.

90-100 80-90
2
9

Ex (1):- Find the mode from following values of variable.


13, 9, 8, 7, 13, 12, 15, 13
Ans:- Arrange the values in increasing (ascending) order
7, 8, 9, 12, 13, 13, 13, 15

Ex (3):- C.I. :
f:
Ans:
C.I.
90-100
80-90
70-80
60-70
50-60
40-50
30-40
20-30

It is the value which occurs with the maximum frequency. It is most typical or
common value that receives the highest frequency. The modal class of a frequency distribution is the class with the highest frequency. It is denoted b a symbol Z.
Mode is the value of variable which is repeated the greatest number of times in
the series.

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

16
Quartilies:-

First Quartile (Lower Quartile) Q1 is the value below which there are one fourth of the items
and above which there are three fourth of the items.

Second Quartile (Median) Q2 divides the total distribution into two halves.

P A Z A R E
(III)

N I L E S H

P A Z A R E

In distribution, we consider Q 3 as the largest value and Q1 as the smallest. It


means, the items below the lower quartile and the items above the upper quartile are not
at all included in the computation. Thus we are considering only the middle half portion of
the distribution. The range so obtained is divided by two as we are considering only half of
the data. Thus the Quartil deviation measures the difference between the value of Q1 and
Q3 . It is denoted symbolically by Q.D.
Q 3 - Q1
Quartile Deviation(QD) =
2
N/4 - F
f

)x c

Coefficient of C of Q.D.

&
Q3 = L +
Q 3 - Q1
Q 3 + Q1

3N/4 - F
f

)x c

(1):Ans:-

19, 23, 9, 27, 3, 1, 31


1
1

3
2

Q.D. =

9
3

Q 3 - Q1
2

( 7 4+ 1 )th item

Q1 =

QDM notes for MBA

8
4

)th item

19
4

23
5

27
6

31
7

Q1 =

(n 4+ 1 )th item

X
N
, Q3 =

( 3 (n 4+ 1) )th item

, Q3 =

(3 ( 74+ 1) )th item

, Q3 =

(3 4* 8 )th item

Q1 =

Arrange increasing (ascending) order

16

Q1 = L +

Ex :- Find the Quartile and Coefficient of Q.D. of the following values

Series (I) is less dispersed and more uniform.


Series (III) is less uniform and more dispersed.

(3 (n4+ 1) )th item

R=L-S
= 29 - 1
= 28
L-S
C.R. =
L+ S
C.R. = 29 - 1
29+ 1
C.R. = 28
30
= 0.933

R=L-S
= 21 - 9
= 12
L-S
C.R. =
L+ S
C.R. = 21 - 9
21+9
C.R. = 12
30
= 0.4

Q3 =

(I)

Range R = L - S
= 17 - 13
=4
L-S
Coeff. of R. =
L+ S
Coeff. of R. = 17 - 13
17+ 13
4
Coeff. of R. =
30
= 0.1333

17
21
29

13,
9,
1,

Values of variables
14,
15,
16,
12,
15,
18,
8,
15,
22,
(II)

( 2 (n4+ 1) )th item

Quartile Deviation:-

P A

Ex (1):- Compute the range and the Coefficient of Range of the series, and state which one
is more dispersed and which one is more uniform.

Q2 =

P A

Largest Value - Smallest Value


L - R
(ii) Coefficient of Range (R) = Largest Value + Smallest Value = L + R

(n 4+ 1 )th item

N I L E S H

(i) Range = Largest value - Smallest value


R = L - S

Q1 =

Range repersents the difference between the values of the etremes-- the larges
value and the smallest value. The value in between the two extremes are not at all taken
into consideration. It is denoted symbolically by R.

Range:-

Third Quartile (Upper Quartile) Q3 is the value below which there are three fourth of the
items and above which there are one fourth of the items.

The Quartiles are also positional averages like the median. As the median value
divides the entire distribution into two equal parts, the quartiles (Q1 , Q2 and Q3 ) divide the
entire distribution into four equal parts.

Ex (6):- Find the mode , Mean = 48.40 and Median = 48.67?


Mode (Z) = 3 x Me - 2 * X
= 3 x 48.67 - 2 x 48.40
= 146.01 - 96.8 = 49.21
Mode (Z) = 49.21

Ex (5):- Find the mode , Mean = 49.2 and Median = 48.37?


Mode (Z) = 3 x Me - 2 * X
= 3 x 48.37 - 2 x 49.2
= 145.11 - 98.4 = 46.71
Mode (Z) = 46.71

Series
i.
ii
iii
Ans:

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400


=

Q3 =

24
2

Ans:-

24
30

0.8

4
1

7
2

13
3

17
4

Arrange increasing (ascending) order

24
5

30
6

32
7

39
8

X
N

Q1 =

Q 3 - Q1
2

Q1 =

n+1
4

( 8 4+ 1)th item

th

item

, Q3 =

, Q3 =

3 (n + 1)
4

th

item

(3 ( 84+ 1) )th item


th

item

31.5 - 8.25
31.5+ 8.25

23.25
39.75

N I L E S H
Q 3 - Q1
2

11.5 - 3.5
2

8
2

= 11.625

Q 3 - Q1
Q3 + Q1

11.5 - 3.5
11.5+ 3.5

8
15

0.5333

0.5849

Coffiecient of Q.D. = 0.58

17

(4):Ans:-

1, 3, 10, 15, 27, 35, 42, 46, 49, 50, 55


1
1

3
2

Q.D. =

10
3

15
4

27
5

Q 3 - Q1
2

Q1 =

3
6

42
7

46
8

Arrange ascending order

49
9

(n 4+ 1 )th item

50
10
, Q3 =

( 114+ 1 )th item

Q1 =

12
4

)th item

, Q3 =

( 3 *4 12 )th item

Q1 =

12
4

)th item

, Q3 =

, Q3 = 3 ( 11 + 1)
4

36
4

X
N

( 3 (n 4+ 1) )th item

Q1 =

QDM notes for MBA

55
11

)th item

Q 3 - Q1
Q3 + Q1

Coffiecient of Q.D. =

Coffiecient of Q.D. = 0.53

Quartile Deviation (Q.D.) = 11.63

(3 4* 5 )th item

23.25
= 11.625
2

, Q3 =

31.5 - 8.25
=
2

Coffiecient of Q.D. =

(3 ( 44+ 1) )th item

P A Z A R E

Q 3 - Q1
2

, Q3 =

Quartile Deviation (Q.D.) = 4

Q.D. =

)th item

( 3 (n 4+ 1) )th item

P A

item

9 th
27 th
item
, Q3 = 4
item
4
th
( 2.25 ) item
,
Q3 = ( 6.75 )th item
nd item
rd item
nd item
(2)
+ 0.25 x (3
-2
),
Q3 = ( 6 )th item + 0.75 x (7th item - 6th item)
7 + 0.25 x ( 13 - 7 )
,
Q3 = 30 + 0.75 x ( 32 - 30 )
7 + 0.25 x ( 6 )
,
Q3 = 30 + 0.75 x ( 2 )
7 + 1.25
,
Q3 = 30 + 1.5
8.25
,
Q3 = 31.5
Q1 =

Q1 =
Q1 =
Q1 =
Q1 =
Q1 =
Q1 =

th

P A

Q1 =

3* 9
, Q3 =
4

5
4

, Q3 =

5
15
th
th
item
, Q3 =
item
4
4
th
th
( 1.25 ) item
,
Q3 = ( 3.75 ) item
( 1 )st item + 0.25 x (2nd item - 1st item) ,
Q3 = ( 3 )rd item + 0.75 x (4th item - 3rd item)
3 + 0.25 x ( 5 - 3 )
,
Q3 = 10 + 0.75 x ( 12 - 10 )
3 + 0.25 x ( 2 )
,
Q3 = 10 + 0.75 x ( 2 )
3 + 0.25
,
Q3 = 10 + 1.5
3.5
,
Q3 = 11.5

Q.D. =

)
P( A
Z A( ) R E
9
4

( n 4+ 1 )th item

Q.D. =

Q1 =
Q1 =
Q1 =
Q1 =
Q1 =
Q1 =

N I L( ) E S( H
)

Q1 =

Q1 =

Ans:-

Q 3 - Q1
,
2

X
N

4, 7, 17, 24, 13, 30, 32, 39

12
4

( 4 4+ 1 )th item

Q1 =

(2):-

Coffiecient of Q.D. = 0.8

10
3

27 - 3
27+ 3

5
2

Arrange increasing (ascending) order

Q1 =

Q 3 - Q1
Q3 + Q1

3
1
Q.D. =

= 12

Quartile Deviation (Q.D.) = 12


Coffiecient of Q.D. =

3, 10, 12, 5

27 - 3
2

Q 3 - Q1
2

(3):-

24 th
item
4
th
Q3 = ( 6 ) item
Q3 = 27

Q.D. =

E-mail :- nilesh_pazare@rediffmail.com

8
th
item
4
th
Q1 = ( 2 ) item
Q1 = 3

Q1

17

)th item
Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

18

Q1 = ( 3 )th item
Q1 = 10

39
2

Coffiecient of Q.D. =

= 19.5

Q 3 - Q1
Q3 + Q1

40 - 13.67
40 + 13.67

26.33
53.67

0.49

49 - 10
2

Q 3 - Q1
Q.D. =
2

Quartile Deviation (Q.D.) = 13.16

Q3 = ( 9 )th item
Q3 = 49

,
,

E-mail :- nilesh_pazare@rediffmail.com

Coffiecient of Q.D. = 0.49

Quartile Deviation (Q.D.) = 19.5


39
59

0.6666

Q3 - Q1
Quartile Deviation(QD) =
2

N/4-cf
f

Q1 = L +

N/4 -
cf x c
f
N = 35,
N
35
=
4
4 = 8.75
L = 16.5, cf = 5, f = 5,
c=5

3N/4- cf
f
3N
3 x 35 129
=
4 =
4
4 = 26.25
L = 31.5,cf = 22, f = 7,
c=5

8.75-5
5
3.75
Q1 = 16.5 + x 5
5
= 16.5 + 0.75 x 5
= 16.5 + 3.75
= 20.25
Q1 = 20.25

26.25 - 22
x 5
7
4.25
Q3 = 31.5 + x 5
7
= 31.5 + 0.6071 x 5
= 31.5 + 3.0357
= 34.5357
Q3 = 34.54

Q1 = L +

Q3 = L + x c

P A Z A R E

Q1 = 16.5 + x 5

Q 3 - Q1
2

Q3 = 31.5 +

34.54-20.25
=
2

14.29
2

= 7.145

Q.D. =

Quartile Deviation (Q.D.) = 7.15


Coffiecient of Q.D. =

= 13.16

26.33
2

40 - 13.67
2

Q 3 - Q1
Q.D. =
2

Q3 = 39.5 +

32.25 - 32
x 10
5
0.25
Q3 = 39.5 + x 10
5
= 39.5 + 0.05 x 10
= 39.5 + 0.5
= 40
Q3 = 40

Q1 = 9.5 + x 10

10.75-7
9
3.75
Q1 = 9.5 +
x 10
9
= 9.5 + 0.41666 x 10
= 9.5 + 4.1666
= 13.6666
Q1 = 13.67

Q3 = L + x c

3N/4- cf
f
3N
3 x 43 129
=
4 =
4
4 = 32.25
L = 39.5,cf = 32, f = 5,
c = 10

Q1 = L +

x c

N/4 - cf
x c
f
N = 43,
N
43
=
4
4 = 10.75
L = 9.5, cf = 7, f = 9,
c = 10

x c &

3N/4-cf
Q3 = L +
f

Q 3 - Q1
Q3 + Q1

34.54 -20.25
34.54+20.25

14.29
54.79

0.2608

Coffiecient of Q.D. = 0.26

18

QDM notes for MBA

P A

P A Z ( A) R (E )

P A

N I L E S H

N I L E S H

Ex (5):- 0-9
10-19 20-29 30-39 40-49 50-59 60-69
7
9
6
10
5
4
2
Ans:- Since there is an inclusive class interval distribution, we shall convert it into exclusive class interval series.
C.I.
C.I.
f
c.f.
60-69
59.5-69.5
2
2+41= 43
50-59
49.5-59.5
4
4+37 = 41
40-49
39.5-49.5
5
5+32 = 37
After Converting
30-39
29.5-39.5
10
10+22 = 32
20-29
19.5-29.5
6
6+16 = 22
10-19
9.5-19.5
9
9+7 = 16
0-9
0.5-9.5
7
7
N=43

Coffiecient of Q.D. = 0.66

Ex (6):- 7-11
12-16 17-21 22-26 27-31 32-36 37-41 42-46
2
3
5
4
8
7
2
4
Ans:- Since there is an inclusive class interval distribution, we shall convert it into exclusive class interval series.
C.I.
C.I.
f
c.f.
7-11
6.5-11.5
2
2
12-16
11.5-16.5
3
3+2 = 5
17-21
16.5-21.5
5
5+5 = 10
22-26
21.5-26.5
4
4+10 = 14
After Converting
27-31
26.5-31.5
8
8+14 = 22
32-36
31.5-36.5
7
7+22 = 29
37-41
36.5-41.5
2
2+29 = 31
42-46
41.5-46.5
4
4+31 = 35
N=35
Q3 - Q1
3N/4-cf
QD =
Q1 = L + N/4-cf x c & Q3 = L +
x c
2

49 - 10
49 + 10

Q 3 - Q1
Q3 + Q1

Coffiecient of Q.D. =

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

19

Mean Deviation:-

or

.......... Relative Measure

fd
n

............. Absolute Measure

fxA - fxB - (fA - fB) Me*


n

N I L E S H
A=3 xA = 9+10+18=37
A

Ex (2):- From the following variables find the Mean Deviation and Coefficient of Mean
Deviation from the mean. ====> 15, 4, 3, 10, 12, 5, 1, 2, 6, 12
Ans: Arrange the data in an ascending order to have the short cut method applicable.
x
=
n
d
=
=
n
X =

70
= 7
10
42
= 4.2
10

Coefficient of =

4.2
7

= 0.6

Coefficient of = 0.6
(Tip: the devations (d) are treated as positive
ignoring the negative sign.)
Second Edition 2013 - 2014

QDM notes for MBA

d=x-X
1-7= 6
2-7= 5
3-7= 4
4-7= 3
5-7= 2
6-7= 1
10-7= 3
12-7= 5
12-7= 5
15-7= 8
d = 42

R
19

x
1
2
3
4
5
6
10
12
12
15
x=70,n=10

= 4, So student can solve the

(i) Make two sections in the entire distribution, as A and B, so that all the items greater than
average (including average) should fall in A section and all the items smaller than average should fall in the B section.
(ii) Terms used in the formula:
xA :
the sum of the values greater than average.
xB :
the sum of the values smaller than average.
A
:
the total number of items greater than average.
B
:
the total number ot items smaller than average.
n
:
the total number of items.
fxA :
the sum of the fx greater than the average.
fxB :
the sum of the fx smaller than the average.
fA :
the sum of the frequencies greater than average
fB :
the sum of the frequencies smaller than average

P A Z A R E

From above observation, the value of Mean Deviation


problem both the formula, but use easy one.

(Note: In place of Me* we can take x or z as the deviations are concerned.)


Steps to be followed in the short cut method:

xA -xB - (A - B) X
n
37 - 13 - (3 - 3) * 8.34
6
24 - ( 0 ) * 8.34
6
24
= 4
6

P A

(B) Discrete and Continous Series: =

P A Z A R E

B=3 xB = 3+4+6=13
B
n=6,
X = 8.34

P A

When the averages are in fractions, the calculation of mean deviation becomes a tedious
job. So, to make the things more simplified, a shor-cut method or formula is used as
under:
xA - xB - (A - B) Me*
(A) Individual Observations: =
n

9
10
18

Put all these values in formula

N I L E S H

(Note: d is the sum of the deviations and fd is the sum of the products f and d).

x
3
4
6

Coefficient of = 0.48

(B) Discrete and Continous Series: =

50
= 8.3333 = 8.34
6
24
= 4
6

4
Coefficient of =
=
= 0.4796
x
8.34
x
=
n
d
=
=
n
X =

or

Me

d=x-X
3-8.34= 5.34
4-8.34= 4.34
6-8.34= 2.34
9-8.34= 0.66
10-8.34= 1.66
18-8.34= 9.66
d = 24

x
3
4
6
9
10
18
x=50,n=6

Coefficient of

Ex (1):- From the following variables find the Mean Deviation and Coefficient of Mean
Deviation from the mean. ====> 10, 18, 3, 9, 6, 4
Ans: Arrange the data in an ascending order to have the short cut method applicable.

Mean Devaiation is the average difference among the items in a series from the
mean itself or median or mode of that series. It is concerned with the extent to which the
values are despersed about the mean or the median or the mode. It is found by the
averaging all the deviations from the central tendency. These deviations are taken into
computations with regard to negative sign (i.e. all the deviations assumed as possitive).
In aggregating the devations, the algebraic negative signs are not taken into
account. It means all the devations are treated as positive ignoring the negative sign.
Mean deviation or average deviation is denoted symbolically by the Greak small
alphabet (delta)
d
(A) Individual Observations: =
............. Absolute Measure
n

E-mail :- nilesh_pazare@rediffmail.com

*
fuysk ;ks- ik>kjs 09766134400

20
4) Ans: Arrange the data in an descending order.

28.69
120

P A Z A R E

16.1538

16.15

Mean Deviation ( ) = 16.15

C.I.
16-17
14-15
12-13
10-11
8-9
6-7
4-5

f
5
4
4
8
5
4
2
N=32

Xm
16.5
14.5
12.5
10.5
8.5
6.5
4.5

f.Xm
5*16.5=82.5
4*14.5=58
4*12.5=50
8*10.5=4
5*8.5=42.5
4*6.5=26
2*4.5=9
f.Xm=352

fd
n

X = f.Xm/ n
352
32
=11

d=Xm - X
16.5-11=5.5
14.5-11=3.5
12.5-11=1.5
10.5-11=0.5
8.5-11=2.5
6.5-11=4.5
4.5-11=6.5

f.d
5*5.5= 27.5
4*3.5= 14
4*1.5= 6
8*0.5= 4
5*2= 12.5
4*4.5= 18
2*6.5= 13
fd = 95

P A Z A R E
95
32

2.9687

2.97

Mean Deviation ( ) = 2.97

(Tip: the devations (d) are treated as positive ignoring the negative sign.)

5):-

4-5
2

70-79
14

6-7
4

80-89 90-99 100-109 110-119


16
20
16
14

8-9
5

120-129
8

130-139
4

4):- 50-59 60-69


4
8

Ex:- Find the Mean Deviation from following data.

From above observation, the value of Mean Deviation = 28.69, So student can solve the
problem both the formula, but use easy one.

N I L E S H

5) Ans: Arrange the data in an descending order.

120*83= 9960
140*55=7700
160*20=3200
180*9=1620

1680
104

10 - 11 12 - 13 14 - 15 16 - 17
8
4
4
5

20

P A

83
55
20
9

A=83+55+20+9=167
xA = 9960+7700+3200+1620=22480
Put all these values in formula
xA -xB - (A - B) z
=
n
22480-11620-(167-153) * 120
=
320
10860 - (14*120)
10860 - 1680
=
=
320
320
9180
=
= 28.6875 = 28.69
320

120
140
160
180

B=6+19+40+23+65=153
xB = 120+760+2400+1840+6500=11620

P A

fx
20*6=120
40*19=760
60*40=2400
80*23=1840
100*65=6500

f
6
19
40
23
65

fd
n

Coefficient of = 0.2390

N I L E S H

x
20
40
60
80
100

f.d
4*40=160
8*30=240
14*20=280
16v10=160
20*0=0
16*10=160
14*20=280
8*30=240
4*40=160
fd = 1680

d=Xm - X
134.5-94.5=40
124.5-94.5=30
114.5-94.5=20
104.5-94.5=10
94.5-94.5=0
84.5-94.5=10
74.5-94.5=20
64.5-94.5=30
54.5-94.5=40

Coefficient of =

f.Xm
X = f.Xm/ n
4*134.5=538
8*124.5=996
14*114.5=1603
16*104.5=1672
9828
20*94.5=1890
104
16*84.5=1352
=94.5
14*74.5=1043
8*64.5=516
4*54.5=218
f.Xm=9828

= 28.69

Xm
134.5
124.5
114.5
104.5
94.5
84.5
74.5
64.5
54.5

From the defination of mode


The highest frequency is 83
z = 120
= fd = 9180 = 28.6875
n
320

fd
6*100=600
19*80=1520
40*60=2400
23*40=920
65*20=1300
83*0= 0
55*20=1100
20*40=800
9*60=540
fd = 9180

d=x-z
20-120=100
40-120=80
60-120=60
80-120=40
100-120=20
120-120= 0
140-120=20
160-120=40
180-120=60

f
6
19
40
23
65
83
55
20
9
n=6

C.I.
f
130-139 4
120-129 8
110-119 14
100-109 16
90-99
20
80-89
16
70-79
14
60-69
8
50-59
4
N=104

Ex (3):- Following are the runs scored by the btsmen in different innings of cricket tests.
Runs:
20
40
60
80
100
120
140
160
180
No of Batsmen:
6
19
40
23
65
83
55
20
9
Compute the Mean Deviation from mode and its Coefficient.
Ans: Arrange the data in an ascending order to have the short cut method applicable.
x
20
40
60
80
100
120
140
160
180

E-mail :- nilesh_pazare@rediffmail.com

QDM notes for MBA

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

21

Standard Deviation ():-

Coefficient of Variation

(x - X)2
n

* 100

----- Relative Measure

B: Discrete and Continuous series:

or

----- Absolute Measure

N I L E S H

Coefficient of Variation

* 100

----- Relative Measure

A: Individual Observation

d2
n -

(n)

fd2
n

fd
n

d
n fd2
n

d
n

(fd
)
n

x c
2

x c

c - Common factor

21

1105.34
= 184.22 = 13.57
6
= 203 - ( -4.33)2 =
203 - 18.77

13.57
c.v. =
* 100 =
* 100 = 0.3107*100
= 184.23 = 13.57
X
43.67
c.v. = 31.07%

d
n

N I L E S H

From above observation, it seen than example solve by any method the answer is come
same. So student solve easy method, which they are suitable to solve the problems.

P A Z A R E

Ex (2):- From the following variables find the Standard Deviation and Coefficient of
variation(c.v.)
====> 50, 26, 37, 35, 34
Ans: Arrange the data in an ascending order
x
d=x-X
26
26-36.40 = -10.4
34
34-36.40 = -2.4
35
35-36.40 = -1.4
37
37-36.40 = 0.6
50
50-36.40 = 13.6
x=182

d2
(-10.4)2=108.16
(-2.4)2=5.76
(-1.4)2=1.96
(0.6)2=0.36
(13.6)2=184.96
d2 = 301.20

x
182
X = n = 5 = 36.40
d2
n

301.20
= 60.24 = 7.76
5
7.76
c.v. = X * 100 = 36.4 * 100 = 0.2131*100
c.v. = 21.31%

QDM notes for MBA

d2
(-9)2 = 81
(-1)2 = 1
(0)2 = 0
(2)2 = 4
(15)2 = 225
d2 = 311

d=(x- A)
26-35= -9
34-35= -1
35-35= 0
37-35= 2
50-35= 15
d = 7
d2
d
n - n

( )

= 62.2 - ( 1.4)2
=

60.24

311
5

( 75 )

62.2 - 1.96

7.76

Second Edition 2013 - 2014

B: Discrete & Continous series

( )

A: Individual Observation

1218
-26
- 6
6

Step-deviation Method:The deviations are further divided by the common factor in case of assumed
mean. This deliberate error is compensated by multiplying the entire formula by the same
factor. The formula works as under.

B: Discrete & Continous series

( )

P A

P A Z A R E

P A

Short Cut Method:Sometimes the mean will be a fractional figure. Then we should take the deviations from the assumed mean and the direct method formula will be having some adjustment.. As the deviations are not taken from the actual mean we get the d as some value
instead zero. The short cut formula works as under.

d2
d
n - n

f(x - X)2
n

fd 2
n

x
262
X = n = 6 = 43.6666 = 43.67

----- Absolute Measure

d2
(-25)2= 625
(-18)2= 324
(-5)2= 25
(0)2= 0
(10)2= 100
(12)2= 144
d2 = 1218

d=(x- A)
23-48= -25
30-48= -18
43-48= -5
48-48= 0
58-48= 10
60-48= 12
d = -26

or

d 2
n

d2
(-20.67) =427.25
(-13.67)2=186.87
(-0.67)2=0.45
(4.33)2=18.75
(14.33)2=205.35
(16.33)2=266.67
d2 = 1105.34
2

x
d=x-X
23
23-43.67= -20.67
30
30-43.67= -13.67
43
43-43.67= -0.67
48
48-43.67= 4.33
58
58-43.67= 14.33
60
60-43.67= 16.33
x=262

A: Individual Observations:

Ex (1):- From the following variables find the Standard Deviation and Coefficient of
variation(c.v.)
====> 43, 48, 60, 30, 58, 23
Ans: Arrange the data in an ascending order

Standard Deviation is the root of the sum of the squares of the deviations devided
by their number. it is also called Mean Error Deviation, Mean Square Deviation or Root
Mean Square Deviation. It is a second moment of a dispersion. Since the sum of the
square of the deviation from the mean is minimum, the deviations are taken only from
mean (but not from median or mode).
Standard Deviation is the root-mean-square average of all the deviations from
the mean and it is denoted by (sigma).

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

22
Ans: Arrange the data in an ascending order.

* 100

X
38.50
= 0.8436 * 100 = 84.36%

CV =
CV

* 100 =

X
43.10
= 0.8271 * 100 = 82.71%

= 8.6168 = 8.62

8.62

CV

CV

74.25

B is better in studies and he should get a prize also as his average is more and variance
is less.

P A Z A R E

Ex (5):- Prices of particular commodity in five yearsin two cities are given below.
Tests:
1
2
3
4
5
City A :
20
22
19
23
16
City B :
10
20
18
12
15
Find from the table which city had more stable prices.
Ans:
City A
City B
x
d=x - X
d2 = d*d
x
d=x-X
d2 = d*d
2
16
16-20= -4 (-4) =16
10
10-15 = -5
( -5 )2 = 25
2
19
19-20= -1 (-1) = 1
12
12-15 = -3
( -3 )2 = 9
20
20-20= 0 (0)2 = 0
15
15-15 = 0
( 0 )2 = 0
2
22
22-20= 2 (2) = 4
18
18-15 = 3
( 3 )2 = 9
2
23
23-20= 3 (3) = 9
20
20-15 = 5
( 5 )2 = 25
x=100
d2 = 30
x=75
d2 = 68
x
100
x
75
X =
=
= 20
X =
=
= 15
n
5
n
5

dn = 305

QDM notes for MBA

= 2.45

dn = 685

13.6

= 3.6878 = 3.69
Second Edition 2013 - 2014

E
22

* 100 =
* 100
X
61.5
= 0.1401 * 100 = 14.01%

R
6
7
8
9
10
72
72
51
60
54
69
72
51
57
66
is the criterion for awarding a prize, who

CV =

obtained by two students A and B in 10 tests of 100

* 100 =
* 100
X
60.90
= 0.2022 * 100 = 20.22%

(Tip:- The word-> more consistent, more stable, more uniform then check the coefficient of
variation value and if coefficient value (cv) is less, then that group is more consistent,
more stable and more uniform.)

4
5
48
52
60
63
if consistency

N I L E S H

DECO is a better run scorer and more consistent player than NEKO. (because his average is more and variation is less)

Ex (4):- Following are the marks


marks each.
Tests:
1
2
3
A:
44
80
76
B:
48
75
54
Find who is better in studies and
should get the prize.

742.50
10

= 12.3162 = 12.32

12.32

1270.69

* 100

d 2 =
n

P A

* 100 =

151.69

CV =

P A Z A R E
= 35.647 = 35.65

35.65

615
= 61.5
10

1516.90
10

x
=
n

12706.90
10

d 2 =
n

X =

d2 = d*d
(-13.5)2=182.25
(-10.5)2=110.25
(-7.5)2=56.25
(-4.5)2=20.25
(-1.5)2=2.25
(1.5)2=2.25
(4.5)2=20.25
(7.5)2=56.25
(10.5)2=110.25
(13.5)2=182.25
d2 = 742.50

d 2 =
n

609
= 60.90
10

-13.5
-10.5
-7.5
-4.5
-1.5
1.5
4.5
7.5
10.5
13.5

CV =

x
=
n

(B) x
d=x-X
48 48-61.5=
51 51-61.5=
54 54-61.5=
57 57-61.5=
60 60-61.5=
63 63-61.5=
66 66-61.5=
69 69-61.5=
72 72-61.5=
75 75-61.5=
x=615

1054.65

431
= 43.1
10

X =

P A

10546.50 =
10

x
=
n

d 2 =
n

X =

385
= 38.5
10

d2 = d*d
(-35.1)2=1232.01
(-35.1)2=1232.01
(-31.1)2=967.21
(-30.1)2=906.01
(-27.1)2=734.41
(-3.1)2=9.61
(12.1)2=166.41
(41.9)2=1755.61
(52.9)2=2798.41
(53.9)2=2905.21
d2 = 12706.90

x
=
n

= 32.475 = 32.48

32.48
CV

DECO
x
d=x-X
8
8-43.1= -35.1
8
8-43.1= -35.1
12 12-43.1= -31.1
13 13-43.1= -30.1
16 16-43.1= -27.1
40 40-43.1= -3.1
56 56-43.1= 12.9
85 85-43.1= 41.9
96 96-43.1= 52.9
97 97-43.1= 53.9
x=431

N I L E S H

X =

d2 = d*d
(-38.5)2=1482.25
(-31.5)2=992.25
(-25.5)2=650.25
(-24.5)2=600.25
(-16.5)2=272.25
(-2.5)2=6.25
(6.5)2=42.25
(26.5)2=702.25
(43.5)2=1892.25
(62.5)2=3906.25
d2 = 10546.50

NECO
x
d=x - X
0
0-38.5= -38.5
7
7-38.5= -31.5
13 13-38.5= -25.5
14 14-38.5= -24.5
22 22-38.5= -16.5
36 36-38.5= -2.5
45 45-38.5= 6.5
65 65-38.5= 26.5
82 82-38.5= 43.5
101 101-38.5= 62.5
x=385

d2 = d*d
(-16.9)2=285.61
(-12.9)2=166.41
(-9.9)2=98.01
(-8.9)2=79.21
(-6.9)2=47.61
(-0.9)2=0.81
(11.1)2=123.21
(11.1)2=123.21
(15.1)2=228.01
(19.1)2=364.81
d2 = 1516.90

(A) x
d=x - X
44 44-60.9= -16.9
48 48-60.9= -12.9
51 51-60.9= -9.9
52 52-60.9= -8.9
54 54-60.9= -6.9
60 60-60.9= -0.9
72 72-60.9= 11.1
72 72-60.9= 11.1
76 76-60.9= 15.1
80 80-60.9= 19.1
x=609

Ex (3):- Following are the runs scored by the two batsmen named NEKO and DECO in ten
innings. Find who is better scorer and who is more consistent.
NEKO:
101
22
0
36
82
45
7
13
65
14
DECO:
97
12
40
96
13
8
85
8
56
16
Ans: Arrange the data in an ascending order.

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

23

3.69
*100 =
* 100
X
15
= 0.246 * 100 = 24.60%

CV =

CV

Coefficient of variation is less in prices of City A: the prices of City A are more stable than
the City B.

2.66 - ( -0.925)

2.66 - 0.8556

* 100 = 1.34 * 100 = 1.24074 * 100 = 124.07%


1.08

94
40

-32

X = 1.2

( 40 )

2.35 - ( -0.8)

* 100

- 0.64

Team B is more consistent as it has less variation.

23

1.6

- 0.3136

= 1.1341 = 1.134

fx
13*13=169
14*10=140
15*12=180
16*2=32
17*1=17
x=538

Girls
d=x-A
-2
-1
0
1
2

fd
13* -2 = -26
10* -1 = -10
12* 0 = 0
2* 1 = 2
1* 2 = 2
fd= -32

= 7.85%

fd 2
-2 * -26 = 52
-1* -10 = 10
0*0=0
1*2=2
2*2=4
fd2 =68

P A Z A R E

= 1.0804

= 1.08972 * 100 = 108.97%

fd 2
n -

(n)

68
38

-32

fx
=
n

X =

538
38

X = 14.1578 = 14.16

( 38 ) =

1.7895 - ( -0.8421) 2 =

1.7895- 0.7091

= 1.0394 = 1.04

CV = * 100 = 1.04 * 100


X
14.16

= 0.07340 * 100 = 7.34%

Age of boys is more variable as it variation is more.


Ex (8):- An agent obtained samles of bulbs
durability and got the followig results.
Durability in 00 hr: 17-19
19-21
Company A:
100
160
Company B:
30
420
Which company bulbs are more uniform?
QDM notes for MBA

from the 2 companies. He had them tested for


21-23
260
120

23-25
80
30
Second Edition 2013 - 2014

= 1.3076 = 1.31

CV = * 100 = 1.31
X
1.2

2.35

f
13
10
12
2
1
n=38

48
40

1.6 - ( -0.56)

(n)

fx
=
n

14.44

= 1.71

X =

fd 2
-2 * -34 = 68
-1* -9 = 9
0*0=0
1*5=5
2 * 6 = 12
fd2 =94

fd
n

fx
0*17=0
1*9=9
2*6=12
3*5=15
4*3=12
x=48

-28
50

N I L E S H

f
17
9
6
5
3
n=40

Match B
d=x-A
fd
-2
17* -2 = -34
-1
9* -1 = -9
0
6* 0 = 0
1
5* 1 = 5
2
3* 2 = 6
fd= -32

P A

P A Z A R E

80
50

* 100 = 1.134 * 100 = 0.0785 * 100

x
0
1
2
3
4

= 1.3432 = 1.34

x
13
14
15
16
17

( 53 )

CV =

-49

P A

1.8044

141

53

= 1.2864
CV =

(n)

(n)

fd 2

N I L E S H

fd
n

Ex (6):- The goals scored by two teams A and B in the football matches were as follows.
Goals:
0
1
2
3
4
Matches A:
27
9
8
4
5
B:
17
9
6
5
3
Find the team which is more consistent.
Ans:
Match A
x
f
fx
d=x-A
fd
fd 2
0
27
0*27=0
-2
27* -2 = -54
-2 * -54 = 108
1
9
1*9=9
-1
9* -1 = -9
-1* -9 = 9
fx
57
X =
=
2
8
2*8=16
0
8* 0 = 0
0*0=0
n
53
3
4
3*4=12
1
4* 1 = 4
1*4=4
X = 1.0755 = 1.08
4
5
4*5=20
2
5* 2 = 10
2 * 10 = 20
n=53
x=57
fd= -49
fd2 =141

Ex (7):- The following table gives the age distribution of boys and girls in a high school.
Find which of the tow groups is more variable in age.
Age in Years:
13
14
15
16
17
No.of Stu (boys):
12
15
15
5
3
(girls):
13
10
12
2
1
Ans:
Boys
x
f
fx
d=x-A
fd
fd 2
13 12
13*12=156
-2
12* -2 = -24
-2 * -24 = 48
14 15
14*15=210
-1
15* -1 = -15
-1* -15 = 15
fx
722
X =
=
15 15
15*15=225
0
15* 0 = 0
0*0=0
n
50
16 5
16*5=80
1
5* 1 = 5
1*5=5
X = 14.44
17 3
17*3=51
2
3* 2 = 6
2 * 6 = 12
n=50
x=722
fd= -28
fd2 =80

2.45
* 100 =
* 100
X
20
CV = 0.1225 * 100 = 12.25%

CV =

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400


Ans:

24

A Company
fd
f
-1* -100=100 30
0*0 = 0
420
1*260=260
120
2*160=320
30
fd2=680
n=600

fd
-1*30=-30
0*420=0
1*120=120
2*30=60
fd=150

= -1

CI
500-700
700-900
900-1100
1100-1300

CV =

* 100

XB =

A =

( 150
)
600

0.45 - (0.25)2 * 2

- 0.2844 * 2

B =

0.45 - 0.0625 * 2

* 2 = 0.9213 * 2

0.3875

* 100 =

1.85
21.07

B =
* 100

0.08780 * 100 = 8.78%

CVB =

* 2 = 0.6225 * 2

1.2449 = 1.25
B
XB

= -200 = -1
200

* 100 =

1.25
20.5

fd
fd2 fd 2
* c ,
=
* c
n
n
n
Put the values from above table and
A = 800, c = 200

* 100

24

CV =

* 100

XB = 800 + 17
* 200
61
= 800 + 0.2787 * 200
= 800 + 55.7377 = 855.7377
XB = 855.74

N I L E S H

A =
A =
A =

72
64

( 36
)
64

* 200

B =

CVA =

( 17
)
61

* 200

P A Z A R E
2

1.125 - (0.5625) * 200


1.125 - 0.31641 * 200
0.8086 * 200 = 0.8992 * 200

A =

31
61

179.8432
A
XA

= 179.84

B =

0.5081 - (0.2787)2 * 200

B =

0.5081 - 0.07767 * 200

B =
B =

0.43043

179.84
* 100 =

912.5

* 100

0.197084 * 100 = 19.71%

CVB =

*200 = 0.6560 * 200

131.2143 = 131.22
B
XB

131.22
* 100 =

855.74

* 100

CVB = 0.15334 * 100 = 15.34%

B Suppliers lamps are more Uniform as their variation is less than the A Suppliers
lamps.
Ex (10):- An analysis of the monthly wages paid to workers in two firms A and B belonging to the same industries givs the following results:
Firm A
Firm B
No. of wage earners
Average monthly wage
Variance of the distribution
QDM notes for MBA

586.00
Rs. 52.50
Rs. 100.00

648.00
Rs. 47.50
Rs. 121.00
Second Edition 2013 - 2014

Ex (9):- A purchasing agent obtained samples of lamps from two suppliers A and B with
the following information.
Length of the Life hr: 500-700 700-900 900-1100
1100-1300
Supplier A:
10
16
30
8
Supplier B:
3
42
12
4
W hich Suppliers lamps are more uniform?

