ASSIGNMENT BBA 104 QUANTITATIVE TECHNIQUES IN BUSINESS

What do you mean by Measures of Central Tendency? Explain the Measures of Central
Tendency?
The term central tendency refers to the "middle" value or perhaps a typical value of the data,
and is measured using the mean, median, or mode. Each of these measures is calculated
differently, and the one that is best to use depends upon the situation.
Mean
The mean is the most commonly-used measure of central tendency. When we talk about an
"average", we usually are referring to the mean. The mean is simply the sum of the values
divided by the total number of items in the set. The result is referred to as the arithmetic
mean. Sometimes it is useful to give more weighting to certain data points, in which case the
result is called the weighted arithmetic mean.
Median

The median is determined by sorting the data set from lowest to highest values and taking the
data point in the middle of the sequence. There is an equal number of points above and below
the median. For example, in the data set {1,2,3,4,5} the median is 3; there are two data points
greater than this value and two data points less than this value. In this case, the median is
equal to the mean.
The median can be determined for ordinal data as well as interval and ratio data. Unlike the
mean, the median is not influenced by outliers at the extremes of the data set. For this reason,
the median often is used when there are a few extreme values that could greatly influence the
mean and distort what might be considered typical. This often is the case with home prices
and with income data for a group of people, which often is skewed. For such data, the median
often is reported instead of the mean.
Mode

The mode is the most frequently occurring value in the data set. For example, in the data set
{1,2,3,4,4}, the mode is equal to 4. A data set can have more than a single mode, in which
case it is multimodal. In the data set {1,1,2,3,3} there are two modes: 1 and 3.
The mode can be very useful for dealing with categorical data. For example, if a sandwich
shop sells 10 different types of sandwiches, the mode would represent the most popular
sandwich. The mode also can be used with ordinal, interval, and ratio data. However, in
interval and ratio scales, the data may be spread thinly with no data points having the same
value. In such cases, the mode may not exist or may not be very meaningful.
Briefly explain the following:

a) Cumulative frequency distribution

b) Pie Chart
c) Bar Chart
d) Histogram
e) Frequency polygon
Cumulative frequency is used to determine the number of observations that lie above (or
below) a particular value in a data set. The cumulative frequency is calculated using a
frequency distribution table, which can be constructed from stem and leaf plots or directly
from the data.
A pie chart (or a circle chart) is a circular statistical graphic, which is divided into slices to
illustrate numerical proportion. In a pie chart, the arc length of each slice (and consequently
its central angle an area), is proportional to the quantity it represents. Pie charts are very
widely used in the business world and the mass media. However, they have been criticized,
and many experts recommend avoiding them, pointing out that research has shown it is
difficult to compare different sections of a given pie chart, or to compare data across different
pie charts. Pie charts can be replaced in most cases by other plots such as the bar chart.
A bar chart is a chart that presents grouped data with rectangular bars with lengths
proportional to the values that they represent. The bars can be plotted vertically or
horizontally. A vertical bar chart is sometimes called a column bar chart.
A bar graph is a chart that uses either horizontal or vertical bars to show comparisons among
categories. One axis of the chart shows the specific categories being compared, and the other
axis represents a discrete value. Some bar graphs present bars clustered in groups of more
than one, and others show the bars divided into subparts to show cumulative effect.
A histogram is a graphical representation of the distribution of numerical data. It is an
estimate of a continuous variable(quantitative variable) and was first introduced by Karl
Pearson. The rectangles of a histogram are drawn so that they touch each other to indicate
that the original variable is continuous.
Frequency polygons are a graphical device for understanding the shapes of distributions.
They serve the same purpose as histograms, but are especially helpful for comparing sets of
data. Frequency polygons are also a good choice for displaying cumulative frequency
distribution. In a Frequency Polygon, a line graph is drawn by joining all the midpoints of
the top of the bars of a histogram.
3 a. Explain the methods of determining trend in time series.
b. Fit a straight line trend by method of least squares to the following data:
Year
2000 2001 2002 2003 2004
Production
4
6
9
10 11
(in lakhs)
Secular Trend or Long Term Trend - The secular trend is the main component of a time series
which results from long term effect of socio-economic and political factors. This trend may

show the growth or decline in a time series over a long period. This is the type of tendency
which continues to persist for a very long period. Prices, export and imports data, for
example, reflect obviously increasing tendencies over time.
Methods of Determining Trend in time Series
1.
Free Hand or Graphic Methods - In this method all of the data is plotted on a graph. A
smooth curve is then drawn through the midpoints of each fluctuation. The advantage of this
method is that it is simple, flexible and does not need any complex mathematical formula.
2.
Semi Average Methods when a straight line appears, this method is used sometimes to be
an adequate expression of trend. Original data are divided into two parts in this method. The
average of each part is then calculated. The average of each part is centred in the period of the
time of the part from which it has been computed and then plotted on the graph paper. In this
way a line may be drawn to pass through the plotted points, which gives the trend line.
3.
Moving Average Methods - This method smooth out seasonal variations in a graph by
taking data averages over each cycle when calculating, moving means, take the same number
of intervals as the length of the seasonal patterns. The advantage of this method is that it is
easy and simple to compute. The disadvantage is that if the proper period of the moving
means is not used then the results can be misleading.
4.

Least Squares Methods - Mathematically this is the most accurate method of finding a
trend line. This approach can be used to fit a straight line, parabolic trend or exponential
trend. The calculations used in this method can be quite time consuming, however a number
of graphic calculators and/or Excel can easily compute the equations of a straight line,
parabolic or exponential trend. The method involves taking the sum of the deviations from
the actual values and forming a mathematical equation which can be used for forecasting.

XY

X2

Y=2.6+1.8X

YY

4.4

-0.4

12

6.2

-0.2

27

8.0

10

40

16

9.8

0.2

11

55

25

11.6

-0.6

X=15 Y=40 XY=138 X2=55

Trend Values

(YY)=
0

The equation of least square line Y=a

+ bX

Normal Equation for a

Y=na + bX 40=5a+15b ---- (1)

Normal Equation for b

XY=aX+bX2 138=15a+55b ----(2)

Eliminate a from equation (1) and (2), multiply equation (1) by 3 and subtract form equation
(2), we get the values of a and b.
Here

a=2.6 and b=1.8, the equation of least square line becomes Y=2.6 + 1.8X.