MGT24-M-105

UNIT II
Quantitative Techniques in
Management
Measures of dispersion
Bhupendra Tripathi
Assistant Professor
Syllabus
Unit - II: Measures of dispersion

Measures of Dispersion- Meaning, Interpretation and

Properties of Range, Quartile Deviation and Mean
Deviation. Standard Deviation and Variance, Properties of
standard deviation, Combined Standard Deviation,
Coefficient of Variation and its practical implication.
 Unit III
Measures of Dispersion
 Dispersion

A measure of Dispersion may be defined as a statistics

signifying the extent of the scattering of items around a
measure of central tendency.

The property of deviations of values from the average is called

Dispersion or Variation.
Distribution of Weights of a Product
Machine A B
Sample size 1000 1000
Average weight 80 80
Minimum weight 20 40
Maximum weight 140 100

Machine ‘B’ produces products with weights much closer

to the average than Machine ‘A’. As a manufacturer or
customer, we would choose Machine ‘B’. In other words,
we choose that machine whose spread is smaller.
The degree of variation is found by the measures of variation.

They are as follows:

1. Range (R)

2. Quartile Deviation (Q.D)

3. Mean Deviation (M.D)

4. Standard Deviation (S.D)

They have units of measurement attached to them. Therefore, they are known
as absolute measures of variation.
Relative Measures
For comparing two different distributions whose measurements are in
different units such that in terms of kilograms and in terms of centimetres.

Relative measures are used.

Since that do not have any units attached to them.

The relative measures are as-

1. Coefficient of Range

2. Coefficient of Quartile Deviation

3. Coefficient of Mean Deviation

4. Coefficient of Variation
 Prerequisite of a good measure of
Variation
1. It should be easy to understand and simple to calculate.

2. It should be based on all values.

3. It should be rigidly defined.

4. It should not be affected by extreme values.

5. It should not be affected by sampling fluctuations.

6. It should be capable of further algebraic treatment.

Range
‘Range’ represents the differences between the values of the
extremes. The range of any sample is the difference between the
highest and the lowest values in the series.

It is denoted by ‘R’.

In a frequency distribution, the range is taken to be the difference

between the lower limit of the class at the lower extreme of the
distribution and the upper limit of the class at the upper extreme
of the distribution.

Range can be computed using following equation.

Range = Largest value – Smallest value = L - S

𝑳𝒂𝒓𝒈𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆 −𝑺𝒎𝒂𝒍𝒍𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆 𝑳−𝑺

Coefficient of Range = = 𝑳+𝑺
𝑳𝒂𝒓𝒈𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆+𝑺𝒎𝒂𝒍𝒍𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆
 Merits and Demerits of Range

Range is used-

 In Statistical Quality control

 When the study does not require deep analysis

 When data has no abnormal values

Solved Problem 1
Find the Range of the following series-
26, 28, 28, 26, 28, 30, 27, 29, 26, 24
Solution
The range ‘R’ is calculated as follows:
R= Range = Largest value – Smallest value = L - S

R = 30 – 24 =6
Therefore, the range is 6.
Solved Problem 2
Compute range and coefficient of range for the following series of data.

(X) 6 12 18 24 30 36 42
(f) 20 130 16 14 20 15 40

Solution
R= Range = Largest value – Smallest value = L – S = 42 – 6 = 36
𝑳𝒂𝒓𝒈𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆 −𝑺𝒎𝒂𝒍𝒍𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆 𝑳−𝑺
Coefficient of Range = = 𝑳+𝑺 = 𝟒𝟐−𝟔 = 𝟑𝟔 = .75
𝑳𝒂𝒓𝒈𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆+𝑺𝒎𝒂𝒍𝒍𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆 𝟒𝟐+𝟔 𝟒𝟖
Solved Problem 3
Find Range and co-efficient of Range from following data and state which is more
dispersed and which is more uniform -

Series -I 10 11 12 13 14
Series -II 40 41 42 43 44
Series -III 100 101 102 103 104
Solution R= Range = Largest value – Smallest value = L – S
𝑳𝒂𝒓𝒈𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆 −𝑺𝒎𝒂𝒍𝒍𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆 𝑳−𝑺
Coefficient of Range = =
𝑳𝒂𝒓𝒈𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆+𝑺𝒎𝒂𝒍𝒍𝒆𝒔𝒕 𝑽𝒂𝒍𝒖𝒆 𝑳+𝑺

Series -I Series -II Series -III

Smallest 10 40 100
Largest 14 44 104
Range 4 4 4
Coefficient 0.166 0.0476 0.0196
Series III is less dispersed and more uniform
Series I is more dispersed and less uniform
Quartile
A measure, which divides an array, into four equal parts is known as a
Quartile. Each portion contains an equal number of items.