The Bulbs of B company are more Uniform and durable than the bulbs of A company
as the variation in B bulbs is less.

XA = 800 + 36
* 200
64
= 800 + 0.5625 * 200
= 800 + 112.5 = 912.5
XA = 912.5

CVA =

CVB = 0.06097 * 100 = 6.097%

XA

B =

= 1.85

-1*-3=3
0*0 = 0
1*12=12
2*8=16
fd2=31

1.8426

- (0.5333)2 * 2

Xm- 800 = 600-800


200
200

d =

X = A+

A =

*2

CVA =

270
600

CVA =

B =

P A Z A R E

1.1333
1.1333
0.8489

A =

*2

fd2

fd
-1*3=-3
0*42=0
1*12=12
2*4=8
fd=17

P A

A =

( 320
)
600

P A

A =

680
600

f
3
42
12
4
n=61

A =

N I L E S H
XB

-1* -10=10
0*0 = 0
1*30=30
2*16=32
fd2=72

20 + 150 * 2
600
= 20 + 0.25 * 2
= 20 + 0.5 = 20.5
= 20.5

XA = 20 + 320 * 2
600
= 20 + 0.5333 * 2
= 20 + 1.0667 = 21.0667
XA = 21.07

fd

-1*10= -10
0*16= 0
1*30=30
2*8=16
fd=36

fd

10
16
30
8
n=64

-1
0
1
2

Similarly, all Xm and d values find from above table.

fd
fd2 fd 2
* c ,
=
* c
n
n
n
Put the values from above table and
A = 20, c = 2

Xm = 500+700 = 1200 = 600


2
2

Similarly, all Xm and d values find from above table.


X = A+

Xm
600
800
1000
1200

d = Xm- 20 = 18-20 = -2
2
2
2

= 18

fd
-1*-30=30
0*0 = 0
1*120=120
2*60=120
fd2=270

17+19 = 36
2
2

Xm =

fd
-1*100= -100
0*160= 0
1*260=260
2*80=160
fd=320

B Supplier
2

f
100
160
260
80
n=600

A Supplier

d
-1
0
1
2

Xm
18
20
22
24

Ans:
2

CI
17-19
19-21
21-23
23-25

B Company
2

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

25

E-mail :- nilesh_pazare@rediffmail.com

Ans:-

Ans: Arrange the data in an ascending order

n = 586, X = 52.50, variance = 100

x
n

X =

* 100
X
11
CV = 47.50 * 100
CV = 0.23147 * 100
CV = 23.15%

Ex (11):- A study of large number of workers revealed an average pulse rate of 81 beats er
minute and standard deviation 12.2 beats. Measurement of heights gave averages 66.9
inches and standard deviation 2.7 inches. Are the industrial workers more variable in
respect of pulse rate?

P A

CV = 15.06%

CV = 4.04%

P A Z A R E

1)

Skp =

X - z

X - Mean,

Me - Median,

or

2)
z - Mode,

Skp =

3( X - Me)

( N 2+1 )

Median ( Me )

th item

( 7+1
)
2

( 82 )

= ( 4 ) th item = 56

56

3)
Quartile Deivation

th item

Q 3 - Q1
2

Q1 =

N+1
4

th item

& Q3 =

3( N + 1 )
4

Q1 =

I L E
H
(N)
(
)S

Q1 =

( 7 4+ 1 )

th item

N+1
4

Q3 = 3( N+1)
4

th item

( 84 )

th item

Q1 =

( 3(74+ 1))

th item

th item

( 3 4* 8 )

th item

th item

P A Z A R E

Q1 = ( 2 ) th item =

53

Q1 = 56

Q 3 - Q1
64 - 53
Q. D. =
=
2
2
Quartile Deviation (Q.D.) = 5.6
4) Mean Deviation
x
d=x-X
46
46-61= -15
x
427
X=
=
53
53-61= -8
N
7
X = 61
54
54-61= -7
56
56-61= -5
= d = 72
60
60-61= -1
N
7
= 10.2857
64
64-61= 3
94
94-61= 33
= 10.29
x=427 d = 72
Mean Deviation ( ) = 10.29
and

Q3 = ( 5 ) th item
Q3 = 64
11
=
2

th item

( 24
4 )

64

5.6

5) Standard Deviation
d2
(-15)2= 225
d 2
1462
(-8)2= 64
=
=
N
7
(-7)2= 49
2
(-5) = 25
= 208.8571
(-1)2= 1
= 14.4519
(3)2= 9
= 14.45
(33)2= 1089
d2 = 1462
Standard Deviation () = 14.45

(Tip:- All the Methods can solve from only one example, so student practise all the
types from only one example for better understand and easy to solve any methods.)

- Standard deviation

25

QDM notes for MBA

Second Edition 2013 - 2014

Karl Person has stated a formula for relative measure of skewness. That is why, the
formula is known as Karl Persons Coefficient of Skewness. It is based on the difference between the Mean and Mode of the distribution which is divided by the standard
deviation. It is denoted by symbolically by Skp.

th item

Median (Me) =

427
= 61
7

Karl Persons Coefficient of Skewness:-

Yes the industrial workers are more variable in pulse rate. Pulse rate variable is more
than the Height in inches.

x1+x2+x3+ x4+ x5+ x6


x
=
N
N
46 + 53 + 54 + 56 + 60 + 64 + 94
X =
7
Arithmetic Mean X = 61
X

94
7

Height in inches
X = 66.9, = 2.7

2.7
CV =
* 100
=
* 100
X
66.9
CV = 0.04035 * 100 = 4.035%

64
6

P A

Pulse Rate
X = 81, = 12.2

12.2
CV =
* 100 =
* 100
X
81
CV = 0.15061 * 100 = 15.06%

Ans:-

60
5

Factory B pays out more wages than factory A, and at the same it has greater variability
also.

N I L E S H

2)

56
4

x = X * n
x = 47.50 * 648
x = 30780 Rs.

1)

x = X * n
x = 52.50 * 586
x = 30765 Rs.

= 11

CV =

54
3

variance
=
121

x
n

X =

53
2

10

* 100
X
10
CV = 52.50 * 100
CV = 0.190476 * 100
CV = 19.05%

46
1

CV =

X:
N:

variance
= 100

n = 648, X = 47.50, variance = 121

Firm B

Firm A

Ex (12):- Find out the Arithmetic Mean, Median, Quartile Deviation, Mean Deviation ,
Standard Deviation from following given data.
53, 56, 64, 54, 46, 60, 94.

i) Which firm pays out the larger amount as monthly wages? and
ii) In which firm is there greater variability in individual wage?

fuysk ;ks- ik>kjs 09766134400

26

Q.D. = Q3 - Q1
2

L = 18.5 , cf = 9 , f = 2 , c = 3

Mean ( X ) = 21.23 , Median (Me) = 21.5


=

64.5 - 42.46

22.04

Mode (z) = 22.04

P A Z A R E
fd = 31 , fd2 = 123 , n = 22 , c = 3

d
- (
)
fd
n
n

x c =

31
- ( )
123
22
22

5.5909 - (1.40909) x 3
=
=
1.8988
3.6054 x 3

x 3

5.5909

x 3

- 1.9855

x 3

5.6963 =

5.70

Standard Deviation ( ) = 5.70

5.5 - 3
Q1 = 15.5 + x 3
6

16.5 - 14
Q3 = 24.5 + x 3
4

CV =

* 100 =

5.70

* 100 = 0.2683 * 100


X
21.23
Coefficient of Variance (CV) = 26.83%

= 26.83%

3N/4- cf
Q3 = L + x c
f
3N
3 x 22
66
=
=
= 16.5
4
4
4
L = 24.5,cf = 14, f = 4,
c=3

)x c

Q1 = L +

3N/4-cf
N/4-cf
x c & Q3 = L +
f
f

N/4 - cf
Q1 = L +
x c
f
N = 22,
N
22
=
= 5.5
4
4
L = 15.5, cf = 3, f = 6,
c=3

= 1.40909 x 3 = 4.2272 = 4.23

6) Standard Deviation ( )

Q3 - Q1
4) Quartile Deviation (QD) =
2

fd = 31 , n = 22 , c = 3

= 3 * 21.5 - 2 * 21.23

z = 3 Me - 2 X

fd
x c
n
= 31 x 3
22

3) Mode (z)

0.2232

N I L E S H

Put the value on formula

( N / 2 - cf)
11 - 9
2
x c = 18.5 +
x 3 = 18.5 +
x 3 = 18.5 + (1 x 3)
f
2
2
Me = 18.5 + 3 = 21.5
Me = L +

= 11

P A

P A Z A R E
N / 2 = 22 / 2

9.63
43.13

Mean Deviation () = 4.23

17 + (1.40909) * 3

= 17 + 4.2272 = 21.2272 = 21.23

2) Median (Me)

26.38-16.75
26.38+16.75

5) Mean Deviation ()

P A

31 * 3
22

17 +

Q 3 - Q1
Q3 + Q1

Coffiecient of Q.D. =

d = Xm - A = 11 - 17 = -6 = -2
c
3
3

from above method, we find the values of Xm , d and c.


=

= 4.815

Coffiecient of Q.D. = 0.22

N I L E S H
fd * c
n

9.63
2

Quartile Deviation (Q.D.) = 4.82

1) Mean

X = A +

26.38-16.75 =
2

c = 12.5 - 9.5
c=3

fd2
-2 * -4 = 8
-1 * -1 = 1
0*0=0
1*2=2
2 * 6 = 12
3 * 12 = 36
4 * 16 = 64
fd2 = 123

f.d
2* -2= -4
1* -1= -1
6*0 = 0
2*1 = 2
3*2 = 6
4*3 = 12
4*4 = 16
fd= 31

21 = 11
2

d
-2
-1
0
1
2
3
4

cf
2
1+2=3
6+3=9
2+9=11
3+11=14
4+14=18
4+18=22

f
2
1
6
2
3
4
4
N=22

10+12
2

Xm =

Xm
11
14
17
20
23
26
29

C.I.
9.5-12.5
12.5-15.5
15.5-18.5
18.5-21.5
21.5-24.5
24.5-27.5
27.5-30.5

C.I.
10-12
13-15
16-18
19-21
22-24
25-27
28-30

2.5
Q3 = 24.5 + x 3
4
= 24.5 + 0.625 x 3
= 24.5 + 1.875
= 26.375
Q3 = 26.38

2.5
Q1 = 15.5 + x 3
6
= 15.5 + 0.4166 x 3
= 15.5 + 1.25
= 16.75
Q1 = 16.75

Ex (13):- Find out the Mean, Median, Mode, Quartile Deviation, Coefficient of QD, Mean
Deviation, Standard Deviation and coefficient of variation from following given data.
C.I. :
10-12 13-15 16-18 19-21 22-24 25-27 28-30
f:
2
1
6
2
3
4
4
Ans:- Since there is an inclusive class interval distribution, we shall convert it into
exclusive class interval series.

E-mail :- nilesh_pazare@rediffmail.com

(Tip:- All the Methods can solve from only one example, so student practise all the
types of problems from only one example for better understand and easy to solve any
methods.)

26

QDM notes for MBA

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

27

E-mail :- nilesh_pazare@rediffmail.com

Karl Pearsons Coefficient of Correlation: ( r ):-

dxdy
r

dxdy
2

dx dy

0.6745

1 - r2
n

Ex (1):- From the following table calculate the coefficient of correlation by Karl Pearsons
method. Arithmetic mean of X and Y variables are 6 and 8 respectively. Comment on the
result through the Probeable Error.
X: 6
2
10
8
Y: 9
11
8
7

27

QDM notes for MBA

Second Edition 2013 - 2014

When the X and Y of the variables are fractional figures, the computation
will be a tedious job. Under such circumstances, we can take the deviations from the
assumed means for the two variables (the next nearest whole number to the
actual mean preferably). Then we have the Short cut formula as under.

Reason for taking the factor 0.6745 is that in a normal distribution 50% of the observation lie in the range 0.6745 where is the mean and is the standard deviation.

These above formula are quite conveniently applied, if the X and Y of the variables are
integer or whole numbers.

Probable factor x Standard Error

(Note: No need to compute Standard Deviation).

P.E. =

P A Z A R E

P A

N I L E S H

It is a difference resulting due to taking samples from the mass or


population. It is not possible to consider the entire population (census method) in statistical analysis and arrive true or actual results. So there lies error in the sampling result as
compared to the actual result obtained in the census method.
Probable Error is a measure (a single fractional figure) which when added to and
substracted from , gives us the two limits, within these two limits, it is probable that all
the results or answers (coefficient of correlation) of the sample pairs, selected from the
same population, will fail. Thus the probable error is a statistical measure which provied
for two limits within which all the answers, obtained from different sample pairs of the
population, will fail.
It is based on the standard errors multiplied by the probable factor. It is obtained by the
formula:

n dx xdy
n
n

dxdy
n
x y

=
2

covariance
x y

dxdy
n

Actual Mean of y
Assumed Mean of y

P A

dxdy

Covariance

Y Ay -

Probable Error:

The above formula can be simplified mathmetically as under.


r =

dy)2
n

(Note: Deviations are taken from actual mean)

Actual Mean of x
Assumed Mean of x

(c) Refer....

P A Z A R E
dxdy
n x y

dx ) ( dy )
= n ( X - Ax ) ( Y - Ay )
n

(b) Refer....

r =

X Ax -

N I L E S H
The formula may be presented as under.

dy

(a) Refer....

dx - Deviation of x values of variable from there X i.e. (x - X).


dy - Deviation of x values of variable from there Y i.e. (y - Y).
x - Standard Deviation of X varable.
y - Standard Deviation of Y varable.
n - Number of items paired.

dx)2
n

(Note: Though the formula seems to be lengthy, the calculations are amazingly simplified.

r =

dx

Where, x = ( x - X ) = dx
y = ( y - Y ) = dy

xy
n x y

dx ) ( dy )
n

The formula is based on arithmetic mean and standard deviation and it is most
widely used. The formula indicates whether the correlation is positive or negative. The
answer lies between +1 and -1 (Perfect Positive and Negative correlation respectively).
Zero represents the absence of correlation.
Karl Pearsons coefficient of correlation is also known as the Product Moment
Coeficient. It is denoted by r which is the symbol of the degree of correlation between
the two variables. Coefficient of Correlation is the numberical measure of the amount
of correlation existing between the two variables X and Y, the subject and the relative
respectively. The variable which is used as the standard is called the subect, and the
variable which is compared with the subject is called the relative. The Coefficient is
calculated by dividing the product of all the deviations of each pair of observations from
their respective means by the product of the standard deviations of the two variables
multiplied by the number of items.

fuysk ;ks- ik>kjs 09766134400

28

Ans: Let us find out the missing figures in X and Y variables.


X variable

Y variable

N I L E S H
dxdy

r =

800

-26

= -0.9192

( High Degree of Negative Correlation )

1 - r2
1 - (-0.9192)2
1 - 0.8449
0.1550
= 0.6745
= 0.6745
= 0.6745
n
2.2360
5
5

0.6745 x 0.06932
=
0.046756
= 0.04676
0.04676

6
36
12

dx

(-1)2= 1
(4)2= 16
(-1)2= 1

(y-24)/6
dy
(6-24)/6= -3
(36-24)/6= 2
(12-24)/6= -2

dy

(-3)2= 9
(2)2= 4
(-2)2= 4

N I L E S H

dxdy
-1 x -3 = 3
4 x2 = 8
-1 x -2 = 2

28

0.143

The two limits, within which all the rs of different samples fall are,

P A Z A R E

0.575
+ 0.143
0.718

0.575
- 0.143
0.432

r answers fall within 0.718 to 0.432


(Positive Range)

Ex (3):- Calculate the coefficient of corelation between income and weight from the following data.
Income (Rs) X: 100
200
300
400
500
600
Weight (lbs) Y: 120
130
140
150
160
170
Ans:Computation of Coefficient of Correlation
x

(x-350)/50
dx
100
120 (100-350)/50= -5
200
130 (200-350)/50= -3
300
140 (300-350)/50= -1
400
150 (400-350)/50= 1
500
160 (500-350)/50= 3
600
170 (600-350)/50= 5
x=2100 y=870 dx=0
QDM notes for MBA

dx2

(y-145)/5
dy
(-5)2= 25 (120-145)/5=
(-3)2= 9 (130-145)/5=
(-1)2= 1 (140-145)/5=
(1)2= 1
(150-145)/5=
(3)2= 9
(160-145)/5=
(5)2= 25 (170-145)/5=
dx2=70
dy=0

dy2
-5
-3
-1
1
3
5

dxdy

(-5)2= 25
(-3)2= 9
(-1)2= 1
(1)2= 1
(3)2= 9
(5)2= 25
dy2=70

-5 x -5 = 25
-3 x -3 = 9
-1 x -1 = 1
1 x1 = 1
3 x3 = 9
5 x 5 = 25
dxdy= 70

Second Edition 2013 - 2014

30
60
30

(x-36)/6
dx
(30-36)/6= -1
(60-36)/6= 4
(30-36)/6= -1

1 - r2
1 - (0.575)2
1 - 0.3306
0.6693
= 0.6745
= 0.6745
= 0.6745
n
10
10
3.1623

0.6745 x 0.21164
=
0.1428 =
0.1428

= 0.575

83.4745

Ex (2):- Calculate the coefficient of corelation from the following data and calculate its
Probeable Error.
Marks in
Statistics(X):
30, 60, 30, 66, 72, 24, 18, 12, 42, 06
Account(Y):
06, 36, 12, 48, 30, 06, 24, 36, 30, 12
Ans:Computation of Coefficient of Correlation

6968

48

Probable Error (P.E.) =

134 x 52

( Low Degree of Positive Correlation )

Probable Error (P.E.) =

P.E. = 0.6745
P.E. =

x dy

48

= 24

P.E. = 0.6745
P.E. =

28.2842

P A Z A R E

r = -0.92

dx

48

=
2

240
10

y =
n

P A

40 x 20

-26

r = 0.575

P A

dx2 x dy2

-26

dxdy

r =

Y =

5 x 4 = 20
6 x1 = 6
-2 x -3 = 6
-3 x 0 = 0
-4 x -2 = 8
1 x -1 = 1
-5 x -2 = 10
dxdy= 48

dxdy
0 x1 = 0
-4 x 3 = -12
4 x -3 = -12
-2 x 0 = 0
2 x -1 = -2
dxdy= -26

= 36

(4)2= 16
(1)2= 1
(-3)2= 9
(0)2= 0
(2)2= 4
(1)2= 1
(-2)2= 4
dy2=52

dy2
(1)2= 1
(3)2= 9
(-3)2= 9
(0)2= 0
(-1)2= 1
dy2=20

360
10

dxdy

dy=(y-8)
9-8= 1
11-8= 3
5-8= -3
8-8= 0
7-8= -1
dy=0

dx2
(0)2= 0
(-4)2= 16
(4)2= 16
(-2)2= 4
(2)2= 4
dx2=40

dx=(x-6)
6-6= 0
2-6= -4
10-6= 4
4-6= -2
8-6= 2
dx=0

x =
n

X =

y
9
11
5
8
7
y=40

x
6
2
10
4
8
x=30

66
72
24
18
12
42
06
x=360

dy2

(y-24)/6
dy
(5)2= 25 (48-24)/6= 4
(6)2= 36 (30-24)/6= 1
(-2)2= 4
(6-24)/6= -3
(-3)2= 9
(24-24)/6= 0
(-4)2= 16 (36-24)/6= 2
(1)2= 1
(30-24)/6= 1
(-5)2= 25 (12-24)/6= -2
dx2=134
dy=0

Computation of Coefficient of Correlation

(x-36)/6
dx
48
(66-36)/6= 5
30
(72-36)/6= 6
06
(24-36)/6= -2
24
(18-36)/6= -3
36
(12-36)/6= -4
30
(42-36)/6= 1
12
(6-36)/6= -5
y=240 dx=0

9+11+B+8+7
Y = y =
n
5
35
+
B
8 =
5
8 x 5 = 35 + B
40 = 35 + B
B = 40 - 35 = 5
B = 5

dx2

X = x = 6+2+10+A+8
n
5
26
+
A
6 =
5
6 x 5 = 26 + A
30 = 26 + A
A = 30 - 26 = 4
A = 4

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400


x
=
n

X =

29

2100
= 350
6

870
6

y
=
n

Y =

= 145

490

= 1

70

dx)2
n
2

dx ) ( dy )
n

dy2 -

dx2
(5) = 25
(-15)2= 225
(-15)2= 225
(15)2= 225
(25)2= 625
(10)2= 100
dx2=1425

1425 -

dx = 45, dy = -15, dx = 1725, dy = 1425, dxdy = -1500, n = 6

29

15)2
6

dxdy
-5 x 0 = 0
-15 x 10=-150
-15 x 10=-150
15 x -20=-300
15 x -30=-750
10 x -15=-150
dxdy=-1500

( 15 ) ( -45 )
6
2

1725 - -45)
6

-1500

dy)2
n

P A Z A R E
-1500

dy2
(0) = 0
(10)2= 100
(10)2= 100
(-20)2= 400
(-300)2= 900
(-15)2= 225
dy2=1725

dy=(y-40)
(40-40)= 0
(50-40)= 10
(50-40)= 10
(20-40)= -20
(10-40)= -30
(25-40)= -15
dy=-45

1425 - 2256

-675
6

1725 - 2025
6

-1500 - ( -112.5)
r

-1500 + 112.5

1425 - 37.5

1725 - 337.5

-1387.5
=
37.25 x 37.25

-1387.5
1387.5

QDM notes for MBA

1387.5

1387.5

-1

Second Edition 2013 - 2014

Put

y
dx=(x-65)
40
(60-65)= -5
50
(50-65)= -15
50
(50-65)= -15
20
(80-65)= 15
10
(90-65)= 25
25
(75-65)= 10
y=195 dx=15

x
60
50
50
80
90
75
x=405

dx

Computation of Coefficient of Correlation

N I L E S H

-1

( There is perfect Negative Correlation )

= 32.5

dxdy

1387.5

(Note: 67.5 - 2.5 = 65 & 32.5 + 7.5 = 40, put the assumed mean 65 & 40 and solve it, the
answer is come same.)

(Note: Deviation are taken from the assumed means and the short cut formula is used.
Because actual means 67.5 and 32.5 are in fractions. 67.5 - 7.5 = 60 & 32.5 + 2.5 = 35)

1387.5

P A

195
6

-1387.5
1387.5

-1500 + 112.5

y =
n

-1387.5
=
37.25 x 37.25

Y =

dxdy
0 x5 = 0
-10 x 15=-150
-10 x 15=-150
20 x -15=-300
30 x -25=-750
15 x -10=-150
dxdy=-1500

1725 - 337.5 1425 - 37.5

405 = 67.5
6

dy2
(5)2= 25
(15)2= 225
(15)2= 225
(-15)2= 225
(-25)2= 625
(-10)2= 100
dy2=1425

-1500 - ( -112.5)

x =
n

dy=(y-35)
(40-35)= 5
(50-35)= 15
(50-35)= 15
(20-35)= -15
(10-35)= -25
(25-35)= -10
dy=-15

P A

X =

dx2
(0)2= 0
(-10)2= 100
(-10)2= 100
(20)2= 400
(30)2= 900
(15)2= 225
dx2=1725

r = -1

1425 - 225
6

y
dx=(x-60)
40
(60-60)= 0
50
(50-60)= -10
50
(50-60)= -10
20
(80-60)= 20
10
(90-60)= 30
25
(75-60)= 15
y=195 dx=45

-675
6

Computation of Coefficient of Correlation

1725 - 2025
6

how to find fail stud --> 800 - 480 = 320


(Like that find others)
how to find % -->
(480 / 800) * 100 = 60%
(320 / 800) * 100 = 40%

P A Z A R E

1425 - -15)
6

L
Ex (4):- Calculate Karl Persons coefficient of corelation between percentages of pass
and failure from the following data.
No. of Student: 800
600
900
700
500
400
No. of Passed: 480
300
450
560
450
300
Ans:- Let us convert the data into the number of students passed and failed.
No. of Student:
800
600
900
700
500
400
No. of Passed (X):
480
300
450
560
450
300
No. of Failed (Y):
320
300
450
140
050
100
Pass % (X) :
060
050
050
080
090
075
Fail % (Y):
040
050
050
020
010
025

N I L E S H

45)2
6
-1500

( There is perfect Positive Correlation )

x
60
50
50
80
90
75
x=405

1725 -

r = 1

70 x 70

70

( 45 ) ( -15 )
6

dx2 x dy2

70

70

dxdy

-1500
r

The deviation are divided by common factor and short cut method adopted.
r =

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

30

dxdy

Average Profit =

Profit
No. of shops

&

Average Profit =

7200
= 600
12

&

dx

dx)2
n

46

36
6

-22 - 3
r

19 - 1.5
-25
=
4.1833 x 6.3245

-25
=

46 - 6
-25
26.4575

17.5

(x-320)/10
dx2
(y-140)/10
dy2
dx
dy
600
100 (600-320)/10=28 784
(100-140)/10= -4
16
300
200 (300-320)/10= -2 4
(200-140)/10= 6
36
400
300 (400-320)/10= 8
64
(300-140)/10= 16
256
150
50
(150-320)/10= -17 289
(50-140)/10= -9
81
180
60
(180-320)/10= -14 196
(60-140)/10= -8
64
x=1630 y=710
dx= 3
dx2=1337
dy= 1
dy2=453
x

P A Z A R E

x
=
n

X =

1630
= 326
5

1337 -

-0.94491

30

Y =

y
=
n

710
5

28 x -4 = -112
-2 x 6=-12
8 x 16=128
-17 x -9=153
-14 x -8=112
dxdy=269

= 142

(Note: Deviations are taken from the assumed means. i.e. 326-6 = 320 & 142-2 = 140)
dx ) ( dy )
dxdy n
r
=
2
dx)
dy)2
2
dx2 dy
n
n

269

40

dxdy

QDM notes for MBA

3)2
5

(3)(1)
5

453

1)2
5
Second Edition 2013 - 2014

9
6

Computation of Coefficient of Correlation

19

N I L E S H

18
6

-6)2
6

46 -

- 25

dy)2
n

( -3 ) ( -6 )
6

-3)2
6

19 -

1200
= 100
12

dy

-25
r

dx ) ( dy )
n

Advert. Expenses
No. of Shops

P A

P A

dxdy

Average A.E. =

(Like above find out all the values of X and Y)

We are taking assumed means. In Y varaible we are dividing the deviation by the common
factor. So a short cut formula is used.

P A Z A R E

Average Avrt. Expen

N I L E S H

Ex (6):- Find Pearsonian coefficient of correlation between average profits and average
advertisement expenditure per shop and interpret. calculate its Probeable Error.
No. of shops:
12
18
25
20
10
Total Profit (Rs):
7200
5400
10000 3000
1800
Total Advertisement Exp(Rs): 1200
3600
7500
1000
600
Ans:- Let us obtain the average profits and average advertisement expenses X & Y.

-3 x 2= -6
-2 x 1= -2
-1 x 0=0
0 x -1= 0
1 x -2= -2
2 x -6= -12
dxdy=-22

0.014

(y-50)/5
dy2
dy
(60-50)/5= 2
4
(55-50)/5= 1
1
(50-50)/5= 0
0
(45-50)/5= -1
1
(40-50)/5= -2
4
(20-50)/5= -6
9
dy=-6
dy2=46

% of
y
60
55
50
45
40
20

Probable Error (P.E.) =

(x-23.5)
dx2
dx
20.5-23.5=-3
9
21.5-23.5=-2
4
22.5-23.5=-1
1
23.5-23.5=0
0
24.5-23.5=1
1
25.5-23.5=2
4
dx=-3
dx2=19

P.E. =

M.V.
x
20.5
21.5
22.5
23.5
24.5
25.5

Age
C.I.
20-21
21-22
22-23
23-24
24-25
25-26

1 - r2
1 - (-0.95)2
1 - 0.9025
0.04975
= 0.6745
= 0.6745
= 0.6745
n
2.44948
6
6

0.6745 x 0.02031
=
0.01369
= 0.014

P.E. = 0.6745

Computation of Coefficient of Correlation

( High Degree of Negative Correlation )

how to find mid value --> (20+21) / 2 = 41 / 2 = 20.5 (Like that find others)
how to find % -->
(72 / 120) * 100 = 60%
(55 / 100) * 100 = 55%

r = -0.95

Ex (5):- Following are the results of B.Com. examination in a college. Compute coefficient
of correlation between age and sucess in the examination and interpret the result. calculate its Probeable Error.
Age of Candidates: 20-21 21-22 22-23 23-24 24-25 25-26
Candi. Appeared:
120
100
70
40
10
5
Successful Cand:
72
55
35
18
4
1
Ans:- Let us obtain the Mid-value of age group and convert the successful candidates into
percentages.

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

31

269
r

=
9
5

453

1
5

269 - ( 0.6 )

268.4
=
36.54 x 21.279

r = 0.3451

0.3451

( Low Degree of Positive Correlation )

0.2659

0.2659

0.3451
- 0.2659
0.0792

r answers fall within 0.6110 to 0.0792


(Positive Range)

55 x 100 = 0.55 x 100 = 55.00


100

(Like find other also)

X =

P A Z A R E

x
n

320
8

= 40

Y =
dxdy

dx

dx)2
n

y
=
n

1482.78
= 185.35
8

dx ) ( dy )
n

dy

dxdy
-5 x -5 = 25
1 x 1= 1
-1 x -1= 1
5 x 5= 25
3 x 2= 6
-3 x -2= 6
dxdy=64

(y-185)
dy2
dxdy
dy
55-185= 130
16900 910
66.67-185= 118.33 14002 591.65
100-185= 85
7225 255
111.11-185= -73.89 5460 73.89
150-185= -35
1225 -35
200-185= 15
225
45
300-185= 115
13225 575
500-185= 315
99225 2205
dy
dy2
dxdy
2.78
157487 4620.54

dy)2
n

Put the values dx=0, dx2=168, dy=2.78, dy2=157487, dxdy=4620.54


on above formula

31

QDM notes for MBA

dy2
25
1
1
25
4
4
dy2=60

dy = (y-15)
(10-15) = -5
(16-15) = 1
(14-15) = -1
(20-15) = 5
(17-15) = 2
(13-15) = -2
dy= 0

dx=(x-450)/50
dx2
(200-450)/50= -5
25
(500-450)/50= 1
1
(400-450)/50= -1
1
(700-450)/50= 5
25
(600-450)/50= 3
9
(300-450)/50= -3
9
dx= 0
dx2=70

(x-40)/5
dx2
P.Lakh
dx
y
(5-40)/5 = -7
49
55.00
(15-40)/5 = -5 25
66.67
(25-40)/5 = -3 9
100
(35-40)/5 = -1 1
111.11
(45-40)/5 =1
1
150
(55-40)/5 =3
9
200
(65-40)/5 =5
25
300
(75-40)/5 =7
49
500
dx
dx2
y
0
168 1482.78

M.V.
x
05
15
25
35
45
55
65
75
x
320

300
30 = 10

Age
C.I.
0-10
10-20
20-30
30-40
40-50
50-60
60-70
70-80

Computation of Coefficient of Correlation


x
y
200
10
500
16
400
14
700
20
600
17
300
13
x=2700 y=90

No. of Deaths
Population

Blind
x 100
No. of persons

P A

P A

P A Z A R E
=

N I L E S H

Blind per lakh =

Computation of Coefficient of Correlation

Ex (7):- With the following data in six cities calculate the coefficient of correlation by pearsons
method between the density of population and death rate.
City:
A
B
C
D
E
F
Density of population:
200
500
400
700
600
300
Population (in 000):
30
90
40
42
72
24
No. of Deaths:
300
1440
560
840
1224
312
Ans:- Let us obtain the death rate as under.
Death Rate

Ex (8):- The following table gives the distribution of the total population and those who are
totally or partially blind among them. Find out if there is any relation between age and
blindness. Calculate its Probeable Error.
Age in years:
0-10
10-20 20-30 30-40 40-50 50-60 60-70 70-80
No. of persons
(000s):
100
60
40
36
24
11
6
3
Blind:
55
40
40
40
36
22
18
15
Ans:- Let us obtain the Mid values of age groups and blind men per one lakh persons.

N I L E S H

The two limits, within which all the rs of different samples fall are,
0.3451
+ 0.2659
0.6110

( High Degree of Positive Correlation )

Probable Error (P.E.) =

0.2659 =

= 15

1 - r2
1 - (0.3451)2
1 - 0.1192
0.8808
= 0.6745
= 0.6745
= 0.6745
n
5
5
2.2361

0.6745 x 0.3939 =

r = 0.9875

P.E. =

452.8

P.E. = 0.6745

268.4
777.5429

1335.2

90
6

453 - 0.2

y
=
n

1337 - 1.8

268.4
=

Y =

2700
= 450
6

(Note:- When dx = 0 and dy = 0 then use the following formula to find the value of r
dxdy
64
64
64
r =
=
=
=
= 0.98754
2
2
dx x dy
70 x 60
4200
64.8074

x
n

X =

1337

3
5

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

32

4620.54 r

-1500

4620.54 - 0

168 - 0 157487 - 0.96605


4620.54
=
12.96148 x 396.8451

4620.54
5154.70

4620.54

168
=

157486.04

0.8964

Probable Error (P.E.) =

0.04685=

368

122
164.30

556

- 13924
30

309

8649
30

P A Z A R E

368 - 365.8

556 - 464.13 309 - 288.3


2.2
9.5849 x 4.5498

2.2
43.609

2.2

91.87 20.7
=

0.0505

0.0505

Ex (12):- Coefficient of correlation between two variates x and y is 0.8. Their covariance is
20. The variance of x is 16. Find the standard deviation of y series.
Ans:- r = xy
1
= xy x
n x y
n
x y
0.8 = 20 x
0.8 = 20 x

16 x y
1
4 x y

0.8 x 4 = 20 x
QDM notes for MBA

3.2 = 20
y
y =

E
32

10974
30

Ex (10):- Calculate the coefficient of correlation between the X and Y series from the
following data:
Series A
Series B
Arithmetic Mean
74.5
125.5
Assumed Mean ( A )
69.0
112.0
Standard Deviation ()
13.07
15.85
Sum of the products of deviation of X and Y from their assumed means +2176 and no. of
pairs of observation is 8.

93)2
30

(High positive correlation)

122
=
15 x 3.162 x 3.464

309

556 -

P A

122
15 x 10 x 12

118)2
30

N I L E S H
r

0.7425

( 118 ) (93 )
30

0.0469

dxdy
n x y

368 -

P A

0.9546

( Very high positive correlation)

0.0469

P A Z A R E
r

Ex (11):- Calculate the correlation coeficient between the variables X and Y from the
following data.
x = 118
y = 93 x2 = 556
y2 = 309
xy = 368
n = 30
x ) ( y )
Ans:
xy n
r
=
2
x)
y)2
x2 y2 n
n

Ex (9):- Calculate the coefficient of correlation between X and Y series from the following
data:
Series A
Series B
No. of Pairs (n)
15
15
Variance ( )
10
12
Summation of products of deviation of x and y series from their respective mean is 122.
Ans:-

1582
1657.276

N I L E S H
=

= 0.9546

1 - r2
1 - (0.8964)2
1 - 0.80353
0.19647
= 0.6745
= 0.6745
= 0.6745
n
2.82842
8
8

0.6745 x 0.06946

2176 - 594
1657.276

( High Degree of Positive Correlation )

P.E. = 0.6745

2176 - (8 x 5.5 x 13.5) =


1657.276

r = 0.8964

2176 - 8( 74.5 - 69) (125.5 - 112)


8 x 13.07 x 15.85

dxdy - n ( X - Ax) ( Y - Ay) =


n x y

- 7.7284
8

0
8

157487

0
6

2.78)2
8

168

P.E. =

157487

0)2
8

168 -

( 0 ) (2.78 )
8

E-mail :- nilesh_pazare@rediffmail.com

20
3.2

y =

6.25
Standard deviation of y series is 6.25
Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

33

Spearmans Rank Correlation Coefficient: ( rs ):-

6 d2
n3 - n

rs

6 x 119
10 x (100 - 1)
714
990

P A Z A R E
rs

rs

rs

=
=

1 0.28

1 -

1 -

0.7212 = 0.2788
( Very Low Degree of Positive Correlation )

as same.

