Quantitative Techniques For Management

Quantitative Techniques for Management
MBA First Year

Paper No. 6
School of Distance Education

Bharathiar University, Coimbatore - 641 046
Author: P N Mishra & S Jaisankar
Copyright © 2007, Bharathiar University

All Rights Reserved
Edited by: Dr. Subodh Kesharwani

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CONTENTS
Page No.
Unit -I
Lesson 1 Quantitative Techniques – Introduction 7

Lesson 2 Measures of Central Tendency 24
Lesson 3 Mathematical Model 110
Lesson 4 Linear Programming: Graphical Method 119
Lesson 5 Linear Programming: Simplex Method 143
Unit -II
Lesson 6 Transportation Model 167

Lesson 7 Assignment Model 209
Unit -III
Lesson 8 Network Model 241

Lesson 9 Waiting Model (Queuing Theory) 272
Unit -IV
Lesson 10 Probability 299

Lesson 11 Theoretical Probability Distributions 359
Lesson 12 Probability Distribution of a Random Variable 409
Unit-V
Lesson 13 Inventory Model 449

Lesson 14 Game Theory 472
Lesson 15 Simulation 495
QUANTITATIVE TECHNIQUES FOR MANAGEMENT
Number of Credit Hours : 3 (Three)
Subject Description: This course presents the various mathematical models, networking, probability,
inventory models and simulations for managerial decisions.
Goals: To enable the students to learn techniques of operations research and resources management
and their application in decision making in the management.
Objectives: On successful completion of the course the students should have:
1. Understood the basic of the quantitative techniques.
2. Learnt the feasible solution and optimum solution for the resource management.
3. Learnt the time estimation and critical path for project.
4. Learnt about the application of probability techniques in the decision making.
5. Learnt the various inventory models and simulations in the resource planning and management.
UNIT I
QT – Introduction – Measures of Central Tendency – Mean, Median, Mode.
Mathematical Models – deterministic and probabilistic – simple business examples – OR and

optimization models – Linear Programming – formulation – graphical solution –simplex – solution.
UNIT II
Transportation model – Initial Basic Feasible solutions – optimum solution for non – degeneracy and
degeneracy model – Trans-shipment Model – Assignment Model – Travelling Salesmen problem.
UNIT III
Network Model – networking – CPM – critical path – Time estimates – critical path – crashing,
Resource levelling, Resources planning. Waiting Line Model – Structure of model – M/M/1 for
infinite population.
UNIT IV
Probability – definitions – addition and multiplication Rules (only statements) – simple business
application problems – probability distribution – expected value concept – theoretical probability
distributions – Binomial, Poison and Normal – Simple problems applied to business.
UNIT V
Inventory Models – Deterministic – EOQ – EOQ with Price Breaks – Probabilistic Inventory Models
- Probabilistic EOQ model – Game theory-zero sum games: Arithmetic and Graphical Method.
Simulation – types of simulation – Monte Carlo simulation – simulation problems.
Decision Theory – Pay off tables – decision criteria – decision trees.

Quantitative Techniques –
Introduction
Unit-I
5
LESSON
1
QUANTITATIVE TECHNIQUES – INTRODUCTION
CONTENTS
1.0 Aims and Objectives
1.1 Introduction
1.2 Historical Development
1.3 About Quantitative Technique
1.4 Methodology of Quantitative Techniques
1.4.1 Formulating the Problem
1.4.2 Defining the Decision Variables and Constraints
1.4.3 Developing a Suitable Model
1.4.4 Acquiring the Input Data
1.4.5 Solving the Model
1.4.6 Validating the Model
1.4.7 Implementing the Results
1.5 Advantages of Mathematical Modelling
1.6 Scope of Quantitative Technique
1.7 Statistics : An Introduction
1.7.1 Origin and Growth of Statistics
1.7.2 Meaning and Definition of Statistics
1.7.3 Statistics as Data
1.7.4 Statistics as a Science
1.7.5 Statistics as a Science different from Natural Sciences
1.7.6 Statistics as a Scientific Method
1.7.7 Statistics as a Science or an Art
1.8 Let us Sum Up
1.9 Lesson-end Activities
1.10 Keywords
1.11 Questions for Discussion
1.12 Terminal Questions
1.13 Model Answers to Questions for Discussion
1.14 Suggested Readings

Quantitative Techniques
for Management 1.0 AIMS AND OBJECTIVES
In this first lesson we discuss the distinguished approaches to quantitative techniques
and its various applications in management, statistical analysis and other industries. Here
we will discuss the approaches of quantitative techniques.
1.1 INTRODUCTION
Scientific methods have been man’s outstanding asset to pursue an ample number of
activities. It is analysed that whenever some national crisis, emerges due to the impact
of political, social, economic or cultural factors the talents from all walks of life amalgamate
together to overcome the situation and rectify the problem. In this chapter we will see
how the quantitative techniques had facilitated the organization in solving complex
problems on time with greater accuracy. The historical development will facilitate in
managerial decision-making & resource allocation, The methodology helps us in studying
the scientific methods with respect to phenomenon connected with human behaviour
like formulating the problem, defining decision variable and constraints, developing a
suitable model, acquiring the input data, solving the model, validating the model,
implementing the results. The major advantage of mathematical model is that its facilitates
in taking decision faster and more accurately.
Managerial activities have become complex and it is necessary to make right decisions
to avoid heavy losses. Whether it is a manufacturing unit, or a service organization, the
resources have to be utilized to its maximum in an efficient manner. The future is clouded
with uncertainty and fast changing, and decision-making – a crucial activity – cannot be
made on a trial-and-error basis or by using a thumb rule approach. In such situations,
there is a greater need for applying scientific methods to decision-making to increase the
probability of coming up with good decisions. Quantitative Technique is a scientific approach
to managerial decision-making. The successful use of Quantitative Technique for
management would help the organization in solving complex problems on time, with
greater accuracy and in the most economical way. Today, several scientific management
techniques are available to solve managerial problems and use of these techniques helps
managers become explicit about their objectives and provides additional information to
select an optimal decision. This study material is presented with variety of these techniques
with real life problem areas.
1.2 HISTORICAL DEVELOPMENT

During the early nineteen hundreds, Fredrick W. Taylor developed the scientific
management principle which was the base towards the study of managerial problems.
Later, during World War II, many scientific and quantitative techniques were developed
to assist in military operations. As the new developments in these techniques were found
successful, they were later adopted by the industrial sector in managerial decision-making
and resource allocation. The usefulness of the Quantitative Technique was evidenced
by a steep growth in the application of scientific management in decision-making in
various fields of engineering and management. At present, in any organization, whether
a manufacturing concern or service industry, Quantitative Techniques and analysis are
used by managers in making decisions scientifically.
Check Your Progress 1.1
Explain with the help of example some of the important Quantitative Techniques
used in modern business and in industrial unit.
8 Contd....
Notes: (a) Write your answer in the space given below. Quantitative Techniques –
Introduction
(b) Please go through the lesson sub-head thoroughly you will get your
answers in it.
(c) This Chek Your Progress will help you to understand the lesson better.
Try to write answers for them, but do not submit your answers to the
university for assessment. These are for your practice only.
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1.3 ABOUT QUANTITATIVE TECHNIQUE

Quantitative Techniques adopt a scientific approach to decision-making. In this approach,
past data is used in determining decisions that would prove most valuable in the future.
The use of past data in a systematic manner and constructing it into a suitable model for
future use comprises a major part of scientific management. For example, consider a
person investing in fixed deposit in a bank, or in shares of a company, or mutual funds, or
in Life Insurance Corporation. The expected return on investments will vary depending
upon the interest and time period. We can use the scientific management analysis to find
out how much the investments made will be worth in the future. There are many scientific
method software packages that have been developed to determine and analyze the
problems.
In case of complete non-availability of past data, quantitative factors are considered in
decision-making. In cases where the scope of quantitative data is limited, qualitative
factors play a major role in making decisions. Qualitative factors are important situations
like sudden change in tax-structures, or the introduction of breakthrough technologies.
Application of scientific management and Analysis is more appropriate when there is
not much of variation in problems due to external factors, and where input values are
steady. In such cases, a model can be developed to suit the problem which helps us to
take decisions faster. In today's complex and competitive global marketplace, use of
Quantitative Techniques with support of qualitative factors is necessary.
Quantitative Technique is the scientific way to managerial decision-making, while emotion
and guess work are not part of the scientific management approach. This approach
starts with data. Like raw material for a factory, this data is manipulated or processed
into information that is valuable to people making decision. This processing and manipulating
of raw data into meaningful information is the heart of scientific management analysis.
Do you think the day will come when all decision in a business unit are made with
assistance of quantitative techniques? Give reasons for your answer.
Notes: (a) Write your answer in the space given below.
answers in it.
Contd.... 9
Quantitative Techniques (c) This Chek Your Progress will help you to understand the lesson better.
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1.4 METHODOLOGY OF QUANTITATIVE TECHNIQUES

The methodology adopted in solving problems is as follows:
Formulating the problem
Defining decision variables and

constraints.
Developing a suitable model
Acquiring the Input Data
Solving the model
Validating the model
Implementing the results
Figure 1.1
1.4.1 Formulating the Problem

As a first step, it is necessary to clearly understand the problem situations. It is important
to know how it is characterized and what is required to be determined. Firstly, the key
decision and the objective of the problem must be identified from the problem. Then, the
number of decision variables and the relationship between variables must be determined.
The measurable guaranties that are represented through these variables are notified.
10 The practical limitations or constraints are also inferred from the problem.
1.4.2 Defining the Decision Variables and Constraints Quantitative Techniques –
Introduction
In a given problem situation, defining the key decision variables are important. Identifying
these variables helps us to develop the model. For example, consider a manufacturer
who is manufacturing three products A, B and C using two machines, I and II. Each unit
of product A takes 2 minutes on machine I and 5 minutes on machine II. Product B
takes 1 minute on machine I and 3 minutes on machine II. Similarly, product C takes 4
minutes and 6 minutes on machine I and machine II, respectively. The total available
time on machine I and machine II are 100 hours and 120 hours, respectively. Each unit
of A yields a profit of Rs. 3.00, B yields Rs. 4.00 and C yields Rs. 5.00. What should be
level of production of products A, B and C that should be manufactured by the company
so as to maximize the profit?
The decision variables, objective and constraints are identified from the problem.
The company is manufacturing three products A, B and C. Let A be x1, B be x2 and C
be x3. x1, x2 and x3 are the three decision variables in the problem. The objective is to
maximize the profits. Therefore, the problem is to maximize the profit, i.e., to know how
many units of x1, x2 and x3 are to be manufactured. There are two machines available,
machine I and machine II with total machine hours available as 100 hours and 120 hours.
The machine hours are the resource constraints, i.e., the machines cannot be used more
than the given number of hours.
To summarize,
l Key decision : How many units of x1, x2 and x3 are to be manufactured
l Decision variables : x1, x2 and x3
l Objective : To maximize profit
l Constraint : Machine hours
1.4.3 Developing a Suitable Model

A model is a mathematical representation of a problem situation. The mathematical
model is in the form of expressions and equations that replicate the problem. For example,
the total profit from a given number of products sold can be determined by subtracting
selling price and cost price and multiplying the number of units sold. Assuming selling
price, sp as Rs. 40 and cost price, cp as Rs. 20, the following mathematical model
expresses the total profit, tp earned by selling number of unit x.
TP = (SP – CP) x
= (40 – 20) x
TP = 20 x
Now, this mathematical model enables us to identify the real situation by understanding
the model. The models can be used to maximize the profits or to minimize the costs. The
applications of models are wide, such as:
l Linear Programming Model
l Integer Programming
l Sensitivity Analysis
l Goal Programming
l Dynamic Programming
l Non Linear Programming
l Queuing Theory
l Inventory Management Techniques 11
Quantitative Techniques l PERT/CPM (Network Analysis)
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l Decision Theory
l Games Theory
l Transportation and Assignment Models.
1.4.4 Acquiring the Input Data

Accurate data for input values are essential. Even though the model is well constructed,
it is important that the input data is correct to get accurate results. Inaccurate data will
lead to wrong decisions.
1.4.5 Solving the Model

Solving is trying for the best result by manipulating the model to the problem. This is done
by checking every equation and its diverse courses of action. A trial and error method
can be used to solve the model that enables us to find good solutions to the problem.
1.4.6 Validating the Model

A validation is a complete test of the model to confirm that it provides an accurate
representation of the real problem. This helps us in determining how good and realistic
the solution is. During the model validation process, inaccuracies can be rectified by
taking corrective actions, until the model is found to be fit.
1.4.7 Implementing the Results

Once the model is tested and validated, it is ready for implementation. Implementation
involves translation/application of solution in the company. Close administration and
monitoring is required after the solution is implemented, in order to address any proposed
changes that call for modification, under actual working conditions.
1.5 ADVANTAGES OF MATHEMATICAL MODELLING

The advantages of mathematical modelling are many:
(a) Models exactly represent the real problem situations.
(b) Models help managers to take decisions faster and more accurately.
(c) Models save valuable resources like money and time.
(d) Large and complex problems can be solved with ease.
(e) Models act as communicators to others by providing information and impact in
changing conditions.
“Quantitative Technique is a very powerful tools and analytical process that offers
the presentation of an optimum solutions in spite of its limitations”. Discuss.
answers in it.
12 Contd....
Quantitative Techniques –
_____________________________________________________________________ Introduction
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1.6 SCOPE OF QUANTITATIVE TECHNIQUE

The scope and areas of application of scientific management are very wide in engineering
and management studies. Today, there are a number at quantitative software packages
available to solve the problems using computers. This helps the analysts and researchers
to take accurate and timely decisions. This book is brought out with computer based
problem solving. A few specific areas are mentioned below.
l Finance and Accounting: Cash flow analysis, Capital budgeting, Dividend and
Portfolio management, Financial planning.
l Marketing Management: Selection of product mix, Sales resources allocation
and Assignments.
l Production Management: Facilities planning, Manufacturing, Aggregate planning,
Inventory control, Quality control, Work scheduling, Job sequencing, Maintenance
and Project planning and scheduling.
l Personnel Management: Manpower planning, Resource allocation, Staffing,
Scheduling of training programmes.
l General Management: Decision Support System and Management of Information
Systems, MIS, Organizational design and control, Software Process Management
and Knowledge Management.
From the various definitions of Quantitative Technique it is clear that scientific management
hen got wide scope. In general, whenever there is any problem simple or complicated
the scientific management technique can be applied to find the best solutions. In this
head we shall try to find the scope of M.S. by seeing its application in various fields of
everyday lift this include define operation too.
Discuss the significance and scope of Quantitative Techniques in modern business

management.

answers in it.
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13
for Management 1.7 STATISTICS : AN INTRODUCTION
1.7.1 Origin and Growth of Statistics

Statistics, as a subject, has a very long history. The origin of STATISTICS is indicated by
the word itself which seems to have been derived either from the Latin word 'STATUS'
or from the Italian word 'STATISTA' or may be from the German word 'STATISTIK.'
The meaning of all these words is 'political state'. Every State administration in the past
collected and analysed data. The data regarding population gave an idea about the possible
military strength and the data regarding material wealth of a country gave an idea about
the possible source of finance to the State. Similarly, data were collected for other purposes
also. On examining the historical records of various ancient countries, one might find
that almost all the countries had a system of collection of data. In ancient Egypt, the data
on population and material wealth of the country were collected as early as 3050
B.C., for the construction of pyramids. Census was conducted in Jidda in 2030 B.C. and
the population was estimated to be 38,00,000. The first census of Rome was done as
early as 435 B.C. After the 15th century the work of publishing the statistical data was
also started but the first analysis of data on scientific basis was done by Captain John
Graunt in the 17th century. His first work on social statistics, ‘Observation on London
Bills of Mortality' was published in 1662. During the same period the gamblers of western
countries had started using statistics, because they wanted to know the more precise
estimates of odds at the gambling table. This led to the development of the 'Theory of
Probability'.
Ancient India also had the tradition of collection of statistical data. In ancient works,
such as Manusmriti, Shukraniti, etc., we find evidences of collection of data for the
purpose of running the affairs of the State where population, military force and other
resources have been expressed in the form of figures. The fact and figures of the
Chandragupta Mauraya's regime are described in 'Kautilya's Arthashastra'. Statistics
were also in use during the Mughal period. The data were collected regarding population,
military strength, revenue, land revenue, measurements of land, etc. The system of data
collection was described in Tuzuk - i - Babri and Ain-i-Akabari. During Akbar's period,
his revenue minister, Raja Todarmal, made a well organised survey of land for the collection
of land revenue. During the British period too, statistics were used in various areas of
activities.
Although the tradition of collection of data and its use for various purposes is very old,
the development of modern statistics as a subject is of recent origin. The development of
the subject took place mainly after sixteenth century. The notable mathematicians who
contributed to the development of statistics are Galileo, Pascal, De-Mere, Farment and
Cardeno of the 17th century. Then in later years the subject was developed by Abraham
De Moivre (1667 - 1754), Marquis De Laplace (1749 - 1827), Karl Friedrich Gauss
(1777 - 1855), Adolphe Quetelet (1796 - 1874), Francis Galton (1822 - 1911), etc. Karl
Pearson (1857 - 1937), who is regarded as the father of modern statistics, was greatly
motivated by the researches of Galton and was the first person to be appointed as Galton
Professor in the University of London. William S. Gosset (1876 - 1937), a student of
Karl Pearson, propounded a number of statistical formulae under the pen-name of 'Student'.
R.A. Fisher is yet another notable contributor to the field of statistics. His book 'Statistical
Methods for Research Workers', published in 1925, marks the beginning of the theory of
modern statistics.
The science of statistics also received contributions from notable economists such as
Augustin Cournot (1801 - 1877), Leon Walras (1834 - 1910), Vilfredo Pareto
(1848 - 1923), Alfred Marshall (1842 - 1924), Edgeworth, A.L. Bowley, etc. They gave
an applied form to the subject.
Among the noteworthy Indian scholars who contributed to statistics are P.C. Mahalnobis,
14 V.K.R.V. Rao, R.C. Desai, P.V. Sukhatme, etc.
1.7.2 Meaning and Definition of Statistics Quantitative Techniques –
Introduction
The meaning of the word 'Statistics' is implied by the pattern of development of the
subject. Since the subject originated with the collection of data and then, in later years,
the techniques of analysis and interpretation were developed, the word 'statistics' has
been used in both the plural and the singular sense. Statistics, in plural sense, means a
set of numerical figures or data. In the singular sense, it represents a method of study
and therefore, refers to statistical principles and methods developed for analysis and
interpretation of data.
Statistics has been defined in different ways by different authors. These definitions can
be broadly classified into two categories. In the first category are those definitions which
lay emphasis on statistics as data whereas the definitions in second category emphasise
statistics as a scientific method.
1.7.3 Statistics as Data

Statistics used in the plural sense implies a set of numerical figures collected with reference
to a certain problem under investigation. It may be noted here that any set of numerical
figures cannot be regarded as statistics. There are certain characteristics which must be
satisfied by a given set of numerical figures in order that they may be termed as statistics.
Before giving these characteristics it will be advantageous to go through the definitions
of statistics in the plural sense, given by noted scholars.
1. "Statistics are numerical facts in any department of enquiry placed in relation to
each other.” - A.L. Bowley
The main features of the above definition are :
(i) Statistics (or Data) implies numerical facts.
(ii) Numerical facts or figures are related to some enquiry or investigation.
(iii) Numerical facts should be capable of being arranged in relation to each other.
On the basis of the above features we can say that data are those numerical facts
which have been expressed as a set of numerical figures related to each other and
to some area of enquiry or research. We may, however, note here that all the
characteristics of data are not covered by the above definition.
2. "By statistics we mean quantitative data affected to a marked extent by multiplicity
of causes.” - Yule & Kendall
This definition covers two aspects, i.e., the data are quantitative and affected by a
large number of causes.
3. "Statistics are classified facts respecting the conditions of the people in a state-
especially those facts which can be stated in numbers or in tables of numbers or in
any other tabular or classified arrangement.” - Webster
4. "A collection of noteworthy facts concerning state, both historical and descriptive.”
- Achenwall
Definitions 3 and 4, given above, are not comprehensive because these confine the
scope of statistics only to facts and figures related to the conditions of the people in
a state. However, as we know that data are now collected on almost all the aspects
of human and natural activities, it cannot be regarded as a state-craft only.
5. "Statistics are measurements, enumerations or estimates of natural or social
phenomena, systematically arranged, so as to exhibit their interrelations.”
- L.R. Connor
This definition also covers only some but not all characteristics of data.
15
Quantitative Techniques 6. "By statistics we mean aggregate of facts affected to a marked extent by a
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multiplicity of causes, numerically expressed, enumerated or estimated according
to a reasonable standard of accuracy, collected in a systematic manner for a
predetermined purpose and placed in relation to each other.” - H. Secrist
This definition can be taken as a comprehensive definition of statistics since most
of the characteristics of statistics are covered by it.
Characteristics of Statistics as Data

On the basis of the above definitions we can now state the following characteristics of
statistics as data :
1. Statistics are numerical facts: In order that any set of facts can be called as
statistics or data, it must be capable of being represented numerically or
quantitatively. Ordinarily, the facts can be classified into two categories : (a) Facts
that are measurable and can be represented by numerical measurements.
Measurement of heights of students in a college, income of persons in a locality,
yield of wheat per acre in a certain district, etc., are examples of measurable facts.
(b) Facts that are not measurable but we can feel the presence or absence of the
characteristics. Honesty, colour of hair or eyes, beauty, intelligence, smoking habit
etc., are examples of immeasurable facts. Statistics or data can be obtained in
such cases also, by counting the number of individuals in different categories. For
example, the population of a country can be divided into three categories on the
basis of complexion of the people such as white, whitish or black.
2. Statistics are aggregate of facts: A single numerical figure cannot be regarded
as statistics. Similarly, a set of unconnected numerical figures cannot be termed as
statistics. Statistics means an aggregate or a set of numerical figures which are
related to one another. The number of cars sold in a particular year cannot be
regarded as statistics. On the other hand, the figures of the number of cars sold in
various years of the last decade is statistics because it is an aggregate of related
figures. These figures can be compared and we can know whether the sale of cars
has increased, decreased or remained constant during the last decade.
It should also be noted here that different figures are comparable only if they are
expressed in same units and represent the same characteristics under different
situations. In the above example, if we have the number of Ambassador cars sold
in 1981 and the number of Fiat cars sold in 1982, etc., then it cannot be regarded as
statistics. Similarly, the figures of, say, measurement of weight of students should
be expressed in the same units in order that these figures are comparable with one
another.
3. Statistics are affected to a marked extent by a multiplicity of factors: Statistical
data refer to measurement of facts in a complex situation, e.g., business or economic
phenomena are very complex in the sense that there are a large number of factors
operating simultaneously at a given point of time. Most of these factors are even
difficult to identify. We know that quantity demanded of a commodity, in a given
period, depends upon its price, income of the consumer, prices of other commodities,
taste and habits of the consumer. It may be mentioned here that these factors are
only the main factors but not the only factors affecting the demand of a commodity.
Similarly, the sale of a firm in a given period is affected by a large number of
factors. Data collected under such conditions are called statistics or statistical data.
4. Statistics are either enumerated or estimated with reasonable standard of
accuracy:This characteristic is related to the collection of data. Data are collected
either by counting or by measurement of units or individuals. For example, the
number of smokers in a village are counted while height of soldiers is measured.
16
We may note here that if the area of investigation is large or the cost of measurement Quantitative Techniques –
Introduction
is high, the statistics may also be collected by examining only a fraction of the total
area of investigation.
When statistics are being obtained by measurement of units, it is necessary to
maintain a reasonable degree or standard of accuracy in measurements. The degree
of accuracy needed in an investigation depends upon its nature and objectivity on
the one hand and upon time and resources on the other. For example, in weighing
of gold, even milligrams may be significant where as, for weighing wheat, a few
grams may not make much difference. Sometimes, a higher degree of accuracy is
needed in order that the problem, to be investigated, gets highlighted by the data.
Suppose the diameter of bolts produced by a machine are measured as 1.546 cms,
1.549 cms, 1.548 cms, etc. If, instead, we obtain measurements only up to two
places after decimal, all the measurements would be equal and as such nothing
could be inferred about the working of the machine. In addition to this, the degree
of accuracy also depends upon the availability of time and resources. For any
investigation, a greater degree of accuracy can be achieved by devoting more time
or resources or both. As will be discussed later, in statistics, generalisations about
a large group (known as population) are often made on the basis of small group
(known as sample). It is possible to achieve this by maintaining a reasonable degree
of accuracy of measurements. Therefore, it is not necessary to always have a high
degree of accuracy but whatever degree of accuracy is once decided must be
uniformly maintained throughout the investigation.
5. Statistics are collected in a systematic manner and for a predetermined
purpose: In order that the results obtained from statistics are free from errors, it is
necessary that these should be collected in a systematic manner. Haphazardly
collected figures are not desirable as they may lead to wrong conclusions. Moreover,
statistics should be collected for a well defined and specific objective, otherwise it
might happen that the unnecessary statistics are collected while the necessary
statistics are left out. Hence, a given set of numerical figures cannot be termed as
statistics if it has been collected in a haphazard manner and without proper
specification of the objective.
6. Statistics should be capable of being placed in relation to each other: This
characteristic requires that the collected statistics should be comparable with
reference to time or place or any other condition. In order that statistics are
comparable it is essential that they are homogeneous and pertain to the same
investigation. This can be achieved by collecting data in identical manner for different
periods or for different places or for different conditions.
Hence, any set of numerical facts possessing the above mentioned characteristics
can be termed as statistics or data.
Example 1: Would you regard the following information as statistics? Explain by giving
reasons.
(i) The height of a person is 160 cms.
(ii) The height of Ram is 165 cms and of Shyam is 155 cms.
(iii) Ram is taller than Shyam.
(iv) Ram is taller than Shyam by 10 cms.
(v) The height of Ram is 165 cms and weight of Shyam is 55 kgs.
Solution: Each of the above statement should be examined with reference to the following
conditions:
17
Quantitative Techniques (a) Whether information is presented as aggregate of numerical figures
for Management
(b) Whether numerical figures are homogeneous or comparable
(c) Whether numerical figures are affected by a multiplicity of factors
On examination of the given information in the light of these conditions we find that only
the information given by statement (ii) can be regarded as statistics.
It should be noted that condition (c) will be satisfied, almost invariably. In order to illustrate
the circumstances in which this condition is not satisfied, we assume that a relation
between quantity demanded and price of a commodity is given by the mathematical
equation q = 100 - 10p and the quantity demanded at various prices, using this equation,
is shown in the following table,
p 1 2 3 4 5 6 7 8 9 10
q 90 80 70 60 50 40 30 20 10 0
The above information cannot be regarded as statistics because here quantity demanded
is affected by only one factor, i.e., price and not by a multiplicity of factors. Contrary to
this, the figures of quantity demanded obtained from a market at these very prices are to
be regarded as statistics.
1.7.4 Statistics as a Science

The use of the word 'STATISTICS' in singular form refers to a science which provides
methods of collection, analysis and interpretation of statistical data. Thus, statistics as a
science is defined on the basis of its functions and different scholars have defined it in a
different way. In order to know about various aspects of statistics, we now state some
of these definitions.
1. "Statistics is the science of counting.” - A.L. Bowley
2. "Statistics may rightly be called the science of averages.” - A.L. Bowley
3. "Statistics is the science of measurement of social organism regarded as a whole in
all its manifestations.” - A.L. Bowley
4. "Statistics is the science of estimates and probabilities.” - Boddington
All of the above definitions are incomplete in one sense or the other because each
consider only one aspect of statistics. According to the first definition, statistics is
the science of counting. However, we know that if the population or group under
investigation is large, we do not count but obtain estimates.
The second definition viz. statistics is the science of averages, covers only one
aspect, i.e., measures of average but, besides this, there are other measures used
to describe a given set of data.
The third definition limits the scope of statistics to social sciences only. Bowley
himself realised this limitation and admitted that scope of statistics is not confined
to this area only.
The fourth definition considers yet another aspect of statistics. Although, use of
estimates and probabilities have become very popular in modern statistics but there
are other techniques, as well, which are also very important.
The following definitions covers some more but not all aspects of statistics.
5. "The science of statistics is the method of judging collective, natural or social
phenomena from the results obtained by the analysis or enumeration or collection
of estimates.” - W.I. King
6. "Statistics or statistical method may be defined as collection, presentation, analysis
and interpretation of numerical data.” - Croxton and Cowden
This is a simple and comprehensive definition of statistics which implies that statistics
18
is a scientific method.
7. "Statistics is a science which deals with collection, classification and tabulation of Quantitative Techniques –
Introduction
numerical facts as the basis for the explanation, description and comparison of
phenomena.” - Lovitt
8. "Statistics is the science which deals with the methods of collecting, classifying,
presenting, comparing and interpreting numerical data collected to throw some
light on any sphere of enquiry.” - Seligman
The definitions given by Lovitt and Seligman are similar to the definition of Croxton
and Cowden except that they regard statistics as a science while Croxton and
Cowden has termed it as a scientific method.
With the development of the subject of statistics, the definitions of statistics given
above have also become outdated. In the last few decades the discipline of drawing
conclusions and making decisions under uncertainty has grown which is proving to
be very helpful to decision-makers, particularly in the field of business. Although,
various definitions have been given which include this aspect of statistics also, we
shall now give a definition of statistics, given by Spiegel, to reflect this new dimension
of statistics.
9. "Statistics is concerned with scientific method for collecting, organising, summarising,
presenting and analysing data as well as drawing valid conclusions and making
reasonable decisions on the basis of such analysis.”
On the basis of the above definitions we can say that statistics, in singular sense, is a
science which consists of various statistical methods that can be used for collection,
classification, presentation and analysis of data relating to social, political, natural,
economical, business or any other phenomena. The results of the analysis can be used
further to draw valid conclusions and to make reasonable decisions in the face of
uncertainty.
1.7.5 Statistics as a Science different from Natural Sciences

Science is a body of systematised knowledge developed by generalisations of relations
based on the study of cause and effect. These generalised relations are also called the
laws of science. For example, there are laws in physics, chemistry, statistics, mathematics,
etc. It is obvious from this that statistics is also a science like any other natural science.
The basic difference between statistics and other natural sciences lies in the difference
in conditions under which its experiments are conducted. Where as the experiments in
natural sciences are done in laboratory, under more or less controlled conditions, the
experiments in statistics are conducted under uncontrolled conditions. Consider, for
example, the collection of data regarding expenditure of households in a locality. There
may be a large number of factors affecting expenditure and some of these factors might
be different for different households.
Due to these reasons, statistics is often termed as a non-experimental science while
natural sciences are termed as experimental sciences. We may note here that social
sciences like economics, business, sociology, geography, political science, etc., belong to
the category of non-experimental science and thus, the laws and methods of statistics
can be used to understand and analyse the problems of these sciences also.
1.7.6 Statistics as a Scientific Method

We have seen above that, statistics as a non-experimental science can be used to study
and analyse various problems of social sciences. It may, however, be pointed out that
there may be situations even in natural sciences, where conducting of an experiment
under hundred per cent controlled conditions is rather impossible. Statistics, under such
conditions, finds its use in natural sciences, like physics, chemistry, etc. 19
Quantitative Techniques In view of the uses of statistics in almost all the disciplines of natural as well as social
for Management
sciences, it will be more appropriate to regard it as a scientific method rather than a
science. Statistics as a scientific method can be divided into the following two categories:
(a) Theoretical Statistics and (b) Applied Statistics
(a) Theoretical Statistics: Theoretical statistics can be further sub-divided into the
following three categories:
(i) Descriptive Statistics: All those methods which are used for the collection,
classification, tabulation, diagrammatic presentation of data and the methods
of calculating average, dispersion, correlation and regression, index numbers,
etc., are included in descriptive statistics.
(ii) Inductive Statistics: It includes all those methods which are used to make
generalisations about a population on the basis of a sample. The techniques
of forecasting are also included in inductive statistics.
(iii) Inferential Statistics: It includes all those methods which are used to test
certain hypotheses regarding characteristics of a population.
(b) Applied Statistics: It consists of the application of statistical methods to practical
problems. Design of sample surveys, techniques of quality control, decision-making
in business, etc., are included in applied statistics.
1.7.7 Statistics as a Science or an Art

We have seen above that statistics is a science. Now we shall examine whether it is an
art or not. We know that science is a body of systematised knowledge. How this knowledge
is to be used for solving a problem is work of an art. In addition to this, art also helps in
achieving certain objectives and to identify merits and demerits of methods that could be
used. Since statistics possesses all these characteristics, it may be reasonable to say that
it is also an art.
Thus, we conclude that since statistical methods are systematic and have general
applications, therefore, statistics is a science. Further since the successful application of
these methods depends, to a considerable degree, on the skill and experience of a
statistician, therefore, statistics is an art also.
1.8 LET US SUM UP

The changes in the structure of human organisation, perfection in various fields and
introduction of decision had given birth to quantitative technique. The application of
Quantitative Techniques methods helps in making decisions in such complicated situation.
Evidently the primarily objective of Quantitative Techniques is to study the different
components of an organisation by employing the methods of mathematical statistics in
order to get the behaviour with greater degree of control on the system. In short, the
objective of Quantitative Technique is to make available scientific basis to the decision-
maker, for solving the problem involving the interaction of different components of the
organisation by employing a team of scientists from distinguish disciplines, all working in
concert for finding a solution which is in the best interest of organisation as a whole. The
best solution thus obtained is known as optimal decision.
1.9 LESSON-END ACTIVITIES

1. Visit a nearby Nokia priority center as I hope it will reach your city. Analyse the
functioning of the priority center and see which types of Quantitative Techniques
could be more useful and applicable. For your convenience and even giving you the
clue that if there are more customers in the priority center and service centers are
20 not able to fulfil the requirements waiting line will be the best approach.
2. Why there is a need of statistics. Indicate one incidence of statistics application in Quantitative Techniques –
Introduction
your daily routine. How the statistics application had bring a paradigm shift.
1.10 KEYWORDS
Management science
Model
Analysis
Decision-making
Mathematical model
Algorithm
Problem
1.11 QUESTIONS FOR DISCUSSION

1. Write True or False against each statement:
(a) Accurate data for input values are essential.
(b) A factor is developed to suit the problem.
(c) Key decision and objective of the problem must be identified.
(d) The methodology helps us in studying the scientific method.
(e) Model does not facilitates managers to take decisions.
2. Briefly comment on the following statements:
(a) Scientific management has got wide scope.
(b) Implementation involves translation/application of solutions.
(c) A model is a mathematical representation of a problem situation.
(d) It is necessary to clearly understand the problem situation.
(e) Scientific management techniques are available to solve managerial problem.
3. Fill in the blanks:
(a) Once the _________ in tested and validated, it is ready for implementation.
(b) Quantitative factors are considered in _________
(c) Managerial science had _________ the organisation.
(d) Managerial criticism had become _________
(e) Fredrich W. Taylor developed the _________ management principle.
4. Distinguish between the following:
(a) Quantitative Techniques and Management.
(b) Solving the model and validating the model translation.
(c) Translation & Application.
1.12 TERMINAL QUESTIONS

