CHAPTER

1 Measures of Central Tendency

1.1 INTRODUCTION: STATISTICS

It is that branch of science which deals with the collection of data, organising summarising, presenting
and analysing data and making valid conclusions and drawing reasonable decisions on the basis of such
study. The word statistics refers to some numerical facts relating to any phenomena in social sciences
or exact sciences. Facts and figure pertaining to population, production, national income, profits, sales,
bank rates, family patterns, dowry system, animal kingdom, plant life, bacteria will all constitute
statistics. The word ‘statistics’ seems to have derived from either the Latin word ‘status’ or the Italian
word ‘statitsta’ both meaning ‘a political state’.
The word ‘statistics’ is presently referred to in two distinct senses. In its first reference as a plural
noun, it means an aggregate of collection of numerical or quantitative expressions of facts, i.e., ‘Numerical
data’ or simply ‘data’. In its second reference as a singular noun, its means a body of principles and
methods used in the collection, presentation, analysis and interpretation of numerical data.
Bowley defines statistics as the science of counting in one context. The emphasis made here is only
on the collection of data. At another place he says: Statistics may right be called the science of averages.
Boddington defines “Statistics as the science of estimates and probabilities”. According to Lovitt, “the
science of statistics deals with the collection classification and tabulation of numerical facts.”

1.2 AVERAGES OR MEASURES OF CENTRAL TENDENCY

An average is a value which is representative of a set of data. Generally, it is difficult for the human
mind to remember huge and unwiedly set of numerical data, to understand their complications and to
compare them easily. Statistical methods help us to make the data simple, precise and understandable.
In this reference ‘statistical averages’ plays an important role. In other words, “Statistical average is
such a simple and precise value, that is used to represent all the values of a statistical series”.
Some of standard definitions are as follows:
1. According to A.E. Waugh, “An average is a single value selected from a group of values to
represent them in some way”.
2. According to Croxton and Cowden, “An average is a single value within the range of the data
that is used to represent all the values in the series”.
2 Business Statistics

In this definition, two points are significant:

(a) Average is a value that lies within the range of data.
(b) Its objective is to find out representative value of a statistical series.
3. Simpson and Kafka state, “A measure of central tendency is a typical value around which other
figures congregates.”

1.3 IMPORTANCE OF AVERAGES

In view of Prof. Tippet, “The average has its limitations, but if they are recognised, there is no single
statistical quantity more valuable than average.” The average plays an important role in statistical
science. In modern practical life averages are required at each step. We usually discuss and refer an
average income, average cost, average run rate, average price etc. Dr. Bowley even called Statistics “as
the science of average.”

1.4 REQUISITES FOR A GOOD AVERAGE

Following are the requisites of a good average:
(a) It should be simple to understand and locate.
(b) It should not be affected much by extreme observations.
(c) It should be based on all the items or observations.
(d) It should be rigidly defined so that the conclusion remains uniform irrespective of enumeration
by any person.
(e) It should be suitable for mathematical treatment.
(f) It should be least affected by fluctuations of sampling.
(g) An average should be such that it represents maximum features of a statistical series.
(h) An average should be in terms of absolute value, i.e., it should not be expressed in terms of
percentage or any other relative measurement.

1.5 TYPES OF AVERAGES

There are different types of statistical averages.
1. Averages of position:
(a) Median (b) Mode
2. Mathematical averages
(a) Arithmetic mean (b) Geometric mean
(c) Harmonic mean (d) Quadratic mean
3. Business averages:
(a) Moving average (b) Composite average (c) Progressive average
According to syllabus, in this Chapter, we only discuss Averages of position and Mathematical
averages in detail (i.e., Mean, Median, Mode, Geometric mean, Harmonic mean)

1.6 AVERAGES OF POSITION

1.6.1 Median
Median of a distribution is the value of the variable which divides it into two equal parts. According to
Connor, “The median is that value of the variable which divides the group into two equal parts—one
 Measures of Central Tendency 3

CHAPTER 1
part comprising all values greater and the other all values less than the median”. Also according to
Secrist “Median of a series is the value of that item-actual or estimated—when a series is arranged in
order of magnitude which divides the distribution in two parts.” Median is generally denoted by Me.
1.6.1.1 Calculation of median in individual series
In case of ungrouped data, if the number of observations is odd then median is the middle value after
the values have been arranged in ascending or descending order of magnitude i.e., if total number of
th
Ê n + 1ˆ
items is n (odd) then median value is Á
Ë 2 ˜¯
item.