33

QDM notes for MBA

Second Edition 2013 - 2014

K L
49 43
11 12
11 12

Ex (2): Find the Spearmans Rank Correlation Coefficient from following data.
Student Hindi(X) English(Y) Rx
Ry
D=Rx - Ry
D2 = D x D
A
5
7
5
5.5
5 - 5.5= -0.5
-0.5 x -0.5= 0.25
B
9
5
1
7
1 - 7 = -6
-6 x -6 = 36
C
7
7
2.5
5.5
2.5 - 5.5= -3
-3 x -3 = 9
D
4
8
7
3.5
7 - 3.5= 3.5
3.5 x 3.5 = 12.25
E
4
9
7
2
7-2=5
5 x 5 = 25
F
7
2
2.5
9
2.5 - 9 = -6.5
-6.5 x -6.5= 42.25
G
1
0
10
10
10 - 10 = 0
0 x0 = 0
H
3
8
9
3.5
9 - 3.5 = 5.5
5.5 x 5.5= 30.25
I
6
4
4
8
4 - 8 = -4
-4 x -4 = 16
J
4
10
7
1
7-1=6
6 x 6 = 36
N=10
D = 0
D2 = 207

F G H
I
J
52 52 52 52
50
6 7 8 9
10
7.5 7.5 7.5 7.5
10
6+7+8+9 =30 = 7.5
4
4
more than value comes

6 D2
N(N2 - 1)
6 x 119
1 10 x (102 - 1)
6 x 119
1 10 x 99
1 -

A
B
C D E
58
58
55 55 55
1
2
3 4 5
1.5
1.5
4 4 4
1+2 = 3 =1.5 3+4+5 =12 = 4
Method -->
2
2
3
3
From above method to find the actual Rank, when 2 or
This method is same as find the value of mean.

Student
Marks(X)
Rough Rank
Correct Rank

L
43
12

In above example, the value 58 come 2 time and its rank give 1.5. How to give the rank 1.5,
we see the following example.
Ex (3)

K
49
11

P A

G H
I J
55 35 39 28
3 8
7 10

J
50
10

A
B C D E F
58 53 33 51 58 48
1.5 4
9 5 1.5 6

I
52
7.5

D2 = 119

Student
Mraks(X)
Rank(R)

H
52
7.5

N I L E S H

N=10,

Student
A B C D E F
G H
I J
Marks(X)
60 43 35 62 25 38 19 27 23 41
Rank(R)
2 3
6 1 8 5
10 7
9 4
In above example, the ranks taken in descending order mean rank started from biggest
value and every marks come only one time so it is simple to find the rank
Ex (2)

G
52
7.5

Note:- The value of D is always come zero ( 0 ), then your finding rank is correct. If the
value of D is not come zero ( 0 ), then you finding rank is wrong.

P A

P A Z A R E

F
52
7.5

Ex (1): Find the Spearmans Rank Correlation Coefficient from following data.
Student Mark(X) Mark(Y)
Rx
Ry
D=Rx - Ry
D2 = D x D
A
32
58
6
3
6-3=3
3 x3 = 9
B
19
28
9.5
10
9.5 - 10= -0.5
-0.5 x -0.5= 0.25
C
71
32
3
8.5
3 - 8.5= -5.5
-5.5 x -5.5= 30.25
D
43
32
5
8.5
5 - 8.5= -3.5
-3.5 x -3.5= 12.25
E
80
34
2
7
2-7=5
5 x 5 =25
F
19
40
9.5
6
9.5 - 6= 3.5
3.5 x 3.5= 12.25
G
31
50
7
5
7-5=2
2 x2 = 4
H
24
52
8
4
8-4=4
4 x 4 = 16
I
97
60
1
2
1 - 2 = -1
-1 x -1 = 1
J
54
64
4
1
4-1=3
3 x3 = 9
N=10
D = 0
D2 = 119

In the ranking systems, the biggest item gets the first rank, the next to it gets the
second rank and so on.
Ex (1)

E
55
4

N I L E S H

D
55
4

number six
numerical difference between corresponding paris of ranks
number of pairs
sum of squares of d

The
The
The
The

or

6 d2
n (n2 - 1)

C
55
4

Where,
6
d
n
d 2

1 -

B
58
1.5

A
58
1.5

rs

Student
Marks(X)
Rank

The formula is based on the ranks of the variables according to their sizes.
Following are the circumstances when the Rank Correlation coefficient is used.
(i) In a beauty contest, cooking contest, flower show contest and interview involving selections, we can use the rank correlation coefficient.
(ii) If the data are irregular or extreme items are erratic or inaccurate, we can use the rank
correlation coefficient.
Under this method of rank correlation coefficient, the individual items of variables
(x and y) are arranged in order of their ranks. We can apply this method only to individual
observations, but not to frequency distributions. In the process of ranking, the original
vaues are not taken into account, but only the ranks are assigned on the basis of original
values. The Ranks Correlation Coefficient is denoted symbolically rs.

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400


N=10,

34

D2 = 119

Ex (4): Find the Spearmans Rank Correlation Coefficient from following data.

rs

=
=

1 -

6 x 207
10 x (100 - 1)
1620
990

1 1.6364 = - 0.6364
- 0.6364
( Moderate Degree of Negative Correlation )

1 0.3864 = 0.6136
0.6136
( Moderate Degree of Positive Correlation )

1 -

0.7818

0.21818 =

0.7818

( High Degree of Positive Correlation )

P A Z A R E

histry(X) Geog.(Y)
98
60
85
40
102
75
112
84
120
98
102
75
106
85
108
84
95
54
103
75
106
83

Note:- The value of D is always come zero ( 0 ), then your finding rank is correct. If the
value of D is not come zero ( 0 ), then you finding rank is wrong.

34

Ry
9
11
7
3.5
1
7
2
3.5
10
7
5

D2 = D x D
0x0=0
0x0=0
0.5 x 0.5 = 0.25
-1.5 x -1.5 = 2.25
0x0=0
0.5 x 0.5 = 0.25
2.5 x 2.5 = 6.25
-0.5 x -0.5 = 0.25
0x0=0
-1 x -1 = 1
-0.5 x -0.5 = 0.25
D2 = 10.5

D=Rx - Ry
0
0
0.5
-1.5
0
0.5
2.5
-0.5
0
-1
-0.5
D = 0

6 D2
N(N2 - 1)
6 x 10.5
11 x (112 - 1)
6 x 10.5
11 x 120

1 -

1 -

0.95228

rs

1 -

rs

1 -

rs

1 -

0.9522

rs
QDM notes for MBA

Rx
9
11
7.5
2
1
7.5
4.5
3
10
6
4.5

0.0.4772 =

6 x 10.5
11 x (121 - 1)
63
1320

( VeryHigh Degree of Positive Correlation )


Second Edition 2013 - 2014

=
=

1 -

1 -

6 x 36
10 x (100 - 1)
216
990

rs

6 x 207
12 x (144 - 1)
663
1716

1 -

1 -

rs

rs

1 -

P A

Student
A
B
C
D
E
F
G
H
I
J
K
N=11

Ex (5): Find the Spearmans Rank Correlation Coefficient from following data.

rs

6 D2
N(N2 - 1)
1 - 6 x 110.50
12 x (122 - 1)
6 x 110.50
1 12 x 143
1 -

rs

6 D2
N(N2 - 1)
6 x 36
10 x (102 - 1)
6 x 36
10 x 99

N I L E S H

1 -

rs

D2 = 119

rs

D2 = D x D
-2 x -2 = 4
1x1=1
0.5 x 0.5 = 0.25
-3 x -3 = 9
0x0=0
3.5 x 3.5 = 12.25
-2.5 x -2.5 = 6.25
1.5 x 1.5 = 2.25
1x1=1
0x0=0
D2 = 36

D=Rx - Ry
1 - 3 = -2
2-1=1
3.5 - 3 = 0.5
3.5 - 6.5= -3
5 - 5= 0
6.5 - 3 = 3.5
6.5 - 9 = -2.5
8 - 6.5 = 1.5
9-8=1
10 - 10 = 0
D = 0

N=10,

rs

Ry
3
1
3
6.5
5
3
9
6.5
8
10

P A Z A R E

Rx
1
2
3.5
3.5
5
6.5
6.5
8
9
10

N I L E S H

D2 = D x D
-0.5 x -0.5= 0.25
-1.5 x -1.5= 2.25
-0.5 x -0.5 = 0.25
1 x1 = 1
-5.5 x -5.5 = 30.25
-1 x -1 = 1
2 x2 = 4
5 x 5 = 25
-2 x -2 = 4
1.5 x 1.5 = 2.25
-2 x -2 = 4
5.5 x 5.5 = 30.25
-2.5 x -2.5 = 6.25
D2 = 110.50

P A

D=Rx - Ry
5 - 5.5= -0.5
9.5 - 11= -1.5
11.5 - 12= -0.5
2-1=1
3.5 - 9 = -5.5
7 - 8 = -1
7-5=2
7-2=5
1 - 3 = -2
11.5 - 10 = 1.5
5 - 7 = -2
9.5 - 4 = 5.5
6 - 3.5 = -2.5
D = 0

Ry
5.5
11
12
1
9
8
5
2
3
10
7
4
6

Rx
5
9.5
11.5
2
3.5
7
7
7
1
11.5
5
9.5
3.5

Chem(Y)
7
11
12
1
9
8
5
2
3
10
7
4
6

Test(Y)
16
19
16
12
14
16
8
12
11
6

1 -

Test(X)
22
21
19
19
17
16
16
15
13
12

rs

Student
A
B
C
D
E
F
G
H
I
J
N=10

rs

rs

6 D2
1 N(N2 - 1)
6 x 207
1 10 x (102 - 1)
6 x 207
1 10 x 99

Ex (3): Find the Spearmans Rank Correlation Coefficient from following data.
Student Phy(X)
A
5
A
45
B
40
C
62
D
60
E
48
F
48
G
48
H
65
I
40
J
55
K
45
L
60
N=12

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

35

Regression:-

E-mail :- nilesh_pazare@rediffmail.com

Standard Deviation Measures: Deviations are taken from actual mean


We can use x for ( x - x ) = dx

x =

( x - x )
n

dxn

and

y for ( y - y ) = dy

y =

( y -ny )

dyn

I
Correlation Measure (Karl Pearsons Coefficient of Correlation):

x, being dependent on y will be the Best Estimate

(Basic Equation)
(Secondary Eq.)

X=a+bY
x = na + b y
xy = a y + b y2

= byx * bxy

The product of the both regression coefficient and root of it the resultant will always be
Correlation. The value of byx and bxy individually both cannot be more than 1. If one is
more than 1, the other must be less than 1. Both the regression coefficients will have the
same algebric signs. Either both of them would be positive or both of them would be
negative. It is not possible that one has a positive sign and the other is a negative sign.
The reason is that the standard deviations are always positive. Only the Coefficient of
Correlation can be either positive or negative.

P A Z A R E

Sometimes we find the means are in fractions. This makes the deviations and their
squares are also in fractions. To avoid the tedious calculations, we can have the assumed
means in round figures. Then, to find regression coefficients we can use the following
procedure.
byx =

ndxdy - ( dx )( dy )
2

ndx

- ( dx )

bxy =

ndxdy - ( dx )( dy )
ndy2 - ( dy )2

x=(x-x )

x
( x - x ) = r y

(y-y )

35

QDM notes for MBA

Second Edition 2013 - 2014

( x - x ) = bxy ( y - y )
and

byx * bxy

y
( y - y ) = r x ( x - x )

= r2

y=(y-y )

r x r

x
xy
=
y
y2

N I L E S H

( y - y ) = byx ( x - x )

y
x
x r
=
x
y

bxy = r

x= a+ by

and

y= a+ bx

xy
x2

x on y

r2

When the Actual Means are in Fraction:

In the above mathematical simplication, the constant a disappears from the calculations
and the basic formulas are changed to,
y on x

xy = a y + b y2
xy = a (0) + b y2
xy = b y2
xy
bxy =
y2
x
bxy = r
y

dy

P A

P A Z A R E

xy = a x + b x2
xy = a (0) + b x2
xy = b x2
xy
byx =
x2
y
byx = r
x

byx * bxy = r

P A

Regression Coefficient: Deviations are taken from actual mean. In case of secondary
equation, x and y stand for zero and the equation are reduced to small size as under.

dx

N I L E S H

Y=a+bX
y = na + b x
xy = a x + b x2

dy

xy

Regression Equation of X on Y :-

y
x

byx = r

Regression Equation of Y on X :-

dx

With the help of regression coefficient, to find the Coefficient of Correlation as under:

a and b are called constants.

dxdy

(i) x on y .............. x = a + by

y, being dependent on x will be the Best Estimate

Regression equations are


(i) y on x .............. y = a + bx

Regression means returning or stepping back to the average value. With the
help of values of one variable (indepedent) we can establish most likely values of other
variable (dependent). On the basis of two available correlated variables, we can forecast
the future data or events or values.
In statistics, the term Regression means simply the Average Relationship.
We can predict or estimate the values of dependent variable from the given related values
of independent variable with the help of a Regression Technique. The Measure of Regression studes the nature of correlationship to estimate the most probable values. Its establishes a functional relationship between the Independent and Dependent variables.

36

Observe the both the method the value of y is come same i.e. 20.6

140
5

= 28

y on x

( y - y ) = bxy ( x - x )
( y - 16) = 0.8696( x - 28)
( y - 16) = 0.8696x - 24.3478
y = 0.8696x - 24.9478 + 16
y = 0.8696x - 8.3478

Y =y = 80 = 16
n
5

bxy = xy2 =160 =0.8696


x 184

Now put the value x = 52


y = 0.8696x - 8.3478
y = 0.8696 * 52 - 8.3478
y = 45.2192 -8.3478
y = 36.8714

Observe the both the method the value of y is come same i.e. 36.8714

36

QDM notes for MBA

Second Edition 2013 - 2014

y = 1.3x + 1.1
y = 1.3 * 15 + 1.1
y = 19.5 + 1.1
y = 20.6

x =
n

Now put the value x = 15 from table

X =

y=(y - y )
x2
xy
10-16= -6
64
36
12-16= -4
16
16
14-16= -2
4
4
18-16= 2
36
4
26-16= 10
64
100
y = 0x2=184 xy=160

bxy = xy2 = 13 = 1.3


x
10

x = (x - x )
20-28= -8
24-28= -4
26-28= -2
34-28= 6
36-28= 8
x = 0

25 = 5
5

x
y
20
10
24
12
26
14
34
18
36
26
x=140 y=80

P A

y =
n

( y - y ) = bxy ( x - x )
( y - 5 ) = 1.3 ( x - 3)
( y - 5 ) = 1.3x - 3.9
y = 1.3x - 3.9 + 5
y = 1.3x + 1.1

Y =

y on x

= 3

15
5

P A Z A R E

Other Alternative
Method

x =
n

y=(y - y )
x
xy
2-5 = -3
4
6
5-5 = 0
1
0
3-5 = -2
0
0
8-5 = 3
1
3
7-5 = 2
4
4
y = 0 x2=10 xy=13

2400 = 140a+4104b
- 2240= 140a+ 3920b
160=
184b
b = 160 / 184 = 0.8696

X =

x = (x - x )
1-3= -2
2-3= -1
3-3= 0
4-3=1
5-3= 2
x = 0

N I L E S H

Other Alternative
Method

x
y
1
2
2
5
3
3
4
8
5
7
x=15 y=25

80 = 5a + 140b
80 = 5a + 140 x 0.8696
80 = 5a + 121.74
80 - 121.74 = 5a
- 41.74 = 5a
a = - 41.74 / 5 = - 8.3478
y = a + bx
y = -8.3478+ 0.8696x
put x = 52
y = -8.3478+ 0.8696 * 52
y = -8.3478 +45.2192 = 36.8714
y = 36.8714

P A Z A R E

P A

88 = 15a + 55b
( - )75 = 15a + 45b
13 =
10b
b = 13 / 10 = 1.3

Now put the value b=0.8696 on eq (1)

To obtain a and b values,


y = na + b x
xy = a x + b x2
put the values from table
80 = 5a + 140b
.... (1) x 28
2400 =140a +4104b .... (2)

N I L E S H

25 = 5a + 15b
25 = 5a + 15 x 1.3
25 = 5a + 19.5
25 - 19.5 = 5a
5.5 = 5a
a = 5.5 / 5 = 1.1
y = a + bx
y = 1.1 + 1.3x
put x = 15
y = 1.1 + 1.3 * 15
y = 1.1 + 19.5 = 20.6
y = 20.6

To obtain a and b values,


y = na + b x
xy = a x + b x2
put the values from table
25 = 5a + 15b .... (1) x 3
88 = 15a + 55b .... (2)

y on x

Now put the value b = 1.3 on eq (1)

y on x

Ex (2):- By using the simultaneous equations method, find out the most probable value of
y, when x = 52.
x:
20
24
26
34
36
y:
10
12
14
18
26
Ans:x
y
x2
xy
20
10
400
200
24
12
576
288
26
14
676
364
34
18
1156
612
36
26
1296
936
x=140 y=80 x2=4104 xy=2400

Ex (1):- By using the simultaneous equations method, find out the most probable value of
y, when x = 15.
x:
1
2
3
4
5
y:
2
5
3
8
7
Ans:x
y
x2
xy
1
2
1
2
2
5
4
10
3
3
9
9
4
8
16
24
5
7
25
35
x=15 y=25 x2=55
xy=88

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

fuysk ;ks- ik>kjs 09766134400

37

y on x
y = bx

290
10

y
=
n

xy ( y - y )
y2

y - 29 = 0.7624 ( x - 36 )
y - 29 = 0.7624x - 27.4464
y = 0.7624x - 27.4464 + 29
y = 0.7624x + 1.5536

x - 36 = 0.8261 ( y - 29 )
x - 36 = 0.8261y - 23.9569
x = 0.8261y -23.9569 + 36
x = 0.8261y + 12.0431

21 ( y - 5 )
28

P A Z A R E

y - 5 = 0.75 ( x - 8 )
y - 5 = 0.75x - 6
y = 0.75x - 6 + 5
y = 0.75x - 1

b) When x = 12
y = 0.75x - 1
y = 0.75 * 12 - 1
y= 9 - 1
y= 8

x - 8 = 0.75 ( y - 5 )
x - 8 = 0.75y - 3.75
x = 0.75y -3.75 + 8
x = 0.75y + 4.25

c)

byx =

xy
=
x2

21
,
28

byx = 0.75

bxy =
&

xy 21
=
y2 28

bxy = 0.75

byx * bxy

0.75 x 0.75

0.5625

0.75

When x = 12 then y = 8

byx * bxy
0.7624 x 0.8261

Husband age is 32 years

8 months 12 days

0.6298

0.7936

37

QDM notes for MBA

xy
494
xy
494
byx = 2 =
, bxy = 2 =
x
648
y
594
byx = 0.7624
& bxy = 0.8261

(x- 8 )=

c)

x on y
x = by
( x - x ) = xy2 ( y - y )
y

21 ( x - 8 )
28

b) If a wifes age is 25 years


x = 0.8261 x 25 + 12.0431
x = 20.6525 + 12.04131
x = 32.69956
x = 32.7 years

= 5

( x - 36 ) = 494 ( y - 29 )
598

(y- 5 )=

( y - 29 ) = 494 ( x - 36 )
648

35
7

P A

(x- x )=

P A

xy ( x - x )
x2

y =
n

N I L E S H

y on x
y = bx

( y - y ) = xy2 ( x - x )
x

x on y
x = by

P A Z A R E

(y- y )=

a)

= 29

Y =

Y =

= 36

= 8

360
10

56
7

x
=
n

x =
n

a)

N I L E S H

X =

X =

Ex (4):- Find the Regression equations for the following data and determine the value of
coefficient of correleation through reqression equation and also predict the average of
value of Y when X is 12
X: 11 7 9
5 8
6 10
Y: 7
5 3
2 6
4 8
Ans:x
y
x = (x- x )
y = (y- y )
x2
y2
xy
2
2
11
7
11-8 = 3
7-5= 2
(3) = 9
(2) = 4
3 x 2= 6
7
5
7-8 = -1
5-5= 0
(-1)2 = 1
(0)2 = 0
-1 x 0= 0
9
3
9-8 = 1
3-5= -2
(1)2 = 1
(-2)2 = 4
1 x -2= -2
5
2
5-8 = -3
2-5= -3
(-3)2 = 9
(-3)2 = 9
-3 x -3= 9
8
6
8-8 = 0
6-5= 1
(0)2 = 0
(1)2 = 1
1 x 0= 0
6
4
6-8 = -2
4-5= -1
(-2)2 = 4
(-1)2 = 1
-2 x -1= 2
10
8
10-8 = 2
8-5= 3
(2)2 = 4
(3)2 = 9
2 x 3= 6
x=56 y=35
x= 0
y= 0
x2=28
y2=28
xy=21

Ex (3):- The following data relate to the ages of husbands and wife.
Age of Husband x:
25 28 30 32 35 36 38 39 42 55
Age of Wife y:
20 26 29 30 25 18 26 35 35 46
Obtain the two regression equation and Determine the value of coefficient of correlation
and estimate the age of husband for the age ow wife 25 years.
Ans:x
y
x = (x- x )
y = (y- y )
x2
y2
xy
2
2
25
20
25-36 = -11
20-29= -9
(-11) =121 (-9) =81
-11 x -9= 99
28
26
28-36 = -8
26-29= -3
(-8)2 =64
(-3)2 =9
-8 x 3= 24
30
29
30-36 = -6
29-29= 0
(-6)2 =36
(0)2 =0
-6 x 0= 0
32
30
32-36 = -4
30-29= 1
(-4)2 =16
(1)2 =1
-4 x 1= -4
35
25
35-36 = -1
25-29= -4
(-1)2 =1
(-4)2 =16
-1 x -4= 4
36
18
36-36 = 0
18-29= -11 (0)2 = 0
(-11)2 =121 0 x 11= 0
38
26
38-36 = 2
26-29= -3
(2)2 =4
(-3)2 =9
2 x -3= -6
2
39
35
39-36 = 3
35-29= 6
(3) =9
(6)2 =36
3 x 6= 18
42
35
42-36 = 6
35-29= 6
(6)2 =36
(6)2 =36
6 x 6= 36
55
46
55-36 = 19
46-29= 17 (19)2 =361
(17)2 =289 19 x 17= 323
x=360 y=290 x= 0
y= 0
x2=648
y2=598
xy=494

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

2.66747

P A Z A R E

b)

bxy =

y on x
y = bx

0.34518

x on y
x = by

= 0.9208

0.9595

nxy - (x)(y)
ny2 - y)2
9(56) - (0)(1)
bxy =
9(59) - (1)2
504 - 0
504
bxy =
=
531 - 1
530
bxy =

byx =

0.9333

bxy =

y on x
y = bx

0.9509

x on y
x = by

( y - y ) = byx ( x - x )
( y - 5.1111) = 0.9333 ( x - 5)
y - 5.1111 = 0.9333x - 4.665
y = 0.9333x - 4.665 + 5.1111
y = 0.9333x + 0.4461

( x - x ) = bxy ( y - y )
( x - 5) = 0.9509 ( y - 5.1111)
x - 5 = 0.9509y - 4.860
x = 0.9509y - 4.860 + 5
x = 0.9509y + 0.14

y = 0.9333x + 0.4461

x = 0.9509y + 0.14

where, byx = 2.6675 & bxy = 0.3452

( High Degree of Positive Correlation )

c)

byx * bxy
0.9333 x 0.9509

= 0.8875

r
=
0.9421
( High Degree of Positive Correlation )

38

QDM notes for MBA

d)

Yield for 10 Rainfall would be


y = 0.9333x + 0.4461
y = 0.9333 * 10 + 0.4461
y = 9.333 + 0.4461 = 9.7791 tonnes
Second Edition 2013 - 2014

byx * bxy
2.6675 x 0.3452

nxy - (x)(y)
nx2 - x)2
9(56) - (0)(1)
9(60) - (0)2
504 - 0
504
=
540 - 0
540

= 5.1111

P A Z A R E

byx =

b)

46
9

c)

y =
n

x = 0.3452y + 6.9306

byx =

y = 2.6675x - 17.4678

byx =

( x - x ) = bxy ( y - y )
( x - 11.375) = 0.3452 ( y - 12.875)
x - 11.375 = 0.3452y - 4.4445
x = 0.3452y - 4.4445 + 11.375
x = 0.3452y + 6.9306

Y =

N I L E S H

a)

( y - y ) = byx ( x - x )
( y - 12.875) = 2.6675 ( x - 11.375)
y - 12.875 = 2.6675x - 30.3428
y = 2.6675x - 30.3428 + 12.875
y = 2.6675x - 17.4678

45 = 5
9

P A

byx =

byx =

ndxdy - (dx)(dy)
ndy2 - dy)2
8(141) - (3)(7)
bxy = 8(407) - (7)2
1128 - 21
1107
bxy = 3256-49 = 3207
bxy =

P A

byx =

ndxdy - (dx)(dy)
ndx2 - dx)2
8(141) - (3)(7)
8(53) - (3)2
1128 - 21
1107
424 - 9 = 415

x =
n

N I L E S H

byx =

X =

= 12.875

103
8

y =
n

Ex (6):- Find the two regression equations from following data and estimate the yield for
10 inches rainfall and Determine the value of coefficient of correlation.
Raninfall (in inches) X:
1
2 3
4 5
6 7 8 9
Yield (tons) Y:
1
3 2
5 5
7 6 9 8
Ans:x
y
x=(x- x )
y=(y- 5)
x2
y2
xy
1
1
1-5 = -4
1-5= -4
(-4)2 = 16
(-4)2 = 16
-4 x -4= 16
2
3
2-5 = -3
3-5= -2
(-3)2 = 9
(-2)2 = 4
-3 x -2= 6
2
3
2
3-5 = -2
2-5= -3
(-2) = 4
(-3)2 = 9
-2 x -3= 6
4
5
4-5 = -1
5-5= 0
(-1)2 = 1
(0)2 = 0
-1 x 0= 0
5
5
5-5 = 0
5-5= 0
(0)2 = 0
(0)2 = 0
0 x 0= 0
6
7
6-5 = 1
7-5= 1
(1)2 = 4
(2)2 = 4
1 x 2= 2
7
6
7-5 = 2
6-5= 2
(2)2 = 1
(1)2 = 1
2 x 1= 2
8
9
8-5 = 3
9-5= 4
(3)2 = 9
(4)2 = 16
3 x 4= 12
9
8
9-5= 4
8-5= 3
(4)2 = 16
(3)2 = 9
4 x 3= 12
x=45 y=46
x= 0
y= 1
dx2=60
dy2=59
xy=56

Y =

dxdy
-3 x -8= 24
-2 x -6= 12
-1 x -4= 4
-1 x 0= 0
0 x 1= 0
2 x 3= 6
3 x 5= 15
5 x 16= 80
xy=141

E-mail :- nilesh_pazare@rediffmail.com

91 = 11.375
8

dy2
(-8)2 = 64
(-6)2 = 36
(-4)2 = 16
(0)2 = 0
(1)2 = 1
(3)2 = 9
(5)2 = 25
(16)2 = 256
dy2=407

x =
n

dx2
(-3)2 = 9
(-2)2 = 4
(-1)2 = 1
(-1)2 = 1
(0)2 = 0
(2)2 = 4
(3)2 = 9
(5)2 = 25
dx2=53

dy=(y- 12)
4-12= -8
6-12= -6
8-12= -4
12-12= 0
13-12= 1
15-12= 3
17-12= 5
28-12= 16
y= 7

dx=(x- 11)
8-11 = -3
9-11 = -2
10-11 = -1
10-11 = -1
11-11 = 0
13-11 = 2
14-11 = 3
16-11 = 5
dx= 3

a)

y
4
6
8
12
13
15
17
28
y=103

X =

From following data, Calculate the two regression equations and Determine the
coefficient of correlation through regression coefficients.
8
9 10 10 11 13 14 16
4
6 8
12 13 15 17 28

Ex (5):value of
X:
Y:
Ans:x
8
9
10
10
11
13
14
16
x=91

38

fuysk ;ks- ik>kjs 09766134400

39

( y - 90 ) = 0.8 12
3

( x - 10 ) = 0.8 3 ( y - 90 )
12

P A

P A Z A R E

If Advt exp. Rs. 20 lakhs


sales would be
y = 3.2 * (20) + 58
y = 64 + 58 = 122
Sales = Rs. 122 lakhs

c) If expected sales are Rs. 140,


Advertising expenses would be
x = 0.2 * (140) - 8
x = 28 - 8
=
20
Advertising expenses = Rs. 20 lakhs
If expected sales are Rs. 190,
Advertising expenses would be
x = 0.2 * (190) - 8
x = 38 - 8
=
30
Advertising expenses = Rs. 30 lakhs

Second Edition 2013 - 2014

QDM notes for MBA

R
39

Ex (9):- The following data based on 450 students, are given for marks in Statistics and
Economics at a certain examination:
Statistics (x)
Economics (y)
Mean Marks
40
48
Standard Deviation
12
16
Sum of the products of Deviation of marks from their respective means is 42075.
(a) give the equations to the two lines of regressions.
(b) Estimate the average marks in Economics of the candidate who obtained 50 marks in
statistics.
Ans:
42075
r
= dxdy
=
= 42075 = 0.48698
n x y
450 x 12 x 16
86400

Ex (8):- You are given below the information about advertising and sales of a company:
Advertising expenses (x)
Sales (y)
(Rs. in lakhs)
(Rs. in lakhs)
Mean
10
90
Variance
9
144
Correlation
0.8
(a) Calculate the two regression lines.
(b) Find the likely sales when advertising expenses are Rs. 15 and Rs. 20.
(c) What should be the advertising expenses when the company wants to attain a sales
target of Rs. 140 lakhs and Rs. 190 lakhs.

sisters age is 12
= 0.64y + 10.92
= 0.64 * 12 + 10.92
= 7.68 + 10.92
= 18.6 (Brothers age)

b) If Advt exp are Rs. 15 lakhs,


sales would be
y = 3.2 * (15) + 58
y = 48 + 58 = 106
Sales = Rs. 106 lakhs

When
x
x
x
x

N I L E S H

P A

P A Z A R E

When brothers age is 33


y = x-3
y = 33 - 3
y = 30
y = 30 (Sisters age)

x - 25 = 0.8* 0.8 ( y - 22 )
x - 25 = 0.64 ( y - 22 )
x - 25 = 0.64y - 14.08
x = 0.64y - 14.08 + 25
x = 0.64y + 10.92
x = 0.64y + 10.92

x - 10 = 0.8* 0.25 ( y - 90 )
x - 10 = 0.2 ( y - 90 )
x - 10 = 0.2y - 18
x = 0.2y - 18 + 10
x = 0.2y - 8
x = 0.2y - 8

N I L E S H

y - 22 = 0.8 * 1.25 ( x - 25 )
y - 22 = 1 ( x - 25 )
y - 22 = 1x - 25
y = 1x - 25 + 22
y = x-3
y =x-3

y - 90 = 0.8 * 4 ( x - 10 )
y - 90 = 3.2 ( x - 10 )
y - 90 = 3.2x - 32
y = 3.2x - 32 + 90
y = 3.2x + 58
y = 3.2x + 58

( y - 22 )

( x - 10 )

( x - 25 ) = 0.8 4
5

( x - 25 )

( y - 22 ) = 0.8 5
4

x on y
x = by
( x - x ) = r x ( y - y )
y

( x - x ) = r x ( y - y )
y

144 = 12

( y - y ) = r y ( x - x )
x

( y - y ) = r y ( x - x )
x

y on x
y = bx

y = variance =

x on y
x = by

x = variance = 9 = 3

y on x
y = bx

(a) Calculation fo Two Regression lines

Ex (7):- Karl Pearsons Coefficient of Correlation between the ages of brothers and sisters in a community was found to be 0.8.
Average of the brothers ages was 25 years and theat of sisters was 22 years. Their
standard deviations were 4 and 5 respectively. Find
(a) The expected age of brother when the sisters age is 12 years and
(b) The expected age of sister when the brothers age is 33 years.
Ans:Brothers (x)
Sisters (y)
Mean Age or Average Age
25
22
Standard Deviation
4
5
Coefficient of Correlation
0.8

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

40

y on x
y = bx

y ( x - x )
x

x ( y - y )
y

54.48

N I L E S H

Average marks in Economics are 54.48

P A Z A R E

followed according to the data available and growth rate.


1) Simple Semi-Average Method.
2) Annual Increment Semi - Average Method.
3) Annual Growth Rate Semi - Average Method.

1) Simple Semi-Average Method:- Divide the series into two equal halves (parts). If the
items are odd in number, the middle item is left out and kept isolated. If the items are even,
we well have two equal parts with no middle item. For example
Year
2001
2002
2003
2004
2005

x
10
20
25
30
35

Part - I

15

>
32.5

Left out
Part - II

Year
2001
2002
2003
2004
2005
2006

x
10
20
25
30
35
45

18.34

>

Part - I

No Middle Item

36.67

Part - II

Second Edition 2013 - 2014

QDM notes for MBA

The Total of the values in each part is devided by the total number of the items of that
part. This gives us the mean value for each part. Each average is then cenred in the period
of time from which we have to plot the two points on the graph i.e. Two Average Values
are plotted. Then both these two points are joined by a straight line which gives the
simple semi-average trend.
10+20 30
10+20+25
55
x1 =
=
= 15
x1 =
=
= 18.34
2
2
3
3
30+35 65
30+35+45
110
x2 =
=
= 32.5
x2 =
=
= 36.67
2
2
3
3

E
40

P A Z A R E

b) Semi - Average Method:- Under this method there are three procedures to be

220 = 10a + 130b


220 = 10a + 130 x 1.00167
220 = 10a + 130.2171
220 - 130.2171 = 10a
89.7829 = 10a
a = 89.7829 / 10 = 8.97829 = 8.978
Regrression equation y on x
y = a + bx
Where a = 8.978 and b = 1.0017
y = 8.978 + 1.0017x

3459 = 130a + 2288b


-2860 = 130a + 1690b
599 =
598b
b = 599 / 598 = 1.00167

Now put the value b = 1.00167 on eq (1)

To obtain a and b values,


y = na + b x
xy = a x + b x2
put the values from given
220 = 10a + 130b
.... (1) x 13
3459 = 130a + 2288b .... (2)

P A

Ex (10):- Find the Regression Equation y on x from the following information: x = 130,
y = 220, x2 = 2288, xy = 3459 and n = 10. ( x and y denote variables but not derivation).
Ans:y on x

N I L E S H

P A

32.45 + 22.03

A trend is determined by just inspecting the plotted


points on a graph sheet. Observe the up and down movements of the points. Smooth out
the irregulatrties by drawing a freehand curve or line through the scatter points. The curve
so drawn would give a general notion of the direction of the change. Such a freehand
smoothed curve eliminaes the short time swings and shows the long perod general
tendency of the changes in the datat. To overcome these limitations, we can use the Semi
- Average Method of measuring the Trend.

0.649 * 50 - 22.03

a) Freehand Curve Method:-

If a student obtained 50 marks in statistics, the average marks in Economics are.


y = 0.649x - 22.03

x - 40 = 0.487 * 0.75 ( y - 48 )
x - 40 = 0.3653 ( y - 48 )
x - 40 = 0.3653y - 17.534
x = 0.3653y - 17.534 + 40
x = 0.3653y + 22.465
x = 0.3653y + 22.465

y - 48 = 0.487 * 1.333 ( x - 40 )
y - 48 = 0.649 ( x - 40 )
y - 48 = 0.649x - 25.97
y = 0.649x - 25.97 + 48
y = 0.649x - 22.03
y = 0.649x - 22.03

( x - 40) = 0.487 12 ( y - 48 )
16

( x - 40 )

( y - 48) = 0.487 16
12

(x- x )=r

The collected data is vast and comple. It is the composition of several forces, which
ma be pulling together the rend in different directions. The problem is solved by statisticians by decomposing the time series to understand the historical past and to give insight
in to the future. There are four methods commonly used in measuring the Trend Value.
a) Graphic (Freehand Curve Fitting) Method.
b) Method of Semi-Average.
c) Method of Moving Averages and
d) Least - Squares Method.

( x - x ) = bxy ( y - y )

(y- y )=r

Computation of Trend Values:-

x on y
x = by

( y - y ) = byx ( x - x )

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

41

Graph showing prices with Trend line

>

>

N I L E S H

<

A
P A
Z
R E

40

x1
27.34

P A
Z A R E

10
9

Actual Line

<

Trend Line

<

Actual Line

15

Scale
x-axis - 1 cm = 1 year
y-axis - 1 cm = 5 unit

20

x2
7.5

10

2004

2003

2002

2001

2000

1999

y - axis

Years

1998

<

1997

<

2004

2003

2002

2001

2000

1999

1998

x - axis

>

x - axis

Years

41

QDM notes for MBA

Second Edition 2013 - 2014

y - axis

>

<

<

1997

Scale
x-axis - 1 cm = 1 year
y-axis - 1 cm = 1 Rs.

<

Prices

25

x1
10

11

Trend Line

P A

x2
41.67

P A

Sugar Production in (000 tonnes)

The value 10 is plotted against the middle of the first 2 years. i.e. 1997 to 1998.
The value 7.5 is plotted aginst the middle of the last 2 years i.e. 2000 to 2001. The year
1999 and the price 5 are left out. Then both the points are joined by a straight line as under.