1. How useful are the Quantitative Techniques in decision-making?
2. Give the areas of application where Quantitative Techniques can be applied. 21
Quantitative Techniques 3. Explain the methodology adopted in solving problems with the help of a flow chart
for Management
diagram.
4. What is a model? Explain with a suitable example.
5. What is meant by validation of model?
6. Explain the advantages of modelling with the help of a short example.
7. Discuss the advantages and limitations of using results from a mathematical model
to make decision as out operations.
8. What are different type of models used in management science.
9. What are some of the opportunities in management science?
10. What is implementation and why it is important?
11. What are some of sources of input data?
12. Briefly trace the history of management science.
13. What is the Quantitative Techniques process? Give several examples of this process.
14. Give a brief account of the origin and development of statistics.
15. Define statistics and discuss its relationship with natural and other sciences.
16. Distinguish between statistical methods and statistics. Discuss the scope and
significance of the study of statistics.
17. Who gave the following definitions of statistics?
(i) “Statistics is the science of counting”.
(Bowley, Boddington, King, Saligman)
(ii) “Statistics is the science of estimates and probabilities”.
(Webster, Secrist, Boddington, Yule & Kendall)
(iii) “The science of statistics is the method of judging collective, natural or social
phenomena from the results obtained by the analysis or enumeration or
collection of estimates”.
(Achenwall, Marshall, W.I. King, Croxton & Cowden)
18. “Statistics are numerical statements of facts, but all facts stated numerically are
not statistics”. Clarify this statement and point out briefly which numerical statements
of facts are statistics.
19. Discuss briefly the utility of statistics in economic analysis and business.
20. Which of the following statements are true?
(a) Statistics is helpful in administration.
(b) Statistics is helpful in business.
(c) Statistics is helpful in economic analysis.
(d) Statistics is helpful in all of the above.
21. “Statistics are the straws out of which I like other economists have to make bricks”.
Discuss.
22. “Science without statistics bear no fruit, statistics without science have no roots”.
Explain the above statement.
23. “It is usually said that statistics is science and art both”. Do you agree with this
statement? Discuss the scope of statistics.
24. Define ‘Statistics’ and explain briefly the divisions of the science of statistics.
25. “Statistics is not a science, it is a scientific method”. Discuss it critically and explain
22 the scope of statistics.
26. Explain clearly the three meanings of the word 'Statistics' contained in the following Quantitative Techniques –
Introduction
statement :
“You compute statistics from statistics by statistics”.
[Hint : Mean, standard deviation, etc., computed from a sample are also known
as statistics.]
27. “Economics and statistics are twin sisters”. Discuss.
28. Discuss the nature and scope of statistics. What are the fields of investigation and
research where statistical methods and techniques can be usefully employed?
29. Explain the following statements :
(a) “Statistics is the science of counting”.
(b) “Statistics is the science of estimates and probabilities”.
(c) “Statistics is the science of averages”.
30. Explain by giving reasons whether the following are data or not:
(i) Arun is more intelligent than Avinash.
(ii) Arun got 75% marks in B.Sc. and Avinash got 70% marks in B.Com.
(iii) Arun was born on August 25, 1974.
(iv) The consumption function of a community is C = 1,000 + 0.8Y, therefore, the
levels of consumption for different levels of income are :
Y 0 1000 2000 4000 6000 8000
C 1000 1800 2600 4200 5800 7400
31. “Statistics are aggregates of facts, affected to a marked extent by a multiplicity of

causes”.
Discuss the above statement and explain the main characteristics of statistics.
32. “Statistics are not merely heap of numbers”. Explain.
33. Elucidate the following statement :
“Not a datum, but data are the subject-matter of statistics”.
1.13 MODEL ANSWERS TO QUESTIONS FOR

DISCUSSION
1. (a) True (b) False (c) True (d) True (e) False
3. (a) model (b) decision-making (c) facilitate (d) complex (e) scientific
1.14 SUGGESTED READINGS

Bierman & Hausman, Quantitative Analysis for Business Decision.
Billy E Gillert, “Introduction to OR”
Franklyn A Lindsay, “New Technique for Management Decision-making”.
Herbert G. Hicks, “New Management of Organisation”.
Joseph L. Massie, “Essentials of Management.”
R. L. Acnoff & M. W. Sasieni, “Fundamentals of OR”.
Norbert Lloyd, Enrich, “Management OR”.
23
Quantitative Techniques for
Management LESSON
2
MEASURES OF CENTRAL TENDENCY
CONTENTS
2.1 Introduction
2.2 Definition of Average
2.3 Functions and Characterstics of an Average
2.4 Various Measures of Average
2.5 Arithmetic Mean
2.6 Median
2.7 Other Partition or Positional Measures
2.8 Mode
2.9 Relation between Mean, Median and Mode
2.10 Geometric Mean
2.11 Harmonic Mean
2.12 Let us Sum Up
2.13 Lesson-end Activity
2.14 Keywords
2.0 AIMS AND OBJECTIVES

In this lesson we would be able to measure the various measures of Central Tendency
like Average, Arithematic mean, Median, Mode and the relationship between various
measures of tendencies. We would also learn the Geometric and Harmonic Mean.
2.1 INTRODUCTION
Summarisation of the data is a necessary function of any statistical analysis. As a first
step in this direction, the huge mass of unwieldy data are summarised in the form of
tables and frequency distributions. In order to bring the characteristics of the data into
sharp focus, these tables and frequency distributions need to be summarised further. A
measure of central tendency or an average is very essential and an important summary
measure in any statistical analysis. An average is a single value which can be taken as
24 representative of the whole distribution.
Measures of Central Tendency
2.2 DEFINITION OF AVERAGE
The average of a distribution has been defined in various ways. Some of the important
definitions are :
(i) "An average is an attempt to find one single figure to describe the whole of
figures". - Clark and Sekkade
(ii) "Average is a value which is typical or representative of a set of data".
- Murray R. Spiegal
(iii) "An average is a single value within the range of the data that is used to
represent all the values in the series. Since an average is somewhere within
the range of data it is sometimes called a measure of central value".
- Croxton and Cowden
(iv) "A measure of central tendency is a typical value around which other figures
congregate". - Sipson and Kafka
2.3 FUNCTIONS AND CHARACTERSTICS OF AN

AVERAGE
1. To present huge mass of data in a summarised form: It is very difficult for
human mind to grasp a large body of numerical figures. A measure of average is
used to summarise such data into a single figure which makes it easier to understand
and remember.
2. To facilitate comparison: Different sets of data can be compared by comparing
their averages. For example, the level of wages of workers in two factories can be
compared by mean (or average) wages of workers in each of them.
3. To help in decision-making: Most of the decisions to be taken in research,
planning, etc., are based on the average value of certain variables. For example, if
the average monthly sales of a company are falling, the sales manager may have to
take certain decisions to improve it.
Characteristics of a Good Average
A good measure of average must posses the following characteristics :
1. It should be rigidly defined, preferably by an algebraic formula, so that different
persons obtain the same value for a given set of data.
2. It should be easy to compute.
3. It should be easy to understand.
4. It should be based on all the observations.
5. It should be capable of further algebraic treatment.
6. It should not be unduly affected by extreme observations.
7. It should not be much affected by the fluctuations of sampling.
2.4 VARIOUS MEASURES OF AVERAGE

Various measures of average can be classified into the following three categories:
(a) Mathematical Averages :
(i) Arithmetic Mean or Mean
(ii) Geometric Mean
(iii) Harmonic Mean
(iv) Quadratic Mean
(b) Positional Averages:
(i) Median
(ii) Mode 25
Quantitative Techniques for (c) Commercial Average
Management
(i) Moving Average
(ii) Progressive Average
(iii) Composite Average
The above measures of central tendency will be discussed in the order of their popularity.
Out of these, the Arithmetic Mean, Median and Mode, being most popular, are discussed
in that order.
2.5 ARITHMETIC MEAN

Before the discussion of arithmetic mean, we shall introduce certain notations. It will be
assumed that there are n observations whose values are denoted by X1,X2, ..... Xn
respectively. The sum of these observations X1 + X2 + ..... + Xn will be denoted in
n
abbreviated form as ∑X
i =1
i , where S (called sigma) denotes summation sign.
The subscript of X, i.e., 'i' is a positive integer, which indicates the serial number of the
observation. Since there are n observations, variation in i will be from 1 to n. This is
indicated by writing it below and above S, as written earlier. When there is no ambiguity
in range of summation, this indication can be skipped and we may simply write X1 + X2
+ ..... + Xn = SXi.
Arithmetic Mean is defined as the sum of observations divided by the number of
observations. It can be computed in two ways : (i) Simple arithmetic mean and
(ii) weighted arithmetic mean. In case of simple arithmetic mean, equal importance is
given to all the observations while in weighted arithmetic mean, the importance given to
various observations is not same.
Calculation of Simple Arithmetic Mean
(a) When Individual Observations are given.
Let there be n observations X1, X2 ..... Xn. Their arithmetic mean can be calculated
either by direct method or by short cut method. The arithmetic mean of these observations
will be denoted by X
Direct Method: Under this method, X is obtained by dividing sum of observations by
number of observations, i.e.,
n
∑X
i =1
i
X=
n
Short-cut Method: This method is used when the magnitude of individual observations
is large. The use of short-cut method is helpful in the simplification of calculation work.
Let A be any assumed mean. We subtract A from every observation. The difference
between an observation and A, i.e., Xi - A is called the deviation of i th observation from
A and is denoted by di. Thus, we can write ; d1 = X1 - A, d2 = X2 - A, ..... dn = Xn - A. On
adding these deviations and dividing by n we get
∑ di = ∑ ( Xi − A) = ∑ Xi − nA = ∑ Xi − A
n n n n
or d =X−A (Where d =
∑ i)
d
n
On rearranging, we get X = A + d = A +
∑d i
n
This result can be used for the calculation of X .
Remarks: Theoretically we can select any value as assumed mean. However, for the
purpose of simplification of calculation work, the selected value should be as nearer to
26 the value of X as possible.
Example 1: The following figures relate to monthly output of cloth of a factory in a Measures of Central Tendency
given year:
Months : Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Output
: 80 88 92 84 96 92 96 100 92 94 98 86
( in '000 metres )
Calculate the average monthly output.

Solution:
(i) Using Direct Method
80 + 88 + 92 + 84 + 96 + 92 + 96 + 100 + 92 + 94 + 98 + 86
X= = 91.5 ('000 mtrs)
12
(ii) Using Short Cut Method
Let A = 90.
Xi 80 88 92 84 96 92 96 100 92 94 98 86 Total
d i = X i - A - 10 - 2 2 - 6 6 2 6 10 2 4 8 - 4 Â di = 18
18
\ X = 90 + = 90 + 1.5 = 91.5 thousand mtrs
12
(b) When data are in the form of an ungrouped frequency distribution
Let there be n values X1, X2, ..... Xn out of which X1 has occurred f1 times, X2 has
occurred f 2 times, ..... Xn has occurred f n times. Let N be the total frequency,
n
i.e., N = ∑f
i =1
i . Alternatively, this can be written as follows :
V alu es X1 X2 - - - Xn T otal F requ en cy

F requ en cy f1 f2 - - - fn N
Direct Method : The arithmetic mean of these observations using direct method is given
by
X1 + X1 + ... + X1 + X 2 + ... + ... + X 2 + ... + ... + X n + ... + X n
1442443 144424443 1442443
f1times f 2times f ntimes
x=
f1 + f 2 + ... f n
Since X1 + X1 + ..... + X1 added f1 times can also be written f1X1. Similarly, by writing
other observation in same manner, we have
n n
∑ fi X i ∑ fi X i
f X + f X + ... + fn Xn i = 1 i =1
X= 1 1 2 2 = =
f1 + f2 + ... + fn n N
∑ f .... (3)
i
i =1
Short-Cut Method: As before, we take the deviations of observations from an arbitrary

value A. The deviation of i th observation from A is di = Xi – A.
Multiplying both sides by fi we have fi di = fi (Xi – A)
Taking sum over all the observations
b g
S fi d i = S fi X i − A = S fi X i − AS fi = S fiXi - A.N 27
Quantitative Techniques for Dividing both sides by N we have
Management
∑ fi di ∑ fi X i Â fi di
= − A = X - A or X=A+ = A+d .
N N N
Example 2: The following is the frequency distribution of age of 670 students of a

school. Compute the arithmetic mean of the data.
X 5 6 7 8 9 10 11 12 13 14
(in years)
Frequency 25 45 90 165 112 96 81 26 18 12
Solution:
Direct method: The computations are shown in the following table :
X 5 6 7 8 9 10 11 12 13 14 Total
f 25 45 90 165 112 96 81 26 18 12 ∑ f = 670
fX 125 270 630 1320 1008 960 891 312 234 168 ∑ fX = 5918
∑ fX 5918
X= = = 8.83 years.
∑f 670
Short-Cut Method: The method of computations are shown in the following table :
X 5 6 7 8 9 10 11 12 13 14 Total
f 25 45 90 165 112 96 81 26 18 12 670
d = X −8 −3 −2 −1 0 1 2 3 4 5 6
fd − 75 − 90 − 90 0 112 192 243 104 90 72 558
∑ fd 558
\ X = A+ =8+ = 8 + 0.83 = 8.83 years.
N 670
(c) When data are in the form of a grouped frequency distribution
In a grouped frequency distribution, there are classes along with their respective
frequencies. Let li be the lower limit and ui be the upper limit of i th class. Further, let the
number of classes be n, so that i = 1, 2,.....n. Also let fi be the frequency of i th class. This
distribution can written in tabular form, as shown.
Note: Here u1 may or may not be equal to l2, i.e., the upper limit of a class may or may
not be equal to the lower limit of its following class.
It may be recalled here that, in a grouped frequency distribution, we only know the
number of observations in a particular class interval and not their individual magnitudes.
Therefore, to calculate mean, we have to make a fundamental
assumption that the observations in a class are uniformly distributed. Class Frequency
Under this assumption, the mid-value of a class will be equal to the Intervals (f )
mean of observations in that class and hence can be taken as their l1 -u1 f1
representative. Therefore, if Xi is the mid-value of i th class with l2 -u2 f2
frequency fi , the above assumption implies that there are fi M M
observations each with magnitude Xi (i = 1 to n). Thus, the ln -un fn
arithmetic mean of a grouped frequency distribution can also be Total
calculated by the use of the formula, given in § 9.5.1(b). = ∑ fi = N
Frequency
Remarks: The accuracy of arithmetic mean calculated for a
grouped frequency distribution depends upon the validity of the fundamental assumption.
This assumption is rarely met in practice. Therefore, we can only get an approximate
value of the arithmetic mean of a grouped frequency distribution.
28
Example 3: Calculate arithmetic mean of the following distribution : Measures of Central Tendency
Class
Intervals : 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50 50 - 60 60 - 70 70 - 80
Frequency : 3 8 12 15 18 16 11 5
Solution: Here only short-cut method will be used to calculate arithmetic mean but it
can also be calculated by the use of direct-method.
Class Mid Frequency
d = X - 35 fd
Intervals Values (X ) (f )
0-10 5 3 - 30 - 90
10-20 15 8 - 20 -160
20-30 25 12 -10 -120
30-40 35 15 0 0
40-50 45 18 10 180
50-60 55 16 20 320
60-70 65 11 30 330
70-80 75 5 40 200
Total 88 660
\ X = A + ∑ = 35 +
fd 660
= 42.5
N 88
Example 4: The following table gives the distribution of weekly wages of workers in a
factory. Calculate the arithmetic mean of the distribution.
Weekly
Wages : 240 - 269 270 - 299 300 - 329 330 - 359 360 - 389 390 - 419 420 - 449
No. of
Workers : 7 19 27 15 12 12 8
Solution: It may be noted here that the given class intervals are inclusive. However, for
the computation of mean, they need not be converted into exclusive class intervals.
Class Mid
Frequency d = X - 344.5 fd
Intervals Values (X )
240-269 254.5 7 - 90 - 630
270-299 284.5 19 - 60 -1140
300-329 314.5 27 - 30 - 810
330-359 344.5 15 0 0
360-389 374.5 12 30 360
390-419 404.5 12 60 720
420-449 434.5 8 90 720
Total 100 -780
\
X = A+
∑ fd = 344.5 − 780 = 336.7
N 100
Step deviation method or coding method
In a grouped frequency distribution, if all the classes are of equal width, say 'h', the
successive mid-values of various classes will differ from each other by this width. This
fact can be utilised for reducing the work of computations.
Xi - A
Let us define ui = . Multiplying both sides by fi and taking sum over all the
h
n
1 n
observations we have, ∑ fu
i =1
i i = ∑ fi ( Xi − A)
h i =1
n n n n
h∑ fi ui = ∑ fi Xi − A∑ fi = ∑ fi Xi − A.N
29
or
i =1 i =1 i =1 i =1
Quantitative Techniques for Dividing both sides by N, we have
Management
n n
∑fui i
i =1
∑f X
i =1
i i
h⋅ = − A= X− A
N N
∑ fu i i
\ X = A + h ⋅ i =1 .... (5)
N
Using this relation we can simplify the computations of Example 4, as shown below.
X - 344.5
u= -3 -2 -1 0 1 2 3 Total
30
f 7 19 27 15 12 12 8 100
fu - 21 - 38 - 27 0 12 24 24 - 26
Using formula (5), we have
30 × 26
X = 344.5 − = 336.7
100
Example 5: Following table gives the distribution of companies according to size of
capital. Find the mean size of the capital of a company.
Capital ( Lacs Rs ) < 5 < 10 < 15 < 20 < 25 < 30
No . of Companies 20 27 29 38 48 53
Solution: This is a 'less than' cumulative frequency distribution. This will first be converted
into class intervals.
Class Frequency Mid - values X − 12.5
u= fu
Intervals (f ) (X) 5
0-5 20 2.5 −2 − 40
5 - 10 7 7.5 −1 −7
10 - 15 2 12.5 0 0
15 - 20 9 17.5 1 9
20 - 25 10 22.5 2 20
25 - 30 5 27.5 3 15
Total 53 −3
5× 3
\ X = 12.5 − = Rs 12.22 Lacs
53
Example 6: A charitable organisation decided to give old age pension to people over
sixty years of age. The scale of pension were fixed as follows :
Age Group : 60 - 65 65-70 70 -75 75- 80 80- 85 85- 90 90- 95

Pension / Month ( Rs ) : 100 120 140 160 180 200 220
If the total pension paid per month in various age groups are :
Age Group : 60 - 65 65 - 70 70 - 75 75 - 80 80 - 85 85 - 90 90 - 95
Total Pension/ Month : 700 600 840 800 720 600 440
Calculate the average amount of pension paid per month per head and the average age
of the group of old persons.
Solution: The computations of pension per head and the average age are shown in the
30 following table.
Rate of Total Mid - values Measures of Central Tendency
No . of X − 77 . 5
Age Pension per Pension paid of Class
Persons u= fu
Group month ( Y ) per month ( T ) Intervals 5
f =T ÷Y
( in Rs ) ( in Rs ) (X)
60 - 65 100 700 7 62 . 5 −3 − 21
65 - 70 120 600 5 67 . 5 −2 − 10
70 - 75 140 840 6 72 . 5 −1 −6
75 - 80 160 800 5 77 . 5 0 0
80 - 85 180 720 4 82 . 5 1 4
85 - 90 200 600 3 87 . 5 2 6
90 - 95 220 440 2 92 . 5 3 6
Total 4700 32 − 21
5 × ( − 21)
Average age X = 77.5 + = 77.5 - 3.28 = 74.22 Years
32
Total pension paid 4700

The average pension per head = = = Rs 146.88
No. of persons 32
Charlier's Check of Accuracy

When the arithmetic mean of a frequency distribution is calculated by short-cut or step-
deviation method, the accuracy of the calculations can be checked by using the following
formulae, given by Charlier.
For short-cut method
∑ f (d
i i + 1) = ∑ fi di + ∑ fi
or ∑ f d = ∑ f (d
i i i i + 1) − ∑ fi = ∑ fi ( di + 1) − N
Similarly, for step-deviation method
∑ f (u
i i + 1) = ∑ fi ui + ∑ fi
or ∑ f u = ∑ f (u
i i i i + 1) − ∑ fi = ∑ fi (ui + 1) − N
Checking the accuracy of calculations of Example 5, we have
∑ f (u + 1) = 20 × ( - 1 ) + ( 7 × 0) + ( 2 × 1) + ( 9 × 2) + ( 10 × 3) + ( 5 × 4) = 50
Since ∑ f (u + 1) − N = 50 − 53 = − 3 = ∑ fu , the calculations are correct.
Weighted Arithmetic Mean
In the computation of simple arithmetic mean, equal importance is given to all the items.
But this may not be so in all situations. If all the items are not of equal importance, then
simple arithmetic mean will not be a good representative of the given data. Hence,
weighing of different items becomes necessary. The weights are assigned to different
items depending upon their importance, i.e., more important items are assigned more
weight. For example, to calculate mean wage of the workers of a factory, it would be
wrong to compute simple arithmetic mean if there are a few workers (say managers)
with very high wages while majority of the workers are at low level of wages. The
simple arithmetic mean, in such a situation, will give a higher value that cannot be regarded
as representative wage for the group. In order that the mean wage gives a realistic
picture of the distribution, the wages of managers should be given less importance in its
computation. The mean calculated in this manner is called weighted arithmetic mean.
The computation of weighted arithmetic is useful in many situations where different
items are of unequal importance, e.g., the construction index numbers, computation of
standardised death and birth rates, etc. 31
Quantitative Techniques for Formulae for Weighted Arithmetic Mean
Management
Let X1, X2 ....., Xn be n values with their respective weights w1, w2 ....., wn. Their
weighted arithmetic mean denoted as Xw is given by,
Xw =
∑w Xi i
(i)
∑w i
(Using direct method),
(ii) Xw = A +
∑w d i i
(where di = Xi - A) (Using short-cut method),
∑w i
Xw = A +
∑w u i i
× h (where ui = X i - A ) (Using step-deviation method)
(iii)
∑w i h
Example 7: Ram purchased equity shares of a company in 4 successive months, as

given below. Find the average price per share.
Month No. of Shares Price per share (in Rs.)
Dec - 91 100 200
Jan - 92 150 250
Feb - 92 200 280
Mar - 92 125 300
Solution: The average price is given by the weighted average of prices, taking the
number of shares purchased as weights.
Price of share ( X ) No . of shares
Month d = X − 150 dw
( in Rs ) (w)
Dec - 91 100 200 − 50 − 10000
Jan - 92 150 250 0 0
Feb - 92 200 280 50 14000
Mar - 92 125 300 − 25 − 7500
Total 1030 − 3500
3,500
Xw = 150 − = Rs 146.60
1,030
Example 8: From the following results of two colleges A and B, find out which of the
two is better :
Examination College A College B
Appeared Passed Appeared Passed
M.Sc. 60 40 200 160
M. A. 100 60 240 200
B.Sc. 200 150 200 140
B. A. 120 75 160 100
Solution: Performance of the two colleges can be compared by taking weighted arithmetic
mean of the pass percentage in various classes. The calculation of weighted arithmetic
mean is shown in the following table.
32
X w for College A =
∑w X
A A
=
32500.2
= 67.71%
∑w A 480
X w for College B =
∑w XB B
=
59999.2
∑w B 800 = 75%
Since the weighted average of pass percentage is higher for college B, hence college B
is better.
Remarks: If X denotes simple mean and Xw denotes the weighted mean of the same
data, then
(i) X = Xw , when equal weights are assigned to all the items.
(ii) X > Xw , when items of small magnitude are assigned greater weights and items of
large magnitude are assigned lesser weights.
(iii) X < Xw , when items of small magnitude are assigned lesser weights and items of
large magnitude are assigned greater weights.
Properties of Arithmetic Mean

Arithmetic mean of a given data possess the following properties :
1. The sum of deviations of the observations from their arithmetic mean is always
zero.
According to this property, the arithmetic mean serves as a point of balance or a
centre of gravity of the distribution; since sum of positive deviations (i.e., deviations
of observations which are greater than X ) is equal to the sum of negative deviations
(i.e., deviations of observations which are less than X ).
Proof : Let X1, X2 ....., Xn be n observations with respective frequencies f1, f2 .....,
fn. Let Sfi = N, be the total frequency. Thus, X =

∑fX i i
N
Let di = X i - X , where i =1, 2 ..... n. Multiplying both sides by fi and taking sum
over all the observations, we have
∑ f d = ∑ f (X − X ) = ∑ f X − X∑ f
i i i i i i i
= ∑ f X − X.N = 0 (Since ∑ f X = NX ) . Hence Proved.

i i i i
2. The sum of squares of deviations of observations is minimum when taken from

their arithmetic mean. Because of this, the mean is sometimes termed as 'least
square' measure of central tendency.
Proof: The sum of squares of deviations of observations from arithmetic mean
∑ f (X − X)
2
= i i
Similarly, we can define sum of squares of deviations of observations from any

arbitrary value A as S = ∑ fi ( Xi − A )
2
.... (1)
We have to show that S will be minimum when A X .

To prove this, we try to find that value of A for which S is minimum. The necessary
and sufficient conditions for minimum of S are :
dS d2S
= 0 and >0
dA dA2 33
Quantitative Techniques for Differentiating (1) w.r.t. A we have
Management
dS
= − 2 ∑ fi ( Xi − A) = 0 , for minima. .... (2)
dA
On dividing both sides by - 2, we have
∑ f (Xi i − A ) = 0 or ∑fX i i − NA = 0
or
∑fX i i
− A = 0 (on dividing both sides by N)
N
Thus, X - A = 0 or A = X .
2
dS
Further, to show that S is minimum, it will be shown that 2 > 0 at A = X .
dA
Differentiating (2) further w.r.t. A, we have
d2S
= − 2∑ fi ( 0 − 1) = 2∑ fi = 2 N , which is always positive.
dA2
Hence S is minimum when A = X .

3. Arithmetic mean is capable of being treated algebraically.
This property of arithmetic mean highlights the relationship between X , ∑ f X and

i i
N. According to this property, if any two of the three values are known, the third
can be easily computed. This property is obvious and requires no proof.
4. If X1 and N1 are the mean and number of observations of a series and X2 and N2
are the corresponding magnitudes of another series, then the mean X of the
N1 X 1 + N 2 X 2
combined series of N1 + N2 observations is given by X = ◊
N1 + N 2
Proof : To find mean of the combined series, we have to find sum of its observations.
Now, the sum of observations of the first series, i.e., ∑fX 1 1 = N1 X1 and the sum
of observations of the second series, i.e., ∑f X 2 2 = N 2 X2 .
\ The sum of observations of the combined series, i.e., N1 X 1 + N 2 X 2 .
N1 X 1 + N 2 X 2
Thus, the combined mean X = ◊
N1 + N 2
This result can be generalised: If there are k series each with mean Xi and number
of observations equal to Ni , where i = 1,2 ..... k, the mean of the combined series
of N1 + N2 + ..... + Nk observations is given by
k
Â Ni X i
N1 X 1 + N 2 X 2 + ... + N k X k i =1
X = =
N1 + N 2 + ... + N k k
Â Ni
i =1
5. If a constant B is added (subtracted) from every observation, the mean of these

34 observations also gets added (subtracted) by it.
Proof : Let X be the mean of the observations X1, X2.....Xn with respective
frequencies as f1, f2 ..... fn. When B is added to every observations, let ui = Xi + B.
Multiply both sides by fi and take sum over all the observations, we get
Sfiui = Sfi(Xi + B) = SfiXi + NB
Dividing both sides by N we get
∑ fu i i
=
fi Xi
+ B or u = X + B .
N N
i.e., The mean of ui = Xi + B is obtained by adding B to the mean of Xi values.
Similarly, it can be shown that if vi = Xi - B, then v = X - B.
6. If every observation is multiplied (divided) by a constant b, the mean of these

observations also gets multiplied (divided) by it.
Proof: Let us define wi = β Xi . Multiplying both sides by fi and taking sum over all
the observations, we get Sfiwi = bSfiXi.
Dividing both sides by N, we get Âfw

i i
=b
fi X i
or w = b X
N N
Xi X
Similarly, it can be shown that if Di = , then D =
b b
Using properties 5 and 6, we can derive the following results :

If Yi = a + bXi , then SfiYi = Sfi(a + bXi) or SfiYi = aSfi + bSfiXi.
Dividing both sides by N( = Sfi ), we have
ÂfY i i
= a +b
fi X i
or Y = a + bX
N N
This shows that relationship between the means of two variables is same as the
relationship between the variables themselves.
7. If some observations of a series are replaced by some other observations, then the
mean of original observations will change by the average change in magnitude of
the changed observations.
X + X + LL + X
Proof: Let mean of n observations be X = 1 2 n . Further, Let X ,
n 1
X2, X3 are replaced by the respective observations Y1, Y2, Y3. Therefore, the
change in magnitude of the changed observations = (Y1 + Y2 + Y3) - (X1 + X2 +
X3).
(Y1 + Y2 + Y3 ) − (X1 + X 2 + X 3 )
Hence average change in magnitude = .
n
Thus, new X = old X + average change in magnitude.

Example 9: There are 130 teachers and 100 non-teaching employees in a college. The
respective distributions of their monthly salaries are given in the following table : 35
Management
06
From the above data find :

(i) Average monthly salary of a teacher.
(ii) Average monthly salary of a non-teaching employee.
(iii) Average monthly salary of a college employee (teaching and non-teaching).
Solution:
(i) Average monthly salary of a teacher
\ X1 = 6500 + 469.23 = Rs 6969.23

(ii) Average monthly salary of a non-teaching employee
\ X2 = 2500 + 190 = Rs 2690

(iii) Combined average monthly salary is
N 1X1 + N 2 X 2
X=
N1 + N 2
Here N1 = 130, X1 = 6969.23, N2 = 100 and X2 = 2690
130 ¥ 6969.23 + 100 ¥ 2690

\ X = = Rs 5108.70
230
Example 10: The average rainfall for a week, excluding Sunday, was 10 cms. Due to
heavy rainfall on Sunday, the average for the week rose to 15 cms. How much rainfall
was on Sunday?
Solution: A week can be treated as composed of two groups: First group consisting of 6
days excluding Sunday for which N1 = 6 and X 1 = 10; the second group consisting of
only Sunday for which N2 = 1. Also, mean of this group will be equal to the observation
itself. Let this be X. We have to determine the value of X.
36
We are also given N = 7 and X 1 = 15 (for the whole week).
6 × 10 + 1 × X
\ 15 = or 60 + X = 15 × 7
7
fi X = 105 - 60 = 45 cms. Thus, the rainfall on Sunday was 45 cms.
Example 11: The mean age of the combined group of men and women is 30.5 years. If
the mean age of the sub-group of men is 35 years and that of the sub-group of women is
25 years, find out percentage of men and women in the group.
Solution: Let x be the percentage of men in the combined group. Therefore, percentage
of women = 100 - x.
We are given that X1 (men) = 35 years and X2 (women) = 25 years

Also X (combined) = 30.5
30.5 =
b
35 x + 25 100 − x g = 35x + 2500 − 25x or 3050 = 10x + 2500
x + 100 − x 100
550
fi x = = 55%. Thus, there are 55% men and 45% women in the group.
10
To find missing frequency or a missing value
Example 12: The following is the distribution of weights (in lbs.) of 60 students of a
class:
Weights : 93 - 97 98 - 102 103 - 107 108 - 112 113 - 117
No. of
Students : 2 5 12 ? 14
Weights : 118 - 122 123 - 127 128 - 132 Total
No. of
Students : ? 3 1 60
If the mean weight of the students is 110.917, find the missing frequencies.
Solution: Let f1 be the frequency of the class 108-112. Then, the frequency of the class
118-122 is given by 60 - (2 + 5 + 12 + 14 + 3 + 1 + f 1) = 23 - f1
Writing this information in tabular form we have :
Weights No. of Mid -Values X - 110
u= fu
(in lbs.) Students (f ) (X ) 5
93-97 2 95 -3 -6
98-102 5 100 -2 -10
103-107 12 105 -1 -12
108-112 f1 110 0 0
113-117 14 115 1 14
118-122 23 - f1 120 2 46 - 2 f1
123-127 3 125 3 9
128-132 1 130 4 4
Total 60 45 - 2 f1
(45 - 2 f1 )5
Using the formula for A.M., we can write 110.917 = 110 +
60
or 11.004 = 45 - 2f1 or 2f1 = 33.996 = 34 (approximately)
Thus, f1 = 17 is the frequency of the class 108 - 112 and 23 - 17= 6 is the frequency of
the class 118 - 122.
Example 13: Find out the missing item (x) of the following frequency distribution whose
arithmetic mean is 11.37. 37
Management
X : 5 7 axf 11 13 16 20
f : 2 4 29 54 11 8 4
X=
Â fX (5 ¥ 2) + (7 ¥ 4) + 29 x + (11 ¥ 54) + (13 ¥ 11) + (16 ¥ 8) + (20 ¥ 4)
=
Âf 112
10 + 28 + 29 x + 594 + 143 + 128 + 80
11.37 = or 11.37 ×112 = 983 + 29x
112
290.44
\ x= = 10.015 = 10 (approximately)
29
Example 14: The arithmetic mean of 50 items of a series was calculated by a student
as 20. However, it was later discovered that an item 25 was misread as 35. Find the
correct value of mean.
Solution: N = 50 and X = 20 \ SXi = 50 × 20 = 1000
990
Thus SXi (corrected) = 1000 + 25 - 35 = 990 and X (corrected) = = 19.8
50
Alternatively, using property 7 :
10
X new = X old + average change in magnitude = 20 - = 20 - 0.2 = 19.8
50
Example 15: The sales of a balloon seller on seven days of a week are as given below:
Days Mon Tue Wed Thu Fri Sat Sun
Sales ( in Rs ) 100 150 125 140 160 200 250
If the profit is 20% of sales, find his average profit per day.
20
Solution: Let P denote profit and S denote sales, \ P = ¥S
100
20 1
Using property 6, we can write P = ¥S or P= ¥S
100 5
100 + 150 + 125 + 140 + 160 + 200 + 250

Now S = = 160.71
7
160.71
\ P= = Rs 32.14
5
Hence, the average profit of the balloon seller is Rs 32.14 per day.
Alternatively, we can find profit of each day and take mean of these values.
Days Mon Tue Wed Thu Fri Sat Sun
Profit ( in Rs ) 20 30 25 28 32 40 50
20 + 30 + 25 + 28 + 32 + 40 + 50
P= = Rs 32.14
7
Merits and Demerits of Arithmetic Mean

Merits
Out of all averages arithmetic mean is the most popular average in statistics because of
38 its merits given below:
1. Arithmetic mean is rigidly defined by an algebraic formula. Measures of Central Tendency
2. Calculation of arithmetic mean requires simple knowledge of addition, multiplication

and division of numbers and hence, is easy to calculate. It is also simple to understand
the meaning of arithmetic mean, e.g., the value per item or per unit, etc.
3. Calculation of arithmetic mean is based on all the observations and hence, it can be
regarded as representative of the given data.
4. It is capable of being treated mathematically and hence, is widely used in statistical
analysis.
5. Arithmetic mean can be computed even if the detailed distribution is not known but
sum of observations and number of observations are known.
6. It is least affected by the fluctuations of sampling.
7. It represents the centre of gravity of the distribution because it balances the
magnitudes of observations which are greater and less than it.
8. It provides a good basis for the comparison of two or more distributions.
Demerits
Although, arithmetic mean satisfies most of the properties of an ideal average, it has
certain drawbacks and should be used with care. Some demerits of arithmetic mean are:
1. It can neither be determined by inspection nor by graphical location.
2. Arithmetic mean cannot be computed for a qualitative data; like data on intelligence,
honesty, smoking habit, etc.
3. It is too much affected by extreme observations and hence, it does not
adequately represent data consisting of some extreme observations.
4. The value of mean obtained for a data may not be an observation of the data and
as such it is called a fictitious average.
5. Arithmetic mean cannot be computed when class intervals have open ends. To
compute mean, some assumption regarding the width of class intervals is to be
made.
6. In the absence of a complete distribution of observations the arithmetic mean may
lead to fallacious conclusions. For example, there may be two entirely different
distributions with same value of arithmetic mean.
7. Simple arithmetic mean gives greater importance to larger values and lesser
importance to smaller values.
Exercise with Hints

1. The frequency distribution of weights in grams of mangoes of a given variety is
given below. Calculate the arithmetic mean.
Weights No . of Weights No . of
( in gms ) Mangoes ( in gms ) Mangoes
410 - 419 14 450 - 459 45
420 - 429 20 460 - 469 18
430 - 439 42 470 - 479 7
440 - 449 52
Hint : Take the mid-value of a class as the mean of its limits and find arithmetic
mean by the step-deviation method.
2. The following table gives the monthly income (in rupees) of families in a certain
locality. By stating the necessary assumptions, calculate arithmetic mean of the
distribution. 39
Quantitative Techniques for Income : 1000 1000 - 2000 2000 - 3000 3000 - 4000 4000 - 5000 5000
Management
No. of
Families : 100 1200 1450 250 70 30
Hint : This distribution is with open end classes. To calculate mean, it is to be assumed
that the width of first class is same as the width of second class. On this
assumption the lower limit of the first class will be 0. Similarly, it is assumed that
the width of last class is equal to the width of last but one class. Therefore, the
upper limit of the last class can be taken as 6,000.
3. Compute arithmetic mean of the following distribution of marks in Economics of 50
students.
Marks more than No. of Students Marks more than No. of Students
0 50 50 15
10 46 60 8
20 40 70 3
30 33 80 0
40 25
Hint: First convert the distribution into class intervals and then calculate X .
4. The monthly profits, in '000 rupees, of 100 shops are distributed as follows:
Profit per Shop : 0 - 100 0 - 200 0 - 300 0 - 400 0 - 500 0 - 600
No. of Shops : 12 30 57 77 94 100
Find average profit per shop.
Hint: This is a less than type cumulative frequency distribution.
5. Typist A can type a letter in five minutes, typist B in ten minutes and typist C in
fifteen minutes. What is the average number of letters typed per hour per typist?
Hint: In one hour, A will type 12 letters, B will type 6 letters and C will type
4 letters.
6. A taxi ride in Delhi costs Rs 5 for the first kilometre and Rs 3 for every additional
kilometre travelled. The cost of each kilometre is incurred at the beginning of the
kilometre so that the rider pays for the whole kilometre. What is the average cost
3
of travelling 2 kilometres?
4
3
Hint: Total cost of travelling 2 kilometres = Rs 5 + 3 + 3 = Rs 11.
4
7. A company gave bonus to its employees. The rates of bonus in various salary
groups are :
Monthly Salary
: 1000 - 2000 2000 - 3000 3000 - 4000 4000 - 5000
( in Rs )
Rate of Bonus
: 2000 2500 3000 3500
( in Rs )
The actual salaries of staff members are as given below :