The lower quartile Q1 refers to the values of variate corresponding to

the cumulative frequency N/4.
Q2 corresponds to the value of variate with cumulative frequency
equal to N/2.
Upper quartile Q3 refers to the value of variate corresponding to
cumulative frequency 3N/4.
For Individual series Q1 and Q3 are given by:
Quartile

Where,
l = lower limit of the quartile class
i = class width
f = frequency of quartile class
N = total frequency
c.f = cumulative frequency of class preceding the quartile class
Quartile deviation
Quartiles divide the total frequency in to four equal parts.

The lower quartile Q1 refers to the values of variate corresponding to

the cumulative frequency N/4.

Q2 corresponds to the value of variate with cumulative frequency

equal to N/2.

Upper quartile Q3 refers to the value of variate corresponding to

cumulative frequency 3N/4.
𝟏
Hence, Quartile Deviation QD = 𝟐(Q3 – Q1)

Q3 – Q1
Co-efficient of Quartile Deviation = Q3 + Q1
Key Statistic

Q3-Q1 is called inter quartile range.

Q3-Q1 gives the middle 50% of reading. Q3 and Q1 are also

known as upper and lower limit of middle 50% of readings.

Quartile range is not capable of further algebraic treatment.

Solved Problem 4
Find the Quartile Deviation and the Co-efficient of Quartile Deviation, from the marks of
12 students depicted as-

Sl. No 1 2 3 4 5 6 7 8 9 10 11 12
Marks 25 30 37 43 48 54 61 67 72 80 84 89

Solution
= 3.25th item

= 3rd item + 0.25 (4th item- 3rd item) = 37 + 0.25(43-37) = 38.5

= 9.75th item

=9th item + 0.75 (10th item – 9th item) = 72 + 0.75(80-72) = 78

𝟏 𝟏
Quartile Deviation QD = 𝟐(Q3 – Q1) = 𝟐(78 – 38.5) = 19.75

Q3 – Q1 𝟑𝟗.𝟓
Co-efficient of Quartile Deviation = Q3 + Q1 = 𝟏𝟏𝟔.𝟓 = .339
Merits and Demerits of Quartile Deviation

Merits It is easy to understand and to compute.

It is rigidly defined.

It is not affected by extreme values.

Demerits It is not based on all values.

It is affected by sampling fluctuations.

It is not capable of further algebraic treatment.

Example
Locate the median and the quartiles from
the data depicted

Computation of Quartiles
Example Computation of Quartiles

Just above 80.25, the c.f (Cumulative Frequency) is 100.

Against 100 c.f, value is 5.

Hence Q1 = 5
Example Computation of Quartiles

Just above 160.5, the c.f (Cumulative Frequency) is 230.

Against 230 c.f, value is 6.

Hence Q2 = 6
Example Computation of Quartiles

Just above 240.75, the c.f (Cumulative Frequency) is 260.

Against 260 c.f, value is 6.5.

Hence Q3 = 6.5
Mean deviation
Mean deviation is defined as the mean of absolute deviations of the
values from the central value.
For individual series, Mean deviation from Mean is calculated as:

For discrete and continuous series, Mean deviation from Mean is

calculated as:

For individual series, Mean deviation from Median is calculated as:

For discrete and continuous series, Mean deviation from Median is

calculated as:

In case of continuous series ‘X’ represents mid value of class-interval.

However, mean deviation from median is the least.
Mean deviation
The corresponding relative measures are coefficient of Mean
Deviation.
Solved Problem 5
Compute Mean deviation and its coefficient from Mean for the data given below-
X: 21, 32, 38, 41,49, 54, 59, 66, 68

Solution
𝑿 𝟒𝟐𝟖
𝑋= = = 47.55
𝒏 𝟗

𝐈 𝐗 −X 𝐈
MD (𝑋) = 𝒇
𝟏𝟏𝟔.𝟒𝟓
= = 12.938
𝟗
𝑴𝑫(𝑋)
Coefficient of MD (𝑋) =
𝑋
12.938
= 47.55

= 0.272
 Solved Problem 6
Compute Mean deviation and its coefficient from Median for the data given below-
X: 21, 32, 38, 41,49, 54, 59, 66, 68