45

30

x2 = 7.5

50

35

x1 = 10

N I L E S H

9
(9+11) / 2 = 20 / 2 = 10
11
5 (left out)
8
7
(8+7) / 2 = 15/2 = 7.5

Graph showing sugar production (in 000 tonnes) with Trend line

1997
1998
1999
2000
2001

The value 27.34 is plotted against the middle of the first 3 years. i.e. 1997 to 1999.
The value 41.67 is plotted aginst the middle of the last 3 years i.e. 2000 to 2002. Then both
the points are joined by a straight line as under.

Ex (2):- Using the method of simple semi-average determine the trend of the following
data.
Year:
1997
1998
1999
2000
2001
Prices:
9
11
5
8
7
Ans:Year
Actual
2 yearly total
Semi-Average
value
average

Ex (1):- Using the method of simple semi-average determine the trend of the following
data.
Year:
1997
1998
1999
2000
2001
2002
Sugar Product:
40
38
4
45
37
43
Ans:Year
Actual
3 yearly total
Semi-Average
value
average
1997
40
1998
38
(40+38+4) / 3 =82 / 3 = 27.34
x1 = 27.34
1999
4
2000
45
2001
37
(45+37+43) / 3 =125/3 = 41.67
x2 = 41.67
2002
43

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

42

28

<

>

<

96

Actual Line

Scale
x-axis - 1 cm = 1 year
y-axis - 1 cm = 2 Unit

2013

2012

y - axis

2011

<

x - axis

2010

90
2009

>

92

2008

1984

1983

1982

1981

1980

1979

1978

98

2007

Scale
x-axis - 1 cm = 1 year
y-axis - 1 cm = 1 Rs.

x1
22.5

1977

1976

1975

<

y - axis

>

x - axis

Years

Years

42

QDM notes for MBA

Second Edition 2013 - 2014

21

100

22

x1
104.67

94

23

104

2006

24

x2
26

Trend Line

25

<

>

<

x2
107.33

106

102

P A Z A R E

Trend Line

Prices

26

108

Actual Line

112

27

2.66
= 0.665
4

N I L E S H

<

>

0.875
= 0.4375
2

P A

107.33 - 104.67
4

102+108+112
322
=
= 107.33
3
3

110

3.5
= 0.875
4

P A Z A R E

Half Yealy Increament

A. I.
2

x2 =

26 - 22.5
=
4

25+26+27+26
104
=
= 26
4
4

P A

Annual Increament

x2 =

Annual Increament

N I L E S H

21+22+23+24 90
=
= 22.5
4
4

100+105+109 314
=
= 104.67
3
3

x2 =26

104

x1 =

Product

x2 =22.5

Trend Value
21.1875
22.0625
22.9375
23.8125
24.6875
25.5625
26.4375
27.3125
x=194

Adjustment
22.0625 - 0.875
22.50 - 0.4375
22.50 + 0.4375
22.9375 + 0.875
25.5625 - 0.875
26.00 - 0.4375
26.00 + 0.4375
26.4375 + 0.875

90

Semi Avg

Semi Total

x1 =

Actual Value
21
22
23
24
25
26
27
26
x=194

Year
1975
1976
1977
1978
1979
1980
1981
1982

The means will be placed against, the respective years with the adjustment by the
Annual Increament. Let us consider the example for finding the Trend values as under.

Ex (2):- Using the method of annual increament semi-average determine the trend of the
following data.
Year:
2006
2007
2008
2009
2010
2011
2012
Product:
100
105
109
96
102
108
112
Ans:Year
Actual Value
Semi Total Semi Avg
Adjustment
Trend Value
2006
100
104.67- 0.665
104.005
2007
105
314
x1=104.67 104.67
104.67
2008
109
104.67 + 0.665
105.335
2009
96
(left out)
105.335 + 0.665
106
2010
102
106 + 0.665
106.665
2011
108
322
x2=107.33 106.665 + 0.665
107.33
2012
112
107.33 + 0.665
107.995

2) Annual Increament Semi-Average Method:- Under this method, the data are divided
into the two equal halves. For each half, a simple srithmetic mean is obtained i.e. x1 and x2
The difference between the two means is divided by the number of items in each part
(i.e. items in one section). This ives us the Annual Increament.
x1 - x2
Annual Increament =
n

E-mail :- nilesh_pazare@rediffmail.com

43

>

350

x1
268.75

x2
340.25

Trend Line

Scale
x-axis - 1 cm = 1 year
y-axis - 1 cm = 50 Unit

2013

2012

2011

y - axis

2010

<

>

x - axis

Years
QDM notes for MBA

Second Edition 2013 - 2014

150

200

<

250

(Note:- The Trend vales are computed and presented in graph by three ways
- Simple, Annual Increment and Annual Growth Methods - by semi average
method. All the ways are giveing the same results. So solve the problem any
one method from giving three methods of semi average. )

43

Actual Line

400

300

Note:- How to x find? ---> First data are divided into two part, if the number is even then
first take Half Year Increament (H.Y.I.) value and then add & substract the value of Annual
increament (A.I.). See the above table.

<

y = y = 140 = 17.5 & Annual Growth Rate(a) = y2 - y1 = 86 - 54 = 32 = 2


n
8
n (n-n )
4(8-4)
16

500
450

= 2 = 1
2

550

2009

Half Y.I. =

A. I.
2

P A Z A R E

2008

21.5 - 13.5 = 8 = 2
4
4

= 21.5

2007

Annual Increament

x2 = 19+23+21+23 = 86
4
4

2006

P A Z A R E

x1 = 12+13+13+16 = 54 = 13.5
4
4

N I L E S H

P A

+ 1=18.5
+ 3=20.5
+ 5=22.5
+ 7=24.5
yc =140

<

y2=86

17.5
17.5
17.5
17.5

P A

19
23
21
23
y=140

y
3060
y2 - y1
1361-1075
286
=
= 340 & Annual Growth Rate(a) =
=
=
= 14.3
n
9
n(n-n )
4(9-4)
20

N I L E S H

y=

yc = y - xa
17.5 - 7=10.5
17.5 - 5=12.5
17.5 - 3=14.5
17.5 - 1=16.5

x
a
xa
-5-2=-7
2
-7 x 2 = -14
-3-2=-5
2
-5 x 2 = -10
-1-2=-3
2
-3 x 2 = -6
-1
2
-1 x 2 = -2
0
(Centrend 17.5)
1
2
1 x2 = 2
1+2=3
2
3 x2 = 6
3+2=5
2
5 x 2 = 10
5+2=7
2
7 x 2 = 14

1989
1990
1991
1992

Actual Value (y)


12
13
y1=54
13
16

Year
1985
1986
1987
1988

Then y will be centred and below it the negative signs and above it the positive signs
for x are considered for deviations of serial number of years. Then the product of the
deviation dx and annual growth are adjusted to the y . Let us consider the example for
finding the trend values as under.

Product

number of items for computing semi - average.


number of items in the series as a whole.

=
=

n
n

Ex (2):- Using the method of annual growth rate semi-average determine the trend of the
following data.
Year:
2006
2007 2008
2009 2010 2011 2012
2013
2014
Product: 190
200
325
360
345
310
335
475
520
Ans:Year
Actual Value (y)
x
a
xa
yc = y - xa
2006
190
-3-1=-4
14.3
-4 x 14.3= -57.2
340-57.2=282.8
2007
200
-2-1=-3
14.3
-3 x 14.3= -42.9
340-42.9=297.1
y1=1075
2008
325
-1-1=-2
14.3
-2 x 14.3= -28.6
340-28.6=311.4
2009
360
0-1= -1
14.3
-1 x 14.3= -14.3
340-14.3=325.7
2010
345 (left out)
0
14.3
0 x 14.3= 0
340 - 0= 340
2011
310
0+1= 1
14.3
1 x 14.3= 14.3
340+14.3=354.3
2012
335
1+1=2
14.3
2 x 14.3= 28.6
340-28.6=368.6
y2=1361
2013
475
2+1=3
14.3
3 x 14.3= 42.9
340+42.9= 382.9
2014
520
3+1=4
14.3
4 x 14.3= 57.2
340+57.2=397.2
y=3060
yc =3060

3) Annual Growth Rate Semi-Average Method:- Under this method, the data are divided
into the two equal halves. For each half, a simple arithmetic mean is obtained i.e. x1 and x2
The average of the whole series is centred and annual growth rate is calculated with
the help of the following formula
y = y and
Annual growth Rate = y2 - y1
n
n (n - n )

E-mail :- nilesh_pazare@rediffmail.com

2014

fuysk ;ks- ik>kjs 09766134400

44

c) Method of Moving Average:-

>

<
y - axis

1973

12

1965

59.250
62.335

<

57.83
60.67
64

>

x - axis

347
364
384

Trend Line

56
59
62.8
65.8

280
295
314
329

54
57
61.25
64.75
67.5

Scale
x-axis - 1 cm = 1 year
y-axis - 1 cm = 2 Unit

16
14

216
228
245
259
270

>

1972

6 y. Centered A.

18

1971

6 y. A.

20

1970

6 y. T.

22

1969

5 y. A.

Actual Line

24

1968

5 y. T

26

1967

4 y. A.

P A Z A< R E

Years

4 y.T. means addition of first 4 year value and 4 y. A. mean 4 y.T. / 4 , like that for 5 year and
6 year calculated. 6 y.Centered A. means addition of first two 6 y.A divided by 2.

44

QDM notes for MBA

4 y. T.

Values
52
50
55
59
64
67
69
70

28

Ex (2):Year
1991
1992
1993
1994
1995
1996
1997
1998

N I L E S H

P A

P A

P A Z A R E

(Note:- The two items in the opening and the two items in the ending are left out in the
5 yearly moving average. )

N I L E S H

(348+349)=697/2=348.5
(349+350)=699/2=349.5
(350+351)=701/2=350.5
(351+356)=707/2=353.5
(356+357)=713/2=356.5
(357+358)=715/2=357.5
(358+362)=720/2=360
(362+364)=726/2=363
(364+367)=731/2=365.5
(367+369)=736/2=368
(369+373)=742/2=371
(373+377)=750/2=375

1044/3=348
1047/3=349
1050/3=350
1053/3=351
1068/3=356
1071/3=357
1074/3=358
1086/3=362
1092/3=364
1101/3=367
1107/3=369
1119/3=373
1131/3=377

330+340+374=1044
340+374+333=1047
374+333+343=1050
333+343+377=1053
343+377+348=1068
377+348+346=1071
348+346+380=1074
346+380+360=1086
380+360+352=1092
360+352+389=1101
352+389+366=1107
389+366+364=1119
366+364+401=1131

3 yr centered avrg

1966

3 year Moving Average

Consumption

3 year moving total

Year
------1967
1968
1969
1970
1971
-------

Values
330
340
374
333
343
377
348
346
380
360
352
389
366
364
401

Values 5 year moving total


5 year Moving Average
12
------14
------18
12+14+18+24+22=90
90/5=18
24
14+18+24+22+20=98
98/5=19.6
22
18+24+22+20+16=100
100/5=20
20
24+22+20+16+25=107
107/5=21.4
16
22+20+16+25+26=109
109/5=21.8
25
------26
-------

Year
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990

Year
1965
1966
1967
1968
1969
1970
1971
1972
1973

Ex (1):-

Ex (3):- Calculate the trend values by five yearly moving average method and plot the same
on a graph from the following:
Year:
1965 1966 1967 1968 1969 1970 1971 1972
1973
Consumption: 12
14
18
24
22
20
16
25
26

Under this method, the trend values can be obtained by employing arithmetic means
of the series except at the two ends of the series. We can have the moving averges for 3,
4, 5, 6, 7, 8, or 9 years depending upoin the size of the items. The procedure of veraging the
3 itmes or 4 items or different items simplifies the analysis and removes variations in the
values for a period concerned. The moving averages may form a straight line trend or a
curve. The process of averaging works as under.
We should decide first the period of the moving average. If it is 3 years or months or
weeks or days, the problem of centering the averages will not arise at all. But if we take 6
years or months or weeks or days, the averages are placed first in between th two middle
items and the arithmetic mean will be applied to center the items.

E-mail :- nilesh_pazare@rediffmail.com

1974

fuysk ;ks- ik>kjs 09766134400

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400


From the following data calculate 3,5 and 7 yearly moving averages.
1
2 3 4 5 6
7 8 9
10 11 12 13 14 15
4
2 0 -4 -2 4
2 0 -4 -2 4
2 0
-4 -2

N I L E S < H
>

N I L E S H

4
5
6
7
8
9
10
11
12

+0.8571
+0.2857
-0.5714
-0.8571
+0.2857
+0.8571
+0.2857
-0.5714
-0.8571

+6
+2
-4
-6
+2
+6
+2
-4
-6

56

Actual Line

54
52

P A

P A Z A
R
E

50
48

42

38

34

45

QDM notes for MBA

1978

1977

1976

1975

1974

1973

1972

1971

1970

1969

y - axis

1968

<

<

(72.75 + 77.70) / 2 = 150.45 / 2 = 75.225


like other values also find directly on above table.

1967

30

Note:- How to find the centred values ---->

Scale
x-axis - 1 cm = 1 year
y-axis - 1 cm = 2 Unit

>

x - axis
Years

Second Edition 2013 - 2014

32

Trend Line

36

40

>

44

Prices

46

P A

Ex (5):- Calculate the trend values by the method of moving averages assuming a four
yearly cycle from the following data relating to sugar production in India.
Year:
1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988
Product: 75
62
76
78
94
84
96 128 116 76
102 168
Ans:Year
Values 4 year moving total
4 year Moving Average
Centred
Year
1977
75
1978
62
75+62+76+78=291
291/4=072.75
1979
76
75.225
1979
62+76+78+94=310
310/4=077.70
1980
78
80.350
1980
76+78+94+84=332
332/4=083.00
1981
94
85.500
1981
78+94+84+96=352
352/4=088.00
1982
84
94.250
1982
94+84+96+128=402
402/4=100.50
1983
96
103.25
1983
84+96+128+116=424
424/4=106.00
1984
128
105.00
1984
96+128+116+76=416
416/4=104.00
1985
116
104.75
1985
128+116+76+102=422
422/4=105.50
1986
76
110.50
1986
116+76+102+168=462
462/4=115.50
1987
102
1988
168

P A Z A R E

0
0
0
0
0
0
0
0
0
0
0

Year

+2.000
-0.667
-2.000
-0.667
+1.333
+2.000
-0.667
-2.000
-0.667
+1.333
+2.000
-0.667
-2.000

7 y. A.

6
-2
-6
-2
4
6
-2
-6
-2
4
6
-2
-6

7 y. T.

5 y. T

3 y. A.

3 y. T.

Ex (6):- Calculate the trend values from the following data using 6 yearly moving averages
and plot the actual and trend values on a graph.
Year:
1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978
Prices:
30
45
35
41
42
47
48
46
40
50
55
52
Ans:Year Values
6 year moving total
6 yr Mv Average Centred
Year
1967
30
--------1968
45
--------1969
35
---30+45+35+41+42+47=240
240/6=40
1970
41
40+43=83/2=41.5 1970
45+35+41+42+47+48=258
258/6=43
1971
42
86.17/2=43.085 1971
35+41+42+47+48+46=259
259/6=43.17
1972
47
87.17/2=43.585 1972
41+42+47+48+46+40=264
262/6=44
1973
48
89.5/2=44.75
1973
42+47+48+46+40+50=273
273/6=45.5
1974
46
93.17/2=46.585 1974
47+48+46+40+50+55=286
286/6=47.67
1975
40
96.17/2=48.085 1975
48+46+40+50+55+52=291
291/6=48.5
1976
50
---1977
55
--------1978
52
---------

Prices
4
2
0
-4
-2
4
2
0
-4
-2
4
2
0
-4
-2

E-mail :- nilesh_pazare@rediffmail.com

Ex (4):Year:
Prices:
Ans:Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

45

fuysk ;ks- ik>kjs 09766134400

46

d) Least - Square Method:-

P A Z A R E

(ii) The sum of the squares of the x values in minimum.

Put the values of x from table and calculate Yc

Yc = a + bx
Yc= 19.5+ 0.8096 (-7) = 19.5 + ( -5.6672) = 19.5 - 5.6672 = 13.8328
Yc= 19.5+ 0.8096 (-5) = 19.5 + ( -4.048) = 19.5 - 4.048 = 15.4520
Yc= 19.5+ 0.8096 (-3) = 19.5 + ( -2.4288) = 19.5 - 2.4288 = 17.0712
Yc= 19.5+ 0.8096 (-1) = 19.5 + ( -0.8096) = 19.5 - 0.8096 = 18.6904
Yc= 19.5+ 0.8096 (1) = 19.5 + 0.8096 = 20.3096
Yc= 19.5+ 0.8096 (3) = 19.5 + 2.4288 = 21.9288
Yc= 19.5+ 0.8096 (5) = 19.5 + 4.048 = 23.5480
Yc= 19.5+ 0.8096 (7) = 19.5 + 5.6672 = 25.1672

N I L E S H
P A Z A R E

Ex (2):- Let us obtain the straight line trend increasing one more observation in the series
making the whole observation odd number of items.
Ans:Year Values(y)
x
x2
xy
Trend values (Yc= a + bx)
1990
16
-4
(-4)2= 16
16 x -4= -64
Yc= 19.5+ 1.3 (-4)= 14.3
1991
14
-3
(-3)2= 9
14 x -3= -42
Yc= 19.5+ 1.3 (-3)= 15.6
1992
20
-2
(-2)2= 4
20 x -2= -40
Yc= 19.5+ 1.3 (-2)= 16.9
1993
18
-1
(-1)2= 1
18 x -1= -18
Yc= 19.5+ 1.3 (-1)= 18.2
1994
19.5
0
(0)2= 0
19.5 x 0= 0
Yc= 19.5+ 1.3 (0)= 19.5
1995
12
+1
(1)2= 1
12 x 1= 12
Yc= 19.5+ 1.3 (1)= 20.8
1996
23
+2
(2)2= 4
23 x 2= 46
Yc= 19.5+ 1.3 (2)= 22.1
1997
28
+3
(3)2= 9
28 x 3= 84
Yc= 19.5+ 1.3 (3)= 23.4
1998
25
+4
(4)2= 16
25 x 4= 100
Yc= 19.5+ 1.3 (4)= 24.7
y=175.5 x=0
x2 =60
xy= 78
Yc= 175.5
a

y
n

= 175.5 = 19.5
9

Yc= a + bx = 19.5 + 1.3x ,

46

= 0.8096

QDM notes for MBA

xy =
x2

78
60

= 1.3

Put the values of x from table and calculate Yc


Second Edition 2013 - 2014

dx
-7
-5
-3
-1
+1
+3
+5
+7

136
168

dx= (x - X )
-3.5
-2.5
-1.5
-0.5
or
+0.5
+1.5
+2.5
+3.5

(B) Year (x)


1991
1992
1993
1994
1995
1996
1997
1998

dx = (x - X )
-3
-2
-1
0
+1
+2
+3

xy =
x2

(A) Year (x)


1991
1992
1993
1994
1995
1996
1997

x
-7
-5
-3
-1
+1
+3
+5
+7

In the time series, the variable x can be measured from any point of origin period as
first year or starting point. It is always better to select the point of origin in the middle of the
x series (i.e. x = 0). this brings balance between the negative and positive values. The
period indicating the higher values can be reduced to the minimum sysmbolically as
under.

Yc= a + bx = 19.5 + 0.8096x

P A

The sum of deviations of the Y (actual values) from the Yc (cmputed values) is equal
to zero.
Y = actual values
Yc = Trend values
(Y - Yc ) = 0

P A

(i)

156 = 19.5
8

A mathematical functional relationship is established between the two vairables in


the least squares method of finding the trend line. It satisfies the following two conditions.

N I L E S H

y
n

y = Sum of y values
x = Sum of x values
n = Number of Observation
x2 = Sum of the squares of x
xy = Sum of the products of x and y.

x = Independent variable
y = Dependent variable on x
a = The y intercept or catch constant
b = Indicate slope & signifies the
changes in x constant

Y on X ---------Y = a + bX
To obtain the values of a and b constants, we have the following two secondary
equations.
y = na + b x
xy = a x + b x2
A linear trend values are obtained by the y on x equation which form a series in
arithmetic progression, the constant difference being the value of b representing the
slope. Following are the notations.

Ex (1):- Let us obtain the straight line trend for the values given below:
Ans:Year Values(y)
x
x2
xy
Trend values (Yc= a + bx)
1990
16
-7
(-7)2=49
16 x -7= -112 Yc= 19.5+ 0.8096 (-7)= 13.8328
1991
14
-5
(-5)2=25
14 x -5= -70
Yc= 19.5+ 0.8096 (-5)= 15.4520
1992
20
-3
(-3)2=9
20 x -3= -60
Yc= 19.5+ 0.8096 (-3)= 17.0712
1993
18
-1
(-1)2=1
18 x -1= -18
Yc= 19.5+ 0.8096 (-1)= 18.6904
1994
12
+1
(1)2=1
12 x 1= 12
Yc= 19.5+ 0.8096 (1)= 20.3096
1995
23
+3
(3)2=9
23 x 3= 69
Yc= 19.5+ 0.8096 (3)= 21.9288
1996
28
+5
(5)2=25
28 x 5= 140
Yc= 19.5+ 0.8096 (5)= 23.5480
1997
25
+7
(7)2=49
25 x 7= 175
Yc= 19.5+ 0.8096 (7)= 25.1672
y=156 x=0
x2 =168
xy=136
Yc= 156

This is the most accurate method of finding the trend values with the help of a mathematical technique, which gives us a straight line trend. A line of the Best Fit can be
obtained by the regression equation Y and X. It is a line from which the actual values
deviated on either sides. The sum of the deviations taken from the arithmetic mean will be
zero. Consequently, the sum of squares of devitations will be leas, as compared to the
other alternatives. That is why this method is called the Method of Least Squares.

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

47

= 70.5

N I L E S H

P A Z A R E

= xy2 =
x

8
20

= 0.4

Put the values of x from table and calculate Yc

47

Year
1988
1989
1990
1991
1992

x
+7
+9
+11
+13
+15

Yc=
Yc=
Yc=
Yc=
Yc=

Put the values of x from table and calculate Yc

Yc= a + bx
65.75+ 3.6667 (7) = 65.75+ 25.6669 = 91.4169
65.75+ 3.6667 (9) = 65.75+ 33.0003 = 98.7503
65.75+ 3.6667 (11) = 65.75+ 40.3337 = 106.0837
65.75+ 3.6667 (13) = 65.75+ 47.6671 = 113.4171
65.75+ 3.6667 (15) = 65.75+ 55.0005 = 120.755

P A Z A R E

Predicted earning for the year 1990 = 106.0837 lakhs and year 1992 = 120.755 lakhs.

Ex (6):- Apply the method of least squares and determine the sales for the year 1975, 1977
and 1978.
Year:
1968
1969
1970
1971
1972
1973
1974
Sales:
100
110
130
125
170
168
191
Ans:Year Values(y)
x
x2
xy
Trend values (Yc= a + bx)
1968
100
-3
(-3)2= 9
100 x -3= -300
Yc= 142+ 15.3214 (-3)= 96.0358
1969
110
-2
(-2)2= 4
110 x -2= -220
Yc= 142+ 15.3214 (-2)= 111.3572
1970
130
-1
(-1)2= 1
130 x -1= -130
Yc= 142+ 15.3214 (-1)= 126.6786
1971
125
0
(0)2= 0
125 x 0= 0
Yc= 142+ 15.3214 (0)= 142
1972
170
+1 (1)2= 1
170 x 1= 170
Yc= 142+ 15.3214 (1)= 157.3214
1973
168
+2 (2)2= 4
168 x 2= 336
Yc= 142+ 15.3214 (2)= 172.6428
1974
191
+3 (3)2= 9
191 x 3= 573
Yc= 142+ 15.3214 (3)= 187.9642
y=994 x=0 x2 =28
xy=429
Yc= 994
QDM notes for MBA

Second Edition 2013 - 2014

Yc= a + bx = 12.5 + 0.4x ,

= 12.5

= 3.667

50
4

616
168

= xy =
x2

= y
n

N I L E S H

Yc= a + bx = 65.75 + 3.6667x ,

Ex (4):- Let us obtain the straight line trend increasing one more observation in the series
making the whole observation odd number of items.
Ans:Year Values(y)
x
x2
xy
Trend values (Yc= a + bx)
1982
10
-3
(-3)2= 9
10 x -3= -30
Yc= 12.5+ 0.4 (-3)= 11.3
1983
13
-1
(-1)2= 1
13 x -1= -13
Yc= 12.5+ 0.4 (-1)= 12.1
1984
15
+1
(1)2= 1
15 x 1= 15
Yc= 12.5+ 0.4 (1)= 12.9
1985
12
+3
(3)2= 9
12 x 3= 36
Yc= 12.5+ 0.4 (3)= 13.7
y=50
x=0
x2 =20
xy=8
Yc= 50
a

= 526 = 65.75
8

P A

(-4 )= 680 - 282 = 398


(-3) = 680 - 211.5 = 468.5
(-2) = 680 - 141 = 539
(-1) = 680 - 70.5 = 609.5
(0) = 680 + 0 = 680
(1) = 680 + 70.5 = 750.5
(2) = 680 + 141 = 821
(3) = 680 + 211.5 = 891.5
(4) = 680 + 282 = 962

P A

Yc = a + bx
Yc= 680+ 70.5
Yc= 680+ 70.5
Yc= 680+ 70.5
Yc= 680+ 70.5
Yc= 680+ 70.5
Yc= 680+ 70.5
Yc= 680+ 70.5
Yc= 680+ 70.5
Yc= 680+ 70.5

= y
n

Put the values of x from table and calculate Yc

4230
60

x
-4
-3
-2
-1
0
+1
+2
+3
+4

= xy2 =
x

Yc= a + bx = 680 + 70.5x ,

= 6120 = 680
9

= y
n

Ex (5):- Fit a straight line tren d by the least squares method to the following data. Assuming that same rate of change continues, state what would be the predicted earning for the
year 1990 and 1992.
Year:
1981
1982
1983
1984
1985
1986
1987
1988
Earning: 38
40
65
72
69
60
87
95
Ans:Year Values(y)
x
x2
xy
Trend values (Yc= a + bx)
1981
38
-7
(-7)2=49
38 x -7= -266
Yc= 65.75+ 3.6667 (-7)= 40.0831
1982
40
-5
(-5)2=25
40 x -5= -200
Yc= 65.75+ 3.6667 (-5)= 47.4165
1983
65
-3
(-3)2=9
65 x -3= -195
Yc= 65.75+ 3.6667 (-3)= 54.7499
1984
72
-1
(-1)2=1
72 x -1= -72
Yc= 65.75+ 3.6667 (-1)= 62.0833
1985
69
+1
(1)2=1
69 x 1= 69
Yc= 65.75+ 3.6667 (1)= 69.4167
1986
60
+3
(3)2=9
60 x 3= 180
Yc= 65.75+ 3.6667 (3)= 76.7501
1987
87
+5
(5)2=25
87 x 5= 435
Yc= 65.75+ 3.6667 (5)= 84.0835
1988
95
+7
(7)2=49
95 x 7= 665
Yc= 65.75+ 3.6667 (7)= 91.4169
y=526 x=0 x2 =168
xy=616
Yc= 526

Ex (3):- Obtain the straight line trend equation and tabulate against each year the trend
values:
Ans:Year Values(y)
x
x2
xy
Trend values (Yc= a + bx)
1972
380
-4
(-4)2= 16
380 x -4= -1520 Yc= 680+ 70.5 (-4)= 398
1973
400
-3
(-3)2= 9
400 x -3= -1200 Yc= 680+ 70.5 (-3)= 468.5
1974
650
-2
(-2)2= 4
650 x -2= -1350 Yc= 680+ 70.5 (-2)= 539
1975
720
-1
(-1)2= 1
720 x -1= -720
Yc= 680+ 70.5 (-1)= 609.5
1976
690
0
(0)2= 0
690 x 0= 0
Yc= 680+ 70.5 (0)= 680
1977
620
+1
(1)2= 1
620 x 1= 620
Yc= 680+ 70.5 (1)= 750.5
1978
670
+2
(2)2= 4
670 x 2= 1340
Yc= 680+ 70.5 (2)= 821
1979
950
+3
(3)2= 9
950 x 3= 2850
Yc= 680+ 70.5 (3)= 891.5
1980
1040
+4
(4)2= 16
1040 x 4= 4160 Yc= 680+ 70.5 (4)= 962
y=6120 x=0
x2 =60
xy=4230
Yc= 6120

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400


= y
n

48

= 994 = 142
7

1)

The Maximisation Case:

For this problem, the decision variables are x1 and x2, the number of units of the products
A and B respectively. The objective function and the constraints are reproduced as :
Z = 40x1 + 35x2

profit

Subject to

2x1 + 3x2 60

Raw material constraint

4x1 + 3x2 96
x1 , x2 0

Labour hours constraint

Sales for the year 1985 = 7 tons and year 1986 = 7.75 tons and year 1988 = 8.5 tons

48

QDM notes for MBA

Maximise

Yc= a + bx
Yc= 13 + 0.75 (-8) = 13 - 6 = 7
Yc= 13 + 0.75 (-7) = 13 - 5.25 = 7.75
Yc= 13 + 0.75 (-6) = 13 - 4.5 = 8.5
Yc= 13 + 0.75 (-5) = 13 - 3.75 = 9.25
Yc= 13 + 0.75 (-4) = 13 - 3 = 10
Yc= 13 + 0.75 (-3) = 13 - 2.25 = 10.75

We shall demostrate the graphical approach first in respect of the maximisations and
then for the minimisation problems.

Put the values of x from table and calculate Yc

= 0.75

x
-8
-7
-6
-5
-4
-3

21
28

Year
1985
1986
1987
1988
1989
1990

= xy2 =
x

P A Z A R E

Yc= a + bx = 13 + 0.75x

The use the graphic method for solving linear programming problems, the following
steps are required:(a) Identify the problem-the decision variables, the objective functions,and the constraint
restrictions.
(b) Draw a graph that includes all the constrainsts/ restrictions and identify the feasible
region.
(c) Obtain the point on the feasible region that optimises the objective function-the optimal solution.
(d) Interpret the results.

P A

= 13

= 91
7

The Graphic Method :-

= y
n

N I L E S H

P A

P A Z A R E

N I L E S H

Ex (7):- Apply the method of least squares and determine the sales for the year 1985, 1986
and 1988.
Year:
1990
1991
1992
1993
1994
1995
1996
Production:
12
10
14
11
13
15
16
Ans:Year Values(y)
x
x2
xy
Trend values (Yc= a + bx)
1968
12
-3
(-3)2= 9
12 x -3= -36
Yc= 13 + 0.75 (-3) = 10.75
1969
10
-2
(-2)2= 4
10 x -2= -20
Yc= 13 + 0.75 (-2) = 11.50
1970
14
-1
(-1)2= 1
14 x -1= -14
Yc= 13 + 0.75 (-1) = 12.25
1971
11
0
(0)2= 0
11 x 0= 0
Yc= 13 + 0.75 (0) = 13
1972
13
+1 (1)2= 1
13 x 1= 13
Yc= 13 + 0.75 (1) = 13.75
1973
15
+2 (2)2= 4
15 x 2= 30
Yc= 13 + 0.75 (2) = 14.50
1974
16
+3 (3)2= 9
16 x 3= 48
Yc= 13 + 0.75 (3) = 15.25
y=91
x=0 x2 =28
xy=21
Yc= 91

Sales for the year 1975 = 203.2856 units and year 1977 = 233.9284 units and
for year 1978 = 249.2498 units.

(a) There should be an objective which should be clearly identifiable and measurable in
quantitative terms. It could be, for example, maximisation of sales, of profit, minimisation
of cost, and so on.
(b) The acitivites to be included should be distinctly identifiable and measureable in
quantitative terms, for instance, the products encluded in a production planning problem.
(c) The resources of the system, which are to be allocated for the attainment of the goal,
should also be identifiable and measureable quantitatively. They must be in limited supply. The technique would involve allocation of these resources in a manner that would
made off the returns on the investment of the resources for the attainment of the objective.
(d) The relationships representing the objective as also the resource limitation considerations, represented by the objective function and the constraint equations or inequalities, respectively, must be linear in nature.
(e) There should be a series of feasible alternative courses of action availbale to the
decision maker which are determined by the resource constraints.

Yc= a + bx
+ 15.3214 (3) = 142 + 45.9642 = 187.9642
+ 15.3214 (4) = 142 + 61.2856 = 203.2856
+ 15.3214 (5) = 142 + 76.607 = 218.607
+ 15.3214 (6) = 142 + 91.9284 = 233.9284
+ 15.3214 (7) = 142 + 107.2498 = 249.2498

142
142
142
142
142

The linear programming method is a technique for choosing the best alternative from
a set of feasible alternationves, in situations in which the objective function as wll as the
contraints can be expressed as linear mathematical functions. In order to apply linear
programming, certain requirements have to be met. These are discussed here.

Yc=
Yc=
Yc=
Yc=
Yc=

Put the values of x from table and calculate Yc

x
+3
+4
+5
+6
+7

Linear Pragramming Problems (LPP) :-

= 15.3214

Year
1974
1975
1976
1977
1978

429
28

Yc= a + bx = 142 + 15.3214x ,

= xy =
x2

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400


Ans:-

49

Objective variable

Subject to contraint-->

Zmax = 40x1 + 35x2

2x1 + 3x2 60

4x1 + 3x2 96

x1 , x2 0

2x1 + 3x2 = 60

( 0 , 20 )
( 30 , 0 )

x2 = 96 / 3 = 32
x1 = 96 / 2 = 24

( 0 , 32 )
( 24 , 0 )

( 0 , 20 ) ( 30 , 0 )

Since, x1=0
Since, x2=0

( 0 , 32 ) ( 24 , 0 )

>

Graphical representation points plotted on graph paper

96

N< I L E S H

26

<
2x

P A Z A R E
1

3x

18

Tip :Take opposite direction of sign for selecting


comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

60

<

16

12
Q

2)

The Minimisation Case:G

Now we shall consider the graphical solution to the linear programming problems of the
minimisation nature.
Minimise

Z = 40x1 + 24x2

Total Cost

Subject to

20x1 + 50x2 4800

Phosphate Requirment

80x1 + 50x2 7200


x1 , x2 0
Zmin = 40x1 + 24x2

Nitrogen Requirment

Raw Material Constraint

P A Z A R E

Ans:-

Feasible Region

Subject to contraint-->

> x1
32

30

28

26

24

22

20

18

16

14

12

10

<

20x1 + 50x2 = 4800


20x1 + 50x2 = 4800

Since, x1=0
Since, x2=0

20x1 + 50x2 = 4800

No. of units of Product A

49

80x1 + 50x2 7200,

x1 , x2 0

Conversion of equation of inequality into equation

<

20x1 + 50x2 4800,

QDM notes for MBA

0 + 50x2 = 4800, x2 = 4800/50 = 96


20x1+ 0 = 4800, x1 = 4800/20 = 240

<

2
x - axis <
O
y - axis

Objective variable

<

Since, Z is higesht at point Q, the optimal solution is to produce 18 units of product A and
8 units of product B every week, to get the profit of Rs. 1000. No other product mix under the
given condition could yield more profit than this.
Thus, maximum profit of Rs.1000 can be achieved when x1 = 18 and x2 = 8 at point Q.

10

(Maximum)

14

Z = 40x1 + 35x2
Z= 0+0=0
Z= 0 + 35 x 20 = 700
Z= 40x18 + 35x8 = 720 + 280 = 1000
Z= 40 x 24 + 0 = 960

P A

22
P
20

x2
0
20
8
0

N I L E S H

Labour Hrs Constraint

P A

No. of units of Product B

24

x1
0
0
18
24

=
3x 2

28

Points
O
P
Q
R

+
4x 1

30

Scale
x-axis - 1 cm = 2 Unit
y-axis - 1 cm = 2 Unit

32

x2

From the graph we find the various points i.e. OPQR and its values.
The Z-values corresponding to the various points in respect of the given problem are
shown here.

4x1 + 3x2 = 96

0 + 3x2 = 96,
4x1+ 0 = 96,

x2 = 60 / 3 = 20
x1 = 60 / 2 = 30

4x1 + 3x2 = 96
4x1 + 3x2 = 96

0 + 3x2 = 60,
2x1+ 0 = 60,

Since, x1=0
Since, x2=0

2x1 + 3x2 = 60
2x1 + 3x2 = 60

From the graph, the line that would yield the maximum profit that passes through the Point
Q. This point give the maximum contribution and thus represents the optimal solution i.e.
18 units of Product A and 8 units of product B. This production of 18 units of A and 8 units
of B will consume
2 x 18 + 3 x 8 = 36 + 24 = 60 kg of raw material and
4 x 18 + 3 x 8 = 72 + 24 = 96 labour hours.
Hence, both the resources shall be fully utilised by this production plan.
In our example, the feasible region is given by the polygon OPQR, so we shall obtain the
ordinates of each of these points (giving the values x1 and x2 ) and caluculate the objective
function value by subsituting them into the objective function. The values of x1 and x2 at
each point can be ready directly from the graph. Also, in respect of those points which lie
on the intersection of tow lines, we can get the values by solving simultaneously the
equation representing those lines.