1120, 1200, 1500, 4500, 4250, 3900, 3700, 3950, 3750, 2900, 2500, 1650, 1350,
4800, 3300, 3500, 1100, 1800, 2450, 2700, 3550, 2400, 2900, 2600, 2750, 2900,
2100, 2600, 2350, 2450, 2500, 2700, 3200, 3800, 3100.
Determine (i) Total amount of bonus paid and (ii) Average bonus paid per employee.
Hint: Find the frequencies of the classes from the given information.
8. Calculate arithmetic mean from the following distribution of weights of 100 students
of a college. It is given that there is no student having weight below 90 lbs. and the
40
total weight of persons in the highest class interval is 350 lbs.
Weights : < 100 < 110 < 120 < 130 < 140 < 150 < 160 < 170 170 ≥ Measures of Central Tendency
Frequency : 3 5 23 45 66 85 95 98 2
Hint: Rearrange this in the form of frequency distribution by taking class inter-
vals as 90 - 100, 100 - 110, etc.
9. By arranging the following information in the form of a frequency distribution, find
arithmetic mean.
"In a group of companies 15%, 25%, 40% and 75% of them get profits less than Rs
6 lakhs, 10 lakhs, 14 lakhs and 20 lakhs respectively and 10% get Rs 30 lakhs or
more but less than 40 lakhs."
Hint: Take class intervals as 0 - 6, 6 - 10, 10 - 14, 14 - 20, etc.
10. Find class intervals if the arithmetic mean of the following distribution is 38.2 and
the assumed mean is equal to 40.
Step deviations : 3 2 1 0 1 2 3
Frequency : 8 14 18 28 17 10 5
Hint: Use the formula X = A +

∑ fu × h to find the class width h.
N
11. From the following data, calculate the mean rate of dividend obtainable to an investor
holding shares of various companies as shown :
Percentage Dividend : 30 - 40 20 - 30 10 - 20 0 - 10
No. of Companies : 4 25 15 6
Average no. of shares of each
company held by the investor : 250 150 200 300
Hint: The no. of shares of each type = no. of companies × average no. of shares.
12. The mean weight of 150 students in a certain class is 60 kgs. The mean weight of
boys in the class is 70 kgs and that of girls is 55 kgs. Find the number of girls and
boys in the class.
Hint: Take n1 as the no. of boys and 150 - n1 as the no. of girls.
13. The mean wage of 100 labourers working in a factory, running two shifts of 60 and
40 workers respectively, is Rs 38. The mean wage of 60 labourers working in the
morning shift is Rs 40. Find the mean wage of 40 laboures working in the evening
shift.
Hint: See example 10.
14. The mean of 25 items was calculated by a student as 20. If an item 13 is replaced
by 30, find the changed value of mean.
15. The average daily price of share of a company from Monday to Friday was
Rs 130. If the highest and lowest price during the week were Rs 200 and
Rs 100 respectively, find average daily price when the highest and lowest price are
not included.
16. The mean salary paid to 1000 employees of an establishment was found to be Rs
180.40. Later on, after disbursement of the salary, it was discovered that the salaries
of two employees were wrongly recorded as Rs 297 and Rs 165 instead of Rs 197
and Rs 185. Find the correct arithmetic mean.
17. Find the missing frequencies of the following frequency distribution : 41
Quantitative Techniques for Class
Management Intervals : 60 - 65 65 - 70 70 - 75 75 - 80 80 - 85 85 - 90 90 - 95 95 - 100
Frequency : 5 10 26 35 ? 20 15 ?
18. Marks obtained by students who passed a given examination are given
below :
Marks obtained
: 40 - 50 50 - 60 60 - 70 70 - 80 80 - 90 90 - 100
( in percent )
No . of
: 10 12 20 9 5 4
Students
If 100 students took the examination and their mean marks were 51, calculate the
mean marks of students who failed.
19. A appeared in three tests of the value of 20, 50 and 30 marks respectively. He
obtained 75% marks in the first and 60% marks in the second test. What should be
his percentage of marks in the third test in order that his aggregate is 60%?
Hint: Let x be the percentage of marks in third test. Then the weighted average of
75, 60 and x should be 60, where weights are 20, 50 and 30 respectively.
20. Price of a banana is 80 paise and the price of an orange is Rs 1.20. If a person
purchases two dozens of bananas and one dozen of oranges, show by stating reasons
that the average price per piece of fruit is 93 paise and not one rupee.
Hint: Correct average is weighted arithmetic average.
21. The average marks of 39 students of a class is 50. The marks obtained by 40th
student are 39 more than the average marks of all the 40 students. Find mean
marks of all the 40 students.
Hint: X + 39 + 39 × 50 = 40 X .
22. The means calculated for frequency distributions I and II were 36 and 32
respectively. Find the missing frequencies of the two distributions.
Frequency of Frequency of
Class Intervals Distribution I Distribution II
5 - 15 4 10
15 - 25 10 14
25 - 35 14 3y
35 - 45 16 13
45 - 55 2x 10
55 - 65 y x
40 + 200 + 420 + 640 + 100 x + 60 y

Hint: 36 = and
44 + 2 x + y
100 + 280 + 90 y + 520 + 500 + 60 x
32 =
47 + 3 y + x
Solve these equations simultaneously for the values of x and y.
23. The following table gives the number of workers and total wages paid in three
departments of a manufacturing unit :
Total wages
Department No . of Workers
( in Rs )
A 105 1, 68 , 000
B 304 4 , 25 , 600
C 424 5 , 08 , 800
If a bonus of Rs 200 is given to each worker, what is the average percentage
increase in wages of the workers of each department and of the total
42
workers?
1,68,000
Hint: (i) Average wage in deptt. A = = 1,600
105
200
\ Percentage increase in wages = ¥ 100 = 12.5%
1,600
Similarly, find for deptt. B and C.
1,68,000 + 4, 25,600 + 5,08,800
(ii) Average wage for total workers =
105 + 304 + 424
Then, find percentage increase as before.
24. The following table gives the distribution of the number of kilometres travelled per
salesman, of a pharmaceutical company, per day and their rates of conveyance
allowance:
No. of kilometre No. of Rate of conveyance
travelled per salesman allowance per kilo -
salesman metre (in Rs)
10 - 20 3 2.50
20 - 30 8 2.60
30 - 40 15 2.70
40 - 50 4 2.80
Calculate the average rate of conveyance allowance given to each salesman per
kilometre by the company.
Hint: Obtain total number of kilometre travelled for each rate of conveyance allowance
by multiplying mid-values of column 1 with column 2. Treat this as frequency 'f'
and third column as 'X' and find X .
25. The details of monthly income and expenditure of a group of five families are given
in the following table:
Income Expenditure per No. of members
Family
( in Rs ) member ( in Rs ) in the family
A 1100 220 4
B 1200 190 5
C 1300 230 4
D 1400 260 3
E 1500 250 4
Find: (i) Average income per member for the entire group of families.
(ii) Average expenditure per family.
(iii) The difference between actual and average expenditure for each family.
Total income of the group of families
Hint: (i) Average income per member = ◊
Total no. of members in the group
Total expenditure of the group

(ii) Average expenditure per family = ◊
No. of families
26. The following table gives distribution of monthly incomes of 200 employees of a
firm:
Income ( in Rs '00 ) : 10-15 15- 20 20- 25 25- 30 30 - 35 35- 40
No. of employees : 30 50 55 32 20 13
Estimate:
(i) Mean income of an employee per month.
(ii) Monthly contribution to welfare fund if every employee belonging to the top
80% of the earners is supposed to contribute 2% of his income to this fund.
43
Hint: The distribution of top 80% of the wage earners can be written as :
Quantitative Techniques for Income( in Rs '00 ) : 16- 20 20 - 25 25- 30 30- 35 35- 40
Management
Frequency : 40 55 32 20 13
By taking mid-values of class intervals find Sfx, i.e., total salary and take 2% of
this.
27. The number of patients visiting diabetic clinic and protein urea clinic in a hospital
during April 1991, are given below :
No. of No. of days of attending
Patients Diabetic Clinic Protein Urea Clinic
0 - 10 2 4
10 - 20 8 6
20 - 30 7 5
30 - 40 7 8
40 - 50 4 3
50 - 60 2 4
Which of these two diseases has more incidence in April 1991? Justify your
conclusion.
Hint: The more incidence of disease is given by higher average number of patients.
28. A company has three categories of workers A, B and C. During 1994, the number
of workers in respective category were 40, 240 and 120 with monthly wages
Rs 1,000, Rs 1,300 and Rs 1,500. During the following year, the monthly wages of
all the workers were increased by 15% and their number, in each category, were
130, 150 and 20, respectively.
(a) Compute the average monthly wages of workers for the two years.
(b) Compute the percentage change of average wage in 1995 as compared with
1994. Is it equal to 15%? Explain.
Hint: Since the weight of the largest wage is less in 1995, the increase in average wage
will be less than 15%.
29. (a) The average cost of producing 10 units is Rs 6 and the average cost of
producing 11 units is Rs 6.5. Find the marginal cost of the 11th unit.
(b) A salesman is entitled to bonus in a year if his average quarterly sales are at
least Rs 40,000. If his average sales of the first three quarters is Rs 35,000,
find his minimum level of sales in the fourth quarter so that he becomes
eligible for bonus.
30. (a) The monthly salaries of five persons were Rs 5,000, Rs 5,500, Rs 6,000, Rs
7,000 and Rs 20,000. Compute their mean salary. Would you regard this mean
as typical of the salaries? Explain.
(b) There are 100 workers in a company out of which 70 are males and 30
females. If a male worker earns Rs 100 per day and a female worker earns
Rs. 70 per day, find average wage. Would you regard this as a typical wage?
Explain
Hint: An average that is representative of most of the observations is said to be a
typical average.
2.6 MEDIAN
Median of distribution is that value of the variate which divides it into two equal parts. In
terms of frequency curve, the ordinate drawn at median divides the area under the curve
44 into two equal parts. Median is a positional average because its value depends upon the
position of an item and not on its magnitude. Measures of Central Tendency
Determination of Median
(a) When individual observations are given
The following steps are involved in the determination of median :
(i) The given observations are arranged in either ascending or descending order of
magnitude.
(ii) Given that there are n observations, the median is given by:
Ê n + 1ˆ
1. The size of ÁË ˜ th observations, when n is odd.
2 ¯
n Ê n + 1ˆ
2. The mean of the sizes of th and ÁË ˜ th observations, when n is even.
2 2 ¯
Example 16: Find median of the following observations :
20, 15, 25, 28, 18, 16, 30.
Solution: Writing the observations in ascending order, we get 15, 16, 18, 20, 25, 28, 30.
Ê 7 + 1ˆ
Since n = 7, i.e., odd, the median is the size of ÁË ˜ th, i.e., 4th observation.
2 ¯
Hence, median, denoted by Md = 20.
Note: The same value of Md will be obtained by arranging the observations in descending
order of magnitude.
Example 17: Find median of the data : 245, 230, 265, 236, 220, 250.
Solution: Arranging these observations in ascending order of magnitude, we get
220, 230, 236, 245, 250, 265. Here n = 6, i.e., even.
6 Ê6 ˆ
\ Median will be arithmetic mean of the size of 2 th, i.e., 3rd and ÁË + 1˜¯ th,
2
236 + 245
i.e., 4th observations. Hence Md = = 240.5 .
2
Remarks: Consider the observations: 13, 16, 16, 17, 17, 18, 19, 21, 23. On the basis of
the method given above, their median is 17.
According to the above definition of median, "half (i.e., 50%) of the observations should
be below 17 and half of the observations should be above 17". Here we may note that
only 3 observations are below 17 and 4 observations are above it and hence, the definition
of median given above is some what ambiguous. In order to avoid this ambiguity, the
median of a distribution may also be defined in the following way :
Median of a distribution is that value of the variate such that at least half of the observations
are less than or equal to it and at least half of the observations are greater than or equal
to it.
Based on this definition, we find that there are 5 observations which are less than or
equal to 17 and there are 6 observations which are greater than or equal to 17. Since
n = 9, the numbers 5 and 6 are both more than half, i.e., 4.5. Thus, median of the
distribtion is 17.
Further, if the number of observations is even and the two middle most observations are
not equal, e.g., if the observations are 2, 2, 5, 6, 7, 8, then there are 3 observations
45
Management Ên ˆ
ÁË = 3˜¯ which are less than or equal to 5 and there are 4 (i.e., more than half) observations
2
which are greater than or equal to 5. Further, there are 4 observations which are less
than or equal to 6 and there are 3 observations which are greater than or equal to 6.
Hence, both 5 and 6 satisfy the conditions of the new definition of median. In such a
case, any value lying in the closed interval [5, 6] can be taken as median. By convention
5+6
we take the middle value of the interval as median. Thus, median is = 5.5
2
(b) When ungrouped frequency distribution is given
In this case, the data are already arranged in the order of magnitude. Here, cumulative
frequency is computed and the median is determined in a manner similar to that of
individual observations.
Example 18: Locate median of the following frequency distribution :
Variable (X) : 10 11 12 13 14 15 16
Frequency ( f ) : 8 15 25 20 12 10 5
Solution:
X : 10 11 12 13 14 15 16
f : 8 15 25 20 12 10 5
c. f . : 8 23 48 68 80 90 95
LM 95 + 1OP th
Here N = 95, which is odd. Thus, median is size of

N 2 Q
i.e., 48th observation. From the table 48th observation is 12, \ Md = 12.
N 95
Alternative Method: = = 47.5 Looking at the frequency distribution we note that
2 2
there are 48 observations which are less than or equal to 12 and there are 72
(i.e., 95 - 23) observations which are greater than or equal to 12. Hence, median is 12.
Example 19: Locate median of the following frequency distribution :
X : 0 1 2 3 4 5 6 7
f : 7 14 18 36 51 54 52 20
Solution:
X 0 1 2 3 4 5 6 7
f 7 14 18 36 51 54 52 20
c. f . 7 21 39 75 126 180 232 252
Here N = 252, i.e., even.

N 252 N
Now = = 126 and + 1 = 127.
2 2 2
\ Median is the mean of the size of 126th and 127th observation. From the table we
note that 126th observation is 4 and 127th observation is 5.
4+5
\ Md = = 4.5
2
Alternative Method: Looking at the frequency distribution we note that there are 126
observations which are less than or equal to 4 and there are 252 - 75 = 177 observations
which are greater than or equal to 4. Similarly, observation 5 also satisfies this criterion.
4+5
Therefore, median = = 4.5.
46 2
(c) When grouped frequency distribution is given (Interpolation formula) Measures of Central Tendency
The determination of median, in this case, will be explained with the help of the following
example.
Example 20: Suppose we wish to find the median of the following frequency distribution.
Classes : 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50 50 - 60
Frequency : 5 12 14 18 13 8
Solution: The median of a distribution is that value of the variate which divides
the distribution into two equal parts. In case of a grouped frequency distribution, this
implies that the ordinate drawn at the median divides the area under
the histogram into two equal parts. Writing the given data in a tabular form, we have :
Classes Frequency ( f ) ' Less than' Frequency
(1) (2) type c. f . ( 3) Density ( 4)
0 - 10 5 5 0. 5
10 - 20 12 17 1. 2
20 - 30 14 31 1. 4
30 - 40 18 49 1. 8
40 - 50 13 62 1. 3
50 - 60 8 70 0. 8
Ê frequency of the class f ˆ

ÁË Note : frequency density in a class = Width of the class = h ˜¯
For the location of median, we make a histogram with heights of different rectangles
equal to frequency density of the corresponding class. Such a histogram is shown below:
Histogram
Figure : 2.1
Since the ordinate at median divides the total area under the histogram into two equal
parts, therefore we have to find a point (like Md as shown in the figure) on X - axis such
that an ordinate (AMd) drawn at it divides the total area under the histogram into two
equal parts.
We may note here that area under each rectangle is equal to the frequency of the
corresponding class.
f
Since area = length × breadth = frequency density× width of class = × h = f.
h
Thus, the total area under the histogram is equal to total frequency N. In the given
example N = 70, therefore N = 35. We note that area of first three rectangles is
2
5 + 12 + 14 = 31 and the area of first four rectangles is 5 + 12 + 14 + 18 = 49. Thus,
median lies in the fourth class interval which is also termed as median class. Let the
point, in median class, at which median lies be denoted by Md. The position of this point
47
Quantitative Techniques for should be such that the ordinate AMd (in the above histogram) divides the area of median
Management
rectangle so that there are only 35 - 31 = 4 observations to its left. From the histogram,
we can also say that the position of Md should be such that
M d - 30 4
= .... (1)
40 - 30 18
40
Thus, M d = + 30 = 32.2
18
Writing the above equation in general notations, we have
N Ê N -Cˆ
M d - Lm 2 - C Á 2 ˜
= or Md = Lm + Á ˜ h ...(2)
h fm ÁË f m ˜¯
Where, Lm is lower limit, h is the width and fm is frequency of the median class and C is
the cumulative frequency of classes preceding median class. Equation (2) gives the
required formula for the computation of median.
Remarks:
1. Since the variable, in a grouped frequency distribution, is assumed to be continuous
N
we always take exact value of , including figures after decimals, when N is odd.
2
2. The above formula is also applicable when classes are of unequal width.
3. Median can be computed even if there are open end classes because here we
need to know only the frequencies of classes preceding or following the median
class.
Determination of Median When 'greater than' type cumulative frequencies are given
By looking at the histogram, we note that one has to find a point denoted by Md such that
area to the right of the ordinate at Md is 35. The area of the last two rectangles is
13 + 8 = 21. Therefore, we have to get 35 - 21 = 14 units of area from the median
rectangle towards right of the ordinate. Let U m be the upper limit of
the median class. Then the formula for median in this case can be written as
N N
-
Um M d -C -C
= 2 or M d = Um - 2 ¥h .... (3)
h fm fm
Note that C denotes the 'greater than type' cumulative frequency of classes following
the median class. Applying this formula to the above example, we get
Md = 40 –
(35 - 21) ¥ 10 = 32.2
18
Example 21: Calculate median of the following data :
Height in inches : 3 - 4 4 - 5 5 - 6 6 - 7 7 - 8 8 - 9 9 - 10 10 - 11
No . of saplings : 3 7 12 16 22 20 13 7
48
Solution: Measures of Central Tendency
Calculation of Median
Class Intervals Frequency ( f ) ' Less than' type c. f .
3-4 3 3
4-5 7 10
5-6 12 22
6-7 16 38
7-8 22 60
8-9 20 80
9 - 10 13 93
10 - 11 7 100
N 100
Since = = 50, the median class is 7- 8. Further, Lm = 7, h = 1, fm = 22 and C = 38.
2 2
50 - 38
Thus, Md = 7 + ¥ 1 = 7.55 inches.
22
Example 22: The following table gives the distribution of marks by 500 students in an
examination. Obtain median of the given data.
Marks : 0 - 9 10 - 19 20 - 29 30 - 39 40 - 49 50 - 59 60 - 69 70 - 79
No. of Students : 30 40 50 48 24 162 132 14
Solution: Since the class intervals are inclusive, therefore, it is necessary to convert
them into class boundaries.
Class Intervals Class Boundaries Frequency ' Less than' type c . f .
0-9 − 0 . 5 - 9. 5 30 30
10 - 19 9 . 5 - 19 . 5 40 70
20 - 29 19. 5 - 29 . 5 50 120
30 - 39 29. 5 - 39. 5 48 168
40 - 49 39 . 5 - 49 . 5 24 192
50 - 59 49 . 5 - 59 . 5 162 354
60 - 69 59 . 5 - 69 . 5 132 486
70 - 79 69 . 5 - 79 . 5 14 500
N
Since = 250, the median class is 49.5 - 59.5 and, therefore, Lm = 49.5, h = 10,
2
fm = 162, C = 192.
250 - 192
Thus, Md = 49.5 + ¥ 10 = 53.08 marks.
162
Example 23: The weekly wages of 1,000 workers of a factory are shown in the following
table. Calculate median.
Weekly Wages (less than) : 425 475 525 575 625 675 725 775 825 875
No. of Workers : 2 10 43 123 293 506 719 864 955 1000
Solution: The above is a 'less than' type frequency distribution. This will first be converted
into class intervals.
Class Intervals Frequency Less than c. f .
less than 425 2 2
425 - 475 8 10
475 - 525 33 43
525 - 575 80 123
575 - 625 170 293
625 - 675 213 506
675 - 725 213 719
725 - 775 145 864
775 - 825 91 955
49
825 - 875 45 1000
N
Management Since = 500, the median class is 625 - 675. On substituting various
2
values in the formula for median, we get
500 − 293
Md = 625 + × 50 = Rs 673.59
213
Example 24: Find the median of the following data :
Age greater than ( in yrs ) : 0 10 20 30 40 50 60 70
No . of Persons : 230 218 200 165 123 73 28 8
Solution: Note that it is 'greater than' type frequency distribution.

Class Intervals Greater than c. f . Frequency
0 - 10 230 12
10 - 12 218 18
20 - 30 200 35
30 - 40 165 42
40 - 50 123 50
50 - 60 73 45
60 - 70 28 20
70 and above 8 8
N 230
Since = = 115, the median class is 40 - 50.
2 2
N
-C
Using the formula, Md = Um - 2 ×h
fm
115 - 73
= 50 - ¥ 10 = 41.6 years
50
Example 25: The following table gives the daily profits (in Rs) of 195 shops of a town.
Calculate mean and median.
Profits : 50 - 60 60 - 70 70 - 80 80 - 90 90 - 100 100 - 110 110 - 120 120 - 130 130 - 140
No.of shops : 15 20 32 35 33 22 20 10 8
Solution: The calculations of X and Md are shown below:

Mid -value X - 95 Less than
Class Intervals f u= fu
(X ) 10 c. f .
50-60 15 55 -4 - 60 15
60-70 20 65 -3 - 60 35
70-80 32 75 -2 - 64 67
80-90 35 85 -1 - 35 102
90-100 33 95 0 0 135
100-110 22 105 1 22 157
110-120 20 115 2 40 177
120-130 10 125 3 30 187
130-140 8 135 4 32 195
Total 195 - 95
∑ fu 95
X =A+ × h = 95 − × 10 = Rs 90.13
N 195
N 195
50 Since 2 = 2 = 97.5, the median class is 80 - 90.
97.5 - 67
\ Md = 80 + ¥ 10 = Rs 88.71
35
Example 26: Find median of the following distribution :
Mid - Values : 1500 2500 3500 4500 5500 6500 7500
Frequency : 27 32 65 78 58 32 8
Solution: Since the mid-values are equally spaced, the difference between their two
successive values will be the width of each class interval. This width is 1,000. On
subtracting and adding half of this, i.e., 500 to each of the mid-values, we get the lower
and the upper limits of the respective class intervals. After this, the calculation of median
can be done in the usual way.
Mid - Values Class Intervals Frequency c. f .(less than)
1500 1000 - 2000 27 27
2500 2000 - 3000 32 59
3500 3000 - 4000 65 124
4500 4000 - 5000 78 202
5500 5000 - 6000 58 260
6500 6000 - 7000 32 292
7500 7000 - 8000 8 300
N
Since = 150, the median class is 4,000 - 5,000.
2
150 - 124
Hence Md = 4,000 + ¥ 1,000 = 4,333.33.
78
Determination of Missing Frequencies
If the frequencies of some classes are missing, however, the median of the distribution is
known, then these frequencies can be determined by the use of median formula.
Example 27: The following table gives the distribution of daily wages of 900 workers.
However, the frequencies of the classes 40 - 50 and 60 - 70 are missing. If the median
of the distribution is Rs 59.25, find the missing frequencies.
Wages ( Rs ) : 30 - 40 40 - 50 50 - 60 60 - 70 70 - 80
No . of Workers : 120 ? 200 ? 185
Solution: Let f1 and f2 be the frequencies of the classes 40 - 50 and 60 - 70 respectively.
Class c. f .
Frequency
Intervals (less than)
30-40 120 120
40-50 f1 120 + f1
50-60 200 320 + f1
60-70 f2 320 + f1 + f 2
70-80 185 900
Since median is given as 59.25, the median class is 50 - 60.
Therefore, we can write
450 - (120 + f1 ) 330 f1

59.25 = 50 + ¥ 10 = 50 +
200 20
or 9.25 × 20 = 330 - f1 or f1 = 330 - 185 = 145

Further, f2 = 900 - (120 + 145 + 200 + 185) = 250. 51
Quantitative Techniques for Graphical location of Median
Management
So far we have calculated median by the use of a formula. Alternatively, it can be
determined graphically, as illustrated in the following example.
Example 28: The following table shows the daily sales of 230 footpath sellers of Chandni
Chowk :
Sales ( in Rs ) : 0 - 500 500 - 1000 1000 - 1500 1500 - 2000
No . of Sellers : 12 18 35 42
Sales ( in Rs ) : 2000 - 2500 2500 - 3000 3000 - 3500 3500 - 4000
No . of Sellers : 50 45 20 8
Locate the median of the above data using
(i) only the less than type ogive, and
(ii) both, the less than and the greater than type ogives.
Solution: To draw ogives, we need to have a cumulative frequency distribution.
Class Intervals Frequency Less than c. f . More than c. f .
0 - 500 12 12 230
500 - 1000 18 30 218
1000 - 1500 35 65 200
1500 - 2000 42 107 165
2000 - 2500 50 157 123
2500 - 3000 45 202 73
3000 - 3500 20 222 28
3500 - 4000 8 230 8
(i) Using the less than type ogive
Figure 2.2
The value N = 115 is marked on the vertical axis and a horizontal line is drawn from this
2
point to meet the ogive at point S. Drop a perpendicular from S. The point at which this
meets X- axis is the median.
(ii) Using both types of ogives
52 Figure 2.3
A perpendicular is dropped from the point of intersection of the two ogives. The point at Measures of Central Tendency
which it intersects the X-axis gives median. It is obvious from Fig. 2.2 and 2.3 that
median = 2080.
Properties of Median
1. It is a positional average.
2. It can be shown that the sum of absolute deviations is minimum when taken from
median. This property implies that median is centrally located.
Merits and Demerits of Median
(a) Merits
1. It is easy to understand and easy to calculate, especially in series of individual
observations and ungrouped frequency distributions. In such cases it can even be
located by inspection.
2. Median can be determined even when class intervals have open ends or not of
equal width.
3. It is not much affected by extreme observations. It is also independent of range or
dispersion of the data.
4. Median can also be located graphically.
5. It is centrally located measure of average since the sum of absolute deviation is
minimum when taken from median.
6. It is the only suitable average when data are qualitative and it is possible to rank
various items according to qualitative characteristics.
7. Median conveys the idea of a typical observation.
(b) Demerits
1. In case of individual observations, the process of location of median requires their
arrangement in the order of magnitude which may be a cumbersome task,
particularly when the number of observations is very large.
2. It, being a positional average, is not capable of being treated algebraically.
3. In case of individual observations, when the number of observations is even, the
median is estimated by taking mean of the two middle-most observations, which is
not an actual observation of the given data.
4. It is not based on the magnitudes of all the observations. There may be a situation
where different sets of observations give same value of median. For example, the
following two different sets of observations, have median equal to 30.
Set I : 10, 20, 30, 40, 50 and Set II : 15, 25, 30, 60, 90.
5. In comparison to arithmetic mean, it is much affected by the fluctuations of sampling.
6. The formula for the computation of median, in case of grouped frequency distribution,
is based on the assumption that the observations in the median class are uniformly
distributed. This assumption is rarely met in practice.
7. Since it is not possible to define weighted median like weighted arithmetic mean,
this average is not suitable when different items are of unequal importance.
Uses
1. It is an appropriate measure of central tendency when the characteristics are not
measurable but different items are capable of being ranked.
2. Median is used to convey the idea of a typical observation of the given data.
3. Median is the most suitable measure of central tendency when the frequency
distribution is skewed. For example, income distribution of the people is generally
positively skewed and median is the most suitable measure of average in this case.
4. Median is often computed when quick estimates of average are desired.
5. When the given data has class intervals with open ends, median is preferred as a
measure of central tendency since it is not possible to calculate mean in this case. 53
Management Check Your Progress 2.1
1 What are the merits and demerits of Mean and Median?

2. Find Arithmetic mean of first ten prime numbers.
answers in it.
_____________________________________________________________________
____________________________________________________________________________________________________________________
_____________________________________________________________________
__________________________________________________________________
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2.7 OTHER PARTITION OR POSITIONAL MEASURES

Median of a distribution divides it into two equal parts. It is also possible to divide it into
more than two equal parts. The values that divide a distribution into more than two equal
parts are commonly known as partition values or fractiles. Some important partition
values are discussed in the following sections.
Quartiles
The values of a variable that divide a distribution into four equal parts are called quartiles.
Since three values are needed to divide a distribution into four parts, there are three
quartiles, viz. Q1, Q2 and Q3, known as the first, second and the third quartile respectively.
For a discrete distribution, the first quartile (Q1) is defined as that value of the variate
such that at least 25% of the observations are less than or equal to it and at least 75% of
the observations are greater than or equal to it.
For a continuous or grouped frequency distribution, Q1 is that value of the variate such
that the area under the histogram to the left of the ordinate at Q1 is 25% and the area to
its right is 75%. The formula for the computation of Q1 can be written by making suitable
changes in the formula of median.
After locating the first quartile class, the formula for Q1 can be written as follows:
FG N − CIJ
Q1 = LQ1 +
H 4 K ×h
fQ
1
Here, LQ1 is lower limit of the first quartile class, h is its width, fQ1 is its frequency and C
is cumulative frequency of classes preceding the first quartile class.
By definition, the second quartile is median of the distribution. The third quartile (Q3) of
a distribution can also be defined in a similar manner.
For a discrete distribution, Q3 is that value of the variate such that at least 75% of the
observations are less than or equal to it and at least 25% of the observations are greater
than or equal to it.
For a grouped frequency distribution, Q3 is that value of the variate such that area under
the histogram to the left of the ordinate at Q3 is 75% and the area to its right is 25%. The
formula for computation of Q3 can be written as
FG 3N − CIJ
54 Q3 = LQ3 +
H 4 K × h, where the symbols have their usual meaning.
f Q3
Deciles Measures of Central Tendency
Deciles divide a distribution into 10 equal parts and there are, in all, 9 deciles denoted as
D1, D2, ...... D9 respectively.
For a discrete distribution, the i th decile Di is that value of the variate such that at least
(10i)% of the observation are less than or equal to it and at least (100 - 10i)% of the
observations are greater than or equal to it (i = 1, 2, ...... 9).
For a continuous or grouped frequency distribution, D i is that value of the variate such
that the area under the histogram to the left of the ordinate at Di is (10i)% and the area
to its right is (100 - 10i)%. The formula for the i th decile can be written as
FG iN − CIJ
Di = LDi +
H 10 K × h (i = 1, 2, ...... 9)
f Di
Percentiles
Percentiles divide a distribution into 100 equal parts and there are, in all, 99 percentiles
denoted as P1, P2, ...... P25, ...... P40, ...... P60, ...... P99 respectively.
For a discrete distribution, the kth percentile Pk is that value of the variate such that at
least k% of the observations are less than or equal to it and at least (100 - k)% of the
observations are greater than or equal to it.
For a grouped frequency distribution, Pk is that value of the variate such that the area
under the histogram to the left of the ordinate at Pk is k% and the area to its right is
(100 - k)% . The formula for the kth percentile can be written as
FG kN − CIJ
Pk = L Pk +
H 100 K × h, (k = 1, 2, ...... 99)
f Pk
Remarks :
(i) We may note here that P25 = Q1, P50 = D5 = Q2 = Md, P75 = Q3, P10 = D1, P20 = D2,
etc.
(ii) In continuation of the above, the partition values are known as Quintiles (Octiles) if
a distribution is divided in to 5 (8) equal parts.
(iii) The formulae for various partition values of a grouped frequency distribution, given
so far, are based on 'less than' type cumulative frequencies. The corresponding
formulae based on 'greater than' type cumulative frequencies can be written in a
similar manner, as given below:
Ê 3N ˆ ÊN ˆ
ÁË - C˜ ÁË - C ˜¯
4 ¯ 4
Q1 = U Q1 - ¥ h , Q3 = U Q3 - ¥h
f Q1 f Q3
ÈÊ iN ˆ ˘ ÈÊ kN ˆ ˘
ÍÁË N - 10 ˜¯ - C ˙ ÍÁË N - 100 ˜¯ - C ˙
Î ˚ ¥h, -Î ˚¥
Di = U Di - Pk = U PK h
f Di f Pk
Here UQ1 ,UQ3 ,UDi ,U PK are the upper limits of the corresponding classes and C
denotes the greater than type cumulative frequencies.
Example 29: Locate Median, Q1, Q3, D4, D7, P15, P60 and P90 from the following data :
Daily Profit ( in Rs ) : 75 76 77 78 79 80 81 82 83 84 85
No . of Shops : 15 20 32 35 33 22 20 10 8 3 2
Solution: First we calculate the cumulative frequencies, as in the following table : 55
Management Daily Profit ( in Rs ) 75 76 77 78 79 80 81 82 83 84 85
No . of Shops ( f ) 15 20 32 35 33 22 20 10 8 3 2
Less than c . f . 15 35 67 102 135 157 177 187 195 198 200
N
1. Determination of Median: Here = 100. From the cumulative frequency column,
2
we note that there are 102 (greater than 50% of the total) observations that are
less than or equal to 78 and there are 133 observations that are greater than or
equal to 78. Therefore, Md = Rs 78.
N
2. Determination of Q1 and Q3: First we determine which is equal to 50. From
4
the cumulative frequency column, we note that there are 67 (which is greater than
25% of the total) observations that are less than or equal to 77 and there are 165
(which is greater than 75% of the total) observations that are greater than or equal
to 77. Therefore, Q1 = Rs 77. Similarly, Q3 = Rs 80.
3. Determination of D4 and D7: From the cumulative frequency column, we note
that there are 102 (greater than 40% of the total) observations that are less than or
equal to 78 and there are 133 (greater than 60% of the total) observations that are
greater than or equal to 78. Therefore, D4 = Rs 78. Similarly, D7 = Rs 80.
4. Determination of P15, P60 and P90: From the cumulative frequency column, we
note that there are 35 (greater than 15% of the total) observations that are less
than or equal to 76 and there are 185 (greater than 85% of the total) observations
that are greater than or equal to 76. Therefore, P15 = Rs 76. Similarly, P60 = Rs 79
and P90 = Rs 82.
Example 30: Calculate median, quartiles, 3rd and 6th deciles and 40th and 70th
percentiles, from the following data:
Wages per Week ( in Rs ) : 50 - 100 100 - 150 150 - 200 200 - 250 250 - 300
No . of Workers : 15 40 35 60 125
Wages per Week ( in Rs ) : 300 - 350 350 - 400 400 - 450 450 - 500
No . of Workers : 100 70 40 15
Also determine (i) The percentage of workers getting weekly wages between Rs 125
and Rs 260 and (ii) percentage of worker getting wages greater than Rs 340.
Solution: First we make a cumulative frequency distribution table :
Class Intervals Frequency c. f . (less than)

