“Use of Central Tendency and Dispersion in Business Decision”

2618 Words Jan 29th, 2013 11 Pages
“Use of Central Tendency and Dispersion in Business Decision”
Course Title: Business Statistics
Course Code: STS201
Submitted To: Mr. Raihanul Hasan Senior Lecturer
Submitted By: Date of submission: 26-12-12

We can use single numbers called “Summary Statistics’ to describe characteristics of a data set. Two of these characteristics are particularly important to decision makers: 1. Central tendency 2. Dispersion
Measures of central tendency and dispersion provide a convenient way to describe and compare sets of data.

Central Tendency:
Central tendency is the middle point of a distribution. Measures of central tendency are also known as
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It is the most common value in a distribution: The mode of 3, 4, 4, 5, 5, 5, 8 is 5. Note that the mode may be very different from the mean and the median.
With continuous data such as response time measured to many decimals, the frequency of each value is one since no two scores will be exactly the same. Therefore the mode of continuous data is normally computed from a grouped frequency distribution. The grouped frequency distribution table shows a grouped frequency distribution for the target response time data. Since the interval with the highest frequency is 600-700, the mode is the middle of that interval (650). Range | Frequency | 500-600 | 3 | 600-700 | 6 | 700-800 | 5 | 800-900 | 5 | 900-1000 | 0 | 1000-1100 | 1 | Table 3: Grouped frequency distribution |

Advantages * represents a number that actually occurred in the data * represents the largest number of scores, and so the probability of getting that score is greater than the probability of getting any of the other scores if an observation is just chosen at random is unaffected by extreme scores (i.e., high resistance) * is unbiased * doesn’t require an interval scale

Disadvantages * the mode depends on how we group the