Conversion of equation of inequality into equation

E-mail :- nilesh_pazare@rediffmail.com

( 0 , 96 )
(240 , 0 )

( 0 , 96 ) ( 240 , 0 )

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400


80x1 + 50x2 =7200
80x1 + 50x2 =7200

50

Since, x1=0
Since, x2=0

( 90 , 0 )

Graphical representation points plotted on graph paper

>

>

96

Feasible Region

84

20

=4

80

Phosp hate
Requirement

Nitrogen Requirement

260

220

200

180

160

140

120

100

80

60

40

x1

No. of Bags of Mixture A

---- eqn (2)

Substract eq (1) from eq (2)


80x1 + 50x2 = 7200
+ 50x2 =_4800
_ 20x1 _

N I L E S H

60x1 + 0

= 2400

Put the value of x1 = 40 on eqn (1)


20x1 + 50x2 = 4800,
20 x 40 + 50x2 = 4800,
800 + 50x2 = 4800
50x2 = 4800 - 800,
50x2 = 4000,
x2 = 4800 / 50 = 80

x1 = 2400 / 60 = 40

Note:- if you are unable to find


correct points from graph then
cross check the answer by
solving those equation which
two line intersect each other

P A Z A R E

from solving the eqn we get the points x1 = 40, x2 = 80

Some Special Cases:In each of the two examples discussed so far, we have obtained a unique optimal
soution. We now consider three types of linear programming problems which do not have
unique optimal solutions. These are problems having multiple optimal solutions, having
no feasible solution, and having unbounded solutions.

QDM notes for MBA

Second Edition 2013 - 2014

1. Multiple Optimal Solutions: As stated above, in each of the three examples that we
have considered, we have observed that the optimal solution is given by an extreme point
of the feasible region and the solution is unique. The uniquesness implies that no other
solution to the given problem shall yield the same value of the objective function as given
by that solution. It is, of course, possible that in a given problem there may be more than
one optimal solution. Each of the multiple optima would naturally yield the same objective
funciton value.
The solution (if it exists) to a linear programming problem shall always be unique if
the slope of the objective function (represented by the iso-profit lines) is different from the

R
50

Joining the two points (0,96) & (240,0) , we get the striaght line corresponding to the above
equation. The area beyond this line represents the feasible area in respect of theis contraint
any point on the straight line or in the region above this line would satisfy the contraint.
Similarly, the second contraint can be depicated by plotting the straight line corresponding
to the equation 80x1 + 50x2 =7200. The points falling on this line and in the area beyond it
indicate the feasible values of x1 & x2 in respect of this contraint.
Since both the requirements are to be met, the feasible region in respect of the problem is
as represented by the shaded area. The feasible region here represents a convex set.
The region is unbounded on the upper side because one of the restrications in the
problem places an upper limit on the value of either of the decision variables. Obviously, if
such limits are placed, the feasible region would be a bounded one.

OR
How to find the correct points of interset point of feasible reasiong.
20x1 + 50x2 = 4800
---- eqn (1)
&
80x1 + 50x2 = 7200

20

<

>

y - axis

240

>R

x - axis <

Since, the total cost is minimum at point P, the optimal solution to the problem is to buy 144
bags of mixture of B only and none of mixture of A. This would entail a total cost of Rs 3456
Thus, miximum cost of Rs.3456 can be achieved when x1 = 0 and x2 = 144 at point P.

P A

>
P A> Z A
R E

P A

2 00

12

+5
0x

=7

36
24

0x 2

48

Minimum

N I L E S H
+5

60

72

Z = 40x1 + 24x2
Z= 0 + 24 x 144 = 3456 <
Z= 40x40 + 24x80 = 1600 + 1920 = 3520
Z= 40 x 240 + 0 = 9600

>

x2
144
80
0

108

Scale
x-axis - 1 cm = 20 Unit
y-axis - 1 cm = 12 Unit

120

8 0x 1

No. of Bags of Mixture B

132

144

x1
0
40
240

Tip :Take opposite direction of sign for selecting


comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

156

Points
P
Q
R

x2

Alternately, the optimal soulution to the problem may be seen to be located at an extreme
point at point P, Q, R. in our example. We can evaluate the ordinates at each of these points
as follows:

( 0 , 144 )

( 0 , 144 )
( 90 , 0 )

80x1 + 50x2 =7200

0 + 50x2 = 7200, x2 = 7200/50 = 144


80x1+ 0 = 7200, x1 = 7200/80 = 90

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

51

Objective variable

x1 , x2

Zmax = Z = 8x1 + 16x2


x2 125 ,

3x1 + 6x2 900 , x1 , x2

Conversion of equation of inequality into equation


( 0 , 200 )
(200, 0 )

N I L E S H

x1 + x2 = 200

( 0 , 200 )

x2 = 125

( 200 , 0 )

x2 = 125,

3x1 + 6x2 = 900


3x1 + 6x2 = 900

( 0 , 125)

Since, x1=0
Since, x2=0

0 + 6x2 = 900,
3x1+ 0 = 900,

x2 = 900/6 = 150
x1 = 900/3 = 300

( 0 , 150 )
(300, 0 )

P A Z A R E
x2

( 0 , 150 )

( 300 , 0 )

>

3x1 + 6x2 = 900


200

C
+

6x

Subject to contraint-->

> x1
400

350

300

250

200

150

50

100

<

x - axis <
O
y - axis

90

Scale
x-axis - 1 cm = 50 Unit
y-axis - 1 cm = 25 Unit

2x1 + x2 40 ,

4x1 - x2 20 , x1 30 ,

x1 , x2 0

Conversion of equation of inequality into equation

2x1 + x2 = 40
2x1 + x2 = 40
2x1 + x2 = 40

51

Zmax = Z = 20x1 + 30x2

QDM notes for MBA

Since, x1=0
Since, x2=0

0 + x2 = 40,
2x1+ 0 = 40,

x2 = 40
x1 = 40 / 2 = 20

( 0 , 40 )
(20, 0 )

( 0 , 40 ) ( 20 , 0 )
Second Edition 2013 - 2014

25

Objective variable

Ans:-

x1 , x2 0

Feasible
Region

50

3x

75

Ex: Solve graphically the following LPP:


Maximise
Z = 20x1 + 30x2
Subject to
2x1 + x2 40 ,
4x1 - x2 20 , x1 30 ,

x2=125

200

125
A
100

Tip :Take opposite direction of sign for selecting


comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

P A Z A R E

2. Infeasibilty: It has already been stated that a solution is called feasible if it satisfies all
the constraints and the non-negativity conditions. Sometimes it is possible that the constraints may be inconsistent so that there is no feasible solution to the problem. Such a
situtaion is called infeasibility.
In the graphic approach to the solution to an LPP, the infeaisbility is evident if its
feasible region is empty so that there is no feasible region in which all the constraints may
be satisfied simultanieously.

x 2=

150

N I L E S H

x 1+

175

The points B and C clearly represented the optima.


In this example, the constraint to which the objective function was paralle, was the one
which formed a side of the boundary of the space of the feasible region. As mentioned in
condition (a), if such a constraint (to which the objective function is parallel) does not form
an edge or boundary of the feasible region, then multiple solutions would not exist. An
optimal solution that is unique and there are no multiple solutions, but in this problem,
there are two optima, which are multiple solutions, So it is called as Multiple Optima
solution problems.

P A

x2 = 200
x1 = 200

0 + x2 = 200,
x1+ 0 = 200,

P A

Since, x1=0
Since, x2=0

(Maximum)
(Maximum)

x1 + x2 = 200
x1 + x2 = 200

Z = 8x1 + 16x2
Z= 0+0=0
Z= 0 + 16 x 125 = 2000
Z= 8x50 + 16x125 = 400+2000 = 2400
Z= 8x100+16X100 = 800+1600 = 2400
Z = 8 X 200 + 0 = 1600

x1 + x2 200 ,

Subject to contraint-->

3x1 + 6x2 900 ,

x2
0
125
125
100
0

x2 125 ,

Ans:-

x1 + x2 200 ,

x1
0
0
50
100
200

Subject to

Points
O
A
B
C
D

Ex: Solve graphically the following LPP:


Maximise
Z = 8x1 + 16x2

We observe that iso-profit lines are parallel to the equation for third constraint 3x1 + 6x2 =
900. As we move the iso-profit line farther from the origin, it coincides with the portion BC
of the constraint line that forms the boundary of the feasible region. It implies that there are
an infiinite number of optimal solutions represented by all points lying on the line segment
BC, including the extreme points represented by B(50,125) and C(100,100). Since the
extreme points are also included in the solutions, we may disregard all other solutions
and consider only these, to establish that the solution to a linear programming problem
shall always lie at an extreme point of the feasible region.
The extreme points of the feasible region are given and evaluated here.

slope of the constraints. In case the objective function has slope which is same as that of
a constraint, then multiple optimal solutions might exist. There are two conditions that
should be satisfied in order that multipleoptimal solutions exist.
(a) The objective function should be parallel to a constraint that forms an edge or boundary on the feasible region and
(b) The constraint should form a boundary on the feasible region in the direction of
optimal movement of the objective functions. In other words, the constraint must be a
binding constraint.

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400


x1 , x2 0

Ans:-

Conversion of equation of inequality into equation

x - axis

<

y - axis

30

25

20

15

10

-20

2x1 + 4x2 16
x1 + 5x2 15
x1 , x2 0

52

2x

P A Z A R E
1

+4
x=
2

x - axis <
O
y - axis

x+
1

16

5x

=1

> x1

Scale
x-axis - 1 cm = 2 Unit
y-axis - 1 cm = 1 Unit

From the graph, we find the points of B i.e. ( 2.33, 2.57 ), which are not bounded to the
feasible region. Clearly, here the objective function is not bound over the feasible region
and we can move the iso-profit line upward witout any limit. The problem has, therefor,
unbounded solution.
For a minimisation LPP, unboundedness occurs when htere are points in the feasible region with arbitrarily small values. To conclude, a maximisation LPP is unbounded
if, moving parallel to the original iso-profit line in the direction of increasing Z, we never
entirely leave the feasible region and, on the other hand, a minimisation problem is
unbounded if we never leave the feasible region while moving in the direction of decreasing Z.

QDM notes for MBA

Second Edition 2013 - 2014

Subject to

Feasible
Region

Z = 10x1 + 20x2

Maximise

3. Unboundedness: For a maximisation type of linear programming problem unboundedness occurs when there is no constraint on the solution so that one or more of the
decision variables can be increased indefinitely without violating any of the restrications
(constraints). Thus, an unbouned LPP occurs if it is possible to find points in the feasible
region with arbitrarily large Z-values (may be profit or revenue). this sugests that practically
if we find the solution to be unbounded of a profit-maximising linear programming problem, it may be concluded that the problem has not been correctly formulated.

P A

P A

It is represented graphically in above figure. The feasible region corresponding to the first
two constrants is bound by the convex set OABC, while the feasible region in respect of the
third constraint is also shown shaded separately. We can easily observe that there is no
common point in the areas shaded.
Therefore, all the constraints cannot be satisfied and as such, there is no feasible solution to the given problem.

Ex :-

N I L E S H

6
5

Feasible
Region

P A Z A R E

( 15 , 0 )

16

>

> x1

N I L E S H
O
-10

(0,3)
( 15, 0 )

Tip :Take opposite direction of sign for selecting


comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

x2

0 + 5x2 = 15,
x1+ 0 = 15,

(0,3)

x2 = 15 / 5 = 3
x1 = 15

(8,0)

<

=4

x1 + 5x2 = 15

-x
1

4x

>

Since, x1=0
Since, x2=0

(0,4)
(8,0)

10

x1=30

2x

(0,4)

x2 = 16 / 4 = 4
x1 = 16 / 2 = 4

20

30

Scale
x-axis - 1 cm = 5 Unit
y-axis - 1 cm = 10 Unit

x1 + 5x2 = 15
x1 + 5x2 = 15

0 + 4x2 = 16,
2x1+ 0 = 16,

>

=2

>
A

40

Since, x1=0
Since, x2=0

2x1+ 4x2 = 16

x2

2x1+ 4x2 = 16
2x1+ 4x2 = 16

14

( 30 , 0 )

x1 , x2

Conversion of equation of inequality into equation

12

x1 = 30

(5,0)

x1 + 5x2 15 ,

( 0 , -20 )

( 0 , -20 )
(5, 0 )

4x1 - x2 = 20

x2 = - 20
x1 = 20 / 4 = 5

2x1 + 4x2 16,

10

0 - x2 = 20,
4x1 - 0 = 20,

Zmax = Z = 10x1 + 20x2

Since, x1=0
Since, x2=0

Subject to contraint-->

4x1 - x2 = 20
4x1 - x2 = 20

Objective variable

4x1 - x2 20 , x1 30 ,

2x1 + x2 40 ,

E-mail :- nilesh_pazare@rediffmail.com

<

Subject to contraint-->

52

fuysk ;ks- ik>kjs 09766134400


Ex (1):- Minimise

Z = 6x1 + 14x2

Subject to

3x1 + 7x2 84 ,

x1 + 2x2 18,

x1 , x2 0

( 0 , 15 ) ( 12 , 0 )
( 0 , 12 )
( 28, 0 )

x2 = 18 / 2 = 9
x1 = 18

(0,9)
( 18, 0 )

Since, x1=0
Since, x2=0

0 + 2x2 = 18,
x1+ 0 = 18,

(0,9)

( 18 , 0 )

x 2=
60

12

2x

3x

18

7x
2

84

Ex (2):- Solve graphically:

Subject to

> x1
30

24

18

12

<

x - axis <
O
y - axis

Note:- if you are unable to find correct points from graph then cross check the answer by
solving those equation which two line intersect each other.

53

QDM notes for MBA

Maximise

Z = 10x1 + 15x2

2x1 + x2 26
2x1 + 4x2 56
x1 - x2 -5
x1 , x2 0
Second Edition 2013 - 2014

Feasible
Region

we get the points x1=10.43, x2=3.65 for B

Scale
x-axis - 2 cm = 6 Unit
y-axis - 2 cm = 3 Unit

we get the points x1=8, x2=5 for A

Put the value of x2 = 10.43 on eqn (1)


5x1 + 4x2 = 60,
5x1 + 4 x 10.43 = 60,
5x1 + 41.72 = 60,
5x1 = 60 - 41.72,
5x1 = 18.28
x1 = 18.28 / 5 = 3.65

P A Z A R E

Put the value of x2 = 5 on eqn (3)


x1 + 2x2 = 18,
x1 + 2 x 5 = 18,
x1 + 10 = 18
x1 = 18 - 10,
x1 = 8,

0 + 23x2 = 240
x2 = 240 / 23 = 10.43

0 + 6x2 = 30
x2 = 30 / 6 = 5

P A

+4

Tip :Take opposite direction of sign for selecting


comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

P A

5x 1

P A Z A R E

At point B, eqn (1) & eqn (2) intersect


mult by 3 on eqn (1) & mult by 5 on eqn (2)
& Substract eqn (1) from eqn (2)
15x1 + 35x2 = 420
_ 12x2 = _ 180
_15x1 +

N I L E S H

>

x1 + 2x2 = 18

15

At point A, eqn (1) & eqn (3) intersect


multiply by 5 on eqn (3) &
Substract eqn (1) from eqn (3)
5x1 + 10x2 = 90
_ 4x2 = _ 60
_ 5x1 +

( 0 , 12 ) ( 28 , 0 )

N I L E S H
x2

OR
How to find the correct points of interset point of feasible reasiong.
5x1 + 4x2 = 60---- eqn (1), 3x1 + 7x2 = 84---- eqn (2), &
x1 + 2x2 = 18---- eqn (3)

x2 = 84 / 7 = 12
x1 = 84 / 3 = 28

Thus, miximum cost of Rs.108 can be achieved when x1 = 18 and x2 = 0 at point D.

3x1 + 7x2 = 84

0 + 7x2 = 84,
3x1+ 0 = 84,

It may be observed here that although the iso-cost line is parallel to the second constraint
line prepresentd by 3x1 + 7x2 = 84, and this constraint does provide a side of the area of
feasible solutions, yet the problem has a unique optimal solution, given by the point D.

Since, x1=0
Since, x2=0

x1 + 2x2 = 18
x1 + 2x2 = 18

( 0 , 15 )
( 12 , 0 )

3x1 + 7x2 = 84
3x1 + 7x2 = 84

x2 = 60 / 4 = 15
x1 = 60 / 5 = 12

Z = 6x1 + 14x2
Z= 6x8 + 14 x 5 = 48 + 70 = 118
Z= 6x3.65 + 14x10.43 = 21.9 + 146.09=167.99=168
Z= 6 x 28 + 0 = 148
Z= 6 x 18 + 0 = 108
Minimum

5x1 + 4x2 = 60

0 + 4x2 = 60,
5x1+ 0 = 60,

x2
5
10.43
0
0

Since, x1=0
Since, x2=0

5x1 + 4x2 = 60
5x1 + 4x2 = 60

Conversion of equation of inequality into equation

x1
8
3.65
28
18

5x1 + 4x2 60,

Subject to contraint-->

Points
A
B
C
D

5x1 + 4x2 60
3x1 + 7x2 84
x1 + 2x2 18
x1 , x2 0
Zmin = Z = 6x1 + 14x2

Objective variable

E-mail :- nilesh_pazare@rediffmail.com

Alternately, the optimal soulution to the problem may be seen to be located at an extreme
point at point A, B, C, D in our example. We can evaluate the ordinates at each of these
points as follows:

Ans:-

53

fuysk ;ks- ik>kjs 09766134400


Ans:-

54

Objective variable

Subject to contraint-->

Zmax = Z = 10x1 + 15x2

2x1 + x2 26,

2x1 + 4x2 56 ,

x1 - x2 -5,

x1 , x2 0

x2 = 56 / 4 = 14
x1 = 56 / 2 = 28

( 0 , 14 )
( 28, 0 )

( 0 , 14 ) ( 28 , 0 )
x2 = 5

(0,5)
( -5, 0 )

How to find the correct points of interset point of feasible reasiong.


2x1 + x2 = 26---- eqn (1),
2x1 + 4x2 = 56---- eqn (2), &
x1 - x2 = -5---- eqn (3)

OR

N I L E S H

At point B, eqn (2) & eqn (3) intersect


multiply by 2 on eqn (3) &
Substract eqn (3) from eqn (2)
2x1 + 4x2 = 56

N I L E S H

_ 2x1 +- 2x2 = +-10


0 + 6x2 = 66
x2 = 66 / 6 = 11

36

28

2x 1

=2
+ x2

24
20

=
-x2

-5

x1

36

32

28

20

12

<

-4

-8

Ex (3):- Solve graphically:


Minimise
Z = 3x1 + 5x2
Subject to
-3x1 + 4x2 12 ;
2x1 - x2 -2 ;
2x1 + 3x2 12 ;
x1 4 ; x2 2 & x1 , x2
Ans:- Objective variable
Zmin = Z = 3x1 + 5x2

x1 , x2 0

> x1

x - axis

y-axis

56

Note:- if you are unable to find correct points from graph then cross check the answer by
solving those equation which two line intersect each other.

<

16

24

A
4

we get the points x1=8, x2=10 for C

>

P A Z A R E

Feasible
Region
2x
1 +
4x
=

2x1 + x2 = 26,
2x1 + 10 = 26,
2x1 = 26 - 10,
2x1 = 16
2x1 = 16 / 2 = 8

12

Put the value of x2 = 11 on eqn (3)


x1 - x2 = -5,
x1 - 11 = -5,
x1 = -5 + 11
x1 = 6,

we get the points x1=6, x2=11 for B

Scale
x-axis - 1 cm = 4 Unit
y-axis - 1 cm = 4 Unit

16

0 + 3x2 = 30

x2 = 30 / 3 = 10
Put the value of x2 = 10 on eqn (1)

P A

P A Z A R E

P A

Tip :Take opposite direction of sign for selecting


comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

32

At point C, eqn (1) & eqn (2) intersect


Substract eqn (1) from eqn (2)
2x1 + 4x2 = 56
+ x2 = _ 26
_ 2x1 _

>

( -5 , 0 )

(0,5)

-x2 = -5
x1 = -5

Maximum

Thus, maximum cost of Rs.230 can be achieved when x1 = 8 and x2 = 10 at point C.

x1 - x2 = -5

0 - x2 = -5,
x1 - 0 = -5,

Z = 10x1 + 15x2
Z= 10 x 0 + 15 x 5 = 0 + 75 = 75
Z= 10 x 6 + 15 x 11 = 60 + 165 = 225
Z= 10 x 8 + 15 x 10 = 80 + 150 = 230
Z= 10 x 13 + 15 x 0 = 130 + 0 = 130

Since, x1=0
Since, x2=0

x2
5
11
10
0

0 + 4x2 = 56,
2x1+ 0 = 56,

x1
0
6
8
13

2x1 + 4x2 = 56

x2

Points
A
B
C
D

( 0 , 26 ) ( 13 , 0 )

Since, x1=0
Since, x2=0

x1 - x2 = -5
x1 - x2 = -5

( 0 , 26 )
( 13 , 0 )

2x1 + 4x2 = 56
2x1 + 4x2 = 56

x2 = 26
x1 = 26 / 2 = 13

2x1 + x2 = 26

0 + x2 = 26,
2x1+ 0 = 26,

Since, x1=0
Since, x2=0

2x1 + x2 = 26
2x1 + x2 = 26

Alternately, the optimal soulution to the problem may be seen to be located at an extreme
point at point A, B, C, D in our example. We can evaluate the ordinates at each of these
points as follows:

Conversion of equation of inequality into equation

E-mail :- nilesh_pazare@rediffmail.com

Subject to contraint--> -3x1+4x2 12, 2x1- x2 -2, 2x1+3x2 12, x1 4, x2 2,

This problem is exhibited graphically in above figure. The feasible region is shaded. This
is significant to note here that have not considered the area below the line corresponding
to x1 - x2 = -5 for the negative values of x1 . This is because of the non negativity condition
x1 0, which implies that negative values of x1 should not be considered.

Conversion of equation of inequality into equation


-3x1+4x2 = 12
Since, x1=0
-3x1 + 4x2 = 12
Since, x2=0
-3x1 + 4x2 = 12

54

QDM notes for MBA

0 + 4x2 = 12,
x2 = 12 / 4 = 3
-3x1+ 0 = 12,
x1 = - 12 / 3 = -4
( 0 , 3 ) ( -4 , 0 )

(0,3)
( -4 , 0 )
Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400


2x1- x2 = -2
2x1- x2 = -2

Since, x1=0
Since, x2=0

(0,2)

Since, x1=0
Since, x2=0

( -1 , 0 )

0 + 3x2 = 12,
2x1+ 0 = 12,
(6,0)
;

x2 = 2

>
=2
-x

2x

12

2
1

x2 = 2

P A Z A R>E
x1

x - axis

<

-1

-2

-3

-4

-5

<

y-axis

we get the points x1=3, x2=2 for Point E

Note:- if you are unable to find correct points from graph then cross check the answer by
solving those equation which two line intersect each other.

Ans:- Let x1 & x2 be the amount invested in Bonds A and B, respectively. Using the given
data, we may state the problem as follows:
Maximise: Z = 0.07x1 + 0.10x2
Subject to x1 + x2 30000, x1 6000 , x2 12000, x1- x2 0,
x1 , x2 0

55

QDM notes for MBA

Second Edition 2013 - 2014

Ex (4):- A retired person wants to invest upto an amount of Rs 30,000 in fixed income
securities. His broker recommends investing in two bonds: Bond A yielding 7% and Bond
B yielding 10%. After some condideration, he decides to invest at most Rs 12,000 in Bond
B and at least Rs 6,000 in Bond A. He also wants the amount invested in Bond A to be at
least equal to the amount invested in Bond B. What should the broker recommend if the
investor wants to maximise his return on investment? Solve graphically.

On the next page, check the correct points from calculation of two intersect lines

we get the points x1=4, x2=6 for C

OR

P A Z A R E

Z = 3x1 + 5x2
Z= 3 x 0.75 + 5 x 3.5 = 2.25 + 17.5 = 19.75
Z= 3 x 0.8 + 5 x 3.6 = 18 + 18 = 20.40
Z= 3 x 4 + 5 x 6 = 12 + 30 = 42
Z= 3 x 4 + 5 x 2 = 12 + 10 = 22
Z= 3 x 3 + 5 x 2 = 9 + 10 = 19
minimise

Thus, Z is minimise x1 = 3 and x2 = 2 at point E and its value is 19.

At point E, eqn (3) & eqn (5) intersect


Put the value of x2=2 on eqn (3)
2x1 + 3x2 = 12,
2x1 + 3 x 2 = 12,
2x1 + 6 = 12,
2x1 = 12 - 6 = 6,
x1 = 6 / 2
x1 = 3

x2
3.5
3.6
6.0
2.0
2.0

At point C, eq (1) & eq (4) intersect


Put the value of x1=4 on eqn (1)
-3x1 + 4x2 = 12,
-3 x 4 + 4x2 = 12,
-12 + 4x2 = 12,
4x2 = 12 + 12 = 24,
x2 = 24 / 4,
x2 = 6

x1
0.75
0.8
4.0
4.0
3.0

we get the points x1=0.8, x2=3.6 for point B

Alternately, the optimal soulution to the problem may be seen to be located at an extreme
point at point A, B, C, D, E in our example. We can evaluate the ordinates at each of these
points as follows:
Points
A
B
C
D
E

N I L E S H

we get the points x1=0.75, x2=3.5 for A


n

P A

-3

x 1+

=
4x 2

Feasible
Region
2x
E D
1 +
3x
2 =
12

P A

N I L E S H

Put the value of x2 = 3.6 on eqn (2)


2x1 - x2 = -2,
2x1 - 3.6 = -2,
2x1 = -2 + 3.6,
2x1 = 1.6,
x1 = 1.6 / 2
x1 = 0.8

x1 = 4

Put the value of x2 = 3.5 on eqn (2)


2x1 - x2 = -2,
2x1 - 3.5 = -2,
2x1 = -2 + 3.5
2x1 = 1.5 ,
x1 = 1.5 / 2,
x1 = 0.75

0 + 5x2 = 18
x2 = 18 / 5 = 3.6

Tip :Take opposite direction of sign for


selecting comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

x2
7

( 0, 2 )

At point B, eqn (1) & eqn (2) intersect


mult by 2 on eqn (1) & mult by 3 on eqn (2)
& Addition of eqn (1) to eqn (2)
-6x1 + 8x2 = 24
6x1 - 3x2 = -6

(4,0)

Scale
x-axis - 1 cm = 1 Unit
y-axis - 1 cm = 1 Unit

(0,4)
( 6, 0 )

x1 = 4---- eqn (4), x2 = 2---- eqn (5)


At point A, eqn (2) & eqn (3) intersect
Substract eqn (2) from eqn (3)
2x1 + 3x2 = 12
- x2 = -2
_ 2x1 +
+
0 + 4x2 = 14
x2 = 14 / 4 = 3.5

(0,4)

x2 = 12 / 3 = 4
x1 = 12 / 2 = 6

How to find the correct points of interset point of feasible reasiong.


-3x1+4x2 = 12---- eqn (1), 2x1- x2 = -2---- eqn (2), & 2x1 + 3x2 = 12---- eqn (3)

x1 = 4

(0,2)
( -1 , 0 )

2x1 + 3x2 = 12

-x2 = -2,
x2 = 2
x1 = -2 / 2 = -1

E-mail :- nilesh_pazare@rediffmail.com

2x1 + 3x2 = 12
2x1 + 3x2 = 12

0 - x2 = -2,
2x1+ 0 = -2,

2x1- x2 = -2

55

fuysk ;ks- ik>kjs 09766134400


Ans:-

56

Objective variable

Subject to contraint-->

Zmax = Z = 0.07x1 + 0.10x2


x2 12000,

Conversion of equation of inequality into equation

( 0, 1 ) ( 1 , 0 )

x2
( in 000 Rs. )

x=

30

=0
- x2

N I L E S H
2

18

00

12

x2 = 12000

x1

x - axis

30

27

24

21

18

15

<

12

P A Z A R >E

<

( in 000 Rs. )

y-axis

Ans:- Let x1 & x2 be the number of dresses of types A and B respectively. Using the given
information, the linear programming problem may be stated as follows:
Maximise: Z = 160x1 + 180x2 Total profit

OR

50
x1
x1

x2
20
x2

Man-Hrs

Cloth material

x2

x2
24

x1
36

x2
24

Machine-Hrs

x1 , x2 0

x2

50 + 20 = 1
x1 x2
+
= 1
50 20

36

56

+
30 30

x1

On the next page, check the correct points from calculation of two intersect lines

x1

= 1

QDM notes for MBA

Since x1 = 0 , 0 + 20 = 1 ,
x1
Since x2 = 0 ,
+0 = 1,
50
Since x1 = 0 , 0 +

x2
24

= 1,

x2 = 20 x 1 = 20

( 0 , 20 )

x1 = 50 x 1 = 50

( 50 , 0 )

x2 = 24 x 1 = 24

( 0 , 24 )
Second Edition 2013 - 2014

The Z - value is maximum at point D. Accordingly, the optimal solution is invest Rs. 1800 in
Bond A and Rs. 1200 in Bond B. It would yield a return of Rs. 2460.

Subject to

Z = 0.07x1 + 0.10x2
Z= 0.07x6000 + 0.10x 0 = 420 + 0 = 420
Z= 0.07x6000 + 0.10x6000 = 420 + 600 = 1020
Z= 0.07x12000 + 0.10x12000 = 840 + 1200 = 2040
Z= 0.07x18000 + 0.10x12000 = 1260 + 1200 = 2460
Z= 0.07x30000 + 0.10x 0 = 2100 + 0 = 2100

P A Z A R E

x2
0
6000
12000
12000
0

Ex (5):- A manufacturer employs three inputs: man hours, machine-hours and cloth material to manufacture to types of dresses. Type A dress fetches him a profit of Rs 160 per
piece, while type B, that of Rs 180 per piece. The manufacturer has enough man-hours to
manufacture 50 pieces of type A or 20 pieces of type B dresses per day while the machinehours he possesses suffice only ofr 36 pieces of type A or for 24 pieces for type B dresses.
Cloth material available per day is limited but sufficient enough for 30 pieces of either type
of dress. formulate the linear programming model and solve it graphically.

x1
6000
6000
12000
18000
30000

N I L E S H

Points
A
B
C
D
E

Note:- if you are unable to find correct points from graph then cross check the answer by
solving those equation which two line intersect each other.

Alternately, the optimal soulution to the problem may be seen to be located at an extreme
point at point A, B, C, D, E in our example. We can evaluate the ordinates at each of these
points as follows:

we get the points x1=12000, x2=12000 at C

P A

Scale
x-axis - 1 cm = 6 Unit
y-axis - 1 cm = 6 Unit

P A

Feasible
Region

x1

At point C, eqn (2) & eqn (4) intersect & Put the value of x2=12000 on eqn (2)
x1 - x2 = 0 ;
x1 - 12000 = 0 ;
x1 = 12000

x+

24

we get the points x1=18000, x2=12000 for D

x1 = 6000

30

Tip :Take opposite direction of sign for


selecting comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

>

x1 - x2 = 0

we get the points x1=6000, x2=6000 for B

( 6000 , 0 ) ;
( 12000 , 0 )

(30000 , 0 )

x1 = 6000
x2 = 12000

( 0 ,30000)
(30000 , 0 )

At point D, eqn (1) & eqn (3) intersect


Put the value of x2 = 12000 on eqn (1)
x1 + x2 = 30000
x1 + 12000 = 30000
x1 = 30000 - 12000 = 18000
x1 = 18000

( 0 ,30000)

x2 = 30000
x1 = 30000

x1 + x2 = 30000

0 + x2= 30000,
x1+ 0 = 30000,

At point B, eqn (2) & eqn (4) intersect


Put the value of x1 = 6000 on eqn (2)
x1 - x2 = 0
6000 - x2 = 0
x2 = 6000
x2 = 6000

Since, x1=0
Since, x2=0

x1 + x2 = 30000
x1 + x2 = 30000

How to find the correct points of interset point of feasible reasiong.


x1 + x2 = 30000---- eqn (1), x1 = 6000---- eqn (2), & x2 = 12000---- eqn (3)
x1 - x2 = 0---- eqn (4)

x1 + x2 30000, x1 6000 ,
x1- x2 0,
x1 , x2 0

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400


x1
36

x2
24

x1

x2

= 1

x1

Since x2 = 0 ,

= 1,

30

30

+0 = 1,

x1 = 30 x 1 = 30

( 30 , 0 )

x2

x1

x2

= 1

Scale
x-axis - 1 cm = 5 Unit
y-axis - 1 cm = 5 Unit

N I L E S H
B

x1

Feasible
Region

50

x2

20

= 1

55

50

45

40

35

30

25

20

15

10

<

y-axis

we get the points x1=18, x2=12 for C

N I L E S H

Note:- if you are unable to find correct points from graph then cross check the answer by
solving those equation which two line intersect each other.

Ans:- Let
x1 : Investment in Portfolio 1
The LPP may be expressed as under:
Maximise:

Z = 0.10x1 + 0.20x2

Total Return

Subject to

x1 + x2 100000, x1 75000, x2 75000,


-2x1 + 3x2 0,
-2x1 + 8x2 0,
x1 , x2 0

Total Investment Ceiling


Risk Requirment
Return Requirment
Non-negativity

OR
On the next page, check the correct points from calculation of two intersect lines

57

QDM notes for MBA

Second Edition 2013 - 2014

The Z - value is maximum at point C. Accordingly, the optimal solution calls for producing
18 units of type A dress and 12 units of type B dress. Total profit is Rs. 5040.

x2 : Investment in Portfolio 2

Z = 160x1 + 180x2
Z=0+0=0
Z= 160 x 0 + 180 x 20 = 0 + 360 = 3600
Z= 160 x 14 + 180 x 15 = 2400 + 2520 = 4920
Z= 160 x 18 + 180 x 12 = 2880 + 2160 = 5040
Z= 160 x 30 + 180 x 0 = 4800 + 0 = 4800

x2
0
20
14
12
0

x1
0
0
15
18
30

Points
O
A
B
C
D

Ex (6):- Let us assume that you have inherited Rs 100000 from your father-in-law that can
be invested in a combination of only two stock protfolios, with the maximum investment
allowed in either portfolio set at Rs 75000. The first portfolio has an average return of 10%,
whereas the second has 20 & In terms of risk factors associated with these portfolios, the
first has a risk rating of 4 (on a scale from 0 to 10), and the second has 9. since you want
to maximise your return, you will not accept an average rate of return below 12% or a risk
factor above 6. Hence, you then face the important question. How much should you invest
in each portfolio? Formulate has this as a linear programming problem and solve it by
graphic method.

Alternately, the optimal soulution to the problem may be seen to be located at an extreme
point at point O, A, B, C, D in our example. We can evaluate the ordinates at each of these
points as follows:

P A Z A R E

P A

x - axis

we get the points x1=15, x2=14 for point B

P A

> x1

P A Z A R E

Put the value of x2 = 12 on eqn (3)


30x1 + 30x2 = 900,
30x1 + 30 x 12 = 900,
30x1 + 360 = 900,
30x1 = 900 - 360,
30x1 = 540
x1 = 540 / 30 = 18

24

0 + 60x2 = 720
x2 = 720 / 60 = 12

Put the value of x2 = 14 on eqn (1)


20x1 + 50x2 = 1000,
20x1 + 50 x 14 = 1000
20x1 + 700 = 1000
20x1 = 1000 - 700,
20x1 = 300,
x1 = 300 / 20 = 15

36

0 + 120x2 = 1860
x2 = 1860 / 120 = 14

At point C, eqn (2) & eqn (3) intersect


mult by 5 on eqn (2) & mult by 4 on eqn (3)
& Substract eqn (3) from eqn (2)
120x1 + 180x2 = 4320
120x1 + 120x2 = 3600

= 1

30

15

<

At point B, eqn (1) & eqn (2) intersect


mult by 6 on eqn (1) & mult by 5 on eqn (2)
& Substract eqn (2) from eqn (1)
120x1 + 300x2 = 6000
120x1 + 180x2 = 4320

30x1+30x2 =900---- eqn (3)

>

24x1+36x2 =864---- eqn (2), &

30

10

20x1+50x2=1000---- eqn (1),

20

( 0 , 30 )

How to find the correct points of interset point of feasible reasiong.


x1
x2
x1
x2
x1
x2
+
= 1
;
+
= 1
;
+
= 1
50 20
36 24
30 30

x1

25

x2 = 30 x 1 = 30

Tip :Take opposite direction of sign for


selecting comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

35
30

( 36 , 0 )

x2

30

x2

>

30

Since x1 = 0 , 0 +

x1 = 36 x 1 = 36

30

= 1

36

+0 = 1,

30

Since x2 = 0 ,

E-mail :- nilesh_pazare@rediffmail.com

x2

x1

= 1

x1

57

58

( 0 , 0.67)

( 1.5 , 0 )

( in 000 Rs. )

Since, x1=1

Since, x2=1

( 0 , 0.25)

110

90

80

70

60

50

40

0 + 5x2 = 200000
x2 = 200000 / 5 = 40000
Put the value of x2 = 40000 on eqn (1)

x2 = 100000 - 75000
x2 = 25000
we get the points x1 = 75000, x2 = 25000

x1 + x2 = 100000,
x1 + 40000 = 100000
x1 = 100000 - 40000
x1 = 60000,
we get the points x1=60000, x2=40000
for point A

At point C, eqn (3) & eqn (4) intersect


Put the value of x1 = 75000 on eqn (3)
-2x1 + 8x2 = 0,
-2 x 75000+ 8x2 = 0,
8x2 = 150000 ,
x2 = 150000 / 8 = 18750
we get the points x1 = 75000, x2 = 18750 for B

Evidently, Rs. 60000 should be invested in Portfolio 1 and Rs. 40000 in Portfolio 2. It would
yield a maximum return of Rs. 14000, while meeting all the given requirments.