50 - 100 15 15
100 - 150 40 55
150 - 200 35 90
200 - 250 60 150
250 - 300 125 275
300 - 350 100 375
350 - 400 70 445
400 - 450 40 485
450 - 500 15 500
N
(i) Calculation of median: Here N = 500 so that = 250. Thus, median class is
2
250 - 300 and hence Lm = 250, fm = 125, h = 50 and C = 150.
Substituting these values in the formula for median, we get
250 - 150
Md = 250 + ¥ 50 = Rs 290
56 125
(ii) Calculation of Quartiles: Measures of Central Tendency
N
(a) For Q1, we first find which is equal to 125. The first quartile class is
4
200 - 250 and hence LQ1 = 200, fQ1 = 60, h = 50 and C = 90.
125 - 90
\ Q1 = 200 + ¥ 50 = Rs 229.17
60
3N
(b) For Q3 we first find which is equal to 375. The third quartile class is
4
300 - 350 and hence LQ3 = 300, fQ3 = 100, h = 50 and C =275.
375 - 275
\ Q3 = 300 + ¥ 50 = Rs 350
100
(iii) Calculation of Deciles:
3N
(a) For D3 we first find which is equal to 150. The third decile class is
10
200 - 250 and hence LD3 = 200, fD3 = 60, h = 50, C = 90.
150 - 90
\ D3 = 200 + ¥ 50 = Rs 250
60
6N
(b) For D6 we first find which is equal to 300. The sixth decile class is
10
300 - 350 and hence LD6 = 300, fD6 = 100, h = 50 and C = 275.
300 - 275
\ D6 = 300 + ¥ 50 = Rs 312.50
100
(iv) Calculation of percentiles:
40 N
(a) For P40 we first find which is equal to 200. The 40th percentile class is
100
250 - 300 and hence LP40 = 250, fP40 = 125, h = 50 and C = 150.
200 - 150
\ P40 = 250 + ¥ 50 = Rs 270
125
70N
(b) For P70 we first find which is equal to 350. The 70th percentile class is
100
300 - 350 and hence LP70 = 300, fP70 = 100, h = 50 and C = 275.
350 - 275
\ P70 = 300 + ¥ 50 = Rs 337.5
100
(v) Determination of percentage of workers getting wages between Rs 125
and Rs 260:
Let x be the percentage of workers getting wage less than 125. Since 125 lies in
the class 100 - 150, this is xth percentiles class. Using the formula for xth percentile
we have
x.500
- 15
125 = 100 + 100 ¥ 50 or 5x – 15 = 20 fi x = 7
40
Further, let y be the percentage of workers getting wages less then 260. Since 260
lies in the class 250 - 300, this is yth percentile class. Using the relevant formula,
we have 57
Management 5 y - 150
260 = 250 + ¥ 50 or 5y – 150 = 25 or y = 35
125
Hence percentage of workers getting wages between Rs 125 and Rs 260 is given
by 35 – 7 = 28%.
Alternative Method
The number of workers getting wages between 125 and 260 can be written directly
as
150 - 125 260 - 250

= ¥ 40 + 35 + 60 + ¥ 125 = 20 + 35 + 60 + 25 = 140.
50 50
140
\ Percentage of workers = × 100 = 28%.
500
(vi) Determination of percentage of workers getting wages greater than Rs 340:
Since we have already computed 'less than' type cumulative frequencies, in the
above table, we shall first find percentage of workers getting wages less than 340.
Let x be this percentage. Also xth percentiles class is 300 - 350.
5 x - 275
\ 340 = 300 + ¥ 50 or 5x - 275 = 80 or x = 71
100
Hence, percentage of workers getting wages greater than Rs 340 is (100 - 71)
= 29%.
Alternative Method
This percentage can also be obtained directly as shown below.
The percentage of workers getting wages greater than Rs 340
350 - 340
= ¥ 100 + 70 + 40 + 15 = 145
50
145
\ Percentage = ¥ 100 = 29%
500
Example 31: From the following table, showing the wage distribution of workers, find
(i) the range of incomes earned by middle 50% of the workers,
(ii) the range of incomes earned by middle 80% of the workers,
(iii) the percentage of workers earning between Rs 550 and Rs 880.
Monthly Income ( Rs ) No . of Workers
0 - 200 150
0 - 400 250
0 - 600 330
0 - 800 380
0 - 1000 400
Solution: The above table gives a 'less than' type cumulative frequency distribution.
Therefore, we can rewrite the above table as :
Monthly Income ( Rs ) c . f . ( less than ) Frequency ( f )
0 - 200 150 150
200 - 400 250 100
400 - 600 330 80
600 - 800 380 50
58 800 - 1000 400 20
(i) The range of incomes earned by middle 50% of the workers is given by Q3 - Q1. Measures of Central Tendency
100 0
Now Q1 = 0 + × 200 = Rs 133.33
150
300 - 250
and Q3 = 400 + ¥ 200 = Rs 525.
80
Thus, Q3 - Q1 = 525 - 133.33 = Rs. 391.67.
(ii) The range of incomes of middle 80% of the workers is given by P90 - P10.
10 ¥ 400
-0
100 ¥ 200 = Rs 53.33
Now P10 = 0 +
150
90 ¥ 400
- 330
100 ¥ 200 = Rs 720.
and P90 = 600 +
50
Thus, P90 - P10 = 720 - 53.33 = Rs 666.67.
(iii) The No. of workers earning between Rs 550 and Rs 880 is given by
600 - 550 880 - 800
¥ 80 + 50 + ¥ 20 = 78.
200 200
78
\ Percentage of workers = × 100 = 19.5%
400
Example 32: The following incomplete table gives the number of students in different
age groups of a town. If the median of the distribution is 11 years, find out the missing
frequencies.
Age Group : 0-5 5 - 10 10 - 15 15 - 20 20 - 25 25 - 30 Total
No. of Students : 15 125 ? 66 ? 4 300
Solution: Let x be the frequency of age group 10 - 15. Then the frequency of the age
group 20 - 25 will be 300 - (15 + 125 + x + 66 + 4) = 90 - x.
Making a cumulative frequency table we have
Age Groups No . of Students c . f . ( less than )
0-5 15 15
5 - 10 125 140
10 - 15 x 140 + x
15 - 20 66 206 + x
20 - 25 90 − x 296
25 - 30 4 300
N 300
Here = = 150. Since median is given as 11, the median class is 10 - 15.
2 2
150 - 140
Hence, 11 = 10 + ¥ 5 or x = 50.
x
Also, frequency of the age group 20 - 25 is 90 - 50 = 40.
Exercise with Hints

1. The following table gives weekly income of 24 families in a certain locality :
S. No. of family : 1 2 3 4 5 6 7 8 9 10 11 12
Weekly Income : 60 400 86 95 100 150 110 74 90 92 280 180
S. No. of family : 13 14 15 16 17 18 19 20 21 22 23 24
Weekly Income : 96 98 104 75 80 94 100 75 600 82 200 84
Calculate Md, Q1, Q3, D4, D7, P20, P45, and P95. 59
Quantitative Techniques for Hint: Arrange the data in ascending or descending order of magnitude and then calculate
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various values. For calculation of Q1 there are two values satisfying the definition.
These two values are 82 and 84. Thus, Q1 can be any value in the closed interval
[82, 84]. By convention, the mid-value of the interval is taken as Q1.
2. Calculate the value of Md, Q1, Q3, D2, D8, P35, P48, and P68, from the following
data:
Classes : below 10 10 -15 15- 20 20 - 25 25- 30 30 - 35 35- 40 40 - 45 45- 50
Frequency : 1 2 5 7 10 7 5 2 1

3. Find median from the following data:
Wages/Week ( Rs ) : 50 - 59 60 - 69 70 - 79 80 - 89 90 - 99 100 - 109 110 - 119
No . of Workers : 15 40 50 60 45 40 15
Hint: This is a distribution with inclusive class intervals. To compute median, these are
to be converted into exclusive intervals like 49.5 - 59.5, 59.5 - 69.5, etc.
4. The following table gives the distribution of wages of 65 employees in a
factory :
Wages ( ≥ ) : 50 60 70 80 90 100 110 120
No. of employees : 65 57 47 31 17 7 2 0
Draw a 'less than type' ogive from the above data and estimate the number of
employees earning at least Rs 63 but less than Rs 75.
Hint: To draw a 'less than' type ogive, the distribution is to be converted into 'less than'
type cumulative frequencies.
5. The following table shows the age distribution of persons in a particular region:
Age ( years) No. of Persons (' 000)
Below 10 2
Below 20 5
Below 30 9
Below 40 12
Below 50 14
Below 60 15
Below 70 15. 5
70 and above 15. 6
(i) Find median age.
(ii) Why is the median a more suitable measure of central tendency than mean in
this case?
Hint: Median is suitable here because the upper limit of the last class is not known and
therefore, mean cannot be satisfactorily calculated.
6. A number of particular articles have been classified according to their weights.
After drying for two weeks the same articles have again been weighed and similarly
classified. It is known that median weight in the first weighing was 20.83 oz. while
in second weighing it was 17.35 oz. Some frequencies a and b in the first weighing
1
and x and y in the second weighing, are missing. It is known that a = x and
3
1
b = y. Find the missing frequencies.
2
Classes 0 - 5 5 - 10 10 - 15 15 - 20 20 - 25 25 - 30
1st weighing a b 11 52 75 22
Frequency 2nd
2nd weighing x y 40 50 30 28
60
ÈÊ 160 + a + b ˆ ˘
ÍÁË ˜¯ - (63 + a + b )˙
Hint: Î 2 ˚ .... (1)
20.83 = 20 + ¥5
75
ÈÊ 148 + x + 4 ˆ ˘
ÍÁË ˜¯ - ( 40 + x + y )˙
Î 2 ˚
and 17.35 = 15 + ¥5 .... (2)
50
Put x = 3a and y = 2b in equation (2) and solve (1) and (2) simultaneously.
7. The percentage distribution of regularly employed workers who commute between
home and work place by foot and those who use cycles, according to the distance
is given below. How will you find the mean distance and the median distance of the
walkers and cyclists? State your assumptions carefully.
Distance in kms Walkers Cyclists
less than 1 4 45.3 11
.
1 4 -1 2 211. 6.0
1 2 -1 15.2 9.6
1- 2 9.8 17.9
2-3 5.3 20.5
3- 4 2.2 19.2
4 -5 0.6 19.2
15.2
above 5 0.5 10.5
Hint: The given percentage of walkers and cyclists can be taken as frequencies. For
calculation of mean, the necessary assumption is that the width of the first class is
1
equal to the width of the following class, i.e., . On this assumption, the lower limit
4
of the first class can be taken as 0. Similarly, on the assumption that width of the
last class is equal to the width of last but one class, the upper limit of last class can
be taken as 6. No assumption is needed for the calculation of median.
8. In a factory employing 3,000 persons, 5 percent earn less than Rs 3 per hour, 580
earn Rs 3.01 to 4.50 per hour, 30 percent earn from Rs 4.51 to Rs 6.00 per hour,
500 earn from 6.01 to Rs 7.5 per hour, 20 percent earn from Rs 7.51 to Rs 9.00 per
hour and the rest earn Rs 9.01 or more per hour. What is the median wage?
Hint: Write down the above information in the form of a frequency distribution. The
class intervals given above are inclusive type. These should be converted into
exclusive type for the calculation of median.
9. The distribution of 2,000 houses of a new locality according to their distance from
a milk booth is given in the following table :
Distance No . of Distance No . of
( in metres ) Houses ( in metres ) Houses
0 - 50 20 350 - 400 275
50 - 100 30 400 - 450 400
100 - 150 35 450 - 500 325
150 - 200 46 500 - 550 205
200 - 250 50 550 - 600 184
250 - 300 105 600 - 650 75
300 - 350 200 650 - 700 50
(i) Calculate the median distance of a house from milk booth.
(ii) In second phase of the construction of the locality, 500 additional houses were
constructed out of which the distances of 200, 150 and 150 houses from the
milk booth were in the intervals 450 - 500, 550 - 600 and 650 - 700 meters
respectively. Calculate the median distance, taking all the 2500 houses into
account.
61
Quantitative Techniques for Hint: Add 200, 150 and 150 to the respective frequencies of the class intervals
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450 - 500, 550 - 600 and 650 - 700.
10. The monthly salary distribution of 250 families in a certain locality of Agra is given
below.
Monthly Salary No. of Families Monthly Salary No. of Families
more than 0 250 more than 2000 55
Draw a ‘less than’ ogive for the data given above and hence find out :
(i) The limits of the income of the middle 50% of the families. (ii) If income tax is
to be levied on families whose income exceeds Rs 1800 p.m., calculate the
percentage of families which will be paying income tax.
11. The following table gives the frequency distribution of marks of 800 candidates in
an examination :
Marks : 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50
No. of candidates : 10 40 80 140 170
Marks : 50 - 60 60 - 70 70 - 80 80 - 90 90 - 100
No. of candidates : 130 100 70 40 20
Draw 'less than' and 'more than' type ogives for the above data and answer the
following from the graph :
(i) If the minimum marks required for passing are 35, what percentage of
candidates pass the examination?
(ii) It is decided to allow 80% of the candidate to pass, what should be the minimum
marks for passing?
(iii) Find the median of the distribution.
12. Following are the marks obtained by a batch of 10 students in a certain class test in
statistics (X) and accountancy (Y).
Roll No. : 1 2 3 4 5 6 7 8 9 10
X : 63 64 62 32 30 60 47 46 35 28
Y : 68 66 35 42 26 85 44 80 33 72
In which subject the level of knowledge of student is higher?
Hint: Compare median of the two series.
13. The mean and median marks of the students of a class are 50% and 60%
respectively. Is it correct to say that majority of the students have secured more
than 50% marks? Explain.
Hint: It is given that at least 50% of the students have got 60% or more marks.
14. The monthly wages of 7 workers of a factory are : Rs 1,000, Rs 1,500, Rs 1,700,
Rs 1,800, Rs 1,900, Rs 2,000 and Rs 3,000. Compute mean and median. Which
measure is more appropriate? Which measure would you use to describe the situation
if you were (i) a trade union leader, (ii) an employer?
Hint: (i) median, (ii) mean.
15. A boy saves Re. 1 on the first day, Rs 2 on the second day, ...... Rs 31 on the 31st
day of a particular month. Compute the mean and median of his savings per day.
If his father contributes Rs 10 and Rs 100 on the 32nd and 33rd day respectively,
compute mean and median of his savings per day. Comment upon the results.
62 Hint: Mean is too much affected by extreme observations.
2.8 MODE
Mode is that value of the variate which occurs maximum number of times in a distribution
and around which other items are densely distributed. In the words of Croxton and
Cowden, “The mode of a distribution is the value at the point around which the items
tend to be most heavily concentrated. It may be regarded the most typical of a series of
values.” Further, according to A.M. Tuttle, “Mode is the value which has the greatest
frequency density in its immediate neighbourhood.”
If the frequency distribution is regular, then mode is determined by the value corresponding
to maximum frequency. There may be a situation where concentration of observations
around a value having maximum frequency is less than the concentration of observations
around some other value. In such a situation, mode cannot be determined by the use of
maximum frequency criterion. Further, there may be concentration of observations around
more than one value of the variable and, accordingly, the distribution is said to be bi-
modal or multi-modal depending upon whether it is around two or more than two values.
The concept of mode, as a measure of central tendency, is preferable to mean and
median when it is desired to know the most typical value, e.g., the most common size of
shoes, the most common size of a ready-made garment, the most common size of income,
the most common size of pocket expenditure of a college student, the most common size
of a family in a locality, the most common duration of cure of viral-fever, the most
popular candidate in an election, etc.
Determination of Mode
(a) When data are either in the form of individual observations or in the form of ungrouped
frequency distribution
Given individual observations, these are first transformed into an ungrouped frequency
distribution. The mode of an ungrouped frequency distribution can be determined in two
ways, as given below :
(i) By inspection or
(ii) By method of Grouping
(i) By inspection: When a frequency distribution is fairly regular, then mode is often
determined by inspection. It is that value of the variate for which frequency is
maximum. By a fairly regular frequency distribution we mean that as the values of
the variable increase the corresponding frequencies of these values first increase
in a gradual manner and reach a peak at certain value and, finally, start declining
gradually in, approximately, the same manner as in case of increase.
Example 33: Compute mode of the following data :
3, 4, 5, 10, 15, 3, 6, 7, 9, 12, 10, 16, 18,
20, 10, 9, 8, 19, 11, 14, 10, 13, 17, 9, 11
Solution: Writing this in the form of a frequency distribution, we get
Values : 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Frequency : 2 1 1 1 1 1 3 4 2 1 1 1 1 1 1 1 1 1
\ Mode = 10
Remarks :
(i) If the frequency of each possible value of the variable is same, there is no mode.
(ii) If there are two values having maximum frequency, the distribution is said to be bi-
modal. 63
Quantitative Techniques for Example 34: Compute mode of the following distribution:
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X: 5 10 15 20 25 30 35 40
f: 2 4 6 10 15 9 5 4
Solution: The given distribution is fairly regular. Therefore, the mode can be deter-
mined just by inspection. Since for X = 25 the frequency is maximum, mode = 25.
(ii) By method of Grouping: This method is used when the frequency distribution is
not regular. Let us consider the following example to illustrate this method.
Example 35: Determine the mode of the following distribution
X : 10 11 12 13 14 15 16 17 18 19
f : 8 15 20 100 98 95 90 75 50 30
Solution: This distribution is not regular because there is sudden increase in frequency
from 20 to 100. Therefore, mode cannot be located by inspection and hence the method
of grouping is used. Various steps involved in this method are as follows :
(i) Prepare a table consisting of 6 columns in addition to a column for various values
of X.
(ii) In the first column, write the frequencies against various values of X as given in the
question.
(iii) In second column, the sum of frequencies, starting from the top and grouped in
twos, are written.
(iv) In third column, the sum of frequencies, starting from the second and grouped in
twos, are written.
(v) In fourth column, the sum of frequencies, starting from the top and grouped in
threes are written.
(vi) In fifth column, the sum of frequencies, starting from the second and grouped in
threes are written.
(vii) In the sixth column, the sum of frequencies, starting from the third and grouped in
threes are written.
The highest frequency total in each of the six columns is identified and analysed to
determine mode. We apply this method for determining mode of the above example.
Analysis Table
V A R I A B L E
Columns 10 11 12 13 14 15 16 17 18 19
1 1
2 1 1
3 1 1
4 1 1 1
5 1 1 1
6 1 1 1
64 Total 0 0 0 3 4 4 2 1 0 0
Since the value 14 and 15 are both repeated maximum number of times in the analysis Measures of Central Tendency
table, therefore, mode is ill defined. Mode in this case can be approximately located by
the use of the following formula, which will be discussed later, in this chapter.
Mode = 3 Median - 2 mean
Calculation of Median and Mean
X 10 11 12 13 14 15 16 17 18 19 Total
f 8 15 20 100 98 95 90 75 50 30 581
c. f . 8 23 43 143 241 336 426 501 551 581
fX 80 165 240 1300 1372 1425 1440 1275 900 570 8767
Ê 581 + 1ˆ 8767
Median = Size of ÁË ˜¯ th, i.e., 291st observation = 15. Mean = = 15.09
2 581
\ Mode = 3 ×15 - 2 ×15.09 = 45 - 30.18 = 14.82
Remarks: If the most repeated values, in the above analysis table, were not adjacent,
the distribution would have been bi-modal, i.e., having two modes
Example 36: From the following data regarding weights of 60 students of a class, find
modal weight :
Weight : 50 51 52 53 54 55 56 57 58 59 60
No. of Students : 2 4 5 6 8 5 4 7 11 5 3
Solution: Since the distribution is not regular, method of grouping will be used for
determination of mode.
Grouping Table
Analysis Table
W E I G H T S
Columns 50 51 52 53 54 55 56 57 58 59 60
1 1
2 1 1
3 1 1
4 1 1 1
5 1 1 1
6 1 1 1 1 1 1
Total 0 0 1 1 1 0 1 3 6 3 1
Since the value 58 has occurred maximum number of times, therefore, mode of the
distribution is 58 kgs.
(b) When data are in the form of a grouped frequency distribution
The following steps are involved in the computation of mode from a grouped frequency
distribution.
(i) Determination of modal class: It is the class in which mode of the distribution
lies. If the distribution is regular, the modal class can be determined by inspection,
65
otherwise, by method of grouping.
Quantitative Techniques for (ii) Exact location of mode in a modal class (interpolation formula): The exact
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location of mode, in a modal class, will depend upon the frequencies of the classes
immediately preceding and following it. If these frequencies are equal, the mode
would lie at the middle of the modal class interval. However, the position of mode
would be to the left or to the right of the middle point depending upon whether the
frequency of preceding class is greater or less
than the frequency of the class following it. The
exact location of mode can be done by the use of
interpolation formula, developed below :
Let the modal class be denoted by Lm - Um, where
Lm and Um denote its lower and the upper limits
respectively. Further, let fm be its frequency and h
its width. Also let f1 and f2 be the respective
frequencies of the immediately preceding and
following classes. Figure 2.4
We assume that the width of all the class intervals of the distribution are equal. If
these are not equal, make them so by regrouping under the assumption that
frequencies in a class are uniformly distributed.
Make a histogram of the frequency distribution with height of each rectangle equal
to the frequency of the corresponding class. Only three rectangles, out of the
complete histogram, that are necessary for the purpose are shown in the above
figure.
Let ∆ 1 = fm - f1 and ∆ 2 = fm - f2. Then the mode, denoted by Mo, will divide the
D1
modal class interval in the ratio D . The graphical location of mode is shown
2
in Fig. 2.4.
To derive a formula for mode, the point Mo in the figure, should be such that
M o - Lm D1
=
U m - M o D 2 or MoD2 - LmD2 = UmD1 - MoD1
fi ( D1 + D2)Mo = LmD2 + UmD1 = LmD2 + (Lm + h)D1 (where Um = Lm + h)

= ( D1 + D2) Lm + D1h
Dividing both sides by D1 + D2, we have
∆1
M o = Lm + ×h .... (1)
∆1 + ∆2
By slight adjustment, the above formula can also be written in terms of the upper
limit (Um) of the modal class.
∆ LM ∆ OP
Mo = Um - h + ∆ + ∆ × h = Um - 1 − ∆ + ∆ × h
1 1
1 2 1 N 2 Q
È D2 ˘
= Um - Í ¥ h˙ .... (2)
Î D1 + D 2 ˚
Replacing D1 by fm - f1 and D2 by fm - f2, the above equations can be written as
f m - f1
Mo = Lm + 2 f - f - f ¥ h .... (3)
m 1 2
66
fm - f2
and Mo = Um - 2 f - f - f ¥ h .... (4)
m 1 2
Note: The above formulae are applicable only to a unimodal frequency distribution.
Example 37: The monthly profits (in Rs) of 100 shops are distributed as follows :
Profit per Shop : 0 - 100 100 - 200 200 - 300 300 - 400 400 - 500 500 - 600
No. of Shops : 12 18 27 20 17 6
Determine the 'modal value' of the distribution graphically and verify the result by
calculation.
Solution: Since the distribution is regular, the modal class would be a class having the
highest frequency. The modal class, of the given distribution, is 200 - 300.
Graphical Location of Mode
To locate mode we draw a histogram of the
given frequency distribution. The mode is
located as shown in Fig. 9.5. From the figure,
mode = Rs 256.
Determination of Mode by interpolation
formula Figure 2.5
Since the modal class is 200 - 300, Lm = 200, D1 = 27 - 18 = 9, D2 = 27 - 20 = 7 and
h = 100.
9
\ Mo = 200 + ¥ 100 = Rs 256.25
9+7
Example 38: The frequency distribution of marks obtained by 60 students of a class in
a college is given below :
Marks : 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59 60 - 64
Frequency : 3 5 12 18 14 6 2
Find mode of the distribution.
Solution: The given class intervals are first converted into class boundaries, as given in
the following table :
Marks : 29. 5 - 34. 5 34. 5 - 39. 5 39. 5 - 44. 5 44. 5 - 49. 5
Frequency : 3 5 12 18
Marks : 49. 5 - 54. 5 54. 5 - 59. 5 59. 5 - 64. 5
Frequency : 14 6 2
We note that the distribution is regular. Thus, the modal class, by inspection, is
44.5 - 49.5.
Further, Lm = 44.5, D1 = 18 - 12 = 6, D2 = 18 - 14 = 4 and h = 5
6
\ Mode = 44.5 + ¥ 5 = 47.5 marks
6+4
Example 39: Calculate mode of the following data :
Weekly Wages ( Rs ) : 200- 250 250- 300 300- 350 350- 400
No. of Workers : 4 6 20 12
Weekly Wages ( Rs ) : 400- 450 450- 500 500- 550 550- 600
No. of Workers : 33 17 8 2
Solution: Since the frequency distribution is not regular, the modal class will be determined
by the method of grouping.
67
Quantitative Techniques for Grouping Table
Management
Analysis Table
Columns 300 - 350 350 - 400 400 - 450 450 - 500 500 - 550
1 1
2 1 1
3 1 1
4 1 1 1
5 1 1 1
6 1 1 1
Total 1 3 6 3 1
The modal class, from analysis table, is 400 - 500.

Thus, Lm = 400, D1 = 33 - 12 = 21, D2 = 33 - 17 = 16 and h = 50
21
Hence, mode = 400 + ¥ 50 = Rs 428.38
37
Example 40: Calculate mode of the following distribution :
Weights (lbs. ) : below 100 below 110 below 120 below 130 below 140
No. of Students : 4 6 24 46 67
Weights (lbs. ) : below 150 below 160 below 170 below 180
No. of Students : 86 96 99 100
Solution: Rewriting the above distribution in the form of a frequency distribution with
class limits, we get
Weights (lbs. ) : Less than 100 100 - 110 110 - 120 120 - 130 130 - 140
Frequency : 4 2 18 22 21
Weights (lbs. ) : 140 - 150 150 - 160 160 - 170 170 - 180
We note that there is a concentration of observations in classes 120 - 130 and 130 - 140,
therefore, modal class can be determined by the method of grouping.
Grouping Table
68
Analysis Table Measures of Central Tendency
Columns 110 - 120 120 - 130 130 - 140 140 - 150 150 - 160
1 1
2 1 1 1 1
3 1 1
4 1 1 1
5 1 1 1
6 1 1 1
Total 2 5 5 3 1
Since the two classes, 120 - 130 and 130 - 140, are repeated maximum number of times
in the above table, it is not possible to locate modal class even by the method of grouping.
However, an approximate value of mode is given by the empirical formula:
Mode = 3 Median - 2 Mean (See § 2.9)
Looking at the cumulative frequency column, given in the question, the median class is
130 - 140. Thus, Lm = 130, C = 46, fm = 21, h = 10.
50 - 46
\ Md = 130 + ¥ 10 = 131.9 lbs.
21
Assuming that the width of the first class is equal to the width of second, we can write
Mid - Values ( X ) 95 105 115 125 135 145 155 165 175 Total
f 4 2 18 22 21 19 10 3 1 100
u X 135 4 3 2 1 0 1 2 3 4
10
fu 16 6 36 22 0 19 20 9 4 28
28 ¥ 10
Thus, X = 135 - = 135 - 2.8 = 132.2 lbs.
100
Using the values of mean and median, we get
Mo = 3 × 131.9 - 2 × 132.2 = 131.3 lbs.
Remarks: Another situation, in which we can use the empirical formula, rather than the
interpolation formula, is when there is maximum frequency either in the first or in the last
class.
Calculation of Mode when either D1 or D2 is negative
The interpolation formula, for the calculation of mode, is applicable only if both D1 and
D2 are positive. If either D1 or D2 is negative, we use an alternative formula that gives
only an approximate value of the mode.
We recall that the position of mode, in a modal class, depends upon the frequencies of its
preceding and following classes, denoted by f1 and f2 respectively. If f1 = f2, the mode
f2
will be at the middle point which can be obtained by adding f + f ¥ h to the lower limit
1 2
f2
of the modal class or, equivalently, it can be obtained by subtracting f + f ¥ h from its
1 2
f1 f2 1
upper limit. We may note that f f = f f = 2 when f1 = f2.
1 2 1 2
Further, if f2 > f1, the mode will lie to the right of the mid-value of modal class and,
f2 1
therefore, the ratio f f2
will be greater than 2 . Similarly, if f2 < f1, the mode will lie to
1
69
Management f2
the left of the mid-value of modal class and, therefore, the ratio f + f will be less than
1 2
1
. Thus, we can write an alternative formula for mode as :
2
f2 f2
Mode = Lm + ¥ h or equivalently, Mode = Um – ¥h
f1 + f 2 f1 + f 2
Remarks: The above formula gives only an approximate estimate of mode vis-a-vis the
interpolation formula.
Example 41: Calculate mode of the following distribution.
Mid - Values : 5 15 25 35 45 55 65 75
Frequency : 7 15 18 30 31 4 3 1
Solution: The mid-values with equal gaps are given, therefore, the corresponding class
intervals would be 0 - 10, 10 - 20, 20 - 30, etc.
Since the given frequency distribution is not regular, the modal class will be determined
by the method of grouping.
Grouping Table
Analysis Table
Columns 10 - 20 20 - 30 30 - 40 40 - 50 50 - 60
1 1
2 1 1
3 1 1
4 1 1 1
5 1 1 1
6 1 1 1
Total 1 3 5 4 1
From the analysis table, the modal class is 30 - 40.

Therefore, Lm = 30, D1 = 30 - 18 = 12, D2 = 30 - 31 = - 1 (negative) and h = 10.
We note that the interpolation formula is not applicable.
f2 31
Mode = Lm + f + f ¥ h = 30 + ¥ 10 = 36.33
1 2 18 + 31
Example 42: The rate of sales tax as a percentage of sales, paid by 400 shopkeepers of
a market during an assessment year ranged from 0 to 25%. The sales tax paid by 18%
of them was not greater than 5%. The median rate of sales tax was 10% and 75th
percentile rate of sales tax was 15%. If only 8% of the shopkeepers paid sales tax at a
rate greater than 20% but not greater than 25%, summarise the information in the form
of a frequency distribution taking intervals of 5%. Also find the modal rate of sales tax.
Solution: The above information can be written in the form of the following
70 distribution :
Class Intervals No. of
(in percentage) Shopkeepers
18
0-5 ¥ 400 = 72
100
5-10 200 - 72 = 128
10-15 300 - 200 = 100
15-20 400 - 72 - 128 - 100 - 32 = 68
8
20-25 ¥ 400 = 32
100
By inspection, the modal class is 5 - 10.
128 - 72
\ Mo = 5 + ¥ 5 = 8.33%
128 - 72 + 128 - 100
Example 43: The following table gives the incomplete income distribution of 300 workers
of a firm, where the frequencies of the classes 3000 - 4000 and 5000 - 6000 are missing.
If the mode of the distribution is Rs 4428.57, find the missing frequencies.
Monthly Income ( Rs ) No. of Workers
1000- 2000 30
2000- 3000 35
3000- 4000 ?
4000- 5000 75
5000-6000 ?
6000-7000 30
7000-8000 15
Solution: Let the frequency of the class 3000 - 4000 be f1. Then the frequency of the
class 5000 - 6000 will be equal to 300 - 30 - 35 - f1 - 75 - 30 - 15 = 115 - f1. It is given that
mode = 4428.57, therefore, modal class is 4000 - 5000.
Thus, Lm = 4000, D1 = 75 - f1, D2 = 75 - (115 - f1) = f1 - 40 and h = 1000.
Using the interpolation formula, we have
75 - f1
4428.57 = 4000 + ¥ 1000
75 - f1 + f1 - 40
75 - f1
or 428.57 = ¥ 1000 or 14.999 = 75 - f1
35
or f1 = 75 - 15 = 60 (taking 14.999 = 15). Also f2 = 115 - 60 = 55
Merits and Demerits of Mode

Merits
1. It is easy to understand and easy to calculate. In many cases it can be located just
by inspection.
2. It can be located in situations where the variable is not measurable but categorisation
or ranking of observations is possible.
3. Like mean or median, it is not affected by extreme observations. It can be calculated
even if these extreme observations are not known.
4. It can be determined even if the distribution has open end classes.
5. It can be located even when the class intervals are of unequal width provided that
the width of modal and that of its preceding and following classes are equal. 71
Quantitative Techniques for 6. It is a value around which there is more concentration of observations and hence
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the best representative of the data.
Demerits
1. It is not based on all the observations.
2. It is not capable of further mathematical treatment.
3. In certain cases mode is not rigidly defined and hence, the important requisite of a
good measure of central tendency is not satisfied.
4. It is much affected by the fluctuations of sampling.
5. It is not easy to calculate unless the number of observations is sufficiently large
and reveal a marked tendency of concentration around a particular value.
6. It is not suitable when different items of the data are of unequal importance.
7. It is an unstable average because, mode of a distribution, depends upon the choice
of width of class intervals.
2.9 RELATION BETWEEN MEAN, MEDIAN AND MODE

The relationship between the above measures
of central tendency will be interpreted in
terms of a continuous frequency curve.
If the number of observations of a frequency
distribution are increased gradually, then
accordingly, we need to have more number
Fig. 2.6
of classes, for approximately the same range
of values of the variable, and simultaneously, the width of the corresponding classes
would decrease. Consequently, the histogram of the frequency distribution will get
transformed into a smooth frequency curve, as shown in Fig. 2.6.
For a given distribution, the mean is the value of the variable which is the point of
balance or centre of gravity of the
distribution. The median is the value such
that half of the observations are below it and
remaining half are above it. In terms of the
frequency curve, the total area under the
curve is divided into two equal parts by the
ordinate at median. Mode of a distribution is
a value around which there is maximum
concentration of observations and is given Fig. 2.7
by the point at which peak of the curve occurs.
For a symmetrical distribution, all the three measures of central tendency are equal i.e.
X = Md = Mo, as shown in Fig. 2.7.
Imagine a situation in which the symmetrical distribution is made asymmetrical or positively
(or negatively) skewed by adding some observations of very high (or very low) magnitudes,
so that the right hand (or the left hand) tail of the frequency curve gets elongated.
Consequently, the three measures will depart from each other. Since mean takes into
account the magnitudes of observations, it would be highly affected. Further, since the
total number of observations will also increase, the median would also be affected but to
a lesser extent than mean. Finally, there would be no change in the position of mode.
More specifically, we shall have Mo < Md < X , when skewness is positive and X < Md
< Mo, when skewness is negative, as shown in Fig 2.8.
72
Fig. 2.8
Empirical Relation between Mean, Median and Mode

Empirically, it has been observed that for a moderately skewed distribution, the difference
between mean and mode is approximately three times the difference between mean and
(
median, i.e., X - M o = 3 X - M d . )
This relation can be used to estimate the value of one of the measures when the values
of the other two are known.
Example 44:
(a) The mean and median of a moderately skewed distribution are 42.2 and 41.9
respectively. Find mode of the distribution.
(b) For a moderately skewed distribution, the median price of men's shoes is Rs 380
and modal price is Rs 350. Calculate mean price of shoes.
Solution:
(a) Here, mode will be determined by the use of empirical formula.
X - M o = 3 ( X - M d ) or M o = 3M d - 2 X
It is given that X = 42.2 and Md = 41.9

\ Mo = 3 × 41.9 - 2 × 42.2 = 125.7 - 84.4 = 41.3
3M d - M o
(b) Using the empirical relation, we can write X =
2
It is given that Md = Rs 380 and Mo = Rs. 350
3 ¥ 380 - 350
\ X= = Rs 395
2
Example 45: Find mode of the following distribution :
Class Intervals : 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50
Frequency : 45 20 14 7 3
Solution: Since the highest frequency occurs in the first class interval, the interpolation
formula is not applicable. Thus, mode will be calculated by the use of empirical formula.
Calculation of Mean and Median
Class Mid - X 25
Intervals Frequency c. f . Values u fu
10
0 - 10 45 45 5 2 90
10 - 20 20 65 15 1 20
20 - 30 14 79 25 0 0
30 - 40 7 86 35 1 7
40 - 50 3 89 45 2 6
Total 89 97
N 89
Since = = 44.5, the median class is 0 - 10.
2 2 73
Management 44.5 - 0
\ Md = 0 + ¥ 10 = 9.89
45
X = 25 –
97 ¥ 10
Also = 14.10
89
Thus, M o = 3M d - 2 X = 3 × 9.89 - 2 × 14.10 = 1.47

Example 46: Estimate mode of the following distribution :
Weekly Wages of
: 105-115 115-125 125-135 135-145 145-155
Workers ( Rs )
No.of Workers : 8 15 25 40 62
Solution: We shall use empirical formula for the calculation of mode.
Calculation of X and Md
Class Mid - X 130
Intervals Frequency c. f . Values u fu
10
105 - 115 8 8 110 2 16
115 - 125 15 23 120 1 15
125 - 135 25 48 130 0 0
135 - 145 40 88 140 1 40
145 - 155 62 150 150 2 124
Total 150 133
N 150
Since = 75, the median class is 135 - 145
2 2
75 - 48
\ Md = 135 + ¥ 10 = 135 + 6.75 = 141.75
40
133 ¥ 10
Also X = 130 + = 138.87
150
Thus, Mo = 3 × 141.75 - 2 × 138.87 = 147.51
Choice of a Suitable Average

The choice of a suitable average, for a given set of data, depends upon a number of
considerations which can be classified into the following broad categories:
(a) Considerations based on the suitability of the data for an average.
(b) Considerations based on the purpose of investigation.
(c) Considerations based on various merits of an average.
(a) Considerations based on the suitability of the data for an average:
1. The nature of the given data may itself indicate the type of average that could
be selected. For example, the calculation of mean or median is not possible if
the characteristic is neither measurable nor can be arranged in certain order
of its intensity. However, it is possible to calculate mode in such cases. Suppose
that the distribution of votes polled by five candidates of a particular
constituency are given as below :
Name of the Candidates : A B C D E
No. of votes polled : 10,000 5,000 15,000 50,000 17,000
Since the above characteristic, i.e., name of the candidate, is neither measurable
nor can be arranged in the order of its intensity, it is not possible to
calculate the mean and median. However, the mode of the distribution is D
74 and hence, it can be taken as the representative of the above distribution.
2. If the characteristic is not measurable but various items of the distribution Measures of Central Tendency
can be arranged in order of intensity of the characteristics, it is possible to
locate median in addition to mode. For example, students of a class can be
classified into four categories as poor, intelligent, very intelligent and most
intelligent. Here the characteristic, intelligence, is not measurable. However,
the data can be arranged in ascending or descending order of intelligence. It
is not possible to calculate mean in this case.
3. If the characteristic is measurable but class intervals are open at one or both
ends of the distribution, it is possible to calculate median and mode but not a
satisfactory value of mean. However, an approximate value of mean can
also be computed by making certain assumptions about the width of class(es)
having open ends.
4. If the distribution is skewed, the median may represent the data more
appropriately than mean and mode.
5. If various class intervals are of unequal width, mean and median can be
satisfactorily calculated. However, an approximate value of mode can be
calculated by making class intervals of equal width under the assumption that
observations in a class are uniformly distributed. The accuracy of the computed
mode will depend upon the validity of this assumption.
(b) Considerations based on the purpose of investigation:
1. The choice of an appropriate measure of central tendency also depends upon
the purpose of investigation. If the collected data are the figures of income of
the people of a particular region and our purpose is to estimate the average
income of the people of that region, computation of mean will be most
appropriate. On the other hand, if it is desired to study the pattern of income
distribution, the computation of median, quartiles or percentiles, etc., might be
more appropriate. For example, the median will give a figure such that 50%
of the people have income less than or equal to it. Similarly, by calculating
quartiles or percentiles, it is possible to know the percentage of people having
at least a given level of income or the percentage of people having income
between any two limits, etc.
2. If the purpose of investigation is to determine the most common or modal size
of the distribution, mode is to be computed, e.g., modal family size, modal size
of garments, modal size of shoes, etc. The computation of mean and median
will provide no useful interpretation of the above situations.
(c) Considerations based on various merits of an average: The presence or absence
of various characteristics of an average may also affect its selection in a given
situation.
1. If the requirement is that an average should be rigidly defined, mean or median
can be chosen in preference to mode because mode is not rigidly defined in
all the situations.
2. An average should be easy to understand and easy to interpret. This
characteristic is satisfied by all the three averages.
3. It should be easy to compute. We know that all the three averages are easy
to compute. It is to be noted here that, for the location of median, the data
must be arranged in order of magnitude. Similarly, for the location of mode,
the data should be converted into a frequency distribution. This type of exercise
is not necessary for the computation of mean.
4. It should be based on all the observations. This characteristic is met only by
mean and not by median or mode.
75
Quantitative Techniques for 5. It should be least affected by the fluctuations of sampling. If a number of
Management
independent random samples of same size are taken from a population, the
variations among means of these samples are less than the variations among
their medians or modes. These variations are often termed as sampling
variations. Therefore, preference should be given to mean when the
requirement of least sampling variations is to be fulfilled. It should be noted
here that if the population is highly skewed, the sampling variations in mean
may be larger than the sampling variations in median.
6. It should not be unduly affected by the extreme observations. The mode is
most suitable average from this point of view. Median is only slightly
affected while mean is very much affected by the presence of extreme
observations.
7. It should be capable of further mathematical treatment. This characteristic is
satisfied only by mean and, consequently, most of the statistical theories use
mean as a measure of central tendency.
8. It should not be affected by the method of grouping of observations. Very
often the data are summarised by grouping observations into class intervals.
The chosen average should not be much affected by the changes in size of
class intervals. It can be shown that if the same data are grouped in various
ways by taking class intervals of different size, the effect of grouping on
mean and median will be very small particularly when the number of
observations is very large. Mode is very sensitive to the method of grouping.
9. It should represent the central tendency of the data. The main purpose of
computing an average is to represent the central tendency of the given
distribution and, therefore, it is desirable that it should fall in the middle of
distribution. Both mean and median satisfy this requirement but in certain
cases mode may be at (or near) either end of the distribution.
Exercise with Hints

1. The following is the distribution of monthly expenditure on food incurred by a sample
of 100 families in a town. Find the modal size of expenditure.
Expenditure ( Rs ) : 500 - 999 1000-1499 1500-1999
No. of families : 6 25 31
Expenditure ( Rs ) : 2000- 2499 2500- 2999 3000- 3499
No. of families : 26 8 4
Hint: Convert the class intervals into class boundaries.