In case of even number of observations there are two middle items and the mean of the value of
th th
Ê nˆ Ên ˆ
ÁË ˜¯ and ÁË + 1˜¯ items is defined as the median.
2 2
Example 1: Find out the median of the following items:
5, 7, 9, 12, 10, 8, 7, 15, 21
Solution: Items arranged in ascending order of magnitude

Serial no. Size of items

1 5
2 7
3 7
4 8
5 9
6 10
7 12
8 15
9 21

n the number of items = 9 (odd)

th
Ê n + 1ˆ
Me = Á
Ë 2 ˜¯
item
th
Ê 9 + 1ˆ
=Á item = 5th item
Ë 2 ˜¯
Me = 9. Ans.
Example 2: The following table gives the Economic Advisors index numbers of wholesale prices:

Year Index numbers

1947 297.4
1948 367.1
1949 381.1
1950 400.7
1951 439.3
1952 386.9
4 Business Statistics

Solution: Index numbers arranged in ascending order of magnitude

Serial no. Size of items

1 297.4
2 367.1
3 381.1
4 386.9
5 400.7
6 439.3

n the numer of items = 6 (even)

th
Ê nˆ
then Á ˜ item = 3rd item
Ë 2¯
= 381.1
th
and ÊÁ n + 1ˆ˜ item = 4 rd item
Ë2 ¯
= 386.9
381.1 + 386.9
Therefore Median =
2
768.0
= = 384.0
2
Me = Median = 384. Ans.

1.6.1.2 Calculation of median in discrete series

In case of discrete frequency (grouped data) distribution median is obtained by considering the cumu-
lative frequencies. Also in discrete series it is checked that values of item (x) are arranged. If not then
they are arranged in ascending order with same frequency. The steps for calculating median are:
 f +1
(a) Find .
2

Ê Â f + 1ˆ
(b) See the cumulative frequency just greater than ÁË ˜.
2 ¯
(c) The corresponding value of x is median.
Example 3: The following data relate to size of shoes sold at a store during a given week. Find the
median.
Size of shoes No. of pairs

4.5 1
5.0 2
5.5 4
6.0 5
 Measures of Central Tendency 5

CHAPTER 1
Size of shoes No. of pairs

6.5 15
7.0 30
7.5 60
8.0 95
8.5 82
9.0 75
9.5 44
10.0 25
10.5 15
11.0 5

Solution:

Size of shoes No. of pairs c.f.

4.5 1 1
5.0 2 3
5.5 4 7
6.0 5 12
6.5 15 27
7.0 30 57
7.5 60 117
8.0 95 212
8.5 82 294
9.0 75 369
9.5 44 413
10.0 25 438
10.5 15 453
11.0 5 458

Me =
( Sf + 1)
2
(458 + 1)
Me =
2
(459)
Me = = 229.5
2
Me = 229.5 lies in c.f. 294. Its corresponding value is 8.5, so
Me = 8.5. Ans.
6 Business Statistics

Example 4: Calculate median from the following frequency distribution:

Marks No. of students

32 8
45 15
62 10
78 4
80 2

Solution:
Marks No. of students c.f.

32 8 8
45 15 23
62 10 33
78 4 37
80 2 39

( Sf + 1)
Me =
2
(39 + 1)
Me =
2
(40 )
Me = = 20
2
Me = 20 lies in c.f. 23. Its corresponding value is 45 so,
Me = 45. Ans.
1.6.1.3 Calculation of median in continuous series
In case of continuous frequency distribution, the class corresponding to the cummulative frequency just
Sf
greater than is called the median class and the value of median is obtained by the formula
2
Ê Sf ˆ
-c
Á 2 ˜
Median = l + Á i
Ë f ˜¯
where, l is the lower limit of the median class.
f is the frequency of the median class.
i is the width of the class interval.
c is the c.f. of the class preceeding the median class.
Sf is the total frequency of the data.
 Measures of Central Tendency 7

CHAPTER 1
Example 5: Calculate the median wages from the following particulars of daily wages of 95 persons:

Daily wages in Rs. No. of wage earners

0–10 12
10–20 18
20–30 25
30–40 20
40–50 9
50–60 5
60–70 6

Solution:
Daily wages in Rs. No. of wage earners c.f.