Note:- if you are unable to find correct points from graph then cross check the answer by
solving those equation which two line intersect each other.

58

QDM notes for MBA

Second Edition 2013 - 2014

At point B, eqn (1) & eqn (4) intersect


Put the value of x1 = 75000 on eqn (1)
x1 + x2 = 100000
75000 + x2 = 100000

Z = 0.10x1 + 0.20x2
Z=0+0=0
Z= 0.10x60000 + 0.20x40000=6000 + 8000 = 14000
Z= 0.10x75000 + 0.20x25000=7500 + 5000 = 12500
Z= 0.10x75000 + 0.20x18750=7500 + 3750 = 11250

30

P A Z A R E

At point A, eqn (1) & eqn (2) intersect


mult by 2 on eqn (1) & add to eqn (2)
2x1 + 2x2 = 200000
-2x1 + 3x2 = 0

Points
x1
x2
O
0
0
A
60000 40000
B
75000 25000
C
75000 18750

( in 000 Rs. )

How to find the correct points of interset point of feasible reasiong.


x1+ x2=100000-- eqn (1), -2x1+ 3x2 = 0-- eqn (2), -2x1+ 8x2 = 0-- eqn (3) & x1= 75000 -- eqn (4)

Alternately, the optimal soulution to the problem may be seen to be located at an extreme
point at point O, A,B,C in our example. We can evaluate the ordinates at each of these
points as follows:

x - axis

See the graph on next page

20

<

(4,0)

x1

-2x1 + 8x2 = 0 ,
Since, x2=1
-2x1 + 8 x 1= 0 ,
-2x1 + 8 = 0
2x1 = 8 ;
x1 = 8 / 2 = 4

10

<
N
I L E S >H
y-axis

-2x1 + 8x2 = 0 ,
Since, x1=1
-2 x 1 + 8x2 = 0, -2 + 8x2 = 0,
8x2 = 2 ;
x2 = 2 / 8 = 0.25

0C
x2

P A

Since, x2=1

P A Z A R E

Scale
x-axis - 1 cm = 10 Unit
y-axis - 1 cm = 10 Unit

Since, x1=1

8
-2x 1 +

P A

-2x1 + 3x2 = 0 ,
Since, x2=1
-2x1 + 3 x 1= 0 ,
-2x1 + 3 = 0
2x1 = 3 ;
x1 = 3 / 2 = 1.5

10

( 75000 , 0 )

-2x1 + 3x2 = 0 ,
Since, x1=1
-2 x 1 + 3x2 = 0, -2 + 3x2 = 0,
3x2 = 2 ;
x2 = 2 / 3 = 0.67

-2

x 1+

3x 2

>Region

x2 = 75000

Feasible

20

( 0 , 100000) (100000 , 0 )

( 75000 , 0 ) ;

40

x1 = 75000

x1 + x2 = 100000

N I L E S H

( 0 ,100000)
(100000 , 0 )

x1 75000

x2 = 100000
x1 = 100000

50

00

0 + x2= 100000,
x1+ 0 = 100000,

60

30

x1 + x2 = 100000 Since, x1=0


x1 + x2 = 100000 Since, x2=0

x2 75000

0
00
1
x2

Conversion of equation of inequality into equation

70

+
x1

x2 75000,
x1 , x2 0

x1 75000 ;
-2x1 + 8x2 0 ;

x1 + x2 100000 ;
-2x1 + 3x2 0 ;

80

- 0.02x1 + 0.08x2 0 mult by 100 & we get -2x1 + 8x2 0


Ans:Maximise: Zmax = 0.10x1 + 0.20x2

90

2) It is desired to have an average return of at least 12 percent. Thus,


0.10x1 + 0.20x2 0.12 (x1 + x2 ) ;
0.10x1 + 0.20x2 0.12 x1 + 0.12x2
0.10x1 + 0.20x2 - 0.12x1 - 0.12 x2 0 ;
- 0.02x1 + 0.08x2 0

Subject to

100

4x1 + 9x2 6x1 + 6x2


- 2x1 + 3x2 0

Tip :Take opposite direction of sign for selecting comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

>

x2

Notes:- 1) The average risk is not to be exceeding 6. Thus, we have,


4x1 + 9x2
x1 + x2 6
4x1 + 9x2 6 (x1 + x2 ) ;
4x1 + 9x2 - 6x1 - 6x2 0 ;

E-mail :- nilesh_pazare@rediffmail.com

100

fuysk ;ks- ik>kjs 09766134400

fuysk ;ks- ik>kjs 09766134400

59
Accordingly, the LPP can be stated as follows:
Maximise: Z = 2250x1 + 2300x2 + 2400x3 - 200000
Subject to : 20 x1 60 ;
70 x2 140 ;
x1 + x2 120 ;
x1 + x2 + x3 = 200 ;

Subject to:

20 x1 60 ;
x1 + x2 120 ;

x1 = 60

x1 = 20

>

100

E
C

x
1

60

40

=1

80

+x

=1

40

20

180

+x

160

140

20

<

Scale
x-axis - 1 cm = 20 Unit
y-axis - 1 cm = 20 Unit

120

60

x2 = 70

100

80

20

Condition (ii)
Condition (iv)

Feasible

>Region

given in the question, we have


Condition (i)
x2 70 and x2 140
Condition (iii)
x1 60
Condition (v)
and
x1 + x2 + x3 = 200

40

From the conditions


x1 20
x3 60
x1 + x2 120

120

Tip :Take opposite direction of sign for


selecting comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

> x1

x - axis

y-axis

59

QDM notes for MBA

Z = 2250x1 + 2300x2 + 2400x3 - 200000

140

160

Maximise:

P A Z A R E

With a hiring free of Rs. 200000 , the objective function can be expressed as:

x2

N I L E S H

<

P A Z A R E

P A

The travel agent wishes to determine the number of packages to offer in each type so as
to maximise the total profit.
a) Formulate this as a linear programming problem
b) Restate the above LPP in terms of two decision variables, taking advantage of the fact
that 200 packages will be sold.
c) Find the optimal solution using graphical method for the restated problem and
interpret your results.
Ans:a) Let x1 , x2 & x2 be the number of packages of Deluxe, Standard & Economy types,
respectively. From the given information, unit profit for each of the 3 types can be
obtained as under:
Deluxe Package
:
10000 - (3000 + 4750 ) = 2250
Standard Package
:
7000 - ( 2200 + 2500 ) = 2300
Economy Package :
6500 - ( 1900 + 2200 ) = 2400

Conversion of equation of inequality into equation


x1 + x2 = 120
Since, x1=0 0 + x2= 120,
x2 = 120
( 0 ,120)
x1 + x2 = 120
Since, x2=0 x1+ 0 = 120,
x1 = 120
(120 , 0 )
x1 + x2 = 120
( 0 , 120) (120, 0 )
x1 + x2 = 140
Since, x1=0 0 + x2= 140,
x2 = 140
( 0 ,140)
x1 + x2 = 140
Since, x2=0 x1+ 0 = 140,
x1 = 140
(140 , 0 )
x1 + x2 = 140
( 0 , 140) (140, 0 )

P A

Meal & other Expenses


4750
2500
2200

x3 60

Hotel Costs
3000
2200
1900

N I L E S H
Price
10000
7000
6500

70 x2 140 ;
x1 , x2 , x3 0

Zmax = -150x1 - 100x2 + 280000

Maximise:

Z = 2250x1 + 2300x2 + 2400x3 - 200000


now, put x3 = 200 - x1 - x2
Z = 2250x1 + 2300x2 + 2400 (200 - x1 - x2 ) - 200000
Z = 2250x1 + 2300x2 + 480000 - 2400x1 - 2400x2 - 200000
Z = 2250x1 - 2400x1 + 2300x2 - 2400x2 +480000 - 200000
Z = -150x1 - 100x2 + 280000

b) Since, x1 + x2 + x3 = 200 ; we have x3 = 200 - x1 - x2 . Substituting it in the above relations,


the LPP can be re-expressed as follows:

Prices and Costs for Tour Packages per Person


Tour Plan
Deluxe
Standard
Economy

x3 60
x1 , x2 , x3 0

Ex (7) :- A local travel agent is planning a charter trip to a major sea prot. The eight day and
seven night package includes the fare for rount trip, surface trasportation, board and
lodging and seleced tour options. The charter trip is restricted to 200 persons and past
experienc indicates that there will not be any problem for getting 200 clients. the problem
for the travel agent is to determine the number of Deluxe, Standard and Economy tour
packages to offer for this charter. These three plans differ according to seating and service
for the flight, quality of accommodations, meal plans and tour options. The following table
summarises the estimated prices for the tree packages and the corresponding expenses
for the travel agent. The travel agent has hired an aircraft for the flat fee of Rs. 200000 for
the entire tips. In planning the trip, the following considerations must be taken into account
i) At least 10% of the packages must be of the Deluxe type.
ii) At least 35% but not more than 70% must be of the Standard type.
iii) At least 30% must be of the Economy type.
iv) The miximum number of Deluxe packages available in any aircraft is restricted to 60
v) The hotel desires that at least 120 of the tourists should be on the Deluxe and the
Standard packages taken together.

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

60
Subject to contraint-->

Conversion of equation of inequality into equation


6x1 + 3x2 = 18
Since, x1=0
6x1 + 3x2 = 18
Since, x2=0
6x1 + 3x2 = 18

4x1 + 5x2 = 30
Since, x1=0 0 + 5x2= 30, x2 = 30 / 5 = 6
4x1 + 5x2 = 30
Since, x2=0 4x1+ 0 = 30, x1 = 30 / 4 = 7.5
4x1 + 5x2 = 30
( 0 , 6 ) ( 7.5, 0 )

(0,6)
( 7.5 , 0 )

x2

5x
2

Feasible

> Region

> x1

x - axis

<

Scale
x-axis - 1 cm = 1 Unit
y-axis - 1 cm = 1 Unit

30

x2
0
6
2
0

Z = 28x1 + 30x2
Z=0+0=0
Z= 28 x 0 + 30 x 6 = 0 + 180 = 180
Z= 28 x 2 + 30 x 2 = 56 + 60 = 116
Z= 28 x 2.67 + 30 x 0 = 74.76 + 0 = 74.76

maximum

Thus, the solution is optimal at point A. The maximum is 180 can be achieved when
x1 = 0 and x2 = 6.

60

QDM notes for MBA

Second Edition 2013 - 2014

x1
0
0
2
2.67

Alternately, the optimal soulution to the problem may be seen to be located at an extreme
point at point O,A,B,C in our example.
Points
O
A
B
C

P A

18

3x1 + x2 8,
x1 , x2 0

x 2=

6x1 + 3x2 18,


4x1 + 5x2 30,

Subject to

4x

Z = 28x1 + 30x2

8
x =

3
2

Note:- if you are unable to find correct points from graph then cross check the answer by
solving those equation which two line intersect each other.

Ex (8):- Maximise:

P A Z A R E

At point E, eqn(2) & eqn (4) intersect


Put the value of x1 = 20 on eqn (4)
x1 + x2 = 120,
20 + x2 = 120,
x2 = 120 - 20,
x2 = 100,
we get the points x1=20, x2=100 for E

At point D, eqn(3) & eqn (4) intersect


Put the value of x1 = 20 on eqn (3)
x1 + x2 = 140,
20 + x2 = 140
x2 = 140 - 20
x2 = 120,
we get the points x1=20, x2=120 for D

+3
6x 1

P A Z A R E

7
6

Tip :Take opposite direction of sign for


selecting comman intersect region.
i.e. sign then <-- direction
and sign then --> direction

At point C, eq (5) & eq (3) intersect


Put the value of x1 = 60 on eqn (3)
x1 + x2 = 140,
60 + x2 = 140,
x2 = 140 - 60,
x2 = 80,
we get the points x1=60, x2=80 for C

N I L E S H

P A

At point A, eq (1) & eq (2) intersect


Put the value of x2 = 70 on eqn (2)
x1 + x2 = 120,
x1 + 70 = 120
x1 = 120 - 70
x1 = 50,
we get the points x1=50, x2=70 for A

<

y-axis
3x 1 +

N I L E S H

x1=20--eq (4) & x1=60--eq (5)

x1+x2=140--eq (3),

>

(0,8)
( 2.67 , 0 )

x1+x2=120--eq (2),

(0,6)
(3,0)

x2=70--eq (1),

0 + 3x2= 18, x2 = 18 / 3 = 6
6x1+ 0 = 18, x1 = 18 / 6 = 3
(0,6) (3,0)

3x1 + x2 = 8
Since, x1=0 0 + x2= 8,
x2 = 8
3x1 + x2 = 8
Since, x2=0 3x1+ 0 = 8, x1 = 8 / 3 = 2.67
3x1 + x2 = 8
( 0 , 8 ) ( 2.67 , 0 )

How to find the correct points of interset point of feasible reasiong.


n

3x1 + x2 8,
x1 , x2 0

Thus, maximum profit of Rs. 267000 can be achieved when x1= 20 , x3 = 100 and x3 = 80
Since x1+ x2 + x3 = 200
So, Put x1 = 20 & x2= 100 on eqn
20 + 100 + x3= 200 ;
120 + x3 = 200
x3 = 200 - 120
x3 = 80

6x1 + 3x2 18,


4x1 + 5x2 30,

Z = -150x1 - 100x2 + 280000


Z= -150x50 - 100x70 + 280000= -7500-7000+280000=265500
Z= -150x60 - 100x70 + 280000= -9000-7000+280000=264000
Z= -150x60 - 100x80 + 280000= -9000-8000+280000=263000
Z= -150x20 - 100x120 + 280000= -3000-12000+280000=265000
Z= -150x20 - 100x100 + 280000= -3000-10000+280000=267000

Zmax = Z = 28x1 + 30x2

x2
70
70
80
120
100

x1
50
60
60
20
20

Objective variable

Points
A
B
C
D
E

Ans:-

Alternately, the optimal soulution to the problem may be seen to be located at an extreme
point at point A,B,C,D,E in our example. We can evaluate the ordinates at each of these
points as follows:

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

61

12

07

C
Demand

500

007

013

008

014

300

006

016

011

007

200

Demand

180

150

350

320

1000

220

016

011

007

200

00

150

350

320

820

670

From / To

12

Supply

013

170

N I L E S H
180

10

150

012

170

07

13

008

014

300

06

16

011

007

200

00

00

350

320

670

00

P A Z A R E

Demand

180

500

820

61

12

07

13

008

06

16

Demand

00

00

QDM notes for MBA

Q
180

10

R
150

Supply

013

000

014

300

011

007

200

180 00

320

500 320

012

170
180

00
120

Second Edition 2013 - 2014

Step 1:- Start the north west corner and above table, AP cell, Find out which value is small
i.e. demand value or supply value. And from observation, it found that the demand
value is small, so put the demand value in AP cell and substract the demand
value from demand & supply cell.
i.e., after substracting the value of demand & supply, we get
demand = 180 - 180 = 0 & supply = 500 - 180 = 220.
Repeat the same step till the Demand & Supply value become zero ( 0 ).

From / To

013

06

012

300

010

014

Step 3:- Start the north west corner and above table, AR cell, Find out which value is small
i.e. demand value or supply value. And from observation, it found that the supply
value is small, so put the supply value in AR cell and substract the supply
value from demand & supply cell.
i.e., after substracting the value of demand & supply, we get
demand = 350 - 170 = 180 & supply = 170 - 170 = 0.
Repeat the same step till the Demand & Supply value become zero ( 0 ).

Supply

180

008

012

013

170

220

150

P A

P A

From / To

013

010

Ex :- Initial Feasible Solution : NWC Method.

012

180

Step 2:- Start the north west corner and above table, AQ cell, Find out which value is small
i.e. demand value or supply value. And from observation, it found that the demand
value is small, so put the demand value in AQ cell and substract the demand
value from demand & supply cell.
i.e., after substracting the value of demand & supply, we get
demand = 150 - 150 = 0 & supply = 220 - 150 = 170.
Repeat the same step till the Demand & Supply value become zero ( 0 ).

North - West Corner Rule :


The North-West-Corner rule (N-W Corner rule) may be stated as follows.
Start with the north-west corner of the transprotation tableau and consider the cell in the
first column and the first row. Corresponding to this cell are the values a1 and b1 respectively in row 1 and column 1.

P A Z A R E

Supply

N I L E S H

Obtaining the initial Feasible Solution: The first step in using the transportation method is
to obtain a feasible solution, namely, the one that satisfies the rim requirements (i.e. the
requirments of demand and supply). The initial feasible solution can be obtained by
several methods. The commonly used are the Nort-West Corner (NWC) Rule, Least Cost
Method (LCM) and the Vogels Appoximation Method (VAM).

These steps are explained below.

It is a method specially developed to solve transportation problem. Unlike simplex


algorithm, it does not require any artificial variables to introduce for obtaining an initial
solution to the problem.
Broadly, the transportation method involves the following three steps:
(1) Obtaining an initial solution, that is to say making an initial assignment in such a way
that a basic fesible solution is obtained.
(2) Ascertaining whether it is optimal or not, by determining opportunity costs associated
with the empty cells. If the solution is optimal then exit, and if it is not optimal, proceed
to step (3)
(3) Revise the solution unitl an optimal solution is reached.

From / To

LPP : Transportation Method

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

62

12 180

10 150

013

07

13

012 170
008 180

014 120

170 00
120 00

06

16

011

007

200

Demand

00

00

000 00

320 200

320 200

N I L E S H

07

13

08 180

06

16

11

Demand

00

00

00

10

150

12

170

00

Supply

013

000

014 120
007 200

000 00
200 00

200

00

200

00

00

D2

D3

D4

Demand

S1

010

006

018

023

300

S2

004

009

013

010

200

S3

007

013

015

005

400

Supply

150

200

200

350

900

supply= 150 - 150 = 0 & demand = 200 - 150 = 50.


Repeat the same step till the Demand & Supply value become zero ( 0 ).

Total Cost = 12 x 180 + 10x 150 + 12 x 170 + 8 x 180 + 14 x 120 + 7 x 200


Total Cost = 2160 + 1500 + 2040 + 1440 + 1680 + 1400 = Rs. 10220

table on next page (after assigned)

62

QDM notes for MBA

Second Edition 2013 - 2014

Step 1:- From above table, first find the least value from whole table and assign that least
value from demand & supply value and above table the cell S2D1 value is least
value i.e. 4. Now allocate the lower value from supply & demand i.e. 150 in S2D1
cell Now the column is satisfied by this allocation, the row total revised.
i.e. substracting the lower value from supply & demand, we get

Step 6:- Start the north west corner and above table, CS cell, Find out which value is small
i.e. demand value or supply value. And from observation, it found that the supply
& demand value are both small, so put the value in CS cell and substract the
value from demand & supply cell.
i.e., after substracting the value of demand & supply, we get
demand = 200 - 200 = 0 & supply = 200 - 200 = 0.

12

D1

180

P A Z A R E

From / To

P A

Ex :- Initial Feasible Solution : Least Cost Method.

From / To

P A

P A Z A R E

N I L E S H

Step 5:- Start the north west corner and above table, BS cell, Find out which value is small
i.e. demand value or supply value. And from observation, it found that the supply
value is small, so put the supply value in BS cell and substract the supply
value from demand & supply cell.
i.e., after substracting the value of demand & supply, we get
demand = 320 - 120 = 200 & supply = 120 - 120 = 0.
Repeat the same step till the Demand & Supply value become zero ( 0 ).

Supply

From / To

Leas Cost Method (LCM) :As the name suggests, this method entails making allocation at each step by selecting from the routes (that is, combinations of soures and destinations) available, the one
with the minimum cost. To begin, we choose the cell which has the minimum cost,
consider the supply available at the source (ai) and the demand at the destination (b j)
corresponding to that, and allocate the lower of the two (ai or bj) to the cell. After this, we
delete the row or column (or both if ai = bj ) whichever is satisfied by this allocation. If the
row is deleted, then the column value (bj) is revised by subtracting the quantity assigned.
Similarly, if the column is deleted, then the row total is revised. After this, we consider the
routes remaining and again choose the one with the least cost, make assignment and
adjust the row/column total. We continue in this manner until all the units are assigned.
It may be mentioned that at any stage, if there is a tie in the minimum cost, so that two
or more routes have the same least cost of shipping, then, conceptually, either of them
may be selected. However, a better initial solution is obtained if the route chosen is the
one where larges quantity can be assigned. Thus, if there are three cells for which the
(least) cost value is equal, then consider all of these one by one and determine the
quantity (by reference to the demand and supply quantities given) which can be despatched, and choose the cell with the largest quantity. If there is still a tie, then either of
them may be selected.

Step 4:- Start the north west corner and above table, BR cell, Find out which value is small
i.e. demand value or supply value. And from observation, it found that the demand
value is small, so put the demand value in BR cell and substract the demand
value from demand & supply cell.
i.e., after substracting the value of demand & supply, we get
demand = 180 - 180 = 0 & supply = 300 - 180 = 120.
Repeat the same step till the Demand & Supply value become zero ( 0 ).

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400


S1

010

Supply

150

006

018

023

300

009

013

010

200

013

015

005

400

200

200

350

900

50

Step 4:- From above table, first find the least value from whole table and assign that least
value from demand & supply value and above table the cell S2D2 value is least
value i.e. 13. Now allocate the lower value from supply & demand i.e. 50 in S2D2
cell Now the column is satisfied by this allocation, the row total revised.
i.e. substracting the lower value from supply & demand, we get

Repeat the same step till the Demand & Supply value become zero ( 0 ).

750

D3

D4

Demand

S1

10

006

018

023

300

S2

04 150

009

013

010

050

P A Z A R E

Supply

07
00

013

015

200

200

005 350
350 00

400 50
750 400

10

006

018

23

300

S2

04 150

009

013

10

050

S3

07

013

015

05

Supply

00

200 00

200

00

200

350

100

050

050

013

07

13

015

00

00

00

150

50

05
50

350

00

00

050
150

100

N I L E S H

P A Z A R E

supply= 200 - 50 = 150 & demand = 50 - 50 = 00.

Repeat the same step till the Demand & Supply value become zero ( 0 ).
From / To

D1

D2

D3

D4

Demand

S1

10

06

018

23

100

S2

04 150

09

013 50

10

000

S3

07

13

015 50

05

Supply

00

00 00

100 50

00

200

350

050 00
100 50

Step 5:- From above table, first find the least value from whole table and assign that least
value from demand & supply value and above table the cell S1D3 value is least
value i.e. 18. Now allocate the lower value from supply & demand i.e. 100 in S1D3
cell Now the column is satisfied by this allocation, the row total revised.
i.e. substracting the lower value from supply & demand, we we get
supply= 100 - 100 = 00 & demand = 100 - 100 = 00.

400 200

63

QDM notes for MBA

Second Edition 2013 - 2014

S1

10

09

Demand

Supply

100

D4

D3

S3

150

23

D2

04

018

D1

S2

200

Demand

Step 5:- From above table, first find the least value from whole table and assign that least
value from demand & supply value and above table the cell S3D3 value is least
value i.e. 15. Now allocate the lower value from supply & demand i.e. 50 in S3D3
cell Now the column is satisfied by this allocation, the row total revised.
i.e. substracting the lower value from supply & demand, we we get

Step 3:- From above table, first find the least value from whole table and assign that least
value from demand & supply value and above table the cell S1D2 value is least
value i.e. 6. Now allocate the lower value from supply & demand i.e. 200 in S1D2
cell Now the column is satisfied by this allocation, the row total revised.
i.e. substracting the lower value from supply & demand, we get
supply= 200 - 200 = 0 & demand = 300 - 200 = 100.
From / To

06

D4

P A

D2

10

P A

D1

S1

D3

N I L E S H

From / To

D2

Repeat the same step till the Demand & Supply value become zero ( 0 ).

D1

supply= 350 - 350 = 0 & demand = 400 - 350 = 50.

From / To

Step 2:- From above table, first find the least value from whole table and assign that least
value from demand & supply value and above table the cell S3D4 value is least
value i.e. 5. Now allocate the lower value from supply & demand i.e. 350 in S3D4
cell Now the column is satisfied by this allocation, the row total revised.
i.e. substracting the lower value from supply & demand, we get

S3

supply= 200 - 50 = 150 & demand = 50 - 50 = 00.

007

Demand

S3

D4

004

D3

S2

150

D2

D1

E-mail :- nilesh_pazare@rediffmail.com

From / To

63

fuysk ;ks- ik>kjs 09766134400


S1

10

06

S2

04 150

09

D3
200

018

100

013 50
015

Supply

00

00 00

100 00

10
05

000
350

00

00
000
10000

Repeat the same step till the Demand & Supply value become zero ( 0 ).

06

60

04

02

05

10

100

02

06

05

01

40

Supply

20

50

50

80

200

08

06

60

6-3=3

04

02

05

10

100

4-2=2

02

06

05

01 40

40 00

2-1=1

Demand

20

50

50

80 40

200 160

Iteration

4-2=2

3-2=1

5-5=0

6-1=5

N I L E S H

P A Z A R E

supply= 100 - 20 = 80 & demand = 20 - 20 = 00.

Repeat the same step till the Demand & Supply value become zero ( 0 ).
From / To

Supply

Iteration

10

03

08

06

60

6-3=3

04

02

05

10

80

4-2=2

02

06

05

01

00

----

Demand

20

50

50

40

Iteration

10-4=6

3-2=1

8-5=3

10-6=4

20

00

40

160

140

Step 3:- To begin with, the cost differences between the pairs of least cost cell are taken
for each row & column. The largest of these being 4 ( =10 -6), the column designat-ed 4 is selected. In the lowest cost cell of this column, A4, a value 40 assigned
and the column 4 is deleted. The requirment at warehouse A is revised at 20
supply= 60 - 40 = 20 & demand = 40 - 40 = 00.

64

QDM notes for MBA

Second Edition 2013 - 2014

08

03

03

10

10

Iteration

Supply

Supply

Step 2:- To begin with, the cost differences between the pairs of least cost cell are taken
for each row & column. The largest of these being 6 ( =10 -4), the column designat-ed 1 is selected. In the lowest cost cell of this column, B1, a value 20 assigned
and the column 1 is deleted. The requirment at warehouse B is revised at 80

P A

Ex :- Initial Feasible Solution : Least Cost Method.


From / To
1
2
3

P A

P A Z A R E

N I L E S H

Vogels Approximation Method (VAM) :The Vogels Approximation Method, commonly known as VAM, is another cost-based
method used for obtaining initial solution to a transportation problem. Actually, it user cost
differentials rather than absolute costs, to select the appropriate cell to make allocations.
First, consider every row of the cost matrix individually and find the difference between
two least cost cells in it. Then, repeat the exercise for every column. Consider all cost
difference and identify the row or column with the largest value. Now, focus on the cell with
the smallest cost in the row or column so chosen and make allocation in that. The number
of units allocated would be lower of the corresponding supply and demand values. In
case of a tie in the larges cost difference, although either of them may be chosen, it is
preferable to choosen the cost difference corresponding to which the larges number of
units may be assigned or corresponding to which the cell chosen has minmum cost. To
illustrate, suppose the larges cost difference is found to be tied for a row and a column. In
applying the first of the rules, determine the quantity (condidering the available supply and
demand) which can be assigned in each case and select the one where larger quantity
can be assigned. In the other case, unit cost values of the two least cost cells, in the row
and column and choose the one which has a lower value.
Delete the row or column which has been satisfied by the allocation and adjust the
quantity of demand/supply. Recalculate the cost difference for the reduced matrix and
proceed in the same manner as discussed above para. Continue with the process until
all units have been assigned.

From / To

Total Cost = 6 x 200 + 18x 100 + 4 x 150 + 13 x 50 + 15 x 50 + 5 x 350


Total Cost = 1200 + 1800 + 600 + 650 + 750 + 1750 = Rs. 6750

supply= 40 - 40 = 00 & demand = 80 - 40 = 40.

13

00
100

07

23

Step 1:- To begin with, the cost differences between the pairs of least cost cell are taken
for each row & column. The largest of these being 5 ( =6 -1), the column designat-ed 4 is selected. In the lowest cost cell of this column, C4, a value 40 assigned
and the row C is deleted. The requirment at warehouse 4 is revised at 40

S3

Demand

50

D4

D2

E-mail :- nilesh_pazare@rediffmail.com

D1

From / To

64

fuysk ;ks- ik>kjs 09766134400


From / To

04

20

Supply

03

08

06

02

05

10

40

80

01

Demand

00

50

50

40

3-2=1

8-5=3

10-6=4

140

---100

Supply

008

004

010

100

009

007

009

800

006

005

008

150

004

003

003

400

Demand

750

200

500

1450

Ans:- a) Find the feasible solution by using NWC method.

supply= 20 - 20 = 00 & demand = 50 - 20 = 30.

10

03

Supply

08

06

40

20

00

8-3=5

P A Z A R E

Demand

04

02

02

06

00

50

3-2=1

05

01

50

00

8-5=3

40
00

80

5-2=3

40

----

100

80

Supply

008 100

004

010

100 /0

009

007

009

800

006

005

008

150

004

003

003

400

200

500

1450

C
D

P A Z A R E

Demand 750

/650

/1350

----

04

20

02

30

08
05

06
50

40

10

Supply
00
00
80

40

02

06

05

01

Demand

00

50 30

50

00 00

00

40

Iteration
---5-2=3

03

----

80 0

Supply

004

010

007

009

800

008

009

006

005

008

150

004

003

003

400

200

500

1350

Demand 650

65

100

QDM notes for MBA

650

/0

/150

10

3
20

From / To

From / To X

Step 5:- Finally, only one row is left and therefore, no cost differences need to be recalculated. The allocations for each of the cells remaining are made having reference to the
requirments: 30 to B2, and 50 to B3.
supply= 30 - 30 = 00 & demand = 80 - 30 = 50 and finally demand = 50 - 50 = 0

Step 2:- Start the north west corner i.e. BX cell, Find out which value is small i.e. demand
value or supply value. And from observation, it found that the supply & demand
value is small are both same, put the value in BX cell and substract the supply
value from demand & supply cell. Repeat the same step.

----

30

10

Iteration

05

N I L E S H

From / To X

Iteration

P A

20

P A

20

From / To

Repeat the same step till the Demand & Supply value become zero ( 0 ).

N I L E S H

Step 1:- Start the north west corner i.e. AX cell, Find out which value is small i.e. demand
value or supply value. And from observation, it found that the supply value is small
so put the supply value in AX cell and substract the supply value from demand &
supply cell. Repeat the same step till the Demand & Supply value become zero.

Step 4:- To begin with, the cost differences between the pairs of least cost cell are taken
for each row & column. The largest of these being 5 ( =8 -3), the column designat-ed 2 is selected. In the lowest cost cell of this column, A2, a value 20 assigned
and the row 1 is deleted. The requirment at warehouse 2 is revised at 30

----

00

40

From / To

05

Ex (1):- Initial Feasible Solution : NWC, LCM, VAM.

5-2=3

06

6-3=3

02

Total Cost = 3 x 20 + 6 x 40 + 4 x 20 + 2 x 30 + 5 x 50 + 1 x 40
Total Cost = 60 + 240 + 80 + 60 + 250 + 40 = Rs. 730

Iteration

40

Iteration

60

20

E-mail :- nilesh_pazare@rediffmail.com

10

65

/700
Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

66
From / To X

04

06

05

009

150

005

008

150

003

003

400

04

03

003

Demand 00

00

500

500

700

/550

650

04

06

05

04

03
/0

000

008

150

003

400

500

550

/400/0

supply= 400 - 200 = 200 & demand = 200 - 200 = 0.

P A Z A R E

Repeat the same step till the Demand & Supply value become zero ( 0 ).

/100

/500

500

/0

From / To X

Supply

008

004

010

100

009

007

009

800

006

005

008

150

003

400

500

/1250
1450

200
D

004

003

Demand 750

200

/0

/200

50

50

009

/400/0

400

/0

N I L E S H

Demand 00

07

000

400

100

09

010

100

Step 1:- In LCM, the least cost is find from table but here 3 is come twice, so find least
value from DY & DZ. And here DY is least value. Now allocate the lower value from
supply & demand in DY cell. Now the column is satisfied by this allocation,
the row total revised. Substracting the lower value from supply & demand.

150

008

supply= 200 - 200 = 0 & demand = 500 - 200 = 300.


Repeat the same step till the Demand & Supply value become zero ( 0 ).

66

QDM notes for MBA

Second Edition 2013 - 2014

table draw on the next page.

Step 2:- From above table, find the least value from whole table and assign that least
value from demand & supply value and above table the cell DZ value is least
value i.e. 3. Now allocate the lower value from supply & demand i.e. 200 in DZ
cell Now the row is satisfied by this allocation, the column total revised.
i.e. substracting the lower value from supply & demand, we get

Step 5:- Finally, Z column is remains and start the north west corner i.e. CZ and put the
small value in that CZ cell i.e. 100 and remaing value put on the DZ cell i.e. 400.
And finally, the total cost value is calculate.

P A

08

50

b) Find the feasible solution by using LCM method.

Supply

P A Z A R E
100

150

Total Cost = 8 x 100 + 9 x 650 + 7 x 150 + 5 x 50 + 8 x 100 + 3 x 400


Total Cost = 800 + 5850 + 1050 + 250 + 800 + 1200 = Rs. 9950

P A

07

N I L E S H

Step 4:- Start the north west corner i.e. CY cell, Find out which value is small i.e. demand
value or supply value. And from observation, it found that the demand value is
small so put the demand value in CY cell and substract the demand value from
demand & supply cell. Repeat the same step till the Demand & Supply value
become zero ( 0 ).
From / To X

650

200

/50

/0

Demand 00

/0

000

09

06

000

150

009

Supply

010

007

000

650

010

09

04

08

004

Supply

08

100

From / To X

100

Step 3:- Start the north west corner i.e. BY cell, Find out which value is small i.e. demand
value or supply value. And from observation, it found that the supply value is small
so put the supply value in BY cell and substract the supply value from demand &
supply cell. Repeat the same step till the Demand & Supply value become zero.

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

67

008

04

010

100

009

07

009

800

006

05

008

150

004

03

Demand 750

00

003

/300

200

/0

/1050
1250

From / To X

500

200

Supply

008

04

10

100

009

07

09

800

006

05

08

150

03 200

03

00

300

Supply

04

10

000

/0

008

009500
006150

07

09 300

800 /500/0

05

08

000

004

03 200

03 200

000

00

300 /0

800 /500/0

C
D

Demand 500/0

Total Cost = 8 x 100 + 9 x 500 + 9 x 300 + 6 x 150 + 3 x 200 + 3 x 200


Total Cost = 800 + 4500 + 2700 + 900 + 600 + 600 = Rs. 10100

N I L E S H

N I L E S H

supply= 150 - 150 = 0 & demand = 750 - 150 = 600.

100

Step 3:- From above table, first find the least value from whole table and assign that least
value from demand & supply value and above table the cell CX value is least
value i.e. 6. Now allocate the lower value from supply & demand i.e. 150 in CX
cell. Now the column is satisfied by this allocation, the row total revised. Substracting the lower value from supply & demand. Repeat the same step again.

From / To X

supply= 800 - 300 = 500 & demand = 300 - 300 = 0 for BZ cell allocate 300
and finally supply= 500 - 500 = 0 & demand 500 - 500 = 0 for BX cell allocate 500

200

Step 5:- Finally, only one row is left and therefore, assign the least value from that row and
The allocations for each of the cells remaining are made having reference to the
requirments: 300 to BZ, and 500 to BX.

Supply

From / To X

E-mail :- nilesh_pazare@rediffmail.com

c) Find the feasible solution by using VAM method.

P A Z A R E
004

Demand 750 /600

200

000

1050/900

Step 1:- To begin with, the cost differences between the pairs of least cost cell are taken
for each row & column. The largest of these being 5 ( =8 -3), the column designat-ed 3 is selected. In the lowest cost cell of this column, DZ, a value 400 assigned
and the row D is deleted. The requirment at column Z is revised 100

P A Z A R E

supply= 400 - 400 = 00 & demand = 500 - 400 = 100.

100

009

07

09

800

006 150

05

08

000

004

03 200

03

00

300

Supply

Iteration

004

010

100

8-4=4

009

007

009

800

9-7=2

006

005

008

150
400

004

003

003

Demand

750

200

500

Iteration

6-4=2

4-3=1

8-3=5

000

6-5=1
/0

400
/100

4-3=1

/1050
1450

Demand 600 /500

200

008

10

04

/0

Supply

008

100

From / To

Repeat the same step till the Demand & Supply value become zero ( 0 ).

900 /800

67

QDM notes for MBA

Step 4:- From above table, first find the least value from whole table and assign that least
value from demand & supply value and above table the cell AX value is least
value i.e. 8. Now allocate the lower value from supply & demand i.e. 100 in AXcell.
Now the row is satisfied by this allocation, the column total revised. Substracting
the lower value from supply & demand. Repeat the same step again.
From / To X

P A

/0

P A

150

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

68

E-mail :- nilesh_pazare@rediffmail.com

supply= 100 - 100 = 00 & demand = 200 - 100 = 100.