2. Calculate mode of the following distribution of weekly income of workers of a
factory :
Weekly Income : 0 - 75 75 - 100 100 - 150 150 - 175 175 - 300 300 - 500
No. of Workers : 9 44 192 116 435 304
Hint: Make class intervals of equal width on the assumption that observations in a class
are uniformly distributed. On this basis, the class of 0 - 75 can be written as 0 - 25,
25 - 50 and 50 - 75 each with frequency 3. The class 100 - 150 will be split as
100 - 125 and 125 - 150 each with frequency 96, etc.
3. Calculate the modal marks from the following distribution of marks of 100 students
of a class :
Marks ( More than) 90 80 70 60 50 40 30 20 10
No. of Students 0 4 15 33 53 76 92 98 100
Hint: Convert 'more than' type frequencies into ordinary frequencies.
76
4. The following table gives the number of geysers of different sizes (in litres) sold by Measures of Central Tendency
a company during winter season of last year. Compute a suitable average of the
distribution:
Capacity : less than 5 5 - 10 10 - 15 15 - 20 20 - 25 25 - 30 above 30
Frequency : 1500 3000 2325 1750 1400 1225 800
Hint: Mode is the most suitable average.
5. Locate a suitable measure of tendency for the following distribution :
Colour of the hair : Brown Black Grey
No. of Persons : 200 250 150
Hint: Since the characteristic is neither measurable nor can be arranged in order
of magnitude, mode is most suitable.
6. The following table gives the classification of students of a class into various
categories according to their level of intelligence. Compute a suitable measures of
central tendency.
Characteristics : Poor Intelligent Very Intelligent Most Intelligent
No. of Students : 8 21 25 6
Hint: Median as well as mode.
7. The following table gives the distribution of 200 families according to the number
of children :
No. of Children : 0 1 2 3 4 5 6 7
No. of families : 12 18 49 62 36 13 7 3
Find X , Md and Mo and interpret these averages.

Hint: X represents mean number of children per family. Similarly interpret
Md and Mo.
8. Given below is the income distribution of 500 families of a certain locality :
Monthly Income : 500 - 1000 1000 - 1500 1500 - 2000 2000 - 2500 2500 - 3000
No. of Families : 50 210 150 60 30
Find the most suitable average if
(i) it is desired to estimate average income per family,
(ii) it is to be representative of the distribution,
(iii) it is desired to study the pattern of the distribution.
Hint: (i) X , (ii) Mo, (iii) Md, quartiles, percentiles, etc.
9. A distribution of wages paid to foremen would show that, although a few reach
very high levels, most foremen are at lower levels of the distribution. The same
applies, of course, to most income distributions. If you were an employer, resisting
a foreman's claim for an increase of wages, which average would suit your case?
Give reasons for supporting your argument. Do you think your argument will be
different in case you are a trade union leader?
Hint: An employer should use arithmetic mean because this is the highest average
when distribution is positively skewed. Mode will be used by a trade union leader.
10. Atul gets a pocket money allowance of Rs 12 per month. Thinking that this was
rather less, he asked his friends about their allowances and obtained the following
data which includes his allowance (in Rs) also.
12, 18, 10, 5, 25, 20, 20, 22, 15, 10, 10, 15, 13, 20, 18, 10, 15, 10, 18, 15, 12, 15, 10, 15,
10, 12, 18, 20, 5, 8.
He presented this data to his father and asked for an increase in his allowance as
he was getting less than the average amount. His father, a statistician, countered
pointing out that Atul's allowance was actually more than the average amount.
Reconcile these statements. 77
Quantitative Techniques for Hint: Atul's demand for more pocket money is based on the calculation of
Management
arithmetic mean while his father countered his argument on the basis of mode.
2.10 GEOMETRIC MEAN

The geometric mean of a series of n positive observations is defined as the nth root of
their product.
Calculation of Geometric Mean

(a) Individual series
If there are n observations, X1, X2, ...... Xn, such that Xi > 0 for each i, their geometric
mean (GM) is defined as
F n In
1
b g GG ∏ X JJ , where the symbol P is used to denote the

1
GM = X 1 . X 2 KK X n n =
Hi = 1 Ki
product of observations.
To evaluate GM, we have to use logarithms. Taking log of both sides we have
log (GM) =
1
n
b
log X 1 . X 2 KK X n g
=
1
log X 1 + log X 2 +LL+ log X n =
∑ log X i
n n
Taking antilog of both sides, we have
È Â log X i ˘
GM = antilog Í n
˙
ÍÎ ˙˚
This result shows that the GM of a set of observations is the antilog of the arithmetic
mean of their logarithms.
Example 47: Calculate geometric mean of the following data :
1, 7, 29, 92, 115 and 375
Solution:
Calculation of Geometric Mean
X 1 7 29 92 115 375 log X

log X 0. 0000 0. 8451 1. 4624 1. 9638 2. 0607 2. 5740 8. 9060
È Â log X ˘
LM
˙ = antilog 8.9060 = 30.50 OP
GM = antilog Í
ÍÎ n ˙˚ 6 N Q
(b) Ungrouped Frequency Distribution
If the data consists of observations X1, X2, ...... Xn with respective frequencies f1, f2,
n
...... fn, where ∑f

i =1
i = N , the geometric mean is given by=
L OP N
1
= MX
f1 f2 fn
KK X n
MN PQ
1 . X2
78
Taking log of both sides, we have Measures of Central Tendency
1
log (GM) = log X 1 f1 + log X 2 f2 + LL + log X n fn
N
n
1
Â f log X
i i
= f1 log X 1 + f2 log X 2 + LL + fn log X n = i =1
N N
Ê1 n ˆ
or GM = antilog Á Â fi log X i ˜ , which is again equal to the antilog of the arithmetic
Ë N i =1 ¯
mean of the logarithm of observations.
Example 48: Calculate geometric mean of the following distribution :
X : 5 10 15 20 25 30
f : 13 18 50 40 10 6
Solution:
Calculation of GM
X f logX f logX
5 13 0. 6990 9. 0870
10 18 1. 0000 18. 0000
15 50 1.1761 58. 8050
20 40 1. 3010 52. 0400
25 10 1. 3979 13. 9790
30 6 1. 4771 8. 8626
Total 137 160. 7736
LM 160.7736 OP = antilog 1.1735 = 14.91

\ GM = antilog
N 137 Q
(c) Continuous Frequency Distribution
In case of a continuous frequency distribution, the class intervals are given. Let X1, X2,
......Xn denote the mid-values of the first, second ...... nth class interval respectively
with corresponding frequencies f1, f2, ...... fn, such that Σ fi = N. The formula for calculation
of GM is same as the formula used for an ungrouped frequency distribution
È Â fi log X i ˘
i.e., GM = antilog Í N
˙
ÎÍ ˙˚
Example 49: Calculate geometric mean of the following distribution :

Class Intervals : 5 - 15 15 - 25 25 - 35 35 - 45 45 - 55
Frequencies : 10 22 25 20 8
Solution:
Calculation of GM
Class f Mid - Value (X ) logX f logX
5 - 15 10 10 1. 0000 10. 0000
15 - 25 22 20 1. 3010 28. 6227
25 - 35 25 30 1. 4771 36. 9280
35 - 45 20 40 1. 6020 32. 0412
45 - 55 8 50 1. 6990 13. 5918
Total 85 121.1837
121.1837
GM = antilog = antilog 1.4257 = 26.65
85 79
Quantitative Techniques for Weighted Geometric Mean
Management
If various observations, X1, X2, ......Xn, are not of equal importance in the data, weighted
geometric mean is calculated. Weighted GM of the observations X1, X2, ......Xn with
respective weights as w1, w2 ......wn is given by :
È Â wi log X i ˘
GM = antilog Í ˙ , i.e., weighted geometric mean of
ÍÎ Â wi ˙˚
observations is equal to the antilog of weighted arithmetic mean of their logarithms.
Example 50: Calculate weighted geometric mean of the following data :
Variable X a f : 5 8 44 160 500
Weights w a f : 10 9 3 2 1
How does it differ from simple geometric mean?
Solution:
Calculation of weighted and simple GM
X Weights ( w) logX wlogX
5 10 0. 6990 6. 9900
8 9 0. 9031 8.1278
44 3 1. 6435 4. 9304
160 2 2. 2041 4. 4082
500 1 2. 6990 2. 6990
Total 25 8.1487 27.1554
27.1554
Weighted GM = antilog = antilog 1.0862 = 12.20
25
8.1487
Simple GM = antilog (n = 5) = antilog 1.6297 = 42.63
5
Note that the simple GM is greater than the weighted GM because the given system of
weights assigns more importance to values having smaller magnitude.
Geometric Mean of the Combined Group

If G1, G2, ...... Gk are the geometric means of k groups having n1, n2, ...... nk observations
respectively, the geometric mean G of the combined group consisting of n1 + n2 + ...... +
nk observations is given by
LM n log G + n log G + LL + n log G OP

1
È Â n log G ˘ i i
N Q
1 2 2 k k
G = antilog antilog Í ˙
n + n + LL + n
1 2 k ÎÍ Â n ˚˙ i
Example 51: If the geometric means of two groups consisting of 10 and 25 observations
are 90.4 and 125.5 respectively, find the geometric mean of all the 35 observations
combined into a single group.
Solution:
È n1 log G1 + n2 log G2 ˘
Combined GM = antilog Í n1 + n2
˙
Î ˚
Here n1 = 10, G1 = 90.4 and n2 = 25, G2 = 125.5
È10log90.4 + 25log125.5 ˘
\ GM = antilog Í ˙
Î 35 ˚
È10 ¥ 1.9562 + 25 ¥ 2.0986 ˘
= antilog Í ˙ = antilog 2.0579 = 114.27
Î 35 ˚
80
To determine the average rate of change of price for the entire period when Measures of Central Tendency
the rate of change of prices for different periods are given

Let P0 be the price of a commodity in the beginning of the first year. If it increases by k1
% in the first year, the price at the end of 1st year (or beginning of second year) is given
by
k1 Ê k1 ˆ k1
P1 = P0 + P0 100 = P0 ÁË1 + ˜¯ = P0(1 + r1), where r1 = 100 denotes the rate of
100
increase per rupee in first year. Similarly, if the price changes by k2% in second year, the
price at the end of second year is given by
k2 Ê k2 ˆ
P2 = P1 + P1 100 = P1 ÁË1 + ˜ = P1(1 + r2)
100 ¯
Replacing the value of P1 as P0(1 + r1) we can write

P2 = P0(1 + r1)(1 + r2)
Proceeding in this way, if 100rn% is the rate of change of price in the i th year, the price
at the end of nth period, Pn, is given by
Pn = P0(1 + r1)(1 + r2) ...... (1 + rn) .... (1)
Further, let 100rn % per year be the average rate of increase of price that gives the price
Pn at the end of n years. Therefore, we can write
Pn = P0(1 + r)(1 + r) ...... (1 + r) = P0(1 + r)n .... (2)
Equating (1) and (2), we can write
(1 + rn) = (1 + r1)(1 + r2) ...... (1 + rn)
b gb g b g
1
or (1 + r) = 1 + r1 1 + r2 KK 1 + rn n .... (3)
This shows that (1 + r) is geometric mean of (1 + r1), (1 + r2), ...... and (1 + rn).
From (3), we get
b gb g b g
1
r = 1 + r1 1 + r2 KK 1 + rn n
-1 .... (4)
Note: Here r denotes the per unit rate of change. This rate is termed as the rate of
increase or the rate of growth if positive and the rate of decrease or the rate of decay if
negative.
Example 52: The price of a commodity went up by 5%, 8% and 77% respectively in
the last three years. The annual average rise of price is 26% and not 30%. Comment.
Solution: The correct average in this case is given by equation (4), given above.
Let r1, r2 and r3 be the increase in price per rupee in the respective years.
5 8 77
\ r1 = = 0.05, r2 = = 0.08 and r3 = = 0.77
100 100 100
The average rate of rise of price, denoted by r, is given by
1
r = ÈÎ(1 + r1 )(1 + r2 ) (1 + r3 )˘˚ 3 - 1
1 1
= ÈÎ(1 + 0.05)(1 + 0.08)(1 + 0.77 ) ˘˚ 3 - 1 = (1.05 ¥ 1.08 ¥ 1.77 ) 3 - 1
81
Quantitative Techniques for 1
1
Now log (1.05 ¥ 1.08 ¥ 1.77) 3 = (log1.05 + log1.08 + log1.77)
Management
3
1 1
= [ 0.0212 + 0.0334 + 0.2480] = × 0.3026 = 0.1009
3 3
1
\ (1.05 ¥ 1.08 ¥ 1.77 ) 3 = antilog 0.1009 = 1.26
Thus, r = 1.26 - 1 = 0.26

Also, the percentage rise of price is 100r% = 26%.
Note: 30% is the arithmetic mean of 5%, 8% and 77%, which is not a correct average.
This can be verified as below :
If we take the average rise of price as 30% per year, then the price at the end of first
year, taking it to be 100 in the beginning of the year, becomes 130.
130 ¥ 130
Price at the end of 2nd year = = 169
100
169 ¥ 130
Price at the end of 3rd year = = 219.7
100
Similarly, taking the average as 26%, the price at the end of 3rd year
126 126 126

= 100 ¥ ¥ ¥ = 200.04
100 100 100
Also, the actual price at the end of 3rd year
105 108 177

= 100 ¥
¥ ¥ = 2007 . This price is correctly given by the
100 100 100
geometric average and hence, it is the most suitable average in this case.
Average Rate of Growth of Population

The average rate of growth of price, denoted by r in the above section, can also be
interpreted as the average rate of growth of population. If P0 denotes the population in
the beginning of the period and Pn the population after n years, using Equation (2), we
can write the expression for the average rate of change of population per annum as
FP I
r=G J
1
n
HP K
n
- 1.
0
Similarly, Equation (4), given above, can be used to find the average rate of growth of
population when its rates of growth in various years are given.
Remarks: The formulae of price and population changes, considered above, can also be
extended to various other situations like growth of money, capital, output, etc.
Example 53: The population of a country increased from 2,00,000 to 2,40,000 within a
period of 10 years. Find the average rate of growth of population per year.
Solution: Let r be the average rate of growth of population per year for the period of 10
years. Let P0 be initial and P10 be the final population for this period.
We are given P0 = 2,00,000 and P10 = 2,40,000.
FP I
1 1
\ r=G J
10 Ê 2, 40,000 ˆ 10
HP K
10
1= Á -1
82 0 Ë 2,00,000 ˜¯
1
Ê 24 ˆ 10 È1 ˘
Now ÁË ˜¯ = antilog Í ( log 24 - log 20)˙
20 Î10 ˚
È1 ˘
= anti log Í (1.3802 - 1.3010)˙ = anti log (0.0079) =1.018
Î10 ˚
Thus, r = 1.018 - 1 = 0.018.
Hence, the percentage rate of growth = 0.018 ××100 = 1.8% p. a.
Example 54: The gross national product of a country was Rs 20,000 crores before 5
years. If it is Rs 30,000 crores now, find the annual rate of growth of G.N.P.
Solution: Here P5 = 30,000, P0 = 20,000 and n = 5.
1
Ê 30,000 ˆ 5
\ r =Á -1
Ë 20,000 ˜¯
1
Ê 3ˆ 5 È1 ˘ È1 ˘
Now Á ˜ = antilog Í (log 3 - log 2) ˙ = antilog Í (0.4771 - 0.3010) ˙
Ë 2¯ Î5 ˚ Î5 ˚
= antilog (0.0352) = 1.084
Hence r = 1.084 - 1 = 0.084
Thus, the percentage rate of growth of G.N.P. is 8.4% p.a
Example 55: Find the average rate of increase of population per decade, which increased
by 20% in first, 30% in second and 40% in the third decade.
Solution: Let r denote the average rate of growth of population per decade, then
1
1
Ê 120 130 140 ˆ 3
r=Á ¥ ¥ - 1 = (1.2 ¥ 1.3 ¥ 1.4) 3
-1
Ë 100 100 100 ˜¯
1
È1 ˘
Now (1.2 ¥ 1.3 ¥ 1.4) = anti log Í (log1.2 + log1.3 + log1.4) ˙
3
Î 3 ˚
LM 1 (0.0792 OP
anti log
N3 Q
0.1139 0.1461) = antilog 0.1131 = 1.297
\ r = 1.297 - 1 = 0.297
Hence, the percentage rate of growth of population per decade is 29.7%.
Suitability of Geometric Mean for Averaging Ratios

It will be shown here that the geometric mean is more appropriate than arithmetic mean
while averaging ratios.
Let there be two values of each of the variables x and y, as given below :
F xI FG y IJ
x y Ratio GH y JK Ratio
H xK
40 60 2/ 3 3/ 2
20 80 1/ 4 4
2 1 3
+ +4
3 4= 11 11
Now AM of (x/y) ratios = and the AM of (y/x) ratios = 2 = .
2 24 2 4
83
Quantitative Techniques for We note that their product is not equal to unity.
Management
1
However, the product of their respective geometric means, i.e., and 6 , is equal to
6
unity.
Since it is desirable that a method of average should be independent of the way in which
a ratio is expressed, it seems reasonable to regard geometric mean as more appropriate
than arithmetic mean while averaging ratios.
Properties of Geometric Mean

1. As in case of arithmetic mean, the sum of deviations of logarithms of values from
the log GM is equal to zero.
This property implies that the product of the ratios of GM to each observation, that
is less than it, is equal to the product the ratios of each observation to GM that is
greater than it. For example, if the observations are 5, 25, 125 and 625, their
GM = 55.9. The above property implies that
55.9 55.9 125 625

¥ = ¥
5 25 55.9 55.9
2. Similar to the arithmetic mean, where the sum of observations remains
unaltered if each observation is replaced by their AM, the product of observations
remains unaltered if each observation is replaced by their GM.
Merits, Demerits and Uses of Geometric Mean

Merits
1. It is a rigidly defined average.
2. It is based on all the observations.
3. It is capable of mathematical treatment. If any two out of the three values, i.e., (i)
product of observations, (ii) GM of observations and (iii) number of observations,
are known, the third can be calculated.
4. In contrast to AM, it is less affected by extreme observations.
5. It gives more weights to smaller observations and vice-versa.
Demerits
1. It is not very easy to calculate and hence is not very popular.
2. Like AM, it may be a value which does not exist in the set of given observations.
3. It cannot be calculated if any observation is zero or negative.
Uses
1. It is most suitable for averaging ratios and exponential rates of changes.
2. It is used in the construction of index numbers.
3. It is often used to study certain social or economic phenomena.
Exercise with Hints

1. A sum of money was invested for 4 years. The respective rates of interest per
annum were 4%, 5%, 6% and 8%. Determine the average rate of interest p.a.
1
Ê 104 105 106 108 ˆ 4
Hint: r = Á ¥ ¥ ¥ - 1 , \ average rate of interest = 100r %.
84 Ë 100 100 100 100 ˜¯
2. The number of bacteria in a certain culture was found to be 4 × 106 at noon of one Measures of Central Tendency
day. At noon of the next day, the number was 9 × 106. If the number increased at
a constant rate per hour, how many bacteria were there at the intervening midnight?
Hint: The number of bacteria at midnight is GM of 4 × 106 and 9 × 106.
3. If the price of a commodity doubles in a period of 4 years, what is the average
percentage increase per year?
1 1
Ê P ˆn Ê 2ˆ 4
Hint: r = Á n ˜ - 1 = Á ˜ - 1 .
ËP ¯ 0
Ë 1¯
4. A machine is assumed to depreciate by 40% in value in the first year, by 25% in

second year and by 10% p.a. for the next three years, each percentage being
calculated on the diminishing value. Find the percentage depreciation p.a. for the
entire period.
1
3
Hint: 1 - r = È(1 - r1 )(1 - r2 ) (1 - r3 ) ˘ 5 .
Î ˚
5. A certain store made profits of Rs 5,000, Rs 10,000 and Rs 80,000 in 1965, 1966
and 1967 respectively. Determine the average rate of growth of its
profits.
1
Ê 80,000 ˆ 2
Hint: r = Á -1 .
Ë 5,000 ˜¯
6. An economy grows at the rate of 2% in the first year, 2.5% in the second, 3% in
the third, 4% in the fourth ...... and 10% in the tenth year. What is the average rate
of growth of the economy?
1
Hint: r = (1.02 × 1.025 × 1.03 × 1.04 × 1.05 × 1.06 × 1.07 × 1.08 × 1.09 × 1.10)10 − 1 .
7. The export of a commodity increased by 30% in 1988, decreased by 22% in 1989
and then increased by 45% in the following year. The increase/decrease, in each
year, being measured in comparison to its previous year. Calculate the average
rate of change of the exports per annum.
1
Hint: r = (1.30 × 0.78 × 1.45) 3 − 1 .
8. Show that the arithmetic mean of two positive numbers a and b is at least as large
as their geometric mean.
Hint: We know that the square of the difference of two numbers is always
positive, i.e., (a - b)2 ≥ 0. Make adjustments to get the inequality (a + b)2 ≥ 4ab
and then get the desired result, i.e., AM ≥ GM.
9. If population has doubled itself in 20 years, is it correct to say that the rate of
growth has been 5% per annum?
È 1 ˘
Hint: The annual rate of growth is given by 100r = 100 Í(2) 20 - 1˙ = 3.53%,
Î ˚
which is not equal to 5%.
10. The weighted geometric mean of 5 numbers 10, 15, 25, 12 and 20 is 17.15. If the
weights of the first four numbers are 2, 3, 5, and 2 respectively, find weight of the
fifth number.
1
Hint: Let x be the weight of the 5th number, then È102.153.255.122.20 x ˘12+ x = 17.15.
Î ˚ 85
Management 2.11 HARMONIC MEAN
The harmonic mean of n observations, none of which is zero, is defined as the reciprocal
of the arithmetic mean of their reciprocals.
Calculation of Harmonic Mean

(a) Individual series
If there are n observations X1, X2, ...... Xn, their harmonic mean is defined as
n n
HM = =
1 1 1 n 1
+ + LL +
X1 X 2 X n i∑
= 1 Xi
Example 56: Obtain harmonic mean of 15, 18, 23, 25 and 30.
5 5
Solution: HM = = = 20.92 Ans.
1 1 1 1 1 0.239
+ + + +
15 18 23 25 30
(b) Ungrouped Frequency Distribution

For ungrouped data, i.e., each X1, X2, ...... Xn, occur with respective frequency f1, f2 ......
fn, where Sfi = N is total frequency, the arithmetic mean of the reciprocals of observations
1 n fi
is given by N i ∑
= 1 Xi
.
N
Thus, HM =
fi
∑X
i
Example 57: Calculate harmonic mean of the following data :

X : 10 11 12 13 14
f : 5 8 10 9 6
Solution:
X 10 11 12 13 14 Total
Frequency ( f ) 5 8 10 9 6 38
1
f 0. 5000 0. 7273 0. 8333 0. 6923 0. 4286 3.1815
X
38
\ HM = = 11.94
3.1815
(c) Continuous Frequency Distribution

In case of a continuous frequency distribution, the class intervals are given. The mid-
values of the first, second ...... nth classes are denoted by X1, X2, ...... Xn. The formula
for the harmonic mean is same, as given in (b) above.
Example 58: Find the harmonic mean of the following distribution :
Class Intervals : 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50 50 - 60 60 - 70 70 - 80
86 Frequency : 5 8 11 21 35 30 22 18
Solution: Measures of Central Tendency

Class Intervals 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50 50 - 60 60 - 70 70 - 80 Total
Frequency ( f ) 5 8 11 21 35 30 22 18 150
Mid - Values (X ) 5 15 25 35 45 55 65 75
f
1. 0000 0. 5333 0. 4400 0. 6000 0. 7778 0. 5455 0. 3385 0. 2400 4. 4751
X
150
\ HM = = 33.52 Ans.
4.4751
Weighted Harmonic Mean

If X1, X2, ...... Xn are n observations with weights w1,w2, ...... wn respectively, their
weighted harmonic mean is defined as follows :
Âw i
HM = w
ÂX i
Example 59: A train travels 50 kms at a speed of 40 kms/hour, 60 kms at a speed of

50 kms/hour and 40 kms at a speed of 60 kms/hour. Calculate the weighted harmonic
mean of the speed of the train taking distances travelled as weights. Verify that this
harmonic mean represents an appropriate average of the speed of train.
Solution: HM =
Âw i
=
150
=
150
.... (1)
w 50 60 40 1.25 + 1.20 + 0.67
ÂX i
+ +
40 50 60
i
= 48.13 kms/hour
Total distance travelled
Verification : Average speed =
Total time taken
We note that the numerator of Equation (1) gives the total distance travelled by train.
Further, its denominator represents total time taken by the train in travelling 150 kms,
50
since is time taken by the train in travelling 50 kms at a speed of 40 kms/hour.
40
60 40
Similarly and are time taken by the train in travelling 60 kms and 40 kms at the
50 60
speeds of 50 kms./hour and 60 kms/hour respectively. Hence, weighted harmonic mean
is most appropriate average in this case.
Example 60: Ram goes from his house to office on a cycle at a speed of 12 kms/hour
and returns at a speed of 14 kms/hour. Find his average speed.
Solution: Since the distances of travel at various speeds are equal, the average speed of
Ram will be given by the simple harmonic mean of the given speeds.
2 2
Average speed = 1 1 = = 12.92 kms/hour
+ 0.1547
12 14
Choice between Harmonic Mean and Arithmetic Mean
The harmonic mean, like arithmetic mean, is also used in averaging of rates like price per
unit, kms per hour, work done per hour, etc., under certain conditions. To explain the
method of choosing an appropriate average, consider the following illustration.
87
Quantitative Techniques for Let the price of a commodity be Rs 3, 4 and 5 per unit in three successive years. If we
Management
3+4+5
take A.M. of these prices, i.e., = 4 , then it will denote average price when
3
equal quantities of the commodity are purchased in each year. To verify this, let us
assume that 10 units of commodity are purchased in each year.
\ Total expenditure on the commodity in 3 years = 10 × 3 + 10 × 4 + 10 × 5.
Total expenditure 10 ¥ 3 + 10 ¥ 4 + 10 ¥ 5 3 + 4 + 5
Also, Average price = = = ,
Total quantity purchased 10 + 10 + 10 3
which is arithmetic mean of the prices in three years.
3
Further, if we take harmonic mean of the given prices, i.e., , it will denote the
1 1 1
+ +
3 4 5
average price when equal amounts of money are spent on the commodity in three years.
To verify this let us assume that Rs 100 is spent in each year on the purchase of the
commodity.
Total expenditure 300 3
\ Average price = = 100 100 100 = 1 1 1
Total quantity purchased
+ + + +
3 4 5 3 4 5
Next, we consider a situation where different quantities are purchased in the three years.
Let us assume that 10, 15 and 20 units of the commodity are purchased at prices of Rs
3, 4 and 5 respectively.
Total expenditure 3 ¥ 10 + 4 ¥ 15 + 5 ¥ 20
Average price = = , which is weighted
Total quantity purchased 10 + 15 + 20
arithmetic mean of the prices taking respective quantities as weights.
Further, if Rs 150, 200 and 250 are spent on the purchase of the commodity at prices of
Rs 3, 4 and 5 respectively, then
150 + 200 + 250 150 200 250

Average price = 150 200 250 , where , and are the quantities
3 4 5
+ +
3 4 5
purchased in respective situations.
The above average price is equal to the weighted harmonic mean of prices taking money
spent as weights.
Therefore, to decide about the type of average to be used in a given situation, the first
step is to examine the rate to be averaged. It may be noted here that a rate represents a
money distance work done
ratio, e.g., price = quantity , speed = , work done per hour = , etc.
time time taken
We have seen above that arithmetic mean is appropriate average of prices
Ê money ˆ
ÁË quantity ˜¯ when quantities, that appear in the denominator of the rate to be averaged,
purchased in different situations are given. Similarly, harmonic mean will be appropriate
when sums of money, that appear in the numerator of the rate to be averaged, spent in
different situations are given.
To conclude, we can say that the average of a rate, defined by the ratio p/q, is given by
the arithmetic mean of its values in different situations if the conditions are given in
terms of q and by the harmonic mean if the conditions are given in terms of p. Further, if
the conditions are same in different situations, use simple AM or HM and otherwise use
weighted AM or HM.
88
Example 61: An individual purchases three qualities of pencils. The relevant data are Measures of Central Tendency
given below :
Quality Price per pencil ( Rs) Money Spent ( Rs)
A 1.00 50
B 1.50 30
C 2.00 20
Calculate average price per pencil.
Solution: Since different sums of money spent in various situations are given, we shall
calculate weighted harmonic mean to calculate average price.
50+30+20 100
= = Rs 1.25
Weighted HM = 50 30 20 50 + 20 + 10
+ +
1.00 1.50 2.00
Example 62: In a 400 metre athlete competition, a participant covers the distance as
given below. Find his average speed.
Speed (Metres per second)
First 80 metres 10
Next 240 metres 7.5
Last 80 metres 10
distance
Solution: Since Speed = and the conditions are given in terms of distance
time
travelled at various speeds, HM will be the appropriate average.
80 + 240 + 80 400
= = 8.33 metres/second
80 240 80 8 + 32 + 8
+ +
10 7.5 10
Example 63: Peter travelled by a car for four days. He drove 10 hours each day. He
drove first day at the rate of 45 kms/hour, second day at the rate of 40 kms/hour, third
day at the rate of 38 kms/hour and fourth day at the rate of 37 kms/hour. What was his
average speed.
Ê distance ˆ
Solution: Since the rate to be averaged is speed= Á and the conditions are
Ë time ˜¯
given in terms of time, therefore AM will be appropriate. Further, since Peter travelled
for equal number of hours on each of the four days, simple AM will be calculated.
45 + 40 + 38 + 37
\ Average speed = = 40 kms/hour
4
Example 64: In a certain factory, a unit of work is completed by A in 4 minutes, by B
in 5 minutes, by C in 6 minutes, by D in 10 minutes and by E in 12 minutes. What is their
average rate of working? What is the average number of units of work completed per
minute? At this rate, how many units of work each of them, on the average, will complete
in a six hour day? Also find the total units of work completed.
Solution: Here the rate to be averaged is time taken to complete a unit of work,
time
i.e., units of work done . Since we have to determine the average with reference to a
(six hours) day, therefore, HM of the rates will give us appropriate average.
89
Management 5
Thus, the average rate of working = 1 1 1 1 1 = 6.25 minutes/unit.
+ + + +
4 5 6 10 12
1
The average number of units of work completed per minute = 6.25 = 0.16.
The average number of units of work completed by each person = 0.16 × 360 = 57.6.
Total units of work completed by all the five persons = 57.6 × 5 = 288.0.
Example 65: A scooterist purchased petrol at the rate of Rs 14, 15.50 and 16 per litre
during three successive years. Calculate the average price of petrol (i) if he purchased
150, 160 and 170 litres of petrol in the respective years and (ii) if he spent Rs 2,200, 2,500
and 2,600 in the three years.
money
Solution: The rate to be averaged is expressed as
litre
(i) Since the condition is given in terms of different litres of petrol in three years,
therefore, weighted AM will be appropriate.
150 ¥ 14 + 160 ¥ 15.5 + 170 ¥ 16
\ Average price = = Rs 15.21/litre.
150 + 160 + 170
(ii) The weighted HM will be appropriate in this case.
2200 + 2500 + 2600 7300
Average price = 2200 2500 2600 =
+ + 157.14 + 161.29 + 162.50
14 15.5 16
= Rs 15.18/litre
Merits and Demerits of Harmonic Mean
Merits
1. It is a rigidly defined average.
2. It is based on all the observations.
3. It gives less weight to large items and vice-versa.
4. It is capable of further mathematical treatment.
5. It is suitable in computing average rate under certain conditions.
Demerits
1. It is not easy to compute and is difficult to understand.
2. It may not be an actual item of the given observations.
3. It cannot be calculated if one or more observations are equal to zero.
4. It may not be representative of the data if small observations are given
correspondingly small weights.
Relationship among AM, GM and HM