0–10 12 12
10–20 18 30
20–30 25 55
30–40 20 75
40–50 9 84
50–60 5 89
60–70 6 95

Ê Sf ˆ
-c
Á 2 ˜
Me = l + Á i
Ë f ˜¯

Sf 95
= = 47.5
2 2

Ê 95 ˆ
- 30
Á 2 ˜
M e = 20 - Á
Ë 25 ˜¯
10

Ê 47.5 - 30 ˆ
M e = 20 + Á ˜ 10
Ë 25 ¯

Ê 17.5 ˆ
M e = 20 + Á
Ë 25 ˜¯
10

Ê 175 ˆ
M e = 20 + Á
Ë 25 ˜¯

Me = 20 + 7
Me = 27. Ans.
8 Business Statistics

Example 6: Calculate median from the following data:

Age No. of students

1–5 1
6–10 3
11–15 26
16–20 44
21–25 20
26–30 6

Solution:
Age No. of students C.I. c.f.

1–5 1 0.5 – 5.5 1

6–10 3 5.5–10.5 4
11–15 26 10.5–15.5 30
16–20 44 15.5–20.5 74
21–25 20 20.5–25.5 94
26–30 6 25.5–30.5 100

Ê Sf ˆ
-c
Á 2 ˜
Me = l + Á i
Ë f ˜¯

Sf 100
= = 50
2 2

Ê 100 ˆ
- 30
Á 2 ˜
M e = 15.5 + Á
Ë 44 ˜¯
5

Ê 50 - 30 ˆ
M e = 15.5 + Á
Ë 44 ¯˜
5

Ê 20 ¥ 5 ˆ
M e = 15.5 + Á
Ë 44 ˜¯

Ê 100 ˆ
M e = 15.5 + Á
Ë 44 ¯˜

Me = 15.5 + 2.27
Me = 17.77. Ans.
 Measures of Central Tendency 9

CHAPTER 1
Example 7: Find the median from the following distribution:

Size Frequency

Below 10 5
Below 20 15
Below 30 32
Below 40 60
Below 50 83
Below 60 95
Below 70 127
Below 80 198
Below 90 250

Solution:
Size Frequency C.I. f c.f.

Below 10 5 0–10 5 5
Below 20 15 10–20 10 15
Below 30 32 20–30 17 32
Below 40 60 30–40 28 60
Below 50 83 40–50 23 83
Below 60 95 50–60 12 95
Below 70 127 60–70 32 127
Below 80 198 70–80 71 198
Below 90 250 80–90 52 250

Ê Sf ˆ
-c
Á 2 ˜
Me = l + Á i
Ë f ˜¯

Sf 250
= = 125
2 2
Ê 250 ˆ
- 95
Á 2 ˜
M e = 60 + Á ˜ 10
Ë 32 ¯
Ê 125 - 95 ˆ
M e = 60 + Á
Ë 32 ˜¯
10

Ê 30 ¥ 10 ˆ
M e = 60 + Á
Ë 32 ˜¯

Ê 300 ˆ
M e = 60 + Á
Ë 32 ˜¯
Me = 60 + 9.375
Me = 69.375. Ans.
10 Business Statistics

Example 8: Calculate the median from the following data:

Class Frequency

Above 0 100
Above 10 88
Above 20 75
Above 30 52
Above 40 24
Above 50 15
Above 60 5

Solution:
Class Frequency C.I. f c.f.

Above 0 100 0–10 12 12

Above 10 88 10–20 13 25
Above 20 75 20–30 23 48
Above 30 52 30–40 28 76
Above 40 24 40–50 9 85
Above 50 15 50–60 10 95
Above 60 5 60–70 5 100

Ê Sf ˆ
-c
Á 2 ˜
Me = l + Á i
Ë f ˜¯

Sf 100
= = 50
2 2

Ê 100 ˆ
- 48
Á 2 ˜
M e = 30 + Á
Ë 28 ˜¯
10

Ê 50 - 48 ˆ
M e = 30 + Á
Ë 28 ˜¯
10

Ê 2 ¥ 10 ˆ
M e = 30 + Á
Ë 28 ˜¯

Ê 20 ˆ
M e = 30 + Á ˜
Ë 28 ¯

Me = 30 + 0.71
Me = 30.71. Ans.
 Measures of Central Tendency 11

CHAPTER 1
Example 9: Locate median from the following data:

Mid-value Frequency

10 6
20 12
30 18
40 30
50 32
60 7
70 3

Solution:
Mid-value Frequency C.I. c.f.