Iteration

008

004 100

010

100 /0

8-4=4

009

007

009

800

9-7=2

006

005

008

150

6-5=1

400
003

003
/100

200

Iteration

8-6=2

5-4=1

100

1050

9-8=1

N I L E S H

Repeat the same step till the Demand & Supply value become zero ( 0 ).
Supply

008

004 100

010

000

----

009

007

009

800

9-7=2

006

005

008

150

/150

750

Iteration

9-6=3

/600

100

/100

7-5=2

100
9-8=1

000
950

004

Demand

600

/0

009

005

008

003

003

100

/0

100

100

800

/700/600/0

000
400
/0

000
800

/700/600/0

Total Cost = 4 x 100 + 9 x 600 + 7 x 100 + 9 x 100 + 6 x 150 + 3 x 400


Total Cost = 400 + 5400 + 700 + 900 + 900 + 1200 = Rs. 9500

N I L E S H

Ex (2):- Initial Feasible Solution : NWC, LCM, VAM.


From / To

C1

C2

C3

Capacity

10

B
C

P A Z A R E

Requirment

15

11

13

80

15

75

20

50

Iteration

6-5=1
----

/800

150

100

Note:-

In above table, the requirment total is 145 and Capacity total is 105. So table is not
balanced. Thats why in Dummy Row taken in table with the difference value of
Capacity & Requirment i.e. 145 - 105 = 40. So 40 value taken in Dummy row
Now the table are as follows, after taking the Dummy.

From / To

C1

C2

C3

Capacity

10

15

11

13

80

15

Dummy

40

Requirment

75

20

50

Step 4:- Finally, only one row is left and therefore, no cost differences need to be recalcu-lated. The allocations for each of the cells remaining are made having reference
to the requirments: 100 to BY, 100 To BZ and 60 to BX.

68

Demand

003

006

007

003

600

004

009

400

/0

Now find out the feasible solution using various method i.e. NWC, LCM and VAM.
QDM notes for MBA

000

010

From / To

008

P A

supply= 150 - 150 = 00 & demand = 750 - 150 = 600.

P A

Step 3:- To begin with, the cost differences between the pairs of least cost cell are taken
for each row & column. The largest of these being 3 ( =9 -6), the column designat-ed 6 is selected. In the lowest cost cell of this column, CY, a value 150 assigned
and the row C is deleted. The requirment at column X is revised 600

P A Z A R E

750

---/950

Supply

Demand

000

004 100

004

Supply

From / To

From / To

Repeat the same step till the Demand & Supply value become zero ( 0 ).

supply= 800 - 100 = 700 & demand = 100 - 100 = 0 for BY cell allocate 100 ,
supply= 700 - 100 = 600 & demand = 100 - 100 = 0 for BZ cell allocate 100 ,
and finally supply= 600 - 600 = 0 & demand = 600 - 600 = 0 for BX cell allocate 600

Step 2:- To begin with, the cost differences between the pairs of least cost cell are taken
for each row & column. The largest of these being 4 ( =8 -4), the column designat-ed 4 is selected. In the lowest cost cell of this column, AY, a value 100 assigned
and the row A is deleted. The requirment at column Y is revised 100

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

69

Ans:- a) Find the feasible solution by using NWC method.

10

15

11

13

80

06

05

04

15

00

00

40

Requirment

75 /65

20

50

145 /135

13

00

5 5

04

15 /10

Dummy

00

40

Requirment

0 /0

5 /0

50

55 /50

05 10

C2
03

C3
08

Capacity
00

P A Z A R E
13

80

06

05

04

15

Dummy

00

00

00

40

Requirment

65 /0

20

50

135 /70

/15

C3

Capacity

03

08

00

11 15
05 5

13

00

04 /10
00 /40

10 /0
40 /0

50 /40/0

50 /40/0

P A Z A R E

Dummy

Requirment

06

00
0 /0

00
0

/0

Total Cost = 5 x 10 + 15 x 65 + 11 x 15 + 5 x 5 + 4 x 10 + 0 x 40
Total Cost = 50 + 975 + 165 + 25 + 40 + 0 = Rs. 1255

Capacity

03

08

00

05 10
15 65

11 15

13

15

06

05

04

15

Dummy

00

00

00

40

Requirment

00 /0

20 /5

50

70

/0

From / To

C1

C2

C3

Capacity

10

15

11

13

80

15

40

Requirment

75

20

50

/55

69

QDM notes for MBA

C3

C2

C1

b) Find the feasible solution by using LCM method.

From / To

Step 3:- Start the north west corner i.e. BC2 cell, Find out which value is small i.e. capacity
value or requirment value. And from observation, it found that the capcity value is
small so put the capacity value in BC2 cell and substract the capacity value from
Capacity & requirment cell. Repeat the same step.

11

10
05
1565

C2

15 65

C1

P A

C1

P A

From / To

N I L E S H

From / To

N I L E S H

Step 2:- Start the north west corner i.e. BC1 cell, Find out which value is small i.e. capacity
value or requirment value. And from observation, it found that the requirment
value is small so put the requirment value in BC1 cell and substract the requirment
value from Capacity & requirment cell. Repeat the same step.

Step 5:- Finally, only one column is left and therefore Start the north west corner i.e. CC3
cell, Find out which value is small i.e. capacity value or requirment value. And
from observation, it found that the capcity value is small so put the capcity value in
CC3 cell and substracted the capcity value and balance the table.

00

00

Dummy

08

03
11 15

/0

10
05
1565

08

Capacity

Capacity

03

C3

C3

05 10

C2

C2

C1

C1

From / To

From / To

Step 4:- Start the north west corner i.e. CC2 cell, Find out which value is small i.e. capacity
value or requirment value. And from observation, it found that the requirment
value is small so put the requirment value in CC2 cell and substract the requirment
value from Capacity & requirment cell. Repeat the same step.

Step 1:- Start the north west corner i.e. AC1 cell, Find out which value is small i.e. capacity
value or requirment value. And from observation, it found that the capacity value is
small so put the capacity value in AC1 cell and substract the capactiy value from
Capacity & requirment cell. Repeat the same step.

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

70

Ans:- b) Find the feasible solution by using LCM method.

05

03

08

10

15

11

13

80

06

05

04

15

00

00 20

Requirment

75

20

50

145

/125

40

/0

00

/20

05 10

03

08

10 /0

15

11

13

80

06

04 15

00

00

0 20

00 20

00

Requirment

60 /50

30

90 /80

From / To
A

C1

05

C2

C3

Capacity

05

03

08

10

06

P A Z A R E

13

80

05

04

15

00

00 20

00 20

20

00

50 /30

125 /105

75

/0

03

08

00

11

80 /50/0

13 30
04 15
20

20

00

P A Z A R E

Requirment

00
50

/50

00
30

00
80

/50/0

Total Cost = 5 x 10 + 15 x 50 + 13 x 30 + 4 x 15 + 0 x 20 + 0 x 20
Total Cost = 50 + 750 + 390 + 60 + 0 + 0 = Rs. 1250
Ans c) Find the feasible solution by using VAM method.

Capacity

05

03

08

10

15

11

13

80

06

05

04 /15

15 /0
00

D
Requirment

00
75

00
/60

00

20

00
30

20

105

/90

70

05

03

08

10

15

11

13

80

06

04

15

00

00 40

40

Requirment

75

20

50 /10

145 /105

QDM notes for MBA

C3

C2

C1

From / To

Step 1:- To begin with, the cost differences betn the pairs of least cost cell are taken for
each row & column. The largest of these being 13 (=13 -0), the column designated 0 is
selected. In the lowest cost cell of this column, DC3, a value 40 assigned and the row D is
deleted. The requirment at column C3 is revised 10
From / To
C1
C2
C3
Capacity

Step 3:- From table, first find the least value from whole table and from table the cell CC3
value is least value i.e. 4. Now allocate the lower value from Capacity i.e.15 in CC3
cell. Now the row is satisfied by this allocation, the column total revised. Repeat
the same step till the Capacity & Requirment value become zero ( 0 ).

11

06

Capacity

Requirment

15

C3

P A

C1

P A

From / To

15 50

C2

N I L E S H
10

N I L E S H

Capacity

Step 5:- Finally, only one row is left and therefore, assign the least value from that row and
The allocations for each of the cells remaining are made having reference to the
requirments: 50 to BC1, and 30 to BC3.

Step 2:- From table, first find the least value from whole table and from table the cell DC3
value is least value i.e. 0. Now allocate the lower value from Capacity i.e. 20 in DC3
cell. Now the row is satisfied by this allocation, the column total revised. Repeat
the same step till the Capacity & Requirment value become zero ( 0 ).

C3

C2

Capacity

C1

C3

From / To

C2

C1

From / To

Step 4:- From table, first find the least value from whole table and from table the cell AC1
value is least value i.e. 5. Now allocate the lower value from Capacity i.e.10 in AC1 cell.
Now the row is satisfied by this allocation, the column total revised. Repeat thesame step
till the Capacity & Requirment value become zero ( 0 ).

Step 1:- From table, first find the least value from whole table and from table the cell DC2
value is least value i.e. 0. Now allocate the lower value from Requirment i.e. 20 in
DC2 cell. Now the column is satisfied by this allocation, the row total revised.
Repeat the same step till the Capacity & Requirment value become zero ( 0 ).

E-mail :- nilesh_pazare@rediffmail.com

/40

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

71

Capacity

Iteration

05

03

08

10

5-3=2

15

11

13

80

05

04 10

15
00

105 /95

Requirment

75

20

10 /0

Iteration

6-5=1

5-3=2

8-4=4

----

C2

05

03

Capacity

Iteration

08

10

5-3=2

P A Z A R E
15

11

13

80
05
00

00

00

00 40

Requirment

75

20 /0

00

Iteration

6-5=1

5-3=2

---

95

6-5=1
----

/75

C2
10

15

06 5

05

00

Requirment

75

60

03

/0

08

10

13

60

05 /0

00

04 10
00 40

00 /0

00

75 /65/60/0

11

20

/0

Janata(J)

Red Lamp(R)

Capacity

---

010

005

090

012

009

004

050

007

003

011

080

009

005

007

060

Dummy

000

000

000

050

Demand

120

100

110

330

05

Capacity

C3

Bharat(Bh)

C1

From / To

From / To

Step 4:- Finally, only one row is left and therefore, no cost differences need to be recalcu-lated. The allocations for each of the cells remaining are made having reference
to the requirments: 10 to AC1 , 60 To BC1 and 05 to CC1.

P A Z A R E

Initial Feasible Solution by using NWC and VAM Methods.


Ans:Note:- In above exmple the Demand total is 320 and Capacity total is 280. So table is not
balanced. Thats why in Dummy Row taken in table with the difference value of
Capacity & Demand i.e. 330 - 280 = 50. So 50 value taken in Dummy row.
Now the table are as follows, after taking the Dummy.

Note:- When the NWC method use to solve the above table, then first find which value is
small from Capacity & Demand. Then start north west corner of that row or column. In
above table Capacity value is small i.e. 90 then start to solve the problem from AJ cell

00

71

QDM notes for MBA

05

15-11=4

06

04 10

/60

20

C3

P A

C1

P A

From / To

N I L E S H

N I L E S H

Step 3:- To begin with, the cost differences betn the pairs of least cost cell are taken for
each row & column. The largest of these being 4 (=15 - 11), the column designated 11 is
selected. In the lowest cost cell of this column, BC2, a value 20 assigned and the column
C2 is deleted. The requirment at row B is revised 20

00

00

5-4=1

00 40

06

13-11=2
/5

Ex (3):- The XYZ Tobacco Company purchases tobacco and stores in warehouses located in the following cities:
W arehouse Location
Capacity (Tonnes)
City A
90
City B
50
City C
80
City D
60
The warehouses supply tobacco to cigarette companies in three cities that have the
following demand:
Cigarette Company
Demand (Tonnes)
Bharat
120
Janata
100
Red Lamp
110
The following railroad shipping costs per tonne(in hundred rupees)have been determined
From / To
Bharat (Bh)
Janata ( J )
Red Lamp ( R )
A
--10
05
B
12
09
04
C
07
03
11
D
09
05
07

C3

C2

C1

From / To

Total Cost = 5 x 10 + 15 x 60 + 11 x 20 + 6 x 5 + 4 x 10 + 0 x 40
Total Cost = 50 + 900 + 220 + 30 + 40 + 0 = Rs. 1240

Step 2:- To begin with, the cost differences betn the pairs of least cost cell are taken for
each row & column. The largest of these being 4 (=8 - 4), the column designated 4 is
selected. In the lowest cost cell of this column, CC3, a value 10 assigned and the column
C3 is deleted. The requirment at row C is revised 5

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

72

Ans:- a) Find the feasible solution by using NWC method.

From / To

003

011

080

009

005

007

060

Dm

000

000

000

050

Demand

120

100

110

330

/240

/10

Capacity

P A Z A R E
---

010

90

005

000

50

/0

050

007

003

011

080

009

005

007

060

Dm

000

000

000

050

10

110

240

Demand

120

/70

/10

09

005

007

060

Dm

00

000

000

050

Demand

70 /0

10

110

190 /120

Bh

R
90

Capacity

N I L E S H
---

10

005

000

12

70

09

004

000

011

010

07

09

05

007

060

00

00

000

050

00

00

110

120

Dm

03

10

/0

P A Z A R E

Demand

/0

/110

Step 5:- Finally, one column is left i.e. R and therefore Start the north west corner i.e. DR
cell, Find out which value is small The allocations for each of the cells remaining are
made having reference to the requirments and balance the table:
i.e. Capacity = 60 - 60 = 0 & Demand = 110 - 60 = 50 and
Finally, Capacity = 50 - 50 = 0 & Demand = 50 - 50 = 0

/190

Bh

---

10

90

Capacity

005

000

004

000

50
B
C

12
07

09
70

03

10

011

000
60

capacity = 50 - 50 = 0 & demand = 120 - 50 = 70

09

05

007

Repeat the same step till the Demand & Supply value become zero ( 0 ).

Dm

00

00

000 50

Demand

00

00

110

72

QDM notes for MBA

/0

i.e., after substracting the value of capacity & demand, we get

From / To

Step 3:- Start the north west corner i.e. CBh cell, Find out which value is small i.e. capacity
value or demand value. And from observation, it found that the demand value is
small so put the demand value in CBh cell and substract the demand value from
Capacity & demand cell. Repeat the same step.

/50/0

060

/0

050 /0
110

004

080

009

011

50

012

003

07

000

P A

004

P A

009

Bh

70

Step 4:- Start the north west corner i.e. CJ cell, Find out which value is small i.e. capacity
value or demand value. And from observation, it found that the both the value are same so
put any value in CJ cell and substract any value from Capacity & demand cell. Repeat the
same step.

Step 2:- Start the north west corner i.e. BBh cell, Find out which value is small i.e. capacity
value or demand value. And from observation, it found that the capacity value is
small so put the capacity value in BBh cell and substract the capactiy value from
Capacity & demand cell. Repeat the same step.
From / To

12

From / To

N I L E S H

000

007

012

005

010

050

Capacity

004

010

009

---

005

Capacity
/0
090

R
90

---

R
90

J
50

Bh

Bh

Step 1:- Start the north west corner i.e. AJ cell, Find out which value is small i.e. capacity
value or demand value. And from observation, it found that the capacity value is
small so put the capacity value in AJ cell and substract the capactiy value from
Capacity & demand cell. Repeat the same step.
From / To

E-mail :- nilesh_pazare@rediffmail.com

/50/0
Second Edition 2013 - 2014

73
From / To

---

J
10

R
05

Capacity
90
20

04

07

03

11

080

7-3=4

09

05

07

060

9-5=4

Dm

00 50

00

00

000

---

190 /170

Demand

70

100

20 /0

---

10

005

090

10-5=5

Iteration

9-7=2

5-3=2

7-4=3

12

09

004

050

9-4=5

07

03

011

080

7-3=4

09

05

007

060

7-5=2

Dm

00 50

000

050 /0

0-0=0

100

110

7-0=7

3-0=0

4-0=4

Iteration

120 /70

330 /280

005

12

09

9-4=5

07

09

03

011

080

7-3=4

05

007

060

7-5=2

Dm

00 50

00

000

000

---

Demand

70

100

110 /20

280 /190

Iteration

9-7=2

5-3=2

7-4=3

09

07

03 80

09

05

00 50

Demand
Iteration

73

04

20

000

---

030

12-9=3

11

080 /0

7-3=4

07

060

9-5=4

00

00

000

---

70

100 /20

00

170 /90

9-7=2

5-3=2

7-4=3

Step 5:- To begin with, the cost differences betn the pairs of least cost cell are taken for
each row & column. The largest of these being 4 (=9-5), the column designated J is
selected. In the lowest cost cell of this column, DJ, a value 20 assigned and the column J
is deleted. The requirment at row D is revised 20

A
B

Table on Next Page

05

P A Z A R E

From / To

Step 3:- To begin with, the cost differences betn the pairs of least cost cell are taken for
each row & column. The largest of these being 5 (=9 -4), the column designated 4 is
selected. In the lowest cost cell of this column, BR, a value 20 assigned and the column
R is deleted. The requirment at row B is revised 20

10

Bh
---

J
10

R
05

12

09

04

07

09

03 80
05 20

Dm

00 50

Demand

70

QDM notes for MBA

Capacity
90
20

000

Iteration
---

030

12-9=3

11

080

7-3=4

07

060 /40

9-5=4

00

00

000

20 /0

00

90

050

10-5=5

Iteration

004

90

10

Capacity

90

---

---

12

Dm

Iteration

Capacity
/0
090

P A

Bh

P A

P A Z A R E

Bh

N I L E S H

Step 2:- To begin with, the cost differences betn the pairs of least cost cell are taken for
each row & column. The largest of these being 5 (=10-5), the column designated 5 is
selected. In the lowest cost cell of this column, AR, a value 90 assigned and the row A is
deleted. The requirment at column R is revised 90
From / To

From / To

N I L E S H

Demand

Step 4:- To begin with, the cost differences betn the pairs of least cost cell are taken for
each row & column. The largest of these being 4 (=7-3), the column designated J is
selected. In the lowest cost cell of this column, CJ, a value 80 assigned and the row C is
deleted. The requirment at column J is revised 80

Iteration

Capacity

9-4=5

09

12

Bh

050

--/30

From / To

00

000

Iteration

Ans:- b) Find the feasible solution by using VAM method.


Step 1:- To begin with, the cost differences betn the pairs of least cost cell are taken for
each row & column. The largest of these being 7 (=7 -0), the column designated 0 is
selected. In the lowest cost cell of this column, DmBh, a value 50 assigned and the row
Dm is deleted. The requirment at column Bh is revised 50

Bh

Total Cost = 10 x 90 + 12 x 50 + 7 x 70 + 3 x 10 + 7 x 60 + 0 x 50
Total Cost = 900 + 600 + 490 + 30 + 420 + 0 = 2440 (in hundred)
Total Cost is 2440 x 100 = Rs. 24400

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

--/70
Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

74

J
10
30

D
Dm

09 40
00 50

Demand

70 /30/0

04

03 80
05 20

11

00

07

40 /0

00

00

00

00

70 /30/0

00 /0

From / To

Supply

10

20

70

25

50

35

60

B
C

P A Z A R E

Demand

08

10

09 50

06

05

09 5
08 25

070 /20/5/0
025 /0

04

05

06 30

Demand

50 /0

35 /15/0

60

030 /0
145 /125/75/60/55/30/0

N I L E S H

Total Cost = 4 x 20 + 9 x 50 + 7 x 15 + 9 x 5 + 8 x 25
Total Cost = 80 + 450 + 105 + 45 + 200 = 880

and
and

Penalty = 6 x 30
Penalty = 180

By using the NWC method, The total cost is Rs. 880 and Penalty is Rs. 180

P A Z A R E

b) Find the feasible solution by using LCM method.

First find the least value from whole table and from table the cell A2 value is least value

09

Ans:- This problem is an unbalanced transprotation problem wherin aggregate requirment


is Rs. 145 units while aggregate supply available is 105 units. to solve, the problem is first
balanced by adding dummy plant T with supply value of 145-105=40 units & cost elements to the given penalty value 4, 5, 6 in column headed (1), (2), (3) respectively.

06

04

Demand

50

In above table the T is assigned as the Penalty, so T is calculated as Penalty.

3
10
9
8
6
60

Supply
20
70
25
40
145

04
10
10
30
/20/10

07
05
05
35

10
09

15

/15/0

Supply
/0
020
60

070

08

025

06

030

60

145

Total Cost = 4 x 20 + 9 x 10 + 9 x 60 + 6 x 10 + 5 x 15
Total Cost = 80 + 90 + 540 + 60 + 75 = 845

and
and

/10/0
/0
/125/95/80/70/60/0

Penalty = 4 x 30
Penalty = 120

By using the LCM method, The total cost is Rs. 845 and Penalty is Rs. 120

74

QDM notes for MBA

Second Edition 2013 - 2014

2
4
7
5
5
35

08

03
20

1
8
9
6
4
50

02

From / To
A
B
C
T
Demand

01

From / To

Since there is not enough supply, some of the demands at the three destinations may not
be satisfied. For the unsatisfied demands let the penalty cost be rupees 4, 5 6 for destinations (1) , (2) and (3) respectively. Find the optimal allocation that the transportation and
penalty costs.

P A

Supply
020 /0

03

04 20
07 15

P A

02

In above table the T is assigned as the Penalty, so T is calculated as Penalty.

Ex (4) :- Consider the following data for the transportation problem.


From / To

01

N I L E S H

Start to solve the problem by the north west corner i.e. A1 cell

Total Cost = 5 x 90 + 12 x 30 + 4 x 20 + 3 x 80 + 9 x 40 + 5 x 20 + 0 x 50
Total Cost = 450 + 360 + 80 + 240 + 100 + 0 = 1590 (in hundred rupees)
Total Cost is 1590 x 100 = Rs. 159000

a) Find the feasible solution by using NWC method.

07

30

/0

09

00

12

20

05

Capacity
90

---

Bh

This type, student can solve in exam paper. If any doubt or confuse to under-standing the example, then student can see the befores example steps to
understand procedure, how to solve the problem.

From / To

Note:- This example directly solve means no steps are given.

Step 6:- Finally, only one column is left and therefore, no cost differences need to be
recalculated. The allocations for each of the cells remaining are made having reference to
the requirments: 40 to DBh and 30 To BBh

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400

75

C) Find the feasible solution by using VAM method.

E-mail :- nilesh_pazare@rediffmail.com

a) Find the feasible solution by using NWC method.

From/To

08

10

020

--

--

09

04 20
07 10

09 60

070

06 20

05 5

08

025

04 30

05

06

030

--

Demand

50

35

60

145

Iteration

--

S1

012

S2

006

S3

009

Demand

200

008
011

50

015

015
/0

250

020

017
/50/0

350

025
250

012

100

007

/100/0

400

400
/0

Supply
/200/0
400
/250/0
300
/400/0
500
1200

Total Cost = 12 x 200 + 8 x 200 + 11 x 50 + 15 x 250 + 17 x 100 + 7 x 400


Total Cost = 2400 + 1600 + 550 + 3750 + 1700 + 2800 = 12800

Iteration

D4

Supply

D3
200

03

D2
200

02

01

From / To

D1

To begin with, the cost differences bet the pairs of least cost cell are taken for each row &
column. The largest of these being start to solve the problem.

b) Find the feasible solution by using LCM method.


D2

S1

012

008

S2

006

Demand

P A Z A R E

By using the VAM method, The total cost is Rs. 835 and Penalty is Rs. 120

020

150
100

Supply

025

400

/150/0

009
200

/0

011

015

015

017

250

/0

012

100

007

350

400

300

/0

400
/0

500

/100/0

1200

P A

Total Cost = 4 x 20 + 7 x 10 + 9 x 60 + 6 x 20 + 5 x 5
Total Cost = 80 + 70 + 540 + 120 + 25 = 835

P A

S3

Penalty = 4 x 30
Penalty = 120

250

D4

N I L E S H

In above table the T is assigned as the Penalty, so T is calculated as Penalty.


and
and

200

D3

D1

N I L E S H

From/To

P A Z A R E

Total Cost = 8 x 200 + 20 x 150 + 6 x 200 +15 x 100 + 17 x 100 + 7 x 400


Total Cost = 1600 + 3000 + 1200 + 1500 + 1700 + 2800 = 11800

c) Find the feasible solution by using VAM method.

Ex (5):- Initial Feasible Solution : NWC, LCM, VAM.

S1

012

008

020

025

400

S2

006

011

015

012

300

S3

009

015

017

007

500

Demand

200

250

350

400

1200

This type, student can solve in exam paper. If any doubt or confuse to under-standing the example, then student can see the befores example steps to
understand procedure, how to solve the problem.

D4

Supply

Iteration

S1

012

S2

006 100

008 250 020 150


011
015 200

025

400

12

S3

009 100

017

300
400
007
500

015

--

--

Demand 200

250

350

400

Iteration

--

--

--

--

012

1200

Note:- This example directly solve means no steps are given.

D3

Supply

D2

Total Cost = 8 x 250 + 20 x 150 + 6 x 100 +15 x 200 + 9 x 100 + 7 x 400


Total Cost = 2000 + 3000 + 600 + 3000 + 900 + 2800 = 12300

75

QDM notes for MBA

D4

D1

D3

D2

D1

From / To

From/To

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

76

E-mail :- nilesh_pazare@rediffmail.com

c)

LPP : Assignment Problem

d)
e)

An assignment problem can be formulated as a transportation problem which, in


turn, is a special type of linear programming problem. Accordingly, an assignment problem can be formulated as a linear programming problem and solved using a modified
simplex method or otherwise. It may noted that its formulation requires that the decision
variables take only one of the two vales 1or 0 accordingly as an assignment is made or not

If ther is no row or column with only a single Zero element left, then select a row/
column arbitrarily and choose one of the jobs (or persons) and make the assign-ment. Now cross the remaining zeros in the column and row in respet of which the
assignment is made.
Repeat steps ( a ) through ( c ) until all assignment are made.
Determine the total cost with reference to the original cost table.

I
Ex (1) :- Solve the assignment problem for optimal solution using HAM.
A
10
2
0
8

B
9
3
5
6

C
15
5
2
6

D
8
4
1
7

E
S

Ans:- Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.

Step 3 : Draw the minimum number of horizontal and vertical lines (not the diagonal
ones) that are required to cover all the Zero elements. If the number of lines drawn is
equal to n (the number of rows/columns) the solution is optimal, and proceed to steps 6.
If the number of lines drawn in smaller than n, go to step 4.

D
8-8=0
4-1=3
1-0=1
7-6=1

N I L E S H
P A Z A R E

Worker / Job
1
2
3
4

A
2-0=2
0-0=0
0-0=0
2-0=2

Step 3 :

B
1-0=1
1-0=1
5-0=5
0-0=0

C
7-0=7
3-0=3
2-0=2
0-0=0

D
0-0=0
3-0=3
1-0=1
1-0=1

Job Assignment

Worker / Job

B 02

A 01

A 07

B 0

B0

A 01

A 03

B 03

B0

A 05

A 02

B 01

C 02

B0

B0

C 01

Step 5 : Repeat steps 3 and 4 until an optimal solution is obtained.

Tip:- 1) First find the single Zero from row, if Zero find in row then cut the column
2) Then find the single Zero from column, if Zero find in column then cut the row
This step repeat till there are Zero not left in given table and optimal solution is satisfied.
In above example table, optimal solution is not satisfied, then Use ABC Analysis.

76

QDM notes for MBA

Second Edition 2013 - 2014

Step 6 : Given the optimal solution, make the job assignment as indicated by the Zero
elements. This is done as follows:
a) Locate a row which contains only one Zero element. Assign the job corresponding
to this element to its corresponding person. Cross out the zeros, if any, in the col-umn corresponding to the element, which is indicative of the fact that the particular
job and person are no more available.
b) Repeat ( a ) for each of such rows which contain only one zero. Similarly, perform
the same operation in respect of each column containing only one Zero element,
crossing out the zero(s), if any, in the row in which the element lies.

C
15-8=7
5-2=3
2-0=2
6-6=0

Step 4 : Select the smallest uncovered (by the lines) cost element. Subtract this element
from all uncovered elements including itself and add this element to each value located at
the intersection of any two lines. The cost elements through which only one line passes
remain unaltered.

B
9-8=1
3-2=1
5-0=5
6-6=0

P A

P A Z A R E

A
10-8=2
2-2=0
0-0=0
8-6=2

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. It is shown in following table.

P A

Step 2 : In the reduced cost table obtained, consider each column and locate the smallest element in it. Subtract the smallest value from every other entry in the column. As a
consequence of this action, there would be at least one zero in each of the row and
columns of the second reduced cost table.

Worker / Job
1
2
3
4

N I L E S H

Step 1: Locate the smallest cost element in each row of the cost table. Now subtract this
smallest element from each element in that row. As a result, there shall be at least one
zero in each row of this new table, called the Reduced Cost Table.

It may observed that none of the three working methods discussed earlieer to solve
an assigment is efficient. A method, designed specially to handle the assignment problems in an efficient way called the Hungarian Assignment Method, is available, which is
based on the concepts of opportunity cost. For a typical balanced assignment problem
involving a certain number of person and an equal number of jobs, and with an objective
function of the minimisation type, the method is applied as listed in the following steps:

Worker / Job
1
2
3
4

Hungarian Assignment Method (HAM)

fuysk ;ks- ik>kjs 09766134400


Step 4 :

77

ABC Analysis and Job Assignment

1-1=0

7-1=6

1-1=0

3-1=2

03

5-1=4

2-1=1

01

2+1=3

1+1=2

N I L E S H

Step 3 :

After ABC Analysis, The optimal assignments can be made as the least number of lines
covering all zeros.

P A Z A R E
Cost
08
03
00
06
17

05

11

14

N I L E S H
2

17

21

01

04

03

04

19

01

Tip:- 1) First find the single Zero from row, if Zero find in row then cut the column
2) Then find the single Zero from column, if Zero find in column then cut the row

P A Z A R E

This step repeat till there are Zero not left in given table and optimal solution is satisfied.
In above example table, optimal solution is satisfied. The assignment are made after
scanning the rows and column for unit Zeros. Assignments mad are shown with circle.

( Zmin = 17 )

Ex (2) :- Solve the assignment problem for optimal solution using HAM.

Step 4 :

Total Cost Calculation ( takes actual tables values )


Worker
1
2
3
4

QDM notes for MBA

Jobs
B1
D2
C3
A4
Total =

Cost
40
55
48
41
184

E
77

Worker / Job
A
B
C
D
1
45
40
51
67
2
57
42
63
55
3
49
52
48
64
4
41
45
60
55
Ans:Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.

Assignment are mad in the following order. Rows 1, 3, and 4 contain only one zero each.
So assign 1-B, 3-C and 4-A. Since worker 1 has been assigned job B, we cross the zero
in the second column of the second row. After making these assignment only worker 2 and
job D are left for assignment. The final pattern of assignments is 1-B, 2-D, 3-C and 4-A,
involving a total time of 40 + 55 + 48 + 41 = 184 minutes.

Jobs
D1
B2
A1
C4
Total =

Worker
1
2
3
4

P A

Total Cost Calculation ( takes actual tables values )

D
27-13=14
13-13=0
16-13=3
14-13=1

Job Assignment

Worker / Job

P A

Step 5 :

C
11-0=11
21-0=21
0-0=0
19-0=19

02

B
0-0=0
0-0=0
4-0=4
4-0=4

A
5-0=5
17-0=17
1-0=1
0-0=0

Worker / Job
1
2
3
4

Worker / Job

D
67-40=27
55-42=13
64-48=16
55-41=14

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. It is shown in following table.

Note:- This step 4 means ABC Analysis & Job Assignment is same for all problems for
assigning and after ABC classified & ABC Treament, to draw the reduced cost table.
Here, Key element is 1, after ABC Treatment, the following table appears

C
51-40=11
63-42=21
48-48=0
60-41=19

2) No change in B

B
40-40=0
42-42=0
52-48=4
45-41=4

1) Deduct key element from all A


3) Add key element to all C

A
45-40=5
57-40=17
49-48=1
41-41=0

ABC Treatment :-

Worker / Job
1
2
3
4

ABC Classified
A - Uncrossed B- Single Crossed
C-Double Crossed
Key element = minimum key of all A

E-mail :- nilesh_pazare@rediffmail.com

( Zmin = 184 minutes )

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

78

Ex (3) :- Using the following cost matrix, determine a) optimal job assignment & b) cost.

E-mail :- nilesh_pazare@rediffmail.com

Step 4 :

A - Uncrossed B- Single Crossed


Key element = minimum key of all A

1) Deduct key element from all A


3) Add key element to all C

2) No change in B

ABC Treatment :-

ABC Classified
C-Double Crossed

4
2-2=0
2-2=0
2-2=0
2-2=0
6-6=0

5
8-2=6
7-2=5
4-2=2
4-2=2
10-6=4

Here, Key element is 2, after ABC Treatment, the following table appears
Machinist / Job

2
1-1=0
5-1=4
3-1=2
3-1=2
4-1=3

3
1-1=0
6-1=5
4-1=3
6-1=5
3-1=2

4
0-0=0
0-0=0
0-0=0
0-0=0
0-0=0

5
6-2=4
5-2=3
2-2=0
2-2=0
4-2=2

P A Z A R E

Step 3 :

0+2=2

4+2=6

06

4-2=2

5-2=3

03

04

2-2=0

3-2=1

2-2=0

5-3=2

02

3-2=1

2-2=0

02

N I L E S H

After ABC Analysis, The optimal assignments can be made as the least number of lines
covering all zeros.
Step 5 :

P A Z A R E
Total Cost Calculation ( takes actual tables values )

C 07

B 0

B 0

C 0

C 04

B 06

A 04

A 05

B 0

B 03

B 04

A 02

A 03

B 0

B 0

B0

A 02

A 05

B 0

B 0

B 02

A 03

A 02

B 0

B 02

( Zmin = 21 )

The total cost associated with the optimal machinist-job assignment is 121.

Cost
02
04
03
09
03
21

Jobs
B4
C5
D1
E3
A2
Total =

Machinist
A
B
C
D
E

7+2=9

Job Assignment

Machinist / Job

P A

1
8-1=7
7-1=6
5-1=4
1-1=0
3-1=2

P A

Machinist / Job
A
B
C
D
E

N I L E S H

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. It is shown in following table.

3
3-2=1
8-2=6
6-2=4
8-2=6
9-6=3

2
3-2=1
7-2=5
5-2=3
5-2=3
10-6=4

1
10-2=8
9-2=7
7-2=5
3-2=1
9-6=3

Machinist / Job
A
B
C
D
E

Note:- This step 4 means ABC Analysis & Job Assignment is same for all problems for
assigning and after ABC classified & ABC Treament, to draw the reduced cost table.

Machinist / Job
1
2
3
4
5
A
10
3
3
2
8
B
9
7
8
2
7
C
7
5
6
2
4
D
3
5
8
2
4
E
9
10
9
6
10
Ans:Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.

ABC Analysis and Job Assignment

Ex (4) :- Using the following cost matrix, determine a) optimal job assignment & b) cost.

This step repeat till there are Zero not left in given table and optimal solution is satisfied.
In above example table, optimal solution is not satisfied, then Use ABC Analysis.

78

Person/ Job

J1

J2

J3

J4

J5

P1
P2
P3
P4

27
31
20
22

18
24
17
28

--21
20
20

20
12
--16

21
17
16
27

QDM notes for MBA

Tip:- 1) First find the single Zero from row, if Zero find in row then cut the column
2) Then find the single Zero from column, if Zero find in column then cut the row

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

79

Ans:- Since the number of lines covering all zeros is less than n, we select the lowest
uncovered cell, which equals 2. So, assign the dummy row.

E-mail :- nilesh_pazare@rediffmail.com

P1

9-4=5

---

02

03

P2

19-4=15

12

9-4=5

05

P3

4-4=0

01

4-4=0

---

P4

6-4=2

12

4-4= 0

11

P5

0+4=4

0+4=4

0+4=4

Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.
Person/ Job

J3

27-18=9
31-12=19
20-16=4
22-16=6
0-0=0

18-18=0
24-12=12
17-16=1
28-16=12
0-0=0

J4

--21-12=9
20-16=4
20-16=4
0-0=0

20-18=2
12-12=0
--16-16=0
0-0=0

J5
21-18=3
17-12=5
16-16=0
27-16=11
0-0=0

J2

P1
P2
P3
P4
P 5(Dummy)

J1

J3

J4

J5

J3

J4

J5

B0

A ---

B 02

B 03

P2

A 19

B 12

A 09

B 0

B 05

P3

A 04

B 01

A 04

B ---

B0

P4

A 06

B 12

A 04

B 0

B 11

P A Z A R E
B 0

P5

C0

B 0

C 0

C0

P A Z A R E

Z
A
R

2) No change in B

Note:- This step 4 means ABC Analysis & Job Assignment is same for all problems for
assigning and after ABC classified & ABC Treament, to draw the reduced cost table.
Here, Key element is 4, after ABC Treatment, the following table appears

Ex (1):- A company plans to assign 5 salesman to 5 districts in which it operates. Estimates of sales revenue in thousands of rupees for each salesman in differents districts
are given in the following table. In your opinion. What should be the placement of the
salesmen if the objective is to maximise the expected sales revenue?
Ans:-

79

Table and answer on next page.