If all the observations of a variable are same, all the three measures of central tendency
coincide, i.e., AM = GM = HM. Otherwise, we have AM > GM > HM.
Example 66: Show that for any two positive numbers a and b, AM ≥ GM ≥ HM.
Solution: The three averages of a and b are :
a +b 2 2ab
AM = , GM = ab and HM = =
2 1 1 a +b .
90 +
a b
Since the square of the difference between a and b is always a non-negative number, we Measures of Central Tendency
can write
(a - b)2 ≥ 0 or a2 + b2 - 2ab ³ 0 or a2 + b2 ≥ 2ab.
Adding 2ab to both sides, we have
a2 + b2 + 2ab ≥ 4ab or (a + b)2 ≥ 4ab
or
(a + b)2 ≥ ab or
a+b
≥ ab .... (1)
4 2
fi AM ≥ GM .... (2)
a b 2 ab
Divide both sides of inequality (1) by , to get 1 ≥
2 a+b
2ab
Multiply both sides by ab , to get ab ≥
a+b
fi GM ≥ HM .... (3)
Combining (2) and (3), we can write
AM ≥ GM ≥ HM
Note: The equality sign will hold when a = b
Example 67: For any two positive numbers, show that GM = AM ¥ HM .
Solution: If a and b are two positive numbers, then
a +b 2ab
AM = , GM = ab and HM =
2 a +b
a + b 2ab
Now AM.HM = ◊ = ab = (GM)2
2 a+b
or GM = AM ¥ HM . Hence the result.
Example 68:
(a) If AM of two observations is 15 and their GM is 9, find their HM and the two
observations.
(b) Comment on the following :
The AM of 20 observations is 25, GM = 20 and HM = 21.
Solution:
(a) AM ¥ HM = GM
\ 15 ¥ HM = 9 or 15 × HM = 81. Thus, HM = 5.4.
X1 + X 2
Let the two observations be X1 and X2. We are given that = 15
2
or X1 + X2 = 30. .... (1)
Also X1 .X2 9 or X1.X2 = 81
We can write (X1 - X2)2 = (X1 + X2)2 – 4X1X2
= 900 – 4 × 81 = 576
or X1 - X2 = 24 .... (2)
Adding (1) and (2), we get
2X1 = 54, \ X1 = 27. Also X2 = 3
(b) The statement is wrong because HM cannot be greater than GM. 91
Quantitative Techniques for Exercise with Hints
Management
1. A train runs 25 miles at a speed of 30 m.p.h., another 50 miles at a speed of 40
m.p.h., then due to repairs of the track, 6 miles at a speed of 10 m.p.h. What should
be the speed of the train to cover additional distance of 24 miles so that the average
speed of the whole run of 105 miles is 35 m.p.h?
Hint: Let x be the speed to cover a distance of 24 miles,
25 + 50 + 6 + 24
\ 35 = , find x .
25 50 6 24
+ + +
30 40 10 x
2. Prices per share of a company during first five days of a month were
Rs 100, 120, 150, 140 and 50.
(i) Find the average daily price per share.
(ii) Find the average price paid by an investor who purchased Rs 20,000 worth of
shares on each day.
(iii) Find the average price paid by an investor who purchased 100, 110, 120, 130
and 150 shares on respective days.
Hint: Find simple HM in (ii) and weighted AM in (iii).
3. Typist A can type a letter in five minutes, B in ten minutes and C in fifteen minutes.
What is the average number of letters typed per hour per typist?
Hint: Since we are given conditions in terms of per hour, therefore, simple HM of speed
will give the average time taken to type one letter. From this we can obtain the
average number of letters typed in one hour by each typist.
3
Simple HM = = 8.18 minutes per letter.
1 1 1
+ +
5 10 15
60
\ No. of letters typed in 60 minutes = = 7.33
8.18
4. Ram paid Rs 15 for two dozens of bananas in one shop, another Rs 15 for three
dozens of bananas in second shop and Rs 15 for four dozens of
bananas in third shop. Find the average price per dozen paid by him.
Hint: First find the prices per dozen in three situations and since equal money is spent,
HM is the appropriate average.
5. A country accumulates Rs 100 crores of capital stock at the rate of Rs 10 crores/
year, another Rs 100 crores at the rate of Rs 20 crores/year and Rs 100 crores at
the rate of Rs 25 crores/year. What is the average rate of accumulation?
Hint: Since Rs 100 crores, each, is accumulated at the rates of Rs 10, 20
and 25 crores/year, simple HM of these rates would be most appropriate.
6. A motor car covered a distance of 50 miles 4 times. The first time at 50 m.p.h., the
second at 20 m.p.h., the third at 40 m.p.h. and the fourth at 25 m.p.h. Calculate the
average speed.
Hint: Use HM.
7. The interest paid on each of the three different sums of money yielding 10%, 12%
and 15% simple interest p.a. is the same. What is the average yield percent on the
sum invested?
92 Hint: Use HM.
Quadratic Mean Measures of Central Tendency
Quadratic mean is the square root of the arithmetic mean of squares of observations.
If X1, X2 ...... Xn are n observations, their quadratic mean is given by
QM =
X 1 2 + X 2 2 + LL + X n 2
=
∑X i
2
n n
Similarly, the QM of observations X1, X2 ...... Xn with their respective frequencies as f1,
f2 ...... fn is given by QM
ÂfX i i
2
, where N = Sfi.
N
Moving Average
This is a special type of average used to eliminate periodic fluctuations from the time
series data.
Progressive Average
A progressive average is a cumulative average which is computed by taking all the
available figures in each succeeding years. The average for different periods are obtained
as shown below :
X1 + X 2 X1 + X 2 + X 3
X1 , , , LL etc.
2 3
This average is often used in the early years of a business.
Composite Average
A composite average is an average of various other averages. If for example,
X 1 , X 2 , KK X k are the arithmetic means of k series, their composite average
X 1 + X 2 + KK + X k
= .
k
1 Establish the relation between AM, GM and HM.

2. What is Empirical relation among mean, median and mode.
answers in it.
_____________________________________________________________________
____________________________________________________________________________________________________________________
_____________________________________________________________________
__________________________________________________________________
__________________________________________________________________
93
Management 2.12 LET US SUM UP
Thus we can say that Mean, Median, Mode is the essential phenomena in any statistical
analysis. Thus the measure central tendency helps in summarising the data and classify
it into simple form.
(i) X=
ÂfX i i
(Simple AM)
N
(ii) X = A+
Âfd i i
(Short-cut method)
N
(iii) X = A+ h◊
Âfu i i
(Step-deviation method)
N
Xw =
Âw X i i
(iv) (Weighted AM)
Âw i
N 1 X 1 + N 2 X 2 + LL + N k X k
(v) X = (Mean of combined series)
N 1 + N 2 + LL+ N k
N
-C
(vi) M d = Lm + 2 ¥h (Median)
fm
iN
C
(vii) Qi LQi 4 where i = 1, 3 (Quartiles)
fQi
kN
-C
(viii) Pk = LPk + 100 ¥h (k th Percentile)
f Pk
È Â fi log X i ˘
(ix) GM = Anti log Í ˙ (Simple GM)
ÍÎ N ˙˚
È Â wi log X i ˘
(x) GM w = Anti log Í ˙ (Weighted GM)
ÍÎ Â wi ˙˚
G = Anti log
LM n log G + n log G + LL + n log G OP
N Q (GM of the combined series)
1 1 2 2 k k
(xi) n + n + LL+ n 1 2 k
r = b1 + r gb1 + r gb1 + r gKK b1 + r g − 1 is average annual rate of growth per unit

1
(xii) 1 2 3 n
n
where r1, r2 ...... rn are the rates of growth in various years.

N
(xiii) HM = (Simple HM)
f
Â Xi
i
(xiv) HM w =
Âw i
(Weighted HM)
w
ÂX i
2.13 LESSON-END ACTIVITY

The harmonic mean, like arithmetic mean, is also used in averaging of rates like price per
unit, kms per hour etc., under certain conditions. Explain the method of choosing an
appropriate average between arithmetic mean and harmonic mean.
94
2.14 KEYWORDS
Mean
Median
Mode
Average
Central Tendency

1. Write True or False against each of the statement:
(a) In computation of single arithematic mean equal importance is given to all the
items.
(b) Median divides the value of variate into two equal parts.
(c) The value that divides distribution into four equal parts are called Median.
(d) Mode is that value of the variate which occurs maximum no. of times.
(e) Harmonic mean is reciprocal of arithematic mean of their reciprocals.
2. Fill in the blanks :
(a) ................ is a value which is typical representative of a set of data.
(b) A measure of ................ is a typical value around which other figures
congregate.
(c) In ................ given observations are arranged in ascending or descending
order of magnitude.
(d) Decile divides distribution into ................ equal parts.
(e) Mode can be determined in two ways by ................ and by ................
3. Distinguish between:
(a) Median and Mode
(b) Percentile and Decile
(c) Harmonic Mean and Geometric Mean
(d) Progressive Average and Composite Average
(e) Inclusive and Exclusive series
4. Comment on the following:
(a) Summarisation of data is necessary for any statistical analysis.
(b) Arithematic mean is the most popular average in statistics.
(c) Median is a positional average.
(d) An average is a substitute for complex group of variables.

1. What is a statistical average? Describe the characteristics of a good statistical
average.
2. What are the functions of an average? Discuss the relative merits and demerits of
various types of statistical averages.
3. Give the essential requisites of a measure of 'Central Tendency'. Under what
circumstances would a geometric mean or a harmonic mean be more appropriate
than arithmetic mean? 95
Quantitative Techniques for 4. What do you mean by 'Central Tendency'? Describe the advantages and the
Management
disadvantages of arithmetic mean and mode.
5. What are the characteristics of an ideal average? How far these are satisfied by
the mode and median?
6. Distinguish between a mathematical average and a positional average. Give
advantages and disadvantages of each type of average.
7. What do you understand by partition values? Give the definitions of quartiles, deciles
and percentiles.
8. "Each average has its own special features and it is difficult to say which one is the
best". Explain this statement.
9. Discuss the considerations that determine the selection of a suitable average. Explain
by giving one example of each case.
10. Explain the empirical relation between mean, median and mode. What are its uses?
Under what circumstances it is expected to hold true?
11. Distinguish between a simple average and a weighted average. Explain with an
example the circumstances in which the latter is more appropriate than the former.
12. "An average is a substitute for a complex group of variables but it is not always
safe to depend on the substitute alone to the exclusion of individual measurements
of groups". Discuss.
13. Show that if all observations of a series are added, subtracted, multiplied or divided
by a constant b, the mean is also added, subtracted, multiplied or divided by the
same constant.
14. Prove that the algebric sum of deviations of a given set of observations from their
mean is zero.
15. Prove that the sum of squared deviations is least when taken from the mean.
16. The heights of 15 students of a class were noted as shown below. Compute
arithmetic mean by using (i) Direct Method and (ii) Short-Cut Method.
S. No. : 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Ht (cms) : 160 167 174 158 155 171 162 152 156 175 178 167 177 162 153
17. Compute arithmetic mean of the following series :

Marks : 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50 50 - 60
No. of Students : 12 18 27 20 17 6
18. Calculate arithmetic mean of the following data :

Mid -Values : 10 12 14 16 18 20
Frequency : 3 7 12 18 10 5
19. Calculate mean from the following data :

Wages ( in Rs ) : 8 - 12 14 - 18 20 - 24 26 - 30 32 - 36 38 - 42
No . of Workers : 6 10 17 13 3 1
20. Calculate mean marks from the following table :

Marks, less than : 10 20 30 40 50
No. of Students : 25 40 60 75 100
21. The weights (in gms) of 30 articles are given below :

14 16 16 14 22 13 15 24 12 23 14 20 17 21 18 18 19 20 17
16 15 11 12 21 20 17 18 19 22 23.
96
Construct a grouped frequency distribution by taking equal class intervals in which Measures of Central Tendency
the first interval should be 11 - 13 (exclusive). Also find the arithmetic mean.
22. The following information relates to wages of workers in a factory, their total
working hours and the average working hours per worker. Calculate the wage per
worker and the total wage.
Wages ( Rs ) : 50-70 70- 90 90 -110 110-130 130-150 150-170
Total hours worked : 72 200 255 154 78 38
Average No. of hours
: 9 8 8.5 7 7.8 7.6
worked per worker
23. The monthly salaries of 30 employees of a firm are given below :

69 148 132 118 142 116 139 126 114 100 88 62 77 99 103 144
148 63 104 123 95 80 85 106 123 133 140 134 108 129
The firm gave bonus of Rs 10, 15, 20, 25, 30 and 35 for individuals in the respective
salary group; exceeding Rs 60 but not exceeding Rs 75, exceeding Rs 75 but not
exceeding Rs 90 and so on up to exceeding Rs 135 but not exceeding Rs 150. Find
out the average bonus paid per employee.
24. Find out the missing frequency in the following distribution with mean equal to 30.
Class : 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50
Frequency : 5 6 10 ? 13
25. (a) The following table gives the monthly salary of academic staff of a college.
Calculate the simple and weighted arithmetic means of their monthly salary.
Which of these averages is most appropriate and why?
Designation Monthly Salary No. of Teachers

(i) Principal 4500 1
(ii) Reader 3700 5
(iii ) Senior - Lecturer 3000 15
(iv) Lecturer 2200 25
(b) The sum of deviations of a certain number of observations from 12 is 166 and
the sum of deviations of these observations from 16 is 54. Find the number of
observations and their mean.
26. Twelve persons gambled on a certain night. Seven of them lost at an average rate
of Rs 10.50 while remaining five gained at an average of Rs 13.00. Is the information
given above is correct? If not, why?
27. The incomes of employees in an industrial concern are given below. The total
income of ten employees in the class over Rs 250 is Rs 3,000. Compute mean
income. Every employee belonging to the top 25% of the earners is required to pay
1% of his income to workers' relief fund. Estimate the contribution to this fund.
Income ( Rs ) : 0- 50 50-100 100-150 150- 200 200- 250 250 and above
Frequency : 90 150 100 80 70 10
28. Comment on the performance of the students of three universities given below:
Courses Bombay University Calcutta University Madras University
of Study Pass% No. of Students Pass% No. of Students Pass% No. of Students
M. A. 71 300 82 200 81 200
M. Com. 83 400 76 300 76 350
M. Sc. 66 300 60 700 73 200
B. A. 73 500 73 600 74 450
B. Com. 74 200 76 700 58 200
B. Sc. 65 300 65 300 70 700 97
Quantitative Techniques for 29. (a) Compute the weighted arithmetic mean of the indices of various groups as
Management
given below:
Group Index Weight
Food 120 4
Clothing 130 2
Housing 150 2
Education of
Children 100 1
Miscellaneous 160 1
(b) A cumulative frequency distribution has 65 as the mid-value of its last class
interval. The cumulative frequencies of the first, second ...... seventh classes
are 5, 21, 45, 72, 85, 94 and 100 respectively. If all the class intervals are of
equal width of 10 units, write down the relevant frequency distribution. Also
calculate its mean and median.
30. A distribution consists of three components each with total frequency of 200, 250
and 300 and with means of 25, 10 and 15 respectively. Find out the mean of the
combined distribution.
31. Find the average number of children per family for the sub-groups separately as
well as combined as a whole.
Sub - group I Sub - group II
No. of Children No. of families No. of Children No. of families
0 10 4-5 20
1 50 6-7 12
2 60 8-9 4
3 40 10 - 11 4
32. (a) The mean of a certain number of items is 20. If an observation 25 is added to
the data, the mean becomes 21. Find the number of items in the original data.
(b) The mean age of a combined group of men and women is 30 years. If the
mean age of the men's group is 32 years and that for the women’s group is 27
years, find the percentage of men and women in the combined group.
33. The average age of 40 students entering B.A. (Honours) Economics first year in a
college was 19 years. Out of this only 25 students passed the third year examination.
If the average age of these 25 students is 22.5 years, find the average age of the
remaining students.
34. Fifty students took a test. The result of those who passed the test is given below:
Marks : 4 5 6 7 8 9
No. of Students : 8 10 9 6 4 3
If the average marks for all the 50 students was 5.16, find the average marks of
those who failed.
35. A person had 7 children. The average age of the children was 14 years when one
of the child died at the age of 8 years. What will be the average age of the remaining
children after five years of this death?
36. The mean marks of 100 students was calculated as 40. Later on it was discovered
that a score 53 was misread as 83. Find the correct mean.
37. An examination was held to decide the award of a scholarship. The weights given
to various subjects were different. Only three applicants for the scholarship obtained
over 50% marks in aggregate. The marks were as follows :
Subjects Weights % Marks of A % Marks of B % Marks of C

Cost Accounting 5 70 65 90
Statistics 4 63 80 75
Business Law 2 50 40 65
98 Economics 3 55 50 40
Insurance 1 60 40 38
Of the candidates, the one getting the highest average marks is to be awarded the Measures of Central Tendency
scholarship. Determine, who will get it?
38. The number of fully formed tomatoes on 100 plants were counted with the following
results :
2 plants had 0 tomatoes
5 " 1 "
7 " 2 "
11 " 3 "
18 " 4 "
24 " 5 "
12 " 6 "
8 " 7 "
6 " 8 "
4 " 9 "
3 " 10 "
(i) How many tomatoes were there in all?
(ii) What was the average number of tomatoes per plant?
39. (a) The average income of 300 employees of a company is Rs 1,800 p.m. Due to
rise in prices the company owner decided to give ad-hoc increase of 25% of
the average income to each of the 25% lowest paid employees, 10% of the
average income to each of the 10% highest paid employees and 15% to each
of the remaining employees. Find out the amount of money required for
ad hoc increase and also the average income of an employee after this increase.
(b) The frequency distribution of the number of casual leave taken by the
employees of a firm in a particular year is given below in which one entry
marked as '?' is missing. Determine the missing value if the average number
of casual leave taken by an employee is 8.5.
No. of Casual leave taken : 0 4 5 ? 9 10 12
No. of Employees : 8 35 40 65 79 91 82
40. The mean salary paid to 1,000 employees of an establishment was found to be Rs
180.40. Later on, after disbursement of salary, it was discovered that the salaries
of two employees were wrongly entered as Rs 297 and Rs 165
instead of Rs 197 and 185 respectively. Find the correct mean salary.
41. The following variations were recorded in the measurements of parts by a machine:
Variations from the Standard ( mm. ) No. of parts

10 to 15 1
5 to 10 3
0 to 5 20
5 to 0 25
10 to 5 22
15 to 10 17
20 to 15 13
25 to 20 10
30 to 25 7
35 to 30 2
(i) Find average variations.

(ii) What proportion fell within a range of 5 mm. either way of the standard? 99
Quantitative Techniques for (iii) If those which fall more than 10 mm. apart from the standard are classified
Management
as bad, what percentage of the parts are bad?
(iv) Which stretch of 15 mm. contains the greatest number of parts and what
fraction of the total fall inside this stretch?
42. (a) The average monthly production of a certain factory for the first ten months
of a year was 3,500 units. Due to workers' unrest in the last two months, the
average monthly production for the whole year came down to 3,200 units.
Find the average monthly production of the last two months.
(b) The average sales of a balloon seller on the first five days (i.e., Monday to
Friday) of a particular week was Rs 50 and his average sales for the entire
week was Rs 70. If his sales on Sunday were 40% higher than his sales on
Saturday, find his sales on each of the last two days, i.e., on Saturday and
Sunday.
43. Determine median from the following data :
30, 37, 54, 58, 61, 64, 31, 34, 52, 55, 62, 28, 47, 55, 60
44. Locate median of the following data:
65, 85, 55, 75, 96, 76, 65, 60, 40, 85, 80, 125, 115, 40
45. Locate Md, Q1, Q3, D3, D6, P20, P40, P85 and P90 from the following data :
S. No. Marks S. No. Marks S. No. Marks

1 17 7 41 13 11
2 32 8 32 14 15
3 35 9 10 15 35
4 33 10 18 16 23
5 15 11 20 17 38
6 21 12 22 18 12
46. In a class of 16 students, the following are the marks obtained by them in statistics.
Find out the lower quartile, upper quartile, seventh decile and thirty-fifth percentile.
S. No. : 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Marks : 5 12 17 23 28 31 37 41 42 49 54 58 65 68 17 77
47. Locate Md, Q1, Q3, D4, D7, P26, P45, P66, P70 and P79 from the following data :
Age of Children (in years ) : 6 7 8 9 10 11 12 13 14 15
No. of Children : 32 33 39 43 58 59 52 38 33 13
48. Find median from the series given below :

Marks (less than) : 5 10 15 20 25 30 35 40 45 50
No. of Students : 5 13 28 53 83 105 123 135 142 145
49. Calculate median from the following table :

Wages (more than) : 30 40 50 60 70 80 90
No. of Workers : 58 46 40 31 16 5 0
50. Calculate median from the following data :

Class : 0 - 5 5 - 10 10 - 15 15 - 20 20 - 25 25 - 30 30 - 35 35 - 40 40 - 45 45 - 50
Frequency : 5 8 5 22 20 25 19 25 6 5
51. Compute median from the following data :

Class : 10 - 20 20 - 30 30 - 40 40 - 50 50 - 60 60 - 70
100
Frequency : 15 8 17 29 7 4
52. Find out median from the following : Measures of Central Tendency
No. of Workers : 1- 5 6 - 10 11- 15 16 - 20 21- 25

No. of factories : 3 8 13 11 5
53. Calculate median income for the following distribution :

Income ( Rs ) : 40- 44 45- 49 50- 54 55- 59 60- 64 65- 69 70-74
No. of Persons : 2 7 10 12 8 3 3
54. With the help of the following figures, prepare a cumulative frequency curve and
locate the median and quartiles:
Marks Obtained : 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50
No. of Students : 10 12 20 18 10
55. Draw a cumulative frequency curve from the following data and find out the median
and both quartiles:
Class : 1 - 5 6 - 10 11 - 15 16 - 20 21- 25 26 - 30 31- 35 36 - 40 41- 45
Frequency : 7 10 16 32 24 18 10 5 1
56. Calculate median and both quartiles from the following data :
Age : 20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59
No. of Persons : 50 70 100 180 150 120 70 60
57. Calculate the quartiles, D7 and P85 from the following data :
Class : Less than 100 100 - 250 250 - 400 400 - 500 500 - 550
Frequency : 85 100 175 74 66
Class : 550 - 600 600 - 800 800 - 900 900 - 1000
58. Calculate arithmetic mean and median from the data given below :
Income in Rs ( less than ) : 80 70 60 50 40 30 20 10
No . of Workers : 100 90 80 60 32 20 13 5
59. Calculate mean and median from the following series :

Class Intervals : 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50
Frequency : 15 20 18 27 20
60. Calculate mean and median from the following table :

Price ( Rs ) : 10 - 20 10 - 30 10- 40 10 - 50 10- 60 10 -70 10- 80 10- 90
Frequency : 4 16 56 97 124 137 146 150
61. Compute mean and median from the following data :

Marks obtained : 0 - 9 10 - 19 20 - 29 30 - 39 40 - 49 50 - 59 60 - 69 70 - 79 80 - 89
No. of Students : 0 5 10 17 18 30 10 8 2
62. Calculate mean and median of the following distribution :

Size : 0-4 4-8 8 - 12 12 - 16 16 - 20 20 - 24 24 - 28 28 - 32
Frequency : 5 7 9 17 15 14 6 0
63. Following is the distribution of marks obtained by 50 students in 'mercantile law'.

Calculate median marks. If 60% of the students pass this test, find the minimum
marks obtained by a passed candidate.
Marks (more than) : 0 10 20 30 40 50
No. of Students : 50 46 40 20 10 3 101
Quantitative Techniques for 64. Estimate the number of first, second and third divisioners and the number of failures
Management
from the following data. First division is awarded at 60 or more marks, second
division at 50 and above but less than 60, third division at 36 or more but less than
50 and those securing less than 36 are failures.
M arks ( out of 100 ) : 0 - 20 20 - 40 40 - 60 60 - 80 80 and above

N o . of Students : 18 30 66
65 25 12
11
65. Following relate to the weekly wages (in Rs) of workers of a factory :
100, 75, 79, 80, 110, 93, 109, 84, 95, 77, 100, 89, 84, 81, 106, 96, 94, 83, 95, 78, 101,
99, 83, 89, 102, 97, 93, 82, 97, 80, 102, 96, 87, 99, 107, 99, 97, 80, 98, 93, 106, 94, 88,
104, 103, 100, 98, 84, 100, 96, 86, 93, 89, 100, 101, 106, 92, 86, 105, 97, 82, 92, 75,
103, 101, 103, 100, 88, 106, 98, 87, 90, 76, 104, 101, 107, 97, 91, 103, 98, 109, 86, 76,
107, 88, 107, 88, 93, 85, 98, 104, 78, 79, 110, 94, 108, 86, 95, 84, 87.
Prepare a frequency distribution by taking class intervals as 75 - 80, 80 - 85, etc.
and locate its median and the two quartiles.
66. Find an appropriate average for the following distribution :
Weekly Income ( in Rs ) No . of families

Below 100 50
100 - 200 500
200 - 300 555
300 - 400 100
400 - 500 3
500 and above 2
67. In the frequency distribution of 100 families given below, the number of families
corresponding to weekly expenditure groups 200 - 400 and 600 - 800 are missing.
However, the median of the distribution is known to be Rs 500. Find the missing
frequencies.
Expenditure : 0 - 200 200 - 400 400 - 600 600 - 800 800 - 1000
No. of families : 14 ? 27 ? 15
68. Find median from the following distribution :

X : 1 2 3 4 5-9 10 - 14 15 - 19 20 - 25
f : 5 10 16 20 30 15 8 6
69. The following is the monthly wage distribution of a certain factory :
Wages ( Rs ) : 50 - 80 80 -100 100-110 110-120 120-130

No. of Workers : 50 120 200 250 170
Wages ( Rs ) : 130-150 150-170 170- 200
No. of Workers : 130 60 20
(a) Find the median wage.

(b) A fund is to be raised and it is decided that the workers getting less than Rs
120 should contribute 5% of their wages and those getting Rs 120 or more
should contribute 10% of their wages. What sum should be collected?
70. Determine the mode of the following data :
58, 60, 31, 62, 48, 37, 78, 43, 65, 48
71. Locate mode of the following series :
S. No. : 1 2 3 4 5 6 7 8 9 10 11 12
102 Age : 9 7 4 9 10 8 4 10 5 8 15 8
72. Determine whether there is any mode in the following series : Measures of Central Tendency
S. No. : 1 2 3 4 5 6 7 8
Size : 10 10 10 10 10 10 10 10
73. The number of calls received in 240 successive one minute intervals at an exchange
are shown in the following frequency distribution. Calculate mode:
No. of calls : 0 1 2 3 4 5 6 7
Frequency : 14 21 25 43 51 35 39 12
74. Calculate mode from the following data :

Midpoints : 1 2 3 4 5 6 7 8
Frequency : 5 50 45 30 20 10 15 5
75. Calculate mode from the following series :
Class Intervals : 10 - 19 20 - 29 30 - 39 40 - 49 50 - 59 60 - 69
Frequency : 4 6 8 5 4 2
76. Calculate mode of the following frequency distribution :

Marks : 0-6 6 - 12 12 - 18 18 - 24 24 - 30 30 - 36
No. of Students : 12 24 36 38 37 6
77. Calculate mode from the following distribution :

Marks (less than) : 7 14 21 28 35 42 49
No. of Students : 20 25 33 41 45 50 52
78. Calculate median and mode from the following data :

Size : 10 - 20 10 - 30 10 - 40 10 - 50 10 - 60 10 - 70 10 - 80 10 - 90
Frequency : 4 16 56 97 124 137 146 150
79. Calculate X and Mo from the following distribution :

Class Intervals : 6 - 10 11- 15 16 - 20 21- 25 26 - 30
Frequency : 20 30 50 40 10
80. Find out mode of the following data graphically and check the result by calculation:
Size : 0 - 1 1 - 2 2 - 3 3 - 4 4 - 5 5 - 6 6 - 7 7 - 8 8 - 9 9 - 10 10 - 11
Frequency : 3 7 9 15 25 20 14 12 8 6 2
81. (a) Construct a frequency distribution of the marks obtained by 50 students in

economics as given below :
42, 53, 65, 63, 61, 47, 58, 60, 64, 45, 55, 57, 82, 42, 39, 51, 65, 55, 33, 70, 50, 52,
53, 45, 45, 25, 36, 59, 63, 39, 65, 30, 45, 35, 49, 15, 54, 48, 64, 26, 75, 20, 42, 40,
41, 55, 52, 46, 35, 18. (Take the first class interval as 10 - 20).
(b) Calculate mode of the above distribution.
82. The monthly profits (in Rs) of 100 shops are distributed as follows :
Profits : 0 - 100 100 - 200 200 - 300 300 - 500 500 - 600 600 - 800
No. of Shops : 19 21 30 40 10 12
Calculate mode of the distribution.

83. The mode of the following incomplete distribution of weights of 160 students is 56.
Find the missing frequencies.
Weights ( kgs) : 30 - 40 40 - 50 50 -60 60 -70 70 -80 80- 90
No. of Students : 20 36 ? ? 15 5 103
Quantitative Techniques for 84. Calculate mean, median and mode from the following table :
Management
Wages ( Rs ) No. of Persons

Less than 8 5
Less than 16 12
8- 24 29
24 and above 31
32 - 40 8
40 and above 19
48- 56 5
85. (a) In a moderately skewed distribution, the arithmetic mean is 10 and mode is 7.
Find median.
(b) In a moderately asymmetrical distribution, the mean is 25 and the median is
23.5. Find mode.
86. Find geometric mean from the following daily income (in Rs) of 10 families:
85, 70, 15, 75, 500, 8, 45, 250, 40 and 36.
87. Calculate geometric mean of the following distribution :
Marks (less than) : 10 20 30 40 50
No. of Students : 12 27 72 93 100
88. The value of a machine depreciates at a constant rate from the cost price of Rs
1,000 to the scrap value of Rs 100 in ten years. Find the annual rate of depreciation
and the value of the machine at the end of one, two, three years.
89. Calculate weighted GM from the following data :
Items Weights Price Index

Wheat 10 135
Milk 5 140
Sugar 2 160
Eggs 6 120
90. The price of a commodity increased by 12% in 1986, by 30% in 1987 and by 15%
in 1988. Calculate the average increase of price per year.
91. The population of a city was 30 lakh in 1981 which increased to 45 lakh in 1991.
Determine the rate of growth of population per annum. If the same growth continues,
what will be the population of the city in 1995.
92. The value of a machine depreciated by 30% in 1st year, 13% in 2nd year and by
5% in each of the following three years. Determine the average rate of depreciation
for the entire period.
93. The following table gives the diameters of screws obtained in a sample enquiry.
Calculate mean diameter by using geometric average.
Diameter (mm) : 130 135 140 145 146 148 149 150 157
No. of Screws : 3 4 6 6 3 5 2 1 1
94. (a) The price of a commodity doubles in a period of 5 years. What will be the
average rate of increase per annum.
(b) If a sum of Rs 1,500 is invested at 15% rate of interest compounded annually,
determine the amount after 5 years.
104
95. (a) Find the average rate of increase per decade in the population which increased Measures of Central Tendency
by 10% in the first decade, by 20% in the second and by 40% in the third.
(b) The price of a commodity increased by 10% in 1st year, by 15% in 2nd year
and decreased by 10% in 3rd year. Determine the average change of price
after 3 years.
96. The following table gives the marks obtained by 70 students in mathematics.
Calculate arithmetic and geometric means:
Marks ( more than) : 80 70 60 50 40 30 20
No. of Students : 0 7 18 40 40 63 70
97. The population of a city has grown in the following manner :

Years : 1951 1961 1971 1981 1991
Population (lacs) : 10 13 15. 5 20. 8 30. 5
Find the average growth per decade.

98. The geometric means of three groups consisting of 15, 20 and 23 observations are
14.5, 30.2 and 28.8 respectively. Find geometric mean of the combined group.
99. A sum of money was invested for 3 years. The rates of interest in the first, second
and third year were 10%, 12% and 14% respectively. Determine the average rate
of interest per annum.
100. The weighted geometric mean of four numbers 8, 25, 17 and 30 is 15.3. If the
weights of first three numbers are 5, 3 and 4 respectively, find the weight of the
fourth number.
101. The annual rates of growth of output of a factory in five years are 5.0, 6.5, 4.5, 8.5
and 7.5 percent respectively. What is the compound rate of growth of output per
annum for the period?
102. (a) A man invested Rs 1,000, Rs 12,000 and Rs 15,000 at the respective
rates of return of 5%, 14% and 13% p.a. respectively. Determine his average
rate of return per annum.
(b) The arithmetic and the geometric means of two numbers are 20.5 and 20
respectively. Find the numbers.
103. (a) Calculate the harmonic mean of the following data :
9, 5, 2, 10, 15, 35, 20, 24, 21
(b) Calculate HM of the following items :
1.0, 1.5, 15.0, 250, 0.5, 0.05, 0.095, 1245, 0.009
104. Calculate X , GM and HM and verify that X > GM > HM.
Class Intervals : 5 - 15 15 - 25 25 - 35 35 - 45 45 - 55
Frequency : 6 9 15 8 4
105. Four typists take 15, 10, 8, 7 minutes respectively to type a letter. Determine the
average time required to type a letter if
(a) Four letters are to be typed by each typist.
(b) Each typist works for two hours.
106. (a) A person spends Rs 60 for oranges costing Rs 10 per dozen and another Rs
70 for oranges costing Rs 14 per dozen. What is the average price per dozen
paid by him?
(b) Three mechanics take 10, 8, and 6 hours respectively to assemble a machine.
Determine the average number of hours required to assemble one machine. 105
Quantitative Techniques for 107. At harvesting time, a farmer employed 10 men, 20 women and 16 boys to lift
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potatoes. A woman's work was three quarters as effective as that of a man, while
a boy's work was only half. Find the daily wage bill if a man's rate was Rs 24 per
day and the rates for the women and boys were in proportion to their effectiveness.
Calculate the average daily rate for the 46 workers.
108. Saddam takes a trip which entails travelling 1,350 kms by train at a speed of 60
kms/hr, 630 kms by aeroplane at 350 kms/hr, 4,500 kms by ship at 25 kms/hr and
20 kms by car at 30 kms/hr. What is the average speed for the entire journey?
109. (a) A man travels from Lucknow to Kanpur, a distance of 80 kms, at a speed of
45 kms/hr. From Kanpur he goes to Etawah, a distance of 165 kms, at a
speed of 65 kms/hr and from Etawah he comes back to Lucknow, along the
same route, at a speed of 60 kms/hr. What is his average speed for the entire
journey?
(b) If refills for 5 rupees are purchased at 40 paise each and for another 5 rupees
are purchased at 60 paise each, the average price would be 48 paise and not
50 paise. Explain and verify.
110. (a) An aeroplane travels distances of 2,500, 1,200, and 500 kms at the speeds of
500, 400 and 250 kms/hour respectively. Find the average speed for the entire
trip, commenting upon the choice of your average.
(b) A train goes from Delhi to Agra in four hours at speeds of 25, 60, 80 and 40
kms/hour in each successive hour respectively. Find the average speed of the
train and verify your answer.
111. A can do a unit of work in 10 minutes, B in 18 minutes and C in 20 minutes. Find
their average rate of working when :
(i) A works for 8 hours, B for 9 hours and C for 10 hours per day.
(ii) Each of them have to complete 40 units of work per day.
Also determine the total units of work done per day in each of the above situations
and verify your answer.
112. Choose an appropriate average to find the average price per kg., for the
following data:
Articles Qty Purchased Rate ( in gms ./ rupee )

Wheat 5 kg . 250
Rice 3 kg . 150
Sugar 1 kg . 100
Pulses 2 kg . 90
113. Calculate the weighted harmonic mean of the following data :

X : 3 10 25 40
w : 6 3 4 1
Now change the weights as 12, 6, 8 and 2 respectively and recalculate the weighted
harmonic mean. What do you conclude?
114. (a) The speeds of various buses of a company plying on the same route was
found to be as given below :
Speed ( in miles / hour ) : 12 15 18
No . of Buses : 3 5 2
Find the average speed of the 10 buses.