Solution

Median = 49
𝐈 𝐗 −𝐌 𝐈 𝟏𝟏𝟓
MD (Median) = = 𝟗
𝒇
= 12.778

Coefficient of MD (Median) =
𝑴𝑫(𝑀𝑒𝑑𝑖𝑎𝑛) 12.778
= = 0.2608
𝑴𝒆𝒅𝒊𝒂𝒏 49
Solved Problem 7
Compute Mean deviation and its coefficient from Mean for the data.
Marks (X) 5 10 15 20 25
Students (f) 6 7 8 11 8
Solution

𝒇𝐗 𝒇𝐗 𝟔𝟒𝟎
𝑋= = = = 16
𝒇 𝑵 𝟒𝟎
𝐟𝐈 𝐗 −X 𝐈 𝟐𝟑𝟐
MD (𝑋) = = = 5.8
𝒇 𝟒𝟎
𝑴𝑫(𝑋) 𝟓.𝟖
Coefficient of MD (𝑋) = = = 0.363
𝑋 𝟏𝟔
 Merits and Demerits of Mean Deviation

Merits It is based on all values.

It is less affected by extreme values.
It is not affected much by sampling fluctuations.

Demerits It is not capable of further algebraic treatment.

It does not take into account negative signs.

The Mean Deviation is used in the following cases:

 When sample size is small.
 In Statistical analysis of certain economic, business and social
phenomena.
Standard Deviation
Standard deviation is the root of sum of the squares of deviations divided by
their numbers.

It is also called mean square error deviation (or) root mean square deviation.

Since the sum of squares of deviations from the mean is a minimum, the
deviations are taken only from the mean (But not from the median and mode).

The standard deviation is root mean square (RMS) average of all the deviations
from the mean.

It is denoted by sigma (σ).

Square of standard deviation is known as Variance.

Standard Deviation
Individual series: There are two methods of calculating standard deviation in an
individual observation or series:
i) When deviations are taken from Actual Mean: This method is used only when
the mean is a whole number.

ii) Deviation Taken from Assumed Mean: When the Arithmetic Mean is a
fractional value the method explained in (i) will be tedious and time
consuming. Hence we use the following formula.

Where, d stands for the deviation from assumed mean

d = X-A ,
A is assumed mean, 𝑓 = 𝑁
Standard Deviation
Discrete series:
i) Actual Mean Method:

ii) Assumed Mean Method:

Where, d stands for the deviation from assumed mean

d = X-A ,
A = Assumed mean,
𝑓=𝑁
Standard Deviation
Continuous series:
In a continuous series mid-values of the class intervals are to be found out.
Where, ‘X’ is the mid value of class interval for continuous series.

Where, d stands for the deviation from assumed mean

𝑿 −𝑨
d= 𝒊 ,
A = Assumed mean,
𝑓=𝑁
i = Class Width
Solved Problem 8
Find the Standard Deviation of 7, 9, 16, 24 & 26
Solution

𝐗 𝟖𝟐
𝑋= = = 16.40
𝒏 𝟓

𝟐𝟗𝟑.𝟐𝟎
Variance = 𝟓

= 58.64

Standard Deviation = 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒 = 58.64 = 7.66

Hence the standard deviation is Rs. 7.66

Properties of Standard Deviation

1. It is independent of origin but not independent of scale.

2. Standard deviation is always greater than or equal to zero.

3. It is the least of all root-mean-square deviations.

Combined Standard Deviation

Where
Merits and Demerits of Standard Deviation

Merits It is rigidly defined.

It is based on all values.

It is capable of further algebraic treatment.

It is not very much affected by sampling fluctuations.

Demerits It is difficult to understand.

It gives undue weightage for extreme values.

It cannot be calculated for classes with open end

interval.
Coefficient of Variation
When it is required to compare two different sets of values
pertaining to different characteristics or pertaining to same
characteristic, then coefficient of variation (CV) is used.
It is a relative measure expressed in percentage and is defined
as:

𝑺.𝑫.
Coefficient of Variation(CV) = 𝑋 = * 100
𝒎𝒆𝒂𝒏

σ
CV = * 100
𝑋

It is used to compare the homogeneity or stability or uniformity or

consistency of two or more data sets. A low value of coefficient
of variation indicates a low degree of variation.
Numerical-1
From the prices of shares X and Y. State which share is more stable in
its value?
X Y
55 108
54 107
52 105
53 105
56 106
58 107
52 104
50 103
51 104
49 101