QDM notes for MBA

Second Edition 2013 - 2014

1) Deduct key element from all A


3) Add key element to all C

ABC Treatment :-

ABC Classified
C-Double Crossed

In some situations, the assignment problem may call for maximisation of profit,
revenue, etc. as the objective. For dealing with a maximisation problem, we first change
it into an equivalent minimisation problem. This is achieved by subtracting each of the
elements of the given pay-off matrix from a constant (value) K. Thus, we may simply put a
negative sign before each of the pay-off values (which is equivalent to subtracting each
value from zero). Usually, the largest of all values in the given marix is located and then
each one of the values is subtract from it (the larges value is taken so as to avoid the
apperarance of negative signs). Then the problem is solved the same way as a
minimisation problem is.

A - Uncrossed B- Single Crossed


Key element = minimum key of all A

Maximisation Case

ABC Analysis and Job Assignment

( Zmin = 66 )

The total cost associated with the optimal Person-job assignment is 66 in the aggregate.

This step repeat till there are Zero not left in given table and optimal solution is satisfied.

Step 4 :

Cost
18
12
16
20
00
66

N I L E S H

Tip:- 1) First find the single Zero from row, if Zero find in row then cut the column
2) Then find the single Zero from column, if Zero find in column then cut the row

In above example table, optimal solution is not satisfied, then Use ABC Analysis.

Jobs
P1J 2
P2J 4
P3J 5
P4J 3
P5J 1
Total =

P A

A 09

P A

P1

N I L E S H

Machinist
P1
P2
P3
P4
P5

J2

J1

Total Cost Calculation ( takes actual tables values )

Job Assignment

Person/ Job

Step 5 :

Step 3 :

After ABC Analysis, The optimal assignments can be made as the least number of lines
covering all zeros.

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the coln. Every Column has one Zero is present So, table is same as above

J2

J1

Person/ Job

fuysk ;ks- ik>kjs 09766134400


Salesmen/District

D4

D5

40
48
49
30
37

46
32
35
46
41

48
36
41
49
48

36
29
38
44
43

48
44
45
44
47

Note:- When the multi Zeros come in table, then first locate a row/column which

Step 4 :

ABC Treatment :-

D3
1-1=0
13-1=12
8-0=8
0-0=0
1-1=0

D4
13-1=12
20-1=19
11-0=11
5-0=5
6-1=5

D5
1-1=0
5-1=4
4-0=4
5-0=5
2-1=1

P A Z A R E

N I L E S H

Salesmen/District

Job Assignment
D2

D3

D4

D5

B0

B0

B 07

B0

S2

B 0

A 14

A 12

A 14

A 04

S3

B 0

A 12

A 08

A 06

A 04

S4

C 19

B 01

B0

B 0

B 05

S5

C 11

B 05

B0

B 0

B 01

07

00

S2

14-4=10

12-4=8

14-4=10

4-4=0

S3

000

12-4=8

8-4=4

6-4=2

4-4= 0

S4

19+4=23

01

00

05

S5

11+4=15

05

00

01

After ABC Analysis, The optimal assignments can be made as the least number of lines
covering all zeros.
Step 5 :

Total Sales Revenue Calculation ( takes actual tables values )

There are more than one optimal assignments possible in this case because of the
existence of multiple Zeros in different rows and columns. The assignments possible
are:
S1 D 2 , S2 D 1 , S3 D 5 , S4 D 3 , S5 D 4
= 46 + 48 + 45 + 49 + 43 = 231 or
S1 D 2 , S2 D 5 , S3 D 1 , S4 D 3 , S5 D 4
= 46 + 44 + 49 + 49 + 43 = 231 or
S1 D 2 , S2 D 5 , S3 D 1 , S4 D 4 , S5 D 3
= 46 + 44 + 49 + 44 + 48 = 231 or
S1 D 2 , S2 D 1 , S3 D 5 , S4 D 4 , S5 D 3
= 46 + 48 + 45 + 44 + 48 = 231
Each of these assignment patterns would lead to an expected aggregated sales equal to
231 thousand rupees.

80

QDM notes for MBA

Second Edition 2013 - 2014

C 08

00

S1

D1

8+4=12

Salesmen/District

D5
0-0=0
4-0=4
4-0=4
5-0=5
1-0=1

S1

D4
12-5=7
19-5=14
11-5=6
5-5=0
5-5=0

D5

D3
0-0=0
12-0=12
8-0=8
0-0=0
0-0=0

D4

Step 3 :

D2
2-2=0
16-2=14
14-2=12
3-2=1
7-2=5

D3

D1
8-0=8
0-0=0
0-0=0
19-0=19
11-0=11

D2

P A Z A R E

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. It is shown in following table.
Salesmen/District
S1
S2
S3
S4
S5

D1

P A

D2
3-1=2
17-1=16
14-0=14
3-0=3
8-1=7

P A

D1
9-1=8
1-1=0
0-0=0
19-0=19
12-1=11

Here, Key element is 4, after ABC Treatment, the following table appears

N I L E S H

2) No change in B

Note:- This step 4 means ABC Analysis & Job Assignment is same for all problems for
assigning and after ABC classified & ABC Treament, to draw the reduced cost table.

Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.
Salesmen/District
S1
S2
S3
S4
S5

1) Deduct key element from all A


3) Add key element to all C

D5
49-48=1
49-44=5
49-45=4
49-44=5
49-47=2

D4
49-36=13
49-29=20
49-38=11
49-44=5
49-43=6

D3
49-48=1
49-36=13
49-41=8
49-49=0
49-48=1

ABC Classified
C-Double Crossed

D2
49-46=3
49-32=17
49-35=14
49-46=3
49-41=8

A - Uncrossed B- Single Crossed


Key element = minimum key of all A

D1
49-40=9
49-48=1
49-49=0
49-30=19
49-37=12

ABC Analysis and Job Assignment

Ans:- Since, it is a maximisation problem, we would first subtract each of the entries in the
table from the largest one, which equals 49 here. The resultant data are given below.
Salesmen/District
S1
S2
S3
S4
S5

contains only one Zero element. There is least element is only Zero present, that
time, locate a row / column which contains two Zero element, cross out the Zero(s).

D3

D2

E-mail :- nilesh_pazare@rediffmail.com

D1

S1
S2
S3
S4
S5

80

fuysk ;ks- ik>kjs 09766134400

81

Ex (2) :- Suggest optimal assignment of the four salesmen to the four sale-territories.
Given the estimated sales (in lakhs of rupees) as follows:
Datala
12
16
19
13

Salesmen/Territories

Ghugus

Ballarpur

Datala

Yogesh

02

1-1=0

7-1=6

Nilesh

1-1=0

3-1=2

Mangesh

5-1=4

2-1=1

Dinesh

2+1=3

1+1=2

Datala
20-12=8
20-16=4
20-19=1
20-13=7

After ABC Analysis, The optimal assignments can be made as the least number of lines
covering all zeros.
Step 5 :

Ballarpur
15-8=7
5-2=3
2-0=2
6-6=0

Datala
8-8=0
4-2=2
1-0=1
7-6=1

P A Z A R E
Job Assignment

Salesmen/Territories

Chanda

Ghugus

Ballarpur

Nilesh

B0

A 01

A 03

B 02

Mangesh

B0

A 05

A 02

B 01

Dinesh

C 02

B0

B0

C 01

Salesmen/Territories
Aakash
Nilesh
Naresh
Girish

Naginabag
220-200=20
220-160=60
220-190=30
220-180=40

Jatpura
220-150=70
220-120=100
220-195=25
220-175=45

Tukum
220-170=50
220-150=70
220-190=30
220-160=60

Ghutkala
220-202=0
220-140=80
220-200=20
220-190=30

Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.

2) No change in B

Table on next page

81

QDM notes for MBA

Second Edition 2013 - 2014

1) Deduct key element from all A


3) Add key element to all C

ABC Treatment :-

Ghutkala
220
140
200
190

ABC Analysis and Job Assignment


ABC Classified
A - Uncrossed B- Single Crossed
C-Double Crossed
Key element = minimum key of all A

Tukum
170
150
190
160

Ans:- Since, it is a maximisation problem, we would first subtract each of the entries in the
table from the largest one, which equals 220 here. The resultant data are given below.

Tip:- 1) First find the single Zero from row, if Zero find in row then cut the column
2) Then find the single Zero from column, if Zero find in column then cut the row
Step 4 :

Naginabag Jatpura
200
150
160
120
190
195
180
175

B0

P A Z A R E

Salesmen/Territories
Aakash
Nilesh
Naresh
Girish

A 07

( Zmax = 63 )

A 01

B 02

N I L E S H

Ex (3) :- Suggest optimal assignment of the four salesmen to the four sale-territories.
Given the estimated sales (in lakhs of rupees) as follows:

Datala

Yogesh

Cost
12
17
20
14
63

The total cost associated with the optimal Salemen-Territories assignment is 63.

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. In all the column has present the Zero, so table same as above.
Step 3 :

Sale Territories
Datala
Ghugs
Chanda
Ballarpur
Total =

P A

Ghugus
9-8=1
3-2=1
5-0=5
6-6=0

P A

Chanda
10-8=2
2-2=0
0-0=0
8-6=2

Salesmen
Yogesh
Nilesh
Mangesh
Dinesh

N I L E S H

Salesmen/Territories
Yogesh
Nilesh
Mangesh
Dinesh

Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.

Total Sales Revenue Calculation ( takes actual tables values )

Ballarpur
20-05=15
20-15=5
20-18=2
20-14=6

Ghugus
20-11=9
20-17=3
20-15=5
20-14=6

Chanda
20-10=10
20-18=2
20-20=0
20-12=8

Salesmen/Territories
Yogesh
Nilesh
Mangesh
Dinesh

Ans:- Since, it is a maximisation problem, we would first subtract each of the entries in the
table from the largest one, which equals 20 here. The resultant data are given below.

Chanda

Ballarpur
05
15
18
14

Ghugus
11
17
15
14

Chanda
10
18
20
12

Here, Key element is 2, after ABC Treatment, the following table appears

Salesmen/Territories
Yogesh
Nilesh
Mangesh
Dinesh

E-mail :- nilesh_pazare@rediffmail.com

fuysk ;ks- ik>kjs 09766134400


Jatpura
70-0=70
100-60=40
25-20=5
45-30=15

Tukum
50-0=50
70-60=10
30-20=10
60-30=30

Ghutkala
0-0=0
80-60=20
20-20=0
30-30=0

Step 5 :

Ghutkala

Cost
220
150
195
180
745

( Zmax = 745 )

The total Total Sales Revenue associated with the optimal Salemen-Territories assignment is 745.

Job Assignment
Jatpura

A 40

B0

N I L E S H

Nilesh

B0

B 35

B0

C 20

Naresh

B 10

B 0

B0

C0

Girish

A 10

A 10

A 20

B0

Note:Ans:-

How to identified the problem is minimisation or


maximisation

N I L E S H

P A Z A R E

P A

A 65

A 20

Aakash

Cost, Time, Distance

P A

P A Z A R E

ABC Treatment :-

ABC Classified
C-Double Crossed

1) Deduct key element from all A


3) Add key element to all C

2) No change in B

these are come in minimisation.

Profit, Sales, Score,


these are com in maximisation
Marks and Productions

ABC Analysis and Job Assignment

A - Uncrossed B- Single Crossed


Key element = minimum key of all A

Naginabag

Salesmen/Territories

Step 4 :

Sale Territories
Ghutkala
Tukum
Jatpura
Naginabag
=

Tukum

Cost
220
160
190
175
745

Ghutkala
0-0=0
20-0=20
0-0=0
0-0=0

Sale Territories
Ghutkala
Naginabag
Jatpura
Tukum
Total =

Tukum
50-10=40
10-10=0
10-10=0
30-10=20

Jatpura
70-5=65
40-5=35
5-5=0
15-5=10

Salesmen
Aakash
Nilesh
Naresh
Girish

Step 3 :

Naginabag
20-0=20
0-0=0
10-0=10
10-0=10

Total Sales Revenue Calculation ( takes actual tables values )

There are more than one optimal assignments possible in this case because of the
existence of multiple Zeros in different rows and columns. However, the problem has an
alternative optimal solution as well. Both of these are given below:

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. It is shown in following table.
Salesmen/Territories
Aakash
Nilesh
Naresh
Girish

E-mail :- nilesh_pazare@rediffmail.com

Naginabag
20-0=20
60-60=0
30-20=10
40-30=10

Salesmen/Territories
Aakash
Nilesh
Naresh
Girish

82

Note:- This step 4 means ABC Analysis & Job Assignment is same for all problems for
assigning and after ABC classified & ABC Treament, to draw the reduced cost table.

Salesmen/Territories

20-10=10

65-10=55

40-10=30

Nilesh

35

Naresh

10

Girish

10-10=0

10-10= 0

20+10=30

0+10=10

20-10=10

M1
302
303
304

After ABC Analysis, The optimal assignments can be made as the least number of lines
covering all zeros.

M2
302
304
305
301

M3
303
301
304
305
302

M4
302
305
304
303

M5
301
302
304

Aakash

Ghutkala

Tukum

MANAGER

Jatpura

Naginabag

Here, Key element is 10, after ABC Treatment, the following table appears

Most of the managers did not list all the five rooms sincethey were not satisfied with some
of these rooms and thy have left these from the list. Assuming that their preferences can
be quantified by numbers, find out as to which manger should be assigned to which room
so that total preference ranking is a minimum.

82

QDM notes for MBA

Ex (1) :- Welldone Company has taken the third floor of a multi-streyed building for rent
with a view to locate one of their zonal officers. There are five main rooms in tis to be
assigned to five mangers. Each room has its own advantages and disadvantages.
Some have windows, some are closer to the swashrooms or to the canteen or secretarial pool. The rooms are of all different sizes and shapes. Each of the five managers
were asked to rank their room preferences amongst the rooms 301, 302,303,304 and
305. Their preferences were recorded in a table as indicated below:

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

83

4
1
M
2
3

2
5
1
3
4

M
1
4
3
2

1
2
M
3
M

M4

M5

N I L E S H
301
302
303
304
305

M
1-1=0
2-1=1
3-2=1
M

4-1=3
1-1=0
M
2-2=0
3-2=1

2-1=1
5-1=4
1-1=0
3-2=1
4-2=2

M
1-1=0
4-1=3
3-2=1
2-2=1

1-1=0
2-1=1
M
3-2=1
M

Job Assignment

Rooms / Manager M1

M4

B 03

B 01

C 04

B0

C 01

303

A 01

BM

B0

A 03

BM

304

A 01

B0

B 01

A 01

B 01

B 01

B 02

A 01

BM

Step 4 :

304

1-1=0

305

3-1=2

01

1-1=0

01

01

02

1-1=0

Total Rank Calculation ( takes actual tables values )


Room
301
302
303
304
305

Manager
M5
M1
M3
M2
M4
Total =

Ranking
01
01
01
02
02
07
( Zmin = 07 )

N I L E S H
P A Z A R E

1) Deduct key element from all A


2) No change in B
3) Add key element to all C
Note:- This step 4 means ABC Analysis & Job Assignment is same for all problems for
assigning and after ABC classified & ABC Treament, to draw the reduced cost table.

a)
b)

83

Viewing
Hours
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

Network
A
27.1
18.9
19.2
11.5

B
18.1
15.5
18.5
21.4

C
11.3
17.1
09.9
16.8

D
09.5
10.6
07.7
12.8

ABC Treatment :-

ABC Analysis and Job Assignment


ABC Classified
A - Uncrossed B- Single Crossed
C-Double Crossed
Key element = minimum key of all A

C0

1-1=0

01

Which network should be scheduled each hour to provide the maximum audience
exposure?
How would the schedule change if it is decided not to use network A between 1 and
3 P.M.?
QDM notes for MBA

B0

302

305

B0

303

4+1=5

Ex (2) :- A company has just developed a new item for which it proposes to undertake a
national television promotional compaign. It has decided to schedule a series of oneminute commercials during peak audience viewing hours of 1 to 5 P.M. To reach the
widest possible audience, the company wants to schedule one commercial on each of
the networks and to hae only one commercial appear during each of the four one-hour
time blocks. The exposure ratings for each hour, which represent the number of viewers
per Rs. 10000 spent, are given below:

M5

301

0+1=1

M3

M2

302

P A

P A

P A Z A R E

01

The total minimum ranking is Zmin = 07.

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. In all the column has present the Zero, so table same as above.
Step 3 :

03

M3

M2

301

Step 5 :

Rooms / Manager M1

M5

After ABC Analysis, The optimal assignments can be made as the least number of lines
covering all zeros.

Ans:- Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.

M4

How to draw the table, observe the questions data, M1 not assigned 301 room, same M4
also not assigned 301 room, M2 assigned 301 in 4 Rank, same as M3 assigned 2 rank
and M5 assigned 1 rank (See the questions table and understand it)

M3

M5

M2

M4

M
1
2
3
M

M3

301
302
303
304
305

M2

Rooms / Manager M1

Rooms / Manager M1

Here, Key element is 1, after ABC Treatment, the following table appears

In the first step, we formulate the assignment problem using preference ranks. This is in
following table. Notice that the rooms not ranked by a manager are represented by M - as
prohibited assignments.

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

84

Ans:- a) To solve this problem, we first multiply each value in the matrix by 10 to express
exposure ratings per Rs. 1 lakh. It simplifies the calculation work somewhat.
C
11.3x10=113
17.1x10=171
09.9x10=099
16.8x10=168

D
09.5x10=095
10.6x10=106
07.7x10=077
12.8x10=128

D
271-095=176
271-106=165
271-077=194
271-128=143

Here, Key element is 3, after ABC Treatment, the following table appears

D
176-0=176
165-82=83
194-79=115
143-57=86

P A Z A R E

A 0

A 0

3-4 P.M.

C0

B 07

B 75-3=72

B 32-3=29

99

A 93

2-3 P.M.

C0

C 34

B 0

B 0

3-4 P.M.

B0

B 07

A 75

A 32

A 28

A 03

28-3=25

3-3=0

Viewing
Hours

Network

1-2 P.M.

90-7=83

137-7=130

90-7=83

2-3 P.M.

3+7=10

37

3-4 P.M.

7-7=0

72-7=65

29-7=22

4-5 P.M.

99+7=106

25

Total Networks Calculation ( takes actual tables values )


Viewing Hour
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

Network
A
B
C
D
Total =

27.1
18.5
17.1
12.8
75.5

A 140

B 90

B 0

A 34+3=37

After ABC Analysis, The optimal assignments can be made as the least number of lines
covering all zeros.

B0

B 99

B 0+3=3

( Zmax = 75.5 )

for the ( a ) condition Zmax is 75.5

84

QDM notes for MBA

1-2 P.M.

4-5 P.M.

2-3 P.M.

A D

B 140-3=137 B 93-3=90

Step 5 :

Job Assignment
A

B 90

D
176-83=93
83-83=0
115-83=32
86-83=3

C0

Hours

C
158-18=140
18-18=0
93-18=75
46-18=28

Step 3 :

B
90-0=90
34-0=34
7-0=7
0-0=0

A C

1-2 P.M.

P A Z A R E

Network
A
0-0=0
0-0=0
0-0=0
99-0=99

Network

Above table, optimal solution is not satisfied. So again ABC treament use for covering all
zeros. Now, Here, Key element is 7.

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. It is shown in following table.
Viewing
Hours
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

A B

P A

Network
B
C
090-0=90
158-0=158
116-82=34
100-82=18
86-79=7
172-79=93
57-57=0
103-57=46

B A

4-5 P.M.

P A

A
0-0=0
82-82=0
79-79=0
156-57=99

Viewing
Hours

N I L E S H

Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.
Viewing
Hours
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

2) No change in B

N I L E S H

1) Deduct key element from all A


3) Add key element to all C

C
271-113=158
271-171=100
271-099=172
271-168=103

C-Double Crossed

Note:- This step 4 means ABC Analysis & Job Assignment is same for all problems for
assigning and after ABC classified & ABC Treament, to draw the reduced cost table.

B
271-181=090
271-155=116
271-185=086
271-214=057

ABC Treatment :-

A
271-271=000
271-189=082
271-192=079
271-115=156

A - Uncrossed B- Single Crossed


Key element = minimum key of all A

Network

Viewing
Hours
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

ABC Classified

Further, being a maximisation problem, we subtract each value from the largest value to
get the opportunity loss matrix. The result of these steps is given in following table:

ABC Analysis and Job Assignment

B
18.1x10=181
15.5x10=155
18.5x10=185
21.4x10=214

A
27.1x10=271
18.9x10=189
19.2x10=192
11.5x10=115

Step 4 :

Network

Viewing
Hours
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

E-mail :- nilesh_pazare@rediffmail.com

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

85

Ans:- b) For the given restriction, the prohibited time slots are replaced by M, when network
1 and 3 P.M. not to be used, then table are as follows:
C
158
100
172
103

D
176
165
194
143

C
158-90=68
100-100=0
172-79=93
103-57=46

D
176-90=86
165-100=65
194-79=115
143-57=86

M
M
0-0=0
99-0=99

B
0-0=0
16-0=16
7-0=7
0-0=0

C
68-0=68
0-0=0
93-0=93
46-0=46

D
86-65=21
65-65=0
115-65=50
86-65=21

P A Z A R E

Step 3 :

Job Assignment
D

B0

A 68

A 21

2-3 P.M.

C 16

B0

B0

3-4 P.M.

B0

B 07

A 93

A 50

4-5 P.M.

B 99

B0

A 46

A 21

68-21=47

21-21=0

2-3 P.M.

16

3-4 P.M.

07

93

50

4-5 P.M.

99

46-21=25

21-21=0

Above table, first we find the only one Zero, but solution not satisfied the optimal solution
then we find two Zeros and satisfied our solution as optimal solution, However, the
problem has an alternative optimal solution as well. Both of these are given below:
Step 5 :

Total Networks Calculation ( takes actual tables values )


Viewing Hour
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

Network
B
C
A
D
Total =
for the ( b ) condition Zmax is 67.2

Network
D
C
A
B
Total =

18.1
17.1
19.2
12.8
67.2

09.5
17.1
19.2
21.4
67.2

N I L E S H
P A Z A R E

Ex (3) :- A firm produces four products. There are four operatiors who are capable of
producing any of these four products. The firm records 8 hors a day and allows 30 minutes
for lunch. The processing time in minutes and the profit for each of the products are given
below:
Operator/Products
1
2
3
4
Profit (Rs) per unit

A
15
10
25
15
8

B
9
6
15
9
6

C
10
9
15
10
5

D
6
6
9
10
4

1-2 P.M.

Hours

1-2 P.M.

P A

Network
A

P A

Viewing
Hours
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

N I L E S H

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. It is shown in following table.

B
90-90=0
116-100=16
86-79=7
57-57=0

A
M
M
79-79=0
156-57=99

Network

Network

Viewing
Hours
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.

B
090
116
086
057

A
M
M
079
156

Viewing
Hours

Network

Here, Key element is 21, after ABC Treatment, the following table appears

Viewing
Hours
1-2 P.M.
2-3 P.M.
3-4 P.M.
4-5 P.M.

E-mail :- nilesh_pazare@rediffmail.com

Find the optimal assignment of products to operators.

Step 4 :

ABC Analysis and Job Assignment

ABC Treatment :-

C-Double Crossed

1) Deduct key element from all A


3) Add key element to all C

2) No change in B

85

QDM notes for MBA

Second Edition 2013 - 2014

A - Uncrossed B- Single Crossed


Key element = minimum key of all A

Ans:- An 8 hour working day, with a 30-minutes lunch time allowed, implies that new
working time available per day is 7 hours 30 minutes, that is 450 minutes.
Total working hours =
8 hrs = 8 x 60 = 480 mint.
Lunch Break
30minutes = - 30 mint.
Actual working time = 450 mint.
The number of units of deifferent products which cold be produced by the four operators
can be calculated by dividing 450 by the given processing times.

ABC Classified

fuysk ;ks- ik>kjs 09766134400

86

With the profit per unit of each product being given, we may calculate the profit resulting
from each possible asignment. The profit matrix is given in following table:

B 06

C 0

B 25

B 0

A 34

B 0

A 150

A 150

B0

C 20

B 0

B 0

A 04

B 0

A 25

A 120

Step 4 :

ABC Analysis and Job Assignment


ABC Classified
A - Uncrossed B- Single Crossed
C-Double Crossed
Key element = minimum key of all A
ABC Treatment :-

1) Deduct key element from all A


3) Add key element to all C

2) No change in B

To solve the problem, it is first converted into a minimisation problem by obtaining loss
matrix by subtracting each value from 450. The 450 is the highest profit value in the table.

x4=300
(450
6 )
(450
) x4=300
6
x4=200
(450
9 )
(450
) x4=180
10

x5=225
(450
10 )
(450
) x5=250
9
x5=150
(450
15 )
(450
) x5=225
10

x6=300
(450
9 )
(450
) x6=450
6
x6=180
(450
15 )
(450
) x6=300
9

x8=240
(450
15 )
(450
)x8=360
10
x8=144
(450
25 )
(450
)x8=240
15

Operator/Product

Job Assignment

Step 3 :

Optr/Prdct

E-mail :- nilesh_pazare@rediffmail.com

Here, Key element is 4, after ABC Treatment, the following table appears

N I L E S H

450-240=210 450-300=150 450-225=225 450-300=150


450-360=090 450-450=0

Operator/Product

450-250=200 450-300=150

450-240=210 450-300=150 450-225=225 450-180=270

P A Z A R E

Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.
Operator/Product

D
150-150=0

90-0=90

0-0=0

200-0=200

150-0=150

306-250=56

270-250=20

300-250=50

250-250=0

210-150=60

150-150=0

225-150=75

270-150=120

34-4=30
0
4-4=0

25

150-4=146

150-4=146

20-4=16

25-4=21

120-4=116

P A Z A R E

Step 5 :

Total Profit Calculation ( takes actual tables values )


Operator
1
2
3
4

Product
D
B
C
A
Total

Profit
0300
0450
0150
0240
1140

( Zmax = 1140 )

Operator/Product

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. It is shown in following table.

0+4=4

225-150=75

06

150-150=0

210-150=60

After ABC Analysis, The optimal assignments can be made as the least number of lines
covering all zeros.

N I L E S H

3
4

P A

450-144=306 450-180=270 450-150=300 450-200=250

P A

Operator/Product

The optimal assignment of products to operators is Zmax is 1140

0-0=0

75-50=25

0-0=0

90-56=34

0-0=0

200-50=150

150-0=150

56--56=0

20-0=20

50-50=0

0-0=0

60-56=4

0-0=0

75-50=25

120-0=120

60-56=6

Ex (4) :- A solicitors firm employs typists on hourly piece-rate basis for their daily work.
These are five typists and their charges and speed are different. According to an earlier
understanding, only one job is given to one typist and the typist is paid for a full hour even
when he works for a fraction of an hour. Find the least cost allocation for the following data:

86

QDM notes for MBA

Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400


No.of Pages Typed/hr
12
14
08
10
11

Job
P
Q
R
S
T

No.of Pages
199
175
145
298
178

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. It is shown in following table.
Typist/Job

N I L E S H

17x5=85

15x5=75

13x5=65

25x5=125

15x5=75

15x6=90

13x6=78

11x6=66

22x6=132

13x6=78

25x3=75

22x3=66

19x3=57

38x3=114

23x3=69

20x4=80

18x4=72

15x4=60

30x4=120

18x4=72

19x4=76

16x4=64

14x4=56

28x4=112

17x4=68

75-65=10

65-65=0

125-65=60

75-65=10

90-66=24

78-66=12

66-66=0

132-66=66

78-66=12

75-57=18

66-57=09

57-57=0

114-57=57

69-57=12

80-60=20

72-60=12

60-60=0

120-60=60

72-60=12

76-56=20

64-56=08

56-56=0

112-56=56

68-56=12

12-10=2

18-18=0

09-8=1

57-56=1

12-10=2

20-18=2

12-8=4

60-56=4

12-10=2

20-18=2

08-8=0

56-56=0

12-10=2

Job Assignment
P

C 02

B 02

C 0

B 04

B0

B 06

A 04

B 0

A 10

A 02

B0

A 01

B 0

A 01

A 02

B 02

A 04

B 0

A 04

A 02

C 02

B0

C 0

B0

B 02

N I L E S H
ABC Analysis and Job Assignment

P A Z A R E
ABC Classified

ABC Treatment :-

C-Double Crossed

1) Deduct key element from all A


3) Add key element to all C

2) No change in B

Here, Key element is 1, after ABC Treatment, the following table appears
Typist/Job

A 2+1=3

A 02

B 0+1=1

A 04

B0

A 06

A 4-1=3

B 0

A 10-1=9

B 2-1=1

B0

B 1-1=0

C 0

B 1-1=0

C 2-1=1

A 02

A 4-1=3

B 0

A 4-1=3

B 2-1=1

B 2+1=3

B0

C 0+1=1

B0

C 02

Above table, optimal solution is not satisfied. So again ABC treament use for covering all
zeros. Now, Here, Key element is 2.
Table on next page

87

QDM notes for MBA

Second Edition 2013 - 2014

85-65=20

66-56=10

A - Uncrossed B- Single Crossed


Key element = minimum key of all A

12-8=4

24-18=6

Step 4 :

10-10=0

Typist/Job

Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.
Typist/Job

60-56=4

P A

10-8=2

20-18=2

P A

P A Z A R E

Typist/Job

(178
) x5
12
(178
) x6
14
(178
) x3
08
(178
) x4
10
(178
) x4
11

(298
)x5
12
(298
)x6
14
(298
)x3
08
(298
)x4
10
(298
)x4
11

Step 3 :

(145
)x5
12
(145
)x6
14
(145
)x3
08
(145
)x4
10
(145
)x4
11

(175
)x5
12
(175
)x6
14
(175
)x3
08
(175
)x4
10
(175
)x4
11

(199
)x 5
12
(199
)x 6
14
(199
)x 3
08
(199
)x 4
10
(199
)x 4
11

Ans:- Using the given inform, we first obtain the cost matrix, when different jobs are
performed by different typists. The elements of the matrix are obtained as follows. To
illustrate, if typist A is given job P, he would require 199/12 = 16.58 hours and, hence, be
paid for 17 hours @ Rs. 5 per hour. This results in a cost of Rs. 85 for this combination.
Typist/Job

E-mail :- nilesh_pazare@rediffmail.com

Rate/hour (Rs)
5
6
3
4
4

Typist
A
B
C
D
E

87

fuysk ;ks- ik>kjs 09766134400


Typist/Job
A

3-2=1

2-2=0

01

4-2=2

03

9-2=7

01

0+2=2

1+2=3

3-2=1

3-2=1

01

1+2=3

2+2=4

101
102
103
104

Step 5 :

Total Cost Calculation ( takes actual tables values )

Flight
101
102
103
104

Arrival
7 A.M.
9 A.M.
3 P.M.
9 P.M.

204
Departure
6 P.M.
6 P.M.
6 P.M.
6 P.M.

Time
11 hrs
09 hrs
27 hrs
21 hrs

Flight
101
102
103
104

201
24
22
16
10

202
25
23
17
11

203
06
28
22
16

204
11
09
27
21

N I L E S H

Layover Time - Crew at Mumbai


Flight

101
102
103
104

P A Z A R E
Time
20 hrs
22 hrs
28 hrs
10 hrs

Arrival
3 P.M.
3 P.M.
3 P.M.
3 P.M.

203
Departure
5 A.M.
7 A.M.
1 P.M.
7 P.M.

Time
14 hrs
16 hrs
22 hrs
28 hrs

Flight

101
102
103
104

Flight
101
102
103
104

Arrival
10 A.M.
10 A.M.
10 A.M.
10 A.M.

202
Departure
5 A.M.
7 A.M.
1 P.M.
7 P.M.

Time
19 hrs
21 hrs
27 hrs
09 hrs

Arrival
8 P.M.
8 P.M.
8 P.M.
8 P.M.

204
Departure
5 A.M.
7 A.M.
1 P.M.
7 P.M.

Time
09 hrs
11 hrs
17 hrs
23 hrs

Flight
101
102
103
104

88

Flight
101
102
103
104
QDM notes for MBA

201
20
22
28
10

202
19
21
27
09

203
14
16
22
28

Now actual table are as follows for Crew at New Delhi ( Table 2 )

201
Departure
5 A.M.
7 A.M.
1 P.M.
7 P.M.

Arrival
9 A.M.
9 A.M.
9 A.M.
9 A.M.

Ex (5) :- An airline, operating seven days a week, has given the following schedule of its
flights between New Delhi and Mumbai. The crews should have a minimum of five hours
between the flights. Obtain the pairing of flights that minimises layouver time away from
home. For any given pairing, the crew will be based at the city that rusults in the smallest
layover.
New Delhi - Mumbai
Mumbai - New Delhi
Flight No.
Departure
Arrival
Flight No.
Departure
Arrival
101
5 A.M.
7 A.M.
201
7 A.M.
09 A.M.
102
7 A.M.
9 A.M.
202
8 A.M.
10 A.M.
103
1 P.M.
3 P.M.
203
1 P.M.
03 P.M.
104
7 P.M.
9 P.M.
204
6 P.M.
08 P.M.

To begin with, we first assume that all the crew is based at New Delhi. Using this
assumption, we can obtain the layover times of various combinations of flights. To illustrate, the flight 101 which starts from New Delhi at 5 A.M. reaches Mumbai at 7 A.M. If it is to
return as 201, the scheduled time for which is 7 A.M., then it can do so only after 24 hours
since a minimum layove time of 5 hours is required. Similarly, layover times for other flight
combinations can be obtained as shown in the table.

Time
06 hrs
28 hrs
22 hrs
16 hrs

Time
25 hrs
23 hrs
17 hrs
11 hrs

P A

P A

P A Z A R E

203
Departure
1 P.M.
1 P.M.
1 P.M.
1 P.M.

202
Departure
8 A.M.
8 A.M.
8 A.M.
8 A.M.

Now actual table are as follows for Crew at New Delhi ( Table 1 )

( Zmin = 399 )

The total cost allocation of optimal solution is Zmin = 399

Arrival
7 A.M.
9 A.M.
3 P.M.
9 P.M.

101
102
103
104

Arrival
7 A.M.
9 A.M.
3 P.M.
9 P.M.

N I L E S H

Flight

Cost
75
66
66
80
112
399

Job
T
T
T
T
T
Total

Typist
A
A
A
A
A

Time
24 hrs
22 hrs
16 hrs
10 hrs

101
102
103
104

201
Departure
7 A.M.
7 A.M.
7 A.M.
7 A.M.

Flight

In this case, after covering zeros there are 2 Rows lefts i.e. C & E, so assume alternate
and cross the Zero for satisfied the optimal solution.
The minimum number of lines to cover all zeros equals 5, which matches with the order
of the matrix. Accordingly, assignments have been made as described below:

Arrival
7 A.M.
9 A.M.
3 P.M.
9 P.M.

2-2=0

3-2=1

Flight

6-2=2

E-mail :- nilesh_pazare@rediffmail.com

Layover Time - Crew at New Delhi

88

204
09
11
17
23
Second Edition 2013 - 2014

fuysk ;ks- ik>kjs 09766134400

89
Step 4 :

Flight

21 *

16 *

09

103

16

17

22

17 *

104

10

09 *

16

21

40

At
( from
( from
( from
( from

table
table
table
table

The optimal assignment of Total Layover Time Zmin is 40

( * values are select from 2 table)

N I L E S H

P A

P A Z A R E

P A

N I L E S H

To continue, we can obtain the optimal pairing of flights so as to minimise the total laover
time, using the Hungarian Assignment Method.

Step 1 : Row minimization - The minimum value of each row is subtracted from all
elements in the row. It is shown in following table.
Flight

201

202

203

204

101

20-6=14

19-6=13

6-6=0

9-6=3

P A Z A R E

102

22-9=13

21-9=12

16-9=7

9-9=0

103

16-16=0

17-16=1

22-16=6

17-16=1

104

10-9=1

9-9=0

16-9=7

21-9=12

)
)
)
)

( Zmin = 40 )

Note :- * when crew is based at Mumbai

1
1
1
2

22

Crew Based
New Delhi
New Delhi
New Delhi
Mumbai

102

Total

Layover Time
06
06
16
09

06

204
09 *

Flight No.
203
204
201
202

202
19 *

203

101

201
20 *

Flight No.
101
102
103
104

Layover Time - Crew at New Delhi / Mumbai

Total Layover Time Calculation ( takes actual tables values )

Now, since the crew can be based at either of the stations, minimum layover times can be
obtained for different flight combinations y selecting the corresponding by selecting the
corresponding lower value out of the above two tables. for instance, in combining flight
101, we select 20, which is lower of the two values 24 and 20 ( see the both tables), like
that select the lower limits for other flights also. The values are shown in following table:

E-mail :- nilesh_pazare@rediffmail.com

204

101

14

13

03

102

13

12

07

103

01

06

01

104

01

07

12

203

202

201

Flight

Job Assignment

Step 3 :

Step 2 : Column minimization - The minimum value of each column is subtracted from all
elements in the column. In all the column has present the Zero, so table same as above.

With a zero in each column as well, there is no neeed to perform the ABC treatment or
column reductions. Further, the number of lines covring all zeros is equal to the order of
the given matrix, we can obtain the optimal assignment as shown in the table:

89

QDM notes for MBA

Second Edition 2013 - 2014