106
(b) Find mean daily earnings from the following data : Measures of Central Tendency
50 men get at the rate of Rs 50 per man per day

35 " 60 "
25 " 75 "
10 " 100 "
115. A college canteen sells tea for 75 paise per cup, coffee for Rs 1.50 per cup and
bread pakora for Rs 2 per plate. If on a particular day, it sold tea worth
Rs 150, coffee worth Rs 165 and bread pakora worth Rs 200, what is the average
price per item sold?
116. A firm of readymade garments makes both men's and women's shirts. Its profit
average 6% of sales ; its profit in men's shirts average 8% of sales. If the share of
women's shirts in total sales is 60%, find the average profit as a percentage of the
sales of women's shirts.
117. Which of the averages will be most suitable in the following circumstances?
(i) Average rate of growth of population in a given period.
(ii) Average number of children in a family.
(iii) Average size of oranges on a tree.
(iv) Average speed of work.
(v) Average marks of students in a class.
(vi) Average intelligence of students in a class.
(vii) Average size of collars.
(viii) Average income of a lawyer.
(ix) Average size of readymade garments.
(x) Average size of agricultural holdings.
(xi) Average change in prices.
(xii) Average level of health.
118. Select the correct alternative.
(a) Relationship between mean (m), geometric mean (g) and harmonic mean (h)
is:
m.h m+h
(i) g = (ii) g = m.h (iii) g = (iv) None of the these.
m+h 2
(b) In a moderately skewed distribution, mode (Mo) can be calculated by:
3 X - 2M d
(i) M o = , (ii) M o = 3 X - 2 M d
2
(iii) M o = 3 X - 3M d , (iv) M o = 3M d - 2 X
(c) Which of the following would be an appropriate average for determining the
average size of readymade garments :
(i) Arithmetic mean (ii) Median (iii) Mode (iv) Geometric mean
(d) Most appropriate average to determine the size of oranges on a tree is:
(i) Mode (ii) Median (iii) Mean (iv) None of the these.
(e) Most appropriate measure for qualitative measurements is :
(i) Mode (ii) Median (iii) Mean (iv) None of the these. 107
Quantitative Techniques for (f) The most unstable measure of central tendency is :
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(i) Mean (ii) Median (iii) Mode (iv) None of the these.
(g) The sum of deviations of observations is zero when measured from :
(i) Median (ii) GM (iii) Mode (iv) Mean
(h) The average, most affected by the extreme observations, is :
(i) Mode (ii) Mean (iii) GM (iv) Median
(i) The most stable average is :
(i) Mode (ii) Mean (iii) Median (iv) GM
119. State whether the following statements are true or false :
(i) X can be calculated for a distribution with open ends.
(ii) Md is not affected by the extreme observations.
(iii) X is based on all the observations.
(iv) X = Mo = Md, for a symmetrical distribution.
(v) Mo can be calculated if class intervals are of unequal width.
(vi) The class limits should be exclusive for the calculation of Md and Mo.
120. Fill in the blanks :
(i) ...... is most suitable for measuring average rate of growth.
(ii) ...... or ...... are used for averaging rates under certain conditions.
(iii) ...... or ...... are the averages which can be calculated for a distribution with
open ends.
(iv) ...... or ...... are the averages used to study the pattern of a distribution.
(v) ...... or ...... are the averages which can be calculated when the characteristics
are not measurable.
(vi) ...... or ...... or ...... averages depend upon all the observations.
(vii) The sum of squares of deviations is ...... when taken from mean.
(viii) The average which divides a distribution into two equal parts is ...... .
(ix) Md of a distribution is also equal to its ...... quartile.
(x) The point of intersection of the 'less than type' and 'more than type' ogives
corresponds to ...... .
(xi) The algebric sum of deviations of 30 observations from a value 14 is 3. The
mean of these observations is ...... .
121. Examine the validity of the following statements giving necessary proofs and reasons
for your answer :
50
(i) For a set of 50 observations Xi, i = 1, 2 ...... 50, Â(X
i =1
i - 10) = 90 , when
X = 10.
(ii) Geometric mean of a given number of observations cannot be obtained if one
of them is zero.
(iii) The mean depth of water of a river is 130 cms, therefore, a man with a height
of 165 cms can cross the river safely.
(iv) For a wholesale manufacturer, interested in the type which is usually in
demand, median is the most suitable average.
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(v) If AM = 25 and HM = 9, then GM = 15 for two positive values of a variable. Measures of Central Tendency
(vi) For a set of 8 observations AM, GM and HM are 5.2, 6.3 and 7.1 respectively.
(vii) If 2y – 6x = 6 and mode of y is 66, then mode of x is 21.

DISCUSSION
1. (a) True (b) True (c) False (d) True (e) True
2. (a) Average (b) Central Tendency (c) Median (d) Ten
(e) Inspection, grouping

Mario F. Triola, Elementary Statistics, Addison-Wesley January 2006.
David & Moae, Introduction to the Practice of Statistics, W.H. Freeman & Co.
February 2005.
Allan & Blumon, Elementary Statistics : A Step by Step Approach. McGraw-Hill College,
June 2003.
James T. McClave Terry Sincich, William Mendenhall, Statistics, Prentice Hall
February 2005
Mark L. Berenson, David M. Revine, Tineothy C. Krehbiel, Basic Business Statistics:
Concepts & Applications, Prentice Hall, May 2005.
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Quantitative Technique
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3
MATHEMATICAL MODEL
CONTENTS
3.1 Introduction
3.2 Mathematics — The Language of Modelling
3.3 Building a Mathematical Model
3.4 Verifying and Refining a Model
3.5 Variables and Parameters
3.6 Continuous-in-Time vs. Discrete-in-Time Models
3.7 Deterministic Model Example
3.8 Probabilistic Models
3.9 Let us Sum Up
3.11 Keywords

In the previous and preceding previous lessons we had an elaborative view on quantitative
techniques and distinguishable statistical approaches. In this lesson we are going to discuss
various models or rather we can say mathematical models which are extremely powerful
because they usually enable predictions to be made about the system.
3.1 INTRODUCTION
Models in science come in different forms. A physical model that you probably are
familiar with is an anatomically detailed model of the human body. Mathematical models
are less commonly found in science classes, but they form the core of modem cosmology.
Mathematical models are extremely powerful because they usually enable predictions to
be made about a system. The predictions then provide a road map for further
experimentation. Consequently, it is important for you to develop an appreciation for this
type of model as you learn more about cosmology. Two sections of the activity develop
mathematical models of direct relevance to cosmology and astronomy. The math skills
required in the activity increase with each section, but nothing terribly advanced is required.
A very common approach to the mathematical modeling of a physical system is to collect
110
a set of experimental data and then figure out a way to graph the data so that one gets a Mathematical Model
straight line. Once a straight line is obtained, it is possible to generalize the information
contained in the straight line in terms of the powerful algebraic equation: You probably
are familiar with this equation. In it y represents a value on the y-axis, x represents a
value on the x-axis, m represents the slope of the straight line, and b represents the value
of the intercept of the line on the y-axis. In all sections of this activity, your goal will be
to analyze and then graph a set of data so that you obtain a straight line. Then you will
derive the equation that describes the line, and use the equation to make predictions
about the system. So relax and have fun with math!
y = mx + b
Mathematical modeling is the process of creating a mathematical representation of some

phenomenon in order to gain a better understanding of that phenomenon. It is a process
that attempts to match observation with symbolic statement. During the process of building
a mathematical model, the model will decide what factors are relevant to the problem and
what factors can be de-emphasized. Once a model has been developed and used to answer
questions, it should be critically examined and often modified to obtain a more accurate
reflection of the observed reality of that phenomenon. In this way, mathematical modeling
is an evolving process; as new insight is gained, the process begins again as additional
factors are considered. “Generally the success of a model depends on how easily it can be
used and how accurate are its predictions.” (Edwards & Hamson, 1994, p. 3)
3.2 MATHEMATICS — THE LANGUAGE OF MODELLING

Like other languages, the essence of mathematics is the way it enables us to express,
communicate, and reason about ideas and, especially, ideas about our world. The word
“red” in English is important because it describes the color below. Without seeing this
color one misses a great deal about the word “red.”
We are interested in using mathematics to talk about meaningful problems. For this
reason, laboratory equipment like the Texas Instrument CBL that allows us to collect
and record quantitative information about the real world, and sources like the United
States Census are especially important to us.
Working with real problems requires the full power of mathematics — the ability to work
with symbols, with graphics, and with numerical calculations. For this reason computer
algebra systems like MathCad, Maple, Mathematica, and the CAS built into the TI-92
are an integral part of our tool kit. They give us powerful environments for doing
mathematics. And together with a browser, like Netscape, some cables, and equipment
like the TI-CBL they give us the ability to use the full power of mathematics with real
data from the real world.
3.3 BUILDING A MATHEMATICAL MODEL

Building a mathematical model for your project can be challenging, yet interesting, task.
A thorough understanding of the underlying scientific concepts is necessary and a mentor
with expertise in your project topic is invaluable. It is also best to work as part of a team
to provide more brainstorming power. In industry and engineering, it is common practice
for a team of people to work together in building a model, with the individual team
members bringing different areas of expertise to the project.
Although problems may require very different methods of solution, the following steps
outline a general approach to the mathematical modeling process:
1. Identify the problem, define the terms in your problem, and draw diagrams
where appropriate.
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Quantitative Technique 2. Begin with a simple model, stating the assumptions that you make as you focus
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on particular aspects of the phenomenon.
3. Identify important variables and constants and determine how they relate to
each other.
4. Develop the equation(s) that express the relationships between the variables
and constants.
1 What is the difference between physical model and mathematical model?

2. What are the different steps of mathematical modelling process?
answers in it.
_____________________________________________________________________
____________________________________________________________________________________________________________________
_____________________________________________________________________
__________________________________________________________________
__________________________________________________________________
3.4 VERIFYING AND REFINING A MODEL

Once the model has been developed and applied to the problem, your resulting model
solution must be analyzed and interpreted with respect to the problem. The interpretations
and conclusions should be checked for accuracy by answering the following questions:
l Is the information produced reasonable?

l Are the assumptions made while developing the model reasonable?
l Are there any factors that were not considered that could affect the outcome?
l How do the results compare with real data, if available?
In answering these questions, you may need to modify your model. This refining process
should continue until you obtain a model that agrees as closely as possible with the real
world observations of the phenomenon that you have set out to model.
3.5 VARIABLES AND PARAMETERS

Mathematical models typically contain three distinct types of quantities: output variables,
input variables, and parameters (constants). Output variables give the model solution.
The choice of what to specify as input variables and what to specify as parameters is
somewhat arbitrary and often model dependent. Input variables characterize a single
physical problem while parameters determine the context or setting of the physical problem.
For example, in modeling the decay of a single radioactive material, the initial amount of
material and the time interval allowed for decay could be input variables, while the decay
constant for the material could be a parameter. The output variable for this model is the
112 amount of material remaining after the specified time interval.
Mathematical Model
3.6 CONTINUOUS-IN-TIME VS. DISCRETE-IN-TIME
MODELS
Mathematical models of time dependent processes can be split into two categories
depending on how the time variable is to be treated. A continuous-in-time mathematical
model is based on a set of equations that are valid for any value of the time variable.
A discrete-in-time mathematical model is designed to provide information about the state
of the physical system only at a selected set of distinct times.
The solution of a continuous-in-time mathematical model provides information about the
physical phenomenon at every time value. The solution of a discrete-in-time mathematical
model provides information about the physical system at only a fInite number of time
values. Continuous-in-time models have two advantages over discrete-in-time models:
(1) they provide information at all times and (2) they more clearly show the qualitative
effects that can be expected when a parameter or an input variable is changed. On the
other hand, discrete in time models have two advantages over continuous in time models:
(1) they are less demanding with respect to skill level in algebra, trigonometry, calculus,
differential equations, etc. and (2) they are better suited for implementation on a computer.
Some Examples of Mathematical Models
Population Growth
A Spring Mass System
A Falling Rock Heat Flow
Problem 1
Rotating all or part of a space station can create artificial gravity in the station. The
resulting centrifugal force will be indistinguishable from gravitational force. Develop a
mathematical model that will determine the rotational rate of the station as a function of
the radius of the station (distance from the center of rotation) and the desired artificial
gravitational force. Use this model to answer the question: What rotational rate is needed
if the radius of the station is 150 m and Earth surface gravity is desired.
Problem 2
A stretch of Interstate 25 is being widened to accommodate increasing traffIc going
north and south. Unfortunately, the Department of Transportation is going to have to
bring out the orange barrels and close all but one lane at the “big I” intersection.
The department would like to have traffIc move along as quickly as possible without
additional accidents. What speed limit would provide for maximum, but safe, traffic
flow?
3.7 DETERMINISTIC MODEL EXAMPLE

An example of a deterministic model is a calculation to determine the return on a 5-year
investment with an annual interest rate of 7%, compounded monthly. The model is just
the equation below:
F = P (1 + r/m)YM
The inputs are the initial investment (P = $1000), annual interest rate (r = 7% = 0.07), the
compounding period (m = 12 months), and the number of years (Y = 5).
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One of the purposes of a model such as this is to make predictions and try “What If?”
scenarios. You can change the inputs and recalculate the model and you’ll get a new
answer. You might even want to plot a graph of the future value (F) vs. years (Y). In
some cases, you may have a fixed interest rate, but what do you do if the interest rate is
allowed to change? For this simple equation, you might only care to know a worst/best
case scenario, where you calculate the future value based upon the lowest and highest
interest rates that you might expect.
3.8 PROBABILISTIC MODELS

The toy roulette at the left is a pale model of a real roulette wheel. Real roulette wheels
are usually found in casinos, surrounded by glitter and glitz. But this toy captures the
essentials of roulette. Both the toy and real roulette wheels have 38 slots, numbered 1
through 36, 0, and 00. Two of the slots are colored green; 18 are colored red and 18 are
colored black. Betters often bet on red. If they wager $1.00 on red then if the roulette
ball lands in a red slot they win $1.00 but if it lands in either a green slot or a black slot
they lose $1.00. Because there are 18 red slots out of a total of 38 slots the chances of
winning this bet are 18/38 — considerably less than even. The casinos make up the rules
and they make them up so that they make huge profits.
Gambling games like roulette are good models for many phenomena involving chance —
for example, investing in the stock market. It is easier to analyze games involving a
roulette wheel than investments involving the stock market but the same ideas are involved.
In this section we will consider and compare two different strategies that a gamber
might use playing roulette. The same kinds of strategies and considerations are involved
with investments. The same tools that we develop here for roulette can be used by
investors.
Suppose that you have $10.00 and that you want to win an additional $10.00. We will
consider two different strategies.
l The Flamboyant Strategy:
You stride purposefully up to the wheel with a devil-may-care smile on your face.
You bet your entire fortune of $10.00 on one spin of the wheel. If the ball lands in
a red slot then you win, pocket your winnings, and leave with $20.00 and a genuine
114 happy smile on your face. If the ball lands in a slot of a different color then you
smile bravely at everyone as if $10.00 is mere chickenfeed and leave with empty Mathematical Model
pockets and feeling gloomy. With the flamboyant strategy your chances of
winning are 18/38 or roughly 0.4737.
l The Timid Strategy:
With this strategy you approach the roulette table with obvious trepidation. After
watching for a while and working up your courage, you bet $1.00. When the ball
falls in a slot you either win or lose $1.00. Now you have either $9.00 or $11.00.
You continue betting one dollar on each spin of the wheel until you either go broke
or reach your goal of $20.00.
Before continuing pause and think about these two strategies. Which of the two do you
think gives you the best chance of winning? — or are your chances of winning the same
whichever strategy you use?
One way to study the questions raised above is by trying the two strategies in real
casinos, wagering your own real money. This approach has several advantages and
several disadvantages. One advantage is that this approach is realistic. Real casinos are
run by people who know how to make a profit. They are skilled at creating an atmosphere
that is likely to encourage customers to bet and lose more than they might like. The
lessons that you learn in a real casino are more likely to be real lessons than the ones you
learn in a simulated casino like the one we use below. One disadvantage is that this
approach can be very costly both in terms of money and time.
We take a different approach — using the CAS window to simulate playing with the
second, or timid, strategy. We already know the chances of winning with the first, or
flamboyant, strategy — 18/38, or roughly 0.4737.
Computer algebra systems like Maple, MathCad, Mathematica, or the CAS system in
the TI-92 have a procedure that generates random numbers. For example, on the TI-92
the command randO, produces a random number between zero and one. The screen
below shows the results of executing this command seven times. Notice that it produced
seven different random numbers.
Using the random number generator in your CAS window, you can easily simulate one
spin of a roulette with a procedure like the one shown below.
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Your CAS window has a program that is built on this basic idea and will simulate playing
roulette using the timid strategy. Use this program to answer the questions below.
l Compare the timid strategy to the flamboyant strategy.

l Consider an intermediate strategy — betting $2.00 on each spin of the wheel.
l Consider another, intermediate strategy — betting $5.00 on each spin of the wheel.
l Some people enjoy gambling. If you play the flamboyant strategy then you spin the
wheel just once. On the average how often would you spin the wheel with each of
the strategies above.
l What conclusion can you draw from our work in this module regarding the
advisability of diversifying your investments? Be careful. Your answer depends on
your investment goals and your beliefs about whether stock prices are more likely
to rise or to fall.
1 What is the difference between Variables and Parameters?

2. Give two applications of computer algebra system.
answers in it.
_____________________________________________________________________
____________________________________________________________________________________________________________________
_____________________________________________________________________
__________________________________________________________________
__________________________________________________________________
3.9 LET US SUM UP

This course is about the essence of science — understanding the world in which we live.
We use mathematics as a language to help us describe and understand our world. Because
the purpose of Mathematical Modeling is to “talk about” our world, the most important
116 part of this course are the applications — our mathematical discussions about real world
phenomena. In this first chapter we have looked at the following applications. Everything Mathematical Model
we have discussed above — the content of the course — the tools and the technology
— would be useless without you. Indeed, without you there would be no purpose.
The purpose of mathematical modeling is to enable people like you and me to learn about
our world, to form mental pictures of how it works and how we can make it a bit better.
Mathematical modeling requires your active participation — thinking, working with your
computer algebra system, with old-fashioned paper and pencil, exploring the world with
the TI-CBL, rubber bands, and TinkerToys, and exchanging ideas with friends and
colleagues.

As we know that mathematical modelling is the process of creating a mathematical
representation of some phenomenon. So constructing a mathematical model for your
project can be a challenging, yet interesting task. Being a technician and a computer use
you have to think of a system where mathematical modelling will be used. Like use of
mathematical modelling in a National Stock Exchange.
3.11 KEYWORDS
Model
Time Models
Flamboyant Strategy
Timid Strategy
Parameters

(a) Mathematical Modelling is the process of creating a mathematical
representaiton.
(b) Mathematical models typically contain input and output variables and
parameters.
(c) Models only represents patterns found in graphs.
(d) Mathematical Modelling is used to collect a set of experimental data and
figure out to graph.
2. Distinguish between:
(a) Variables and Parameters
(b) Continuous-in-Time and Discrete-in-Time Mathematical Model
(c) The Flamboyant Strategy and The Timid Strategy
(d) Probabilistic Model and Deterministic Model
(e) Mathematics and Mathematical Modelling
3. Write short notes on:
(a) Model
(b) Building a Mathematical Model
(c) Time Mathematical Model
117
Quantitative Technique (d) Compound Interest Model
for Management
(e) Probabilistic Models Strategy
4. Fill in the blanks:
(a) A good model should .................. the essential character of the model to be
analysed.
(b) Building Model can be .................. yet .................. task.
(c) .................. model is based on a set of equations.
(d) The best example of probabilistic model is ..................
(e) .................. is based other than flamboyant and timid strategy.

DISCUSSION
1. (a) True (b) True (c) False (d) True
4. (a) Capture (b) Challenging, interesting (c) Continuous-in-Time
(d) Gambling games (e) CAS window

M.P. Williams, Model Building in Mathematical Programming, Wiley
Bruno Poizat, Moses Klein, A Course in Model Theory: An Introduction to
Contemporary Mathematical Logic, Springer Verlag, May 2000
N.N. Bogulubov, Jr, A.S. Shunovsly, B.I. Sadovnikov, A.S. Shumovskii, Mathematical
Methods of Statistical Mechanics of Model System CRC, Pr I LIC
A.H. Lingstone, Mathematical Logic: An Introduction to Model Theory, Kluwer
Academic (Pub)
Goran Pjordevic, J.Wess, Lyubisa Nesic, Mathematical, Theoretical and
Phenomenological Challenges, World Scientific Pub Co. Inc. (March 2005)
118
LESSON
4
LINEAR PROGRAMMING: GRAPHICAL METHOD
CONTENTS
4.1 Introduction
4.2 Essentials of Linear Programming Model
4.3 Properties of Linear Programming Model
4.4 Formulation of Linear Programming
4.5 General Linear Programming Model
4.6 Maximization & Minimization Models
4.7 Graphical Method
4.8 Solving Linear Programming Graphically Using Computer
4.9 Summary of Graphical Method
4.10 Unbounded LP Problem
4.11 Let us Sum Up
4.13 Keywords

In this unit we have talked about Quantitative Techniques and the Measurement of
Mean, Median and Mode and the various Mathematical Models and now we will talk
about linear programming and in this lesson we will learn the graphical method of linear
programming.
4.1 INTRODUCTION
Linear programming is a widely used mathematical modeling technique to determine the
optimum allocation of scarce resources among competing demands. Resources typically
include raw materials, manpower, machinery, time, money and space. The technique is
very powerful and found especially useful because of its application to many different
types of real business problems in areas like finance, production, sales and distribution,
personnel, marketing and many more areas of management. As its name implies, the
Quantitative Techniques linear programming model consists of linear objectives and linear constraints, which
for Management
means that the variables in a model have a proportionate relationship. For example, an
increase in manpower resource will result in an increase in work output.
4.2 ESSENTIALS OF LINEAR PROGRAMMING MODEL

For a given problem situation, there are certain essential conditions that need to be
solved by using linear programming.
1. Limited resources : limited number of labour, material equipment and
finance
2. Objective : refers to the aim to optimize (maximize the profits or
minimize the costs).
3. Linearity : increase in labour input will have a proportionate
increase in output.
4. Homogeneity : the products, workers' efficiency, and machines are
assumed to be identical.
5. Divisibility : it is assumed that resources and products can be divided
into fractions. (in case the fractions are not possible,
like production of one-third of a computer, a modification
of linear programming called integer programming can
be used).
4.3 PROPERTIES OF LINEAR PROGRAMMING MODEL

The following properties form the linear programming model:
1. Relationship among decision variables must be linear in nature.
2. A model must have an objective function.
3. Resource constraints are essential.
4. A model must have a non-negativity constraint.
4.4 FORMULATION OF LINEAR PROGRAMMING

Formulation of linear programming is the representation of problem situation in a
mathematical form. It involves well defined decision variables, with an objective function
and set of constraints.
Objective function
The objective of the problem is identified and converted into a suitable objective function.
The objective function represents the aim or goal of the system (i.e., decision variables)
which has to be determined from the problem. Generally, the objective in most cases will
be either to maximize resources or profits or, to minimize the cost or time.
For example, assume that a furniture manufacturer produces tables and chairs. If the
manufacturer wants to maximize his profits, he has to determine the optimal quantity of
tables and chairs to be produced.
Let x1 = Optimal production of tables
p1 = Profit from each table sold
120
x2 = Optimal production of chairs Linear Programming:
Graphical Method
p2 = Profit from each chair sold.
Hence, Total profit from tables = p1 x1
Total profit from chairs = p2 x2
The objective function is formulated as below,
Maximize Z or Zmax = p1 x1 + p2 x2
Constraints
When the availability of resources are in surplus, there will be no problem in making
decisions. But in real life, organizations normally have scarce resources within which the
job has to be performed in the most effective way. Therefore, problem situations are
within confined limits in which the optimal solution to the problem must be found.
Considering the previous example of furniture manufacturer, let w be the amount of
wood available to produce tables and chairs. Each unit of table consumes w1 unit of
wood and each unit of chair consumes w2 units of wood.
For the constraint of raw material availability, the mathematical expression is,
w1 x1 + w2 x2 £ w
In addition to raw material, if other resources such as labour, machinery and time are
also considered as constraint equations.
Non-negativity constraint
Negative values of physical quantities are impossible, like producing negative number of
chairs, tables, etc., so it is necessary to include the element of non-negativity as a constraint
i.e., x1, x2 ³ 0
4.5 GENERAL LINEAR PROGRAMMING MODEL

A general representation of LP model is given as follows:
Maximize or Minimize, Z = p1 x1 + p2 x2 ………………pn xn
Subject to constraints,
w11 x1 + w12 x2 + ………………w1n xn ≤ or = or ≥ w1 ………………(i)
w21 x1 + w22 x2 ………………w2n xn ≤ or = or ≥ w2 ………………(ii)
. . . .
. . . .
. . . .
wm1 x1 + wm2 x2 +………………wmn xn ≤ or = ≥ wm ………………(iii)
Non-negativity constraint,
xi ≥ o (where i = 1,2,3 …..n)
1 What are the essentials of LP Model?

2. Why linear programming is used?
Contd... 121
Quantitative Techniques Notes: (a) Write your answer in the space given below.
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answers in it.
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4.6 MAXIMIZATION & MINIMIZATION MODELS

Example 1: A biscuit manufacturing company plans to produce two types of biscuits,
one with a round shape and another with a square shape. The following resources are
used in manufacturing the biscuits,
(i) Raw material, of which daily availability is 150 kg.
(ii) Machinery, of which daily availability is 25 machine hours.
(iii) Labour, of which daily availability is 40 man-hours.
The resources used are shown in Table 1. If the unit profit of round and square biscuits
is Rs 3.00 and Rs 2.00 respectively, how many round and square biscuits should be
produced to maximize total profit ?
Table 4.1: Resources Used
Resources Requirement/Unit Daily availability
Round Square
Raw Material 100 115 1500 grams
Machine 10 12 720 minutes
Manpower 3 2 240 minutes
Solution:
Key Decision: To determine the number of round and square biscuits to be produced.
Decision Variables:
Let x1 be the number of round biscuits to be produced daily, and
x2 be the number of square biscuits to be produced daily
Objective function: It is given that the profit on each unit of round biscuits is Rs 3.00
and of square biscuits is Rs. 2.00. The objective is to maximize profits, therefore, the
total profit will be given by the equation,
Zmax = 3x1+2x2
Constraints: Now, the manufacturing process is imposed by a constraint with the limited
availability of raw material. For the production of round biscuits, 100x 1 of raw material is
used daily and for the production of square biscuits, 115x2 of raw material is used daily.
It is given that the total availability of raw material per day is 1500 grams.
Therefore, the constraint for raw material is,
100x1 + 115x2 £ 1500
122
Similarly, the constraint for machine hours is, Linear Programming:
Graphical Method
10x1+12x2 £ 720
and for the manpower is,
3x1 +2x2 £ 240
Since the resources are to be used within or below the daily available level, inequality
sign of less than or equal sign (£) is used. Further, we cannot produce negative number
of units of biscuits which is a non-negative constraint expressed as,
x1 ³ 0 and x2 ³ 0
Thus, the linear programming model for the given problem is,
Maximize Z = 3x1 + 2x2
100x1+115x2 £ 1500 ..........................(i)
10x1+12x2 £ 720 ..........................(ii)
3x1+2x2 £ 240 ..........................(iii)
where x1 ³ 0, x2 ³ 0
Example 2: Rahul Ads, an advertising company is planning a promotional campaign for
the client's product, i.e., sunglasses. The client is willing to spend Rs. 5 lakhs. It was
decided to limit the campaign media to a weekly magazine, a daily newspaper and TV
advertisement. The product is targeted at middle-aged men and women, and the following
data was collected (Table 4.2).
Table 4.2: Data Collected
Campaign media Cost per advertisement (Rs.) Expected
viewers
Weekly Magazine 30,000 1,15,000
Daily Newspaper 45,000 2,05,000
TV Advetisement 1,25,000 7,00,000
The client is interested to spend only Rs. 1 lakh on the ads in the weekly magazine which
expecting a viewership of a minimum of 21 lakh people in the case of the television
advertising. Maximize the viewers to the advertisements.
Solution:
Key Decision: To determine number of advertisements on weekly magazine, daily
newspaper and TV.
Let x1 be the number of weekly magazine advertisements.
x2 be the number of daily newspaper advertisements.
x3 be the number of TV advertisements.
Objective function: The objective is to maximize the number of viewers through all
media. The total viewers will be given by the equation,
Zmax = 115000x1 + 205000x2+ 700000x3
Constraints: Firstly, the client is willing to spend Rs. 500000 on all media,
30000x1 + 45000x2 + 125000x3 £ 500000
or
30x1 + 45x2+ 125x3 £ 500 ..........................(i)
123
Quantitative Techniques Secondly, a minimum of 2100000 people should view the television advertising,
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700000x3 ³ 2100000
or
x3 ³ 3 ..........................(ii)
Lastly, the client is interested to pay only Rs. 100000 in weekly magazine advertising,
30000x1 £ 100000
or
3x1 £ 10 ..........................(iii)
Summarizing the LP model for the given problem,
Maximize Z = 115000x1 + 205000x2 + 700000x3
30x1 + 45x2 + 125x3 £ 500 ..........................(i)
x3 ³ 3 ..........................(ii)
3x1 £ 10 ..........................(iii)
where x1, x2, x3 ³ 0
Example 3: The data given in Table 4.3 represents the shipping cost (in Rs.) per unit for
shipping from each warehouse to each distribution centre. The supply and demand data
of each warehouse and distribution centre is given. Determine how many units should be
shipped from each warehouse to each centre in order to minimize the overall
transportation cost.
Table 4.3: Data Shows Shipping Cost from Warehouse to Distribution
Distribution Centre
Warehouse 1 2 3 Supply
1 9 10 11 150
2 4 6 8 250
Demand 150 100 150 400
Solution:
Decision Variables
Let xij be the number of units to be shipped from warehouse i to distribution centre j.
x11 be the number of units to be shipped from warehouse 1 to distribution centre 1.
Objective Function: The Table 4.3 shows the transportation cost from each warehouse
to each distribution centre. Therefore 9x11 represents the total cost of shipping x11 units
from warehouse 1 to distribution centre 1. The objective function is to minimize the
transportation cost. Therefore, the objective function is,
Minimize Z = 9x11 + 10x12+11x13+4x21+6x22+8x23
Constraints: The supply and demand constraints to ship the units from warehouses are,
to ship the units and distribution centres must receive the shipped units. Since the given
table is a 2 ´ 3 matrix we have a total 5 constraints apart from the non-negativity
124 constraint. The constraints are as follows,
x11+ x12+x13 £ 150 ..........................(i) Linear Programming:
Graphical Method
x21+ x22+ x23 £ 250 ..........................(ii)
x11+ x21 = 150 ..........................(iii)
x12+ x22=100 ..........................(iv)
x13+ x23=150 ..........................(v)
where xij ³ 0 (i =1,2, and j = 1,2,3)
Thus the LP model for the given transportation problem is summarized as,
Minimize Z = 9x11 + 10x12+11x13+4x21+6x22+8x23
x11+ x12+ x13 £ 150 ..........................(i)
x21+ x22+ x23 £ 250 ..........................(ii)
x11 + x21 = 150 ..........................(iii)
x12 + x22 = 100 ..........................(iv)
x13 + x23 = 150 ..........................(v)
where xij > 0 (i =1,2, and j = 1,2,3)
Example 4: Sivakumar & Co., manufactures two types of T-shirts, one with collar and
another without collar. Each T-shirt with collar yields a profit of Rs. 20, while each T-
shirt without collar yields Rs. 30. Shirt with collar requires 15 minutes of cutting and 25
minutes of stitching. Shirt without collar requires 10 minutes of cutting and 20 minutes of
stitching. The full shift time is available for cutting in an 8 hour shift, but only 6 hours are
available for stitching. Formulate the problem as an LP model to maximize the profit.
Solution:
Key decision: To determine the number of T-shirts with collar and without collar to be
manufactured.
Decision variables:
Let x1 be the number of T-shirts with collar
x2 be the number of T-shirts without collar
Objective Function:
Zmax = 20x1 + 30x2
Constraints:
15x1 + 10x2 £ 8 ´ 60 (Cutting) ..........................(i)
25x1 + 20x2 £ 6 ´ 60 (Stitching) ..........................(ii)
Non-negativity constraints:
x1 ³ 0 , x2 ³ 0
The linear programming model is,
Zmax = 20x1 + 30x2
15x1 + 10x2 £ 480 ..........................(i)
25x1 + 20x2 £ 360 ..........................(ii)
where x1 , x2 ³ 0 125
Quantitative Techniques Example 5: An agricultural urea company must daily produce 500 kg of a mixture
for Management
consisting of ingredients x1, x2 and x3. Ingredient x1 costs Rs. 30 per kg, x2 Rs. 50 per kg
and x3 Rs. 20 per kg. Due to raw material constraint, not more than 100 kg of x1, 70 kg
of x2 and 45 kg of x3 must be used. Determine how much of each ingredient should be
used if the company wants to minimize the cost.
Solution:
Let x1 be the kg of ingredient x1 to be used
x2 be the kg of ingredient x2 to be used
x3 be the kg of ingredient x3 to be used
The objective is to minimize the cost,
Minimize Z = 30x1 + 50x2 + 20x3
x1+ x2+ x3 = 500 (total production) .......................(i)
x1 £ 100 (max. use of x1) .......................(ii)
x2 £ 70 (max. use of x2) .......................(iii)
x3 £ 45 (max. use of x3) .......................(iv)
where x1, x2, x3 ³ 0 (non-negativity)
Example 6: Chandru Bag Company produces two types of school bags: deluxe and
ordinary. If the company is producing only ordinary bags, it can make a total of 200
ordinary bags a day. Deluxe bag requires twice as much labour and time as an ordinary
type. The demand for deluxe bag and ordinary bag are 75 and 100 bags per day
respectively. The deluxe bag yields a profit of Rs 12.00 per bag and ordinary bag yields
a profit of Rs. 7.00 per bag. Formulate the problem as LP model.
Solution:
Let x1 be deluxe bags to be produced per day
x2 be ordinary bags to be produced per day
Objective function: The objective is to maximize the profit. Deluxe bag yields a profit of
Rs. 12.00 per bag and ordinary bag yields a profit of Rs. 7.00 per bag.
Constraints: There are two constraints in the problem, the "number of bags" constraint
and "demand" constraint. It is given that the deluxe bag takes twice as much time of
ordinary bag and if only ordinary bags alone are produced, the company can make 200
bags.
The constraint is,
2x1 + x2 £ 200
The demand for the deluxe bag is 75 bags and ordinary bag is 100 bags
The constraints are,
x1 £ 75
x2 £ 100
and the non-negativity constraint is,
126 x1 ³ 0 , x 2 ³ 0
The LP formulation is Linear Programming:
Graphical Method
Maximize, Z = 12x1+ 7x2
2x1 + x2 £ 200 ..........................(i)
x1 £ 75 ..........................(ii)
x2 £ 100 ..........................(iii)
where x1 , x2 ³ 0
Example 7: Geetha Perfume Company produces both perfumes and body spray from
two flower extracts F1 and F2 The following data is provided:
Table 4.4: Data Collected
Litres of Extract
Perfume Body Spray Daily Availability (litres)
Flower Extract, F1 8 4 20
Flower Extract, F2 2 3 8
Profit Per litre (Rs.) 7 5
The maximum daily demand of body spray is 20 bottles of 100 ml each. A market survey
indicates that the daily demand of body spray cannot exceed that of perfume by more
than 2 litres. The company wants to find out the optimal mix of perfume and body spray
that maximizes the total daily profit. Formulate the problem as a linear programming
model.
Solution:
Let x1 be the litres of perfume produced daily
x2 be the litres of body spray produced daily
Objective function: The company wants to increase the profit by optimal product mix
Zmax = 7x1+5x2
Constraints: The total availability of flower extract F1 and flower extract F2 are 20 and
8 litres respectively. The sum of flower extract F1 used for perfume and body spray
must not exceed 20 litres. Similarly, flower extract F2 must not exceed 8 litres daily.
The constraints are,
8x1+4x2 £ 20 (Flower extract F1)
2x1+3x2 £ 8 (Flower extract F2)
The daily demand of body spray x2 is limited to 20 bottles of 100ml each (i.e, 20 ´ 100 =
2000 ml = 2 litres)
Therefore, x2 £ 2
Again, there is an additional restriction, that the difference between the daily production
of perfume and body spray , x2 – x1 does not exceed 2 litres, which is expressed as
x2–x1 £ 2
(or)
–x1 + x2 £ 2.
The model for Geetha perfumes company is,
Maximize , Z = 7x1+ 5x2
127
Quantitative Techniques Subject to constraints,
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8x1 + 4x2 £ 20 ……………………….(i)
2x1 + 3x2 £ 8 ………………………..(ii)
–x1 + x2 £ 2 ……………………….....(iii)
x2 £ 2 ……………………….............(iv)
where x1, x2 ³ 0
Feasible Solution: Any values of x1 and x2 that satisfy all the constraints of the model
constitute a feasible solution. For example, in the above problem if the values of x1 = 2
and x2 = l are substituted in the constraint equation, we get
(i) 8(2) + 4(1) £ 20
20 £ 20
(ii) 2(2) + 3 (1) £ 8
7£8
(iii) – 2 +1 £ 2
–1£2
(iv) 1 £ 2
All the above constraints (including non-negativity constraint) are satisfied. The objective
function for these values of x1 = 2 and x2 = 1, are
Zmax = 7(2 ) + 5(1)
= 14 + 5 = Rs. 19.00
As said earlier, all the values that do not violate the constraint equations are feasible
solutions. But, the problem is to find out the values of x1 and x2 to obtain the optimum
feasible solution that maximizes the profit. These optimum values of x1 and x2 can be
found by using the Graphical Method or by Simplex Method. (The above problem is
solved using graphical method shown on page number 117).
4.7 GRAPHICAL METHOD