10 6 5–15 6
20 12 15–25 18
30 18 25–35 36
40 30 35–45 66
50 32 45–55 98
60 7 55–65 105
70 3 65–75 108

Ê Sf ˆ
-c
Á 2 ˜
Me = l + Á i
Ë f ˜¯

Sf 108
= = 54
2 2

Ê 108 ˆ
- 36
Á 2 ˜
M e = 35 + Á
Ë 30 ˜¯
10

Ê 54 - 36 ˆ
M e = 35 + Á
Ë 30 ¯˜
10

Ê 18 ¥ 10 ˆ
M e = 35 + Á
Ë 30 ¯˜

Ê 180 ˆ
M e = 35 + Á
Ë 30 ¯˜

M e = 35 + 6

M e = 41. Ans.
12 Business Statistics

Example 10: Find out the missing frequency at Me = 46 and Σf = 230, from the following data:

Class 10–20 20–30 30–40 40–50 50–60 60–70 70–80

Frequency 12 30 – 65 – 25 18

Solution: Given Σf = 230, Me = 46

Class Frequency c.f.

10–20 12 12
20–30 30 42
30–40 D (say) 42 + D
40–50 65 107 + D
50–60 E (say) 107 + D + E
60–70 25 132 + D + E
70–80 18 150 + D + E

Sf 230
= = 115
2 2

Ê Sf ˆ
-c
Á 2 ˜
Me = l + Á i
Ë f ˜¯

Ê 115 - (42 + D ) ˆ
46 = 40 + Á ˜¯ ¥ 10
Ë 65

Ê 115 - (42 + D ) ˆ
46 - 40 = Á ˜¯ ¥ 10
Ë 65

65 ¥ 6 = 10 (73 - D )
390 = 730 - 10D
10 D = 730 - 390 = 340

D = 34 .
Now, 230 = 150 + D + E
230 = 150 + 34 + E
230 = 184 + E
E = 230 - 184

E = 46 . Ans.
Hence missing frequency for the class interval 30–40 is 34 and for class interval 50–60 it is 46.
 Measures of Central Tendency 13

CHAPTER 1
1.6.1.4 Merits and demerits of median
Merits
1. The value of median is rigidly defined, which is an important property for an ideal average.
2. The median is very easy to understood and is easy to calculate.
3. Median is not affected by values of extreme items.
4. In certain cases median can be located merely by observation.
5. It can be calculated for distributions with open-end classes.
Demerits
1. If the number of items in an individual series is in even number, the value of median cannot be
determined exactly. We merely estimate it by taking the mean of two middle terms.
2. Median is not capable for further algebraic treatment.
3. For calculating median it is necessary to arrange the data in ascending order or descending
order, which is not only time consuming but becomes tedious also.
4. Median is a positional average, so its value is not determined by each and every observation.

PRACTICE EXERCISE 1

1. Find out median wages of workers from the following data:

Name of persons A B C D E F G H I

Monthly wages in Rs. 80 180 150 200 250 500 350 220 400

[Ans. 220]
2. Compute the median from the following data:

S. no. 1 2 3 4 5 6 7 8 9

Marks 68 49 32 21 54 38 59 66 41

[Ans. Me = 49]
3. Find the median from the data given below:

Size of items 3.5 4.5 5.5 6.5 7.5 8.5 9.5

Frequency 3 7 22 60 85 32 8

[Ans. Me = 7.5]
4. Find out the median from the following data:
35 men get at the rate of Rs. 4.50 per man
40 ” ” ” Rs. 5.50 ”
48 ” ” ” Rs. 6.50 ”
100 ” ” ” Rs. 7.50 ”
125 ” ” ” Rs. 8.50 ”
87 ” ” ” Rs. 9.50 ”
43 ” ” ” Rs.10.50 ”
22 ” ” ” Rs.11.50 ” [Ans. Me = 8.5]
14 Business Statistics

5. The table shows the age distribution of married females according to sample census of 2001 in the U.P. state:

Age No. of married Age No. of married Age No. of married

females females females

0–5 3 25–30 2223 50–55 531

5–10 31 30–35 1723 55–60 317
10–15 410 35–40 1292 60–65 156
15–20 1809 40–45 963 65–70 59
20–25 2446 45–50 762 70–75 37

Calculate the median ages of married females.

[Ans. 28.8 years]
6. Find the median from the following table:

Size 11–15 16–20 21–25 26–30 31–35 36–40 41–45 46–50

Frequency 7 10 13 26 35 22 11 5

[Ans. Me = 31.71]
7. From the following table, find the median:

No. of days (absent) 5 10 15 20 25 30 35 40 45

No. of students 29 224 465 582 634 644 650 653 655

[Ans. Me = 12.15]
8. The following table gives the marks obtained by 65 students in statistics in certain examination:

Examination marks No. of students

More than 70% 7

More than 60% 18
More than 50% 40
More than 40% 40
More than 30% 63
More than 20% 65

Calculate the median of the series.