Linear programming problems with two variables can be represented and solved
graphically with ease. Though in real-life, the two variable problems are practiced very
little, the interpretation of this method will help to understand the simplex method. The
solution method of solving the problem through graphical method is discussed with an
example given below.
Example 8: A company manufactures two types of boxes, corrugated and ordinary
cartons. The boxes undergo two major processes: cutting and pinning operations. The
profits per unit are Rs. 6 and Rs. 4 respectively. Each corrugated box requires 2 minutes
for cutting and 3 minutes for pinning operation, whereas each carton box requires 2
minutes for cutting and 1 minute for pinning. The available operating time is 120 minutes
and 60 minutes for cutting and pinning machines. Determine the optimum quantities of
the two boxes to maximize the profits.
Solution:
Key Decision: To determine how many (number of) corrugated and carton boxes are to
be manufactured.
Decision variables:
Let xl be the number of corrugated boxes to be manufactured.
x2 be the number of carton boxes to be manufactured
Objective Function: The objective is to maximize the profits. Given profits on corrugated
128 box and carton box are Rs. 6 and Rs. 4 respectively.
The objective function is, Linear Programming:
Graphical Method
Zmax = 6x1 + 4x2
Constraints: The available machine-hours for each machine and the time consumed by
each product are given.
Therefore, the constraints are,
2x1 + 3x2 £ 120 ..........................(i)
2x1+ x2 £ 60 ..........................(ii)
where x1, x2 ³ 0
Graphical Solution: As a first step, the inequality constraints are removed by replacing
‘equal to’ sign to give the following equations:
2x1 + 3x2 = 120 .......................(1)
2x1 + x2 = 60 .......................(2)
Find the co-ordinates of the lines by substituting x1 = 0 and x2 = 0 in each equation. In
equation (1), put x1 = 0 to get x2 and vice versa
2x1 + 3x2 = 120
2(0) + 3x2 = 120, x2 = 40
Similarly, put x2 = 0,
2x1 + 3x2 = 120
2x1 + 3(0) = 120, x1 = 60
The line 2x1 + 3x2 = 120 passes through co-ordinates (0, 40) (60, 0).
The line 2x1 + x2 = 60 passes through co-ordinates (0,60)(30,0).
The lines are drawn on a graph with horizontal and vertical axis representing boxes x1
and x2 respectively. Figure 4.1 shows the first line plotted.
X2
100
No. of carton boxes x2
90
80
70
60
50
(0, 40)
40
30 2x1 + 3x2 = 120
20
10 (60, 0)
X1
10 20 30 40 50 60 70 80 90 100
No. of corrugated boxes x1
Figure 4.1: Graph Considering First Constraint 129

Quantitative Techniques The inequality constraint of the first line is (less than or equal to) £ type which means the
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feasible solution zone lies towards the origin. The no shaded portion can be seen is the
feasible area shown in Figure 4.2 (Note: If the constraint type is ³ then the solution zone
area lies away from the origin in the opposite direction). Now the second constraints line
is drawn.
x2
100
90
80
70
60 (0, 60)
50 2x1 + x2 = 60
L2 40
P
30
20
2x1 + 3x2 = 120
10
10 20 30 40 50 60 70 80 90 100 x1
L1
Figure 4.2: Graph Showing Feasible Area

When the second constraint is drawn, you may notice that a portion of feasible area is
cut. This indicates that while considering both the constraints, the feasible region gets
reduced further. Now any point in the shaded portion will satisfy the constraint equations.
For example, let the solution point be (15,20) which lies in the feasible region.
If the points are substituted in all the equations, it should satisfy the conditions.
2x1 + 3x2 £ 120 = 30 + 60 £ 120 = 90 £ 120
2x1 + x2 £ 60 = 30 + 20 £ 60 = 50 £ 60
Now, the objective is to maximize the profit. The point that lies at the furthermost point
of the feasible area will give the maximum profit. To locate the point, we need to plot the
objective function (profit) line.
Equate the objective function for any specific profit value Z,
Consider a Z-value of 60, i.e.,
6x1 + 4x2 = 60
Substituting x1 = 0, we get x2 = 15 and
if x2 = 0, then x1 = 10
Therefore, the co-ordinates for the objective function line are (0,15), (10,0) as indicated
by dotted line L1 in Figure 4.2. The objective function line contains all possible combinations
of values of xl and x2.
The line L1 does not give the maximum profit because the furthermost point of the
feasible area lies above the line L1. Move the line (parallel to line L1) away from the
origin to locate the furthermost point. The point P, is the furthermost point, since no area
is seen further. Take the corresponding values of x1 and x2 from point P, which is 15 and
130 30 respectively, and are the optimum feasible values of x1 and x2.
Therefore, we conclude that to maximize profit, 15 numbers of corrugated boxes and 30 Linear Programming:
Graphical Method
numbers of carton boxes should be produced to get a maximum profit. Substituting
x1 = 15 and x2= 30 in objective function, we get
Zmax = 6x1 + 4x2
= 6(15) + 4(30)
Maximum profit : Rs. 210.00
4.8 SOLVING LINEAR PROGRAMMING GRAPHICALLY

USING COMPUTER
The above problem is solved using computer with the help of TORA. Open the TORA
package and select LINEAR PROGRAMMING option. Then press Go to Input and
enter the input data as given in the input screen shown below, in Figure 4.3.
Figure 4.3: Linear Programming, TORA Package (Input Screen)

Now, go to Solve Menu and click Graphical in the 'solve problem' options. Then click
Graphical , and then press Go to Output . The output screen is displayed with the graph
grid on the right hand side and equations in the left hand side. To plot the graphs one by
one, click the first constraint equation. Now the line for the first constraint is drawn
connecting the points (40, 60). Now, click the second equation to draw the second line on
the graph. You can notice that a portion of the graph is cut while the second constraint is
also taken into consideration. This means the feasible area is reduced further. Click on
the objective function equation. The objective function line locates the furthermost point
(maximization) in the feasible area which is (15,30) shown in Figure 4.4 below.
131
Figure 4.4: Graph Showing Feasible Area
Quantitative Techniques Example 9: A soft drink manufacturing company has 300 ml and 150 ml canned cola as
for Management
its products with profit margin of Rs. 4 and Rs. 2 per unit respectively. Both the products
have to undergo process in three types of machine. The following Table 4.5, indicates the
time required on each machine and the available machine-hours per week.
Table 4.5: Available Data
Requirement Cola 300 ml Cola 150 ml Available machine-
hours per week
Machine 1 3 2 300
Machine 2 2 4 480
Machine 3 5 7 560
Formulate the linear programming problem specifying the product mix which will maximize
the profits within the limited resources. Also solve the problem using computer.
Solution: Let x1 be the number of units of 300 ml cola and x2 be the number of units of
150 ml cola to be produced respectively. Formulating the given problem, we get
Objective function:
Zmax = 4x1 + 2x2
3x1 + 2x2 £ 300 ............................(i)
2x1 +4x2 £ 480 ............................(ii)
5x1 +7x2 £ 560 ............................(iii)
where x1 , x2 ³ 0
The inequalities are removed to give the following equations:
3x1 + 2x2 = 300 ............................(iv)
2x1 + 4x2 = 480 ............................(v)
5x1 + 7x2 = 560 ............................(vi)
Find the co-ordinates of lines by substituting x1 = 0 to find x2 and x2 = 0 to find x1.
Therefore,
Line 3x2 + 2x2 = 300 passes through (0,150),(100,0)
132 Figure 4.5: Graphical Presentation of lines (TORA, Output Screen)

For objective function, Linear Programming:
Graphical Method
The Line 4x1 + 2x2 = 0 passes through (–10,20),(10,–20)
Plot the lines on the graph as shown in the computer output Figure 4.5.
The objective is to maximize the profit. Move the objective function line away from the
origin by drawing parallel lines. The line that touches the furthermost point of the feasible
area is (100, 0). Therefore, the values of x1 and x2 are 100 and 0 respectively.
Maximum Profit, Zmax = 4x1 + 2x2
= 4(100) + 2(0)
= Rs. 400.00
Example 10: Solve the following LPP by graphical method.
Minimize Z = 18x1+ 12x2
2x1 + 4x2 £ 60 ........................(i)
3x1 + x2 ³ 30 ........................(ii)
8x1 + 4x2 ³ 120 ........................(iii)
where x1 , x2 ³ 0
Solution:
The inequality constraints are removed to give the equations,
2x1 + 4x2 = 60 ........................(iv)
3x1 + x2 = 30 ........................(v)
8x1 + 4x2 = 120 ........................(vi)
The equation lines pass through the co-ordinates as follows:
For constraints,
2x1 + 4x2 = 60 passes through (0,15), (30,0).
3x1 + x2 = 30 passes through (0,30), (10,0).
8x1 + 4x2 = 120 passes through (0,30), (15,0).
The objective function,
18x1 + 12x2 = 0 passes through (–10,15), (10,–15).
Plot the lines on the graph as shown in Figure 4.6
Here the objective is minimization. Move the objective function line and locate a point in
the feasible region which is nearest to the origin, i.e., the shortest distance from the
origin. Locate the point P, which lies on the x – axis. The co-ordinates of the point P are
(15,0) or x1 = 15 and x2 = 0.
The minimum value of Z
Zmin = 18 x1 + 12x2
= 18 (15) + 12 (0)
= Rs. 270.00
133
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Figure 4.6: Graphical Presentation (Output Screen, TORA)
4.9 SUMMARY OF GRAPHICAL METHOD

Step 1: Convert the inequality constraint as equations and find co-ordinates of the line.
Step 2: Plot the lines on the graph.
(Note: If the constraint is ³ type, then the solution zone lies away from the
centre. If the constraint is £ type, then solution zone is towards the centre.)
Step 3: Obtain the feasible zone.
Step 4: Find the co-ordinates of the objectives function (profit line) and plot it on the
graph representing it with a dotted line.
Step 5: Locate the solution point.
(Note: If the given problem is maximization, zmax then locate the solution point at
the far most point of the feasible zone from the origin and if minimization, Zmin
then locate the solution at the shortest point of the solution zone from the origin).
Step 6: Solution type
i. If the solution point is a single point on the line, take the corresponding values
of x1 and x2.
ii. If the solution point lies at the intersection of two equations, then solve for x 1
and x2 using the two equations.
iii. If the solution appears as a small line, then a multiple solution exists.
iv. If the solution has no confined boundary, the solution is said to be an unbound
solution.
134
Example 11: Solve the Geetha perfume company (Example 1.7) graphically using Linear Programming:
Graphical Method
computer.
The formulated LP model is,
Zmax = 7x1 + 5x2
8x1+ 4x2 £ 20 .........................(i)
2x1+ 3x2 £ 8 .........................(ii)
– x1+ x2 £ 2 .........................(iii)
x2 £ 2 .........................(iv)
where x1, x2 ³ 0
Solution: The input values of the problem are given to obtain the output screen as shown
in Figure 4.7.

Results:
Perfumes to be produced, x1 = 1.75 litres or 17.5 say 18 bottles of 100 ml each
Body sprays to be produced, x2 = 1.50 litres or 15 bottles of 100 ml each
Maximum profit, Zmax = Rs. 19.75
Discuss the limitations of graphical method in solving LPP.

answers in it.
Contd.... 135
Quantitative Techniques _____________________________________________________________________
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4.10 UNBOUNDED LP PROBLEM

Example 12: Solve the following LPP graphically
Zmax = 6x1+ 10x2
x1 ³ 6 .........................(i)
x2 ³10 .........................(ii)
2x1+ 4x2 ³ 20 .........................(iii)
where x1 ³ 0, x2 ³ 0
Solution:
The inequality constraints are converted as equations
x1 = 6
x2 = 10
2x1+ 4x2 = 20
The co-ordinates of lines are
x1 = 6 passes through (6,0)
x2 = 10 passes through (0,10)
2x1+ 4x2 = 20 passes through (10,0), (5,0)

The given problem is maximization one. The solution point should be located at the
136 furthermost point of the feasible region.
The feasible zone (shaded area) shown in Figure 4.8 is open-ended, i.e., it has no confined Linear Programming:
Graphical Method
boundary. This means that the maximization is not possible or the LPP has no finite
solution, and hence the solution is unbounded.
Example 13: Solve the given linear programming problem graphically using a computer.
Subject to constraints
x1 – x2 £ 1 ..........................(i)
x1 + x2 ³ 3 ..........................(ii)
x1 , x2 ³ 0
Solution: The input as required is entered into the TORA input screen, the following
output is obtained as shown in Figure 4.9 which shows that the solution is unbounded.
Figure 4.9: Graphical LP Solution (Output Screen, TORA)
What is unbound LP problem?

answers in it.
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137
for Management 4.11 LET US SUM UP
Thus we can say that LP is a method of planning whereby objective function is maximised
or minimised while at the same time satisfying the various restrictions placed on the
potential solution. In technical words, linear programming is defined as a methodology
whereby a linear function in optimized (minimised or maximised) subject to a set of
linear constraints in the form of equalities or inequalities. Thus LP is a planning technique
of selecting the best possible (optimal) strategy among number of alternatives.

LP is about trying to get the best result (e.g. maximum profit, least effort etc.) given
some list of constraints Linear Programming allows for the ethical allocation of scarce
or costly resources while still meeting all technical parameters. Explain how LP
programmes are being used in self-diverse industries an sausage making, fruit juice
mixing, baby cereals and milks, health foods, soups. Also facilitates in formulating
receipes.
4.13 KEYWORDS
Linear Programming
Graphical Method
Maximisation
Minimisation
Constraints
Profit
Optimality

(a) LP is a widely used mathematical modeling technique.
(b) LP consists of linear objectives and linear constraints.
(c) Divisibility refers to the aim to optimize.
(d) Limited resources means limited number of labour, material equipment and
finance.
(e) The objective function represents the aim or goal of the system, which has to
be determined from the solution.
2. Briefly comment on the following statements:
(a) Formulation of LP is the representation of problem situation in a mathematical
form.
(b) A model must have an objective function.
(c) When feasible zone lies towards the origin.
(d) LP techniques are used to optimize the resource for best result.
138
(e) LP techniques are used in analyzing the effect of changes.
3. Fill in the blanks: Linear Programming:
Graphical Method
(a) Organization normally have _________ resources.
(b) A model has a _________ constraint.
(c) In real life, the two _________ problems are practiced very little.
(d) _________ refer to the products, workers’, efficiency, and machines are
assumed to be identical.
(e) The _________ function represents the aim or goal of the system.

1. Define Linear Programming.
2. What are the essential characteristics required for a linear programming model?
3. What is meant by objective function in LP model?
4. What is a constraint? Give a few examples of constraints in real life situations.
5. Enumerate the steps involved in solving a LPP by graphical approach.
6. What is the major limitation of the graphical method?
7. List out the various constraint types in formulating a LP model.
8. Define the feasible area.
9. What are the possible solution types that can result in the graphical method?
10. What is meant by an unbounded solution?
11. How are multiple solutions interpreted in the graphical method?
Exercise Problems
1. For the problem given in Example 7, formulate the constraints for the following
without any change in R.H.S.:
(a) The flower extract F1 must be used at most to 15 litres and at least 5 litres.
(b) The demand for perfume cannot be less than the demand for body spray.
(c) The daily demand of body spray exceeds that of perfume by at least 2 litres.
2. For the problem given in Example 1.7, determine the best feasible solution among
the following values of x1 and x2:
(a) x1 =2, x2 = 1
(b) x1 =0, x2 = 3
(c) x1 =3, x2 = 1
(d) x1 = 5, x2 = 1
(e) x1 = 2, x2 = –1
(f) x1 = 1.75, x2 = 1.50
3. Determine the feasible space for each of the following constraints:
(a) 2x1 – 2x2 £ 5
(b) 5x1 + 10x2 £ 60
(c) x1 – x2 £ 0
(d) 4x1 + 3x2 ³ 15

139
Quantitative Techniques (e) x2 £ 5
for Management
(f) x1 £ 30
4. A company manufactures two types of products, A and B. Each product uses two
processes, I and II. The processing time per unit of product A on process I is 6
hours and on the process II is 5 hours. The processing time per unit of product B on
process I is 12 hours and on process II is 4 hours. The maximum number of hours
available per week on process I and II are 75 and 55 hours respectively. The profit
per unit of selling A and B are Rs.12 and Rs.10 respectively.
(i) Formulate a linear programming model so that the profit is maximized.
(ii) Solve the problem graphically and determine the optimum values of product A
and B.
5. Formulate the following data as a linear programming model.
Time required (minutes/unit)

Products Profit
Lathe Drilling Cleaning
A 25 30 15 25
B 15 5 10 30
C 20 15 10 50
Hours Available 250 400 200
6. A nutrition scheme for babies is proposed by a committee of doctors. Babies can

be given two types of food (I and II) which are available in standard sized packets,
weighing 50 gms. The cost per packet of these foods are Rs. 2 and Rs. 3 respectively.
The vitamin availability in each type of food per packet and the minimum vitamin
requirement for each type of vitamin are summarized in the table given. Develop a
linear programming model to determine the optimal combination of food type with
the minimum cost such that the minimum requirement of vitamin is each type is
satisfied.
Details of food type

Vitamin availability per product
Vitamin Food Food Minimum Daily
Type I Type II requirement
1 1 1 6
2 7 1 14
Cost/Packet (Rs.) 2 3
7. Formulate the problem as a LP model

Resources/Constraints Products/unit Availability
A B
Budget (Rs.) 8 4 4000
Machine Time 2 1 1000 hours
Assembly Time 3 4 750 hours
Selling Price Rs. 20 Rs. 40
Cost Price Rs. 5 Rs. 20
8. Solve the Chandru Bag company problem graphically.

140 (a) Determine the values of x1, x2 and Zmax.
(b) If the company has increased the demand for ordinary bag from 100 to 150, Linear Programming:
Graphical Method
what is the new Zmax value?
(c) If the demand for deluxe bags has reduced to 50 bags, determine the optimal
profit value.
9. Solve the following linear programming model graphically:
4x1 + 6x2 £ 90
8x1 + 6x2 £ 100
5x1 + 4x2 £ 80
where x1 , x2 ³ 0
10. Solve the following LP graphically:
2x1 + 3x2 ³ 20
4x1 + 2x2 ³ 25
where x1 , x2 ³ 0
11. Solve the two variable constraints using graphical method.
x1 ³ 20
x2 £ 25
2x1 + x2 £ 60
where x1 , x2 ³ 0
12. Solve the following LP graphically using TORA.
Maximize Z = 1200x1 + 1000x2
10x1 + 4x2 ³ 600
7x1 + 10x2 ³ 300
2x1 + 4x2 £ 1000
9x1 + 7x2 £ 2500
5x1 + 4x2 £ 1200
where x1 , x2 ³ 0
13. Solve graphically:
x1 – x2 £ 0
– 3x1 + x2 £ 25
where x1 , x2 ³ 0
141
Quantitative Techniques 14. Solve the following LP graphically:
for Management
0.5x1 + 0.5x2 £ 150
0.6x1 + 0.4x2 £ 145
x1 ³ 30
x1 £ 150
x2 ³ 40
x2 £ 200
where x1 , x 2 ³ 0
15. Determine the optimal values of x1 and x2 and hence find the maximum profits for
the following LP problem:
x1 + 3x2 £ 2
4x1 + 5x2 £ 6
where x1 , x 2 ³ 0

DISCUSSION
1. (a) True (b) True (c) False (d) True (e) False
3. (a) scarce (b) non-negative (c) variable (d) Homogeneity
(e) objective

William H, Model Building in Mathematical Programming, Wiley Newyork.
Rohn E., "A New LP Approach to Bond Portfolio Management", Journal of Financial
& Quantitative Analysis 22 (1987): 439-467.
Wagner H, Principles of OR, 2nd ed. Englewood Cliffs, N.J: Prentice Hall, 1975.
Moondra S.,“An LP Model for Workforce Scheduling in Banks", Journal of Bank
Research (1976).
142
LESSON
5
LINEAR PROGRAMMING: SIMPLEX METHOD
CONTENTS
5.1 Introduction
5.2 Additional Variables used in Solving LPP
5.3 Maximization Case
5.4 Solving LP Problems Using Computer with TORA
5.5 Minimization LP Problems
5.6 Big M Method
5.7 Degeneracy in LP Problems
5.8 Unbounded Solutions in LPP
5.9 Multiple Solutions in LPP
5.10 Duality in LP Problems
5.11 Sensitivity Analysis
5.12 Let us Sum Up
5.13 Lesson-end Activities
5.14 Keywords

In the previous lesson we have learnt linear programming with the help of graphical now
we will learn the linear programming with the help of Simplex Method using minimization
and maximization problems and the degeneracy in LP problems and also the Duality and
Sensitivity Analysis.
5.1 INTRODUCTION
In practice, most problems contain more than two variables and are consequently too
large to be tackled by conventional means. Therefore, an algebraic technique is used to
solve large problems using Simplex Method. This method is carried out through iterative
process systematically step by step, and finally the maximum or minimum values of the
objective function are attained.
Quantitative Techniques The basic concepts of simplex method are explained using the Example 1.8 of the
for Management
packaging product mix problem illustrated in the previous chapter. The simplex method
solves the linear programming problem in iterations to improve the value of the objective
function. The simplex approach not only yields the optimal solution but also other valuable
information to perform economic and 'what if' analysis.
5.2 ADDITIONAL VARIABLES USED IN SOLVING LPP

Three types of additional variables are used in simplex method such as,
(a) Slack variables (S1, S2, S3..…Sn): Slack variables refer to the amount of unused
resources like raw materials, labour and money.
(b) Surplus variables (-S1, -S2, -S3..…-Sn): Surplus variable is the amount of resources
by which the left hand side of the equation exceeds the minimum limit.
(c) Artificial Variables (a1, a2, a3.. …an): Artificial variables are temporary slack
variables which are used for purposes of calculation, and are removed later.
The above variables are used to convert the inequalities into equality equations, as given
in the Table 5.1 below.
Table 5.1: Types of Additional Variables
Constraint Type Variable added Format
a) Less than or equal to < Add Slack Variable +S
b) Greater than or equal to > Subtract surplus variable and add -S+a
artificial variable
c) Equal to = Add artificial variable +a
5.3 MAXIMIZATION CASE

The packaging product mix problem is solved using simplex method.
2x1+3x2 £ 120 (Cutting machine) .....................(i)
2x1+ x2 £ 60 (Pinning machine) ......................(ii)
where x1, x2 ³ 0
Considering the constraint for cutting machine,
2x1+ 3x2 ³ 120
The inequality indicates that the left-hand side of the constraints equation has some
amount of unused resources on cutting machine. To convert this inequality constraint
into an equation, introduce a slack variable, S3 which represents the unused resources.
Introducing the slack variable, we have the equation
2x1+ 3x2 + S3 = 120
Similarly for pinning machine, the equation is
2x1+ x2 + S4 = 60
The variables S3 and S4 are known as slack variables corresponding to the three constraints.
Now we have in all four variables (which includes slack variable) and two equations. If
any two variables are equated to zero, we can solve the three equations of the system in
144 two unknowns.
If variables x1 and x2 are equated to zero, Linear Programming :
Simplex Method
i.e., x1 = 0 and x2 = 0, then
S3 = 120
S4 = 60
This is the basic solution of the system, and variables S3 and S4 are known as Basic
Variables, SB while x1 and x2 known as Non-Basic Variables. If all the variables are
non-negative, a basic feasible solution of a linear programming problem is called a Basic
Feasible Solution.
Rewriting the constraints with slack variables gives us,
Zmax = 6x1 + 4x2 + 0S3 + 0S4
2x1 + 3x2 + S3 = 120 ....................(i)
2x1 + x2 + S4 = 60 ....................(ii)
where x1, x2 ³ 0
Though there are many forms of presenting Simplex Table for calculation, we represent
the coefficients of variables in a tabular form as shown in Table 5.2.
Table 5.2: Co-efficients of Variables
Iteration Basic Solution X1 Minimum Equation

X2 S3 S4
Number Variables Value KC Ratio
0 S3 120 2 3 1 0 60
S4 60 2 1 0 1 30
– Zj 0 –6 –4 0 0
If the objective of the given problem is a maximization one, enter the co-efficient of the
objective function Zj with opposite sign as shown in Table 5.3. Take the most negative
coefficient of the objective function and that is the key column Kc. In this case, it is -6.
Find the ratio between the solution value and the key column coefficient and enter it in
the minimum ratio column. The intersecting coefficients of the key column and key row
are called the pivotal element i.e. 2. The variable corresponding to the key column is the
entering element of the next iteration table and the corresponding variable of the key
row is the leaving element of the next iteration table. In other words, x1 replaces S4 in the
next iteration table. Table 5.3 indicates the key column, key row and the pivotal element.
Table 5.3
Iteration Basic Solution X1 Minimum

X2 S3 S4 Equation
Number Variables Value KC Ratio
0 S3 120 2 3 1 0 60
Kr S4 60 2 1 0 1 30
-Zj 0 -6 -4 0 0
145
Quantitative Techniques In the next iteration, enter the basic variables by eliminating the leaving variable (i.e., key
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row) and introducing the entering variable (i.e., key column). Make the pivotal element
as 1 and enter the values of other elements in that row accordingly. In this case, convert
the pivotal element value 2 as 1 in the next interation table. For this, divide the pivotal
element by 2. Similarly divide the other elements in that row by 2. The equation is S4 /2.
This row is called as Pivotal Equation Row Pe. The other co-efficients of the key column
in iteration Table 5.4 must be made as zero in the iteration Table 5.5. For this, a solver, Q,
is formed for easy calculation. Change the sign of the key column coefficient, multiply
with pivotal equation element and add with the corresponding variable to get the equation,
Solver, Q = SB + (–Kc ´ Pe)
The equations for the variables in the iteration number 1 of table 8 are,
For S3 Q = SB + (– Kc ´ Pe)
= S3 + (–2x Pe)
= S3 – 2Pe …………………………(i)
For – Z, Q = SB + (– Kc ´ Pe)
= – Z + ((– 6) ´ Pe)
= – Z + 6Pe …………………………(ii)
Using the equations (i) and (ii) the values of S3 and –Z for the values of Table 1 are
found as shown in Table 5.4
Table 5.4: S3 and –Z Values Calculated
Iteration Basic Solution X1 X2 Minimum

S3 S4 Equation
Number Variables Value KC KC Ratio
0 S3 120 2 3 1 0 60
Kr S4 60 2 1 0 1 30
– Zj 0 –6 –4 0 0
1
S3 60 0 2 1 –1 30 S3 – 2Pe
Kr
Pe x1 30 1 ½ 0 ½ 60 S4 / 2
– Zj 100 0 –1 0 3 – Z + 6Pe
Using these equations, enter the values of basic variables SB and objective function Z. If
all the values in the objective function are non-negative, the solution is optimal. Here, we
have one negative value – 1. Repeat the steps to find the key row and pivotal equation
values for the iteration 2 and check for optimality.
In the iteration 2 number of Table 5.5, all the values of Zj are non-negative, Zj ³ 0, hence
optimality is reached. The corresponding values of x1 and x2 for the final iteration table
gives the optimal values of the decision variables i.e., x1 = 15, x2 = 30. Substituting these
values in the objectives function equation, we get
Zmax = 6x1 + 4x2
= 6(15) + 4(30)
= 90 + 120
146 = Rs. 210.00

Table 5.5: Iteration Table Linear Programming :
Simplex Method
Iteration Basic Solution Minimum
X1 X2 S3 S4 Equation
Number Variables Value Ratio
0 S3 120 2 3 1 0 60
S4 60 2 1 0 1 30
Kr – Zj 0 –6 –4 0 0
1 S3 60 0 2 1 –1 30 S3 – 2pe
Kr x1 30 1 ½ 0 ½ 60 S4/2
Pe – Zj 100 0 –1 0 3 – Z + 6Pe
2 Pe X2 30 0 1 ½ – S3/2
x1 15 1 0 – 1/2 S3 – Pe/2
– Zj 210 0 0 1/4 ¾ – Z + Pe
½ 5/2
The solution is,

x1 = 15 corrugated boxes are to be produced and
x2 = 30 carton boxes are to be produced to yield a
Profit, Zmax = Rs. 210.00
Summary of LPP Procedure

Step 1: Formulate the LP problem.
Step 2: Introduce slack /auxiliary variables.
if constraint type is £ introduce + S
if constraint type is ³ introduce – S + a and
if constraint type is = introduce a
Step 3: Find the initial basic solution.
Step 4: Establish a simplex table and enter all variable coefficients. If the objective
function is maximization, enter the opposite sign co-efficient and if minimization,
enter without changing the sign.
Step 5: Take the most negative coefficient in the objective function, Zj to identify the
key column (the corresponding variable is the entering variable of the next
iteration table).
Step 6: Find the ratio between the solution value and the coefficient of the key column.
Enter the values in the minimum ratio column.
Step 7: Take the minimum positive value available in the minimum ratio column to
identify the key row. (The corresponding variable is the leaving variable of the
table).
Step 8: The intersection element of the key column and key row is the pivotal element.
Step 9: Construct the next iteration table by eliminating the leaving variable and
introducing the entering variable.
Step 10: Convert the pivotal element as 1 in the next iteration table and compute the
other elements in that row accordingly. This is the pivotal equation row (not
key row).
Step 11: Other elements in the key column must be made zero. For simplicity, form the
equations as follows: Change the sign of the key column element, multiply with
pivotal equation element and add the corresponding variable. 147
Quantitative Techniques Step 12: Check the values of objective function. If there are negative values, the solution
for Management
is not an optimal one; go to step 5. Else, if all the values are positive, optimality
is reached. Non-negativity for objective function value is not considered. Write
down the values of x1, x2,……..xi and calculate the objective function for
maximization or minimization.
Note:
(i) If there are no x1, x2 variables in the final iteration table, the values of x1 and x2 are
zero.
(ii) Neglect the sign for objective function value in the final iteration table.
5.4 SOLVING LP PROBLEMS USING COMPUTER WITH

TORA
From the MAIN MENU, select LINEAR PROGRAMMING option, and enter the
input values of the previously discussed problem as shown in the Figure 5.1.
Figure 5.1: Solving LPP using Computer with TORA (Input Screen )
Click Solve Menu, and select Solve Problem → Algebraic → Iterations → All-Slack
Starting Solution. Now, click Go To Output screen, then the first iteration table will be
displayed. To select the entering variable, click a non-basic variable (if correct, the column
turns green). Similarly, select the leaving variable (if correct, the row turns red),
Figure 5.2.
Figure 5.2: Selecting the Leaving Variable (TORA, Output Screen)

148
Then click Next Iteration button to display the next iteration table as shown in Figure 5.3. Linear Programming :
Simplex Method
Figure 5.3: Next Iteration Table (TORA, Output Screen)

Again click next iteration button to get the third and final iteration table. A pop-up menu
also indicates that the solution has reached the optimal level. Now we can notice that all
the values in the objective function Zmax row are non-negative which indicates that the
solution is optimal. The final Iteration Table is shown in Figure 5.4.
Figure 5.4: Final Iteration Table (TORA, Output Screen)

From the final Iteration Table, the values of X1, X2 and Zmax are taken to the corresponding
values in the solution column (last column) of the simplex table.
i.e., Zmax = 210.00
X1 = 30.00
X2 = 15.00
Example 1: Solve the LP problem using Simplex method. Determine the following :
(a) What is the optimal solution?
(b) What is the value of the objective function? 149
Quantitative Techniques (c) Which constraint has excess resources and how much?
for Management
Zmax = 5x1 + 6x2
2x1 + x2 £ 2000 ....................(i)
x1 £ 800 ....................(ii)
x2 £ 200 ....................(iii)
where x1, x2 ³ 0
Solution: Converting the inequality constraints by introducing the slack variables,
Zmax = 5x1 + 6x2 + 0S3 + 0S4 + 0S5
2x1 + x2 + S3 = 2000
x1 + S4 = 800
x2 + S5 = 200
Equate x1 and x2 to zero , to find the initial basic solution
2(0) + 0 + S3 =2000
0 + S4 = 800
0 + S5 = 200
The initial basic solution is,
S3 = 2000
S4 = 800
S5 = 200
Establish a simplex table to represent the co-efficient of variables for optimal computation
as shown in Table 5.6.
Table 5.6: Simplex Table
Iteration Basic Solution Min
X1 X2 S3 S4 S5 Equation
Number Variable Value Ratio
0 S3 2000 2 1 1 0 0 2000
S4 800 1 0 0 1 0 ∝
Kr S3 200 0 1 0 0 1 200
-Z 1200 -5 -6 0 0 0
1 S3 1800 2 0 1 0 -1 900 S3 – P e
Kr S4 800 1 0 0 1 0 800 S4
Pe X2 200 0 1 0 0 1 ∝ S5
-Z 1200 -5 0 0 0 6 – Z + 6Pe
2 S3 200 0 -2 1 -2 -1 S3 – 2Pe
Pe X1 800 1 0 0 1 0 S4
X2 200 0 1 0 0 1 X2
-Zj 5200 0 0 0 5 6 – Z + 5Pe
In the final table, all the values of –Zj are ³ 0, hence optimality is reached. The optimum
solution is,
(a) The value of x1 = 800 units
150 x2 = 200 units

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MBA First Year

School of Distance Education

Copyright © 2007, Bharathiar University

Edited by: Dr. Subodh Kesharwani

Lesson 1 Quantitative Techniques – Introduction 7

Lesson 6 Transportation Model 167

Lesson 8 Network Model 241

Lesson 10 Probability 299

Lesson 13 Inventory Model 449

Number of Credit Hours : 3 (Three)

Objectives: On successful completion of the course the students should have:

1. Understood the basic of the quantitative techniques.

3. Learnt the time estimation and critical path for project.

4. Learnt about the application of probability techniques in the decision making.

QT – Introduction – Measures of Central Tendency – Mean, Median, Mode.

Mathematical Models – deterministic and probabilistic – simple business examples – OR and

Simulation – types of simulation – Monte Carlo simulation – simulation problems.

Decision Theory – Pay off tables – decision criteria – decision trees.

1.14 Suggested Readings

1.2 HISTORICAL DEVELOPMENT

Check Your Progress 1.1

1.3 ABOUT QUANTITATIVE TECHNIQUE

Check Your Progress 1.2

1.4 METHODOLOGY OF QUANTITATIVE TECHNIQUES

Formulating the problem

Defining decision variables and

Developing a suitable model

Acquiring the Input Data

Solving the model

Validating the model

Implementing the results

1.4.1 Formulating the Problem

1.4.3 Developing a Suitable Model

1.4.4 Acquiring the Input Data

1.4.5 Solving the Model

1.4.6 Validating the Model

1.4.7 Implementing the Results

1.5 ADVANTAGES OF MATHEMATICAL MODELLING

Check Your Progress 1.3

1.6 SCOPE OF QUANTITATIVE TECHNIQUE

Check Your Progress 1.4

Discuss the significance and scope of Quantitative Techniques in modern business

Notes: (a) Write your answer in the space given below.

1.7.1 Origin and Growth of Statistics

1.7.3 Statistics as Data

Characteristics of Statistics as Data

1.7.4 Statistics as a Science

1.7.5 Statistics as a Science different from Natural Sciences

1.7.6 Statistics as a Scientific Method

1.7.7 Statistics as a Science or an Art

1.8 LET US SUM UP

1.9 LESSON-END ACTIVITIES

1.11 QUESTIONS FOR DISCUSSION

1.12 TERMINAL QUESTIONS

31. “Statistics are aggregates of facts, affected to a marked extent by a multiplicity of

1.13 MODEL ANSWERS TO QUESTIONS FOR

1.14 SUGGESTED READINGS

2.0 AIMS AND OBJECTIVES