[Ans. Me = 53.6%]
9. Find the median from the data given below:

Mid-point 15 20 25 30 35 40

Frequency 30 28 25 24 20 21

[Ans. Me = 25.7]
 Measures of Central Tendency 15

CHAPTER 1
10. Find out the median from the following frequency distribution:

Class 0–100 100–200 200–300 300–400 400–500 500–600

Frequency 5 3 12 0 15 5

[Ans. Me = 350]
1.6.2 Mode
Mode is defined to be the size of the variable which occurs more frequently in a set of observations. In
other words, mode of the frequency distribution is the value of the variable (x) corresponding to
maximum frequency.
1.6.2.1 Calculation of mode in individual series
In an individual series mode is find by observation and the value occurring maximum number of times
is the modal value. If in the given data all the values are distinct then in that case highest value of x is
the modal value of given data.
Example 11: Find the mode from the following data:
(A) 80, 170, 145, 250, 255, 317, 285, 350, 400.
(B) 15, 35, 40, 42, 48, 50, 52, 42, 18, 12, 48, 54, 48, 5, 10, 55.
Solution:
(A) For the given data highest frequency is 400 and no one value is repeated.
Therefore Mode Mo = 400. Ans.
(B) Since the frequency 48 occurs the maximum number of times, i.e., 3. Hence the mode for the
given data is
Mo = 48. Ans.
1.6.2.2 Calculation of mode in discrete series
In the case of discrete series there are two methods to solve the problem.
(a) By inspection method: In this method, the size or value having the highest frequency will be
identified as mode. Generally, mode is denoted by Mo.
Example 12: Calculate mode from the following data:

Salary (in thousands) 15 20 25 30 35 40

Frequency 4 6 12 18 7 3

Solution: By inspection it is clear that the highest frequency is 18. So, its corresponding value 30 will
be mode.
Hence, Mode = 30 thousand
(b) Grouping method: Grouping method can be used in the following conditions:
(i) When the maximum frequency occurs either in very beginning or at the end of the distribution.
(ii) The frequencies of the variables increase or decrease in a haphazard way.
(iii) When the maximum frequency is repeated or approximately equal concentration is found in
two or more neighbouring values.
In grouping method, to solve the problem six columns are drawn in addition to the column of
values (x) and the frequencies are grouped in the following manner:
16 Business Statistics

(a) first column: The frequencies given in the problem are shown in the first column.
(b) Second column: In this column, frequencies are grouped into two’s from the top of the value.
(c) Third column: In this column, frequencies are again grouped into two’s, but the first frequency
is left out i.e., starts from the second frequency.
(d) Fourth column: In this column, frequencies are grouped into three’s, starting from the first
frequency.
(e) Fifth column: In this column, frequencies are grouped into three’s but this grouping starts from
the second frequency.
(f) Sixth column: In this column, frequencies are grouped again in three’s but this grouping starts
from the third frequency.
After preparing the grouping table, tallies are marked against the values having highest frequency
in first column and the highest total in each of the other column. Finally, the value securing maximum
tallies will be modal value.
Example 13: Calculate the mode from the following data of the marks obtained by nine students:

Marks No. of students

10 3
11 4
12 6
13 8
14 10
15 9
16 5
17 7
18 1

Solution:
Marks No. of students

10 3
11 4
12 6
13 8
14 10
15 9
16 5
17 7
18 1

Ans. Mo = 14
 Measures of Central Tendency 17

CHAPTER 1
Example 14: Find the mode in the following given data:

Size of shoes Frequency

2 10
3 12
4 18
5 25
6 30
7 28
8 15
9 10
10 11

Solution:
Size Frequency 1 2 3 4 5 Analysis table

}
2 10

3 12
22

} } 40

4 18
}
30
} 55 I=1

}
43 III = 3
5 25
} 73 IIII = 5

}
55 III = 3
6 30
} 58
83

}
I=1

7 28
} 43
73

}
8 15
} 53

}
25
9

10
10

11
} 21
36

From the Analysis Table, we have size 6 is repeated 5 times therefore its mode.
Mo = 6. Ans.
1.6.2.3 Calculation of mode in continuous series
In case of continuous series it should be checked before the calculation of mode that each class interval
should be equal or not. If they are not equal, then they should be equalised. After it there are two steps
to find the mode.
1. Find the modal class by either observation or by grouping method (in case of irregular
distribution).
2. Then modal value is obtained by the formula
f1 - f 0
Mo = l + ¥i
2 f1 - f 0 - f2