Describe a specific business situation, other than what has already been selecte
ID: 3022171 • Letter: D
Question
Describe a specific business situation, other than what has already been selected by fellow students in which mean and standard deviation (stddev) can be used in decision making. Please describe how the calculation and use of mean and standard deviation can help in making a decision. Are the mean and standard deviation appropriate measures of central tendency and spread, respectively in your example? Why or why not? What other measures of central tendency and spread might have been more appropriate
Explanation / Answer
Sol)
Mean is good measure but some times it gives false result. To find out spread of the data we use standard deviation.
Without standard deviation, you can’t get a handle on whether the data are close to the average (as are the diameters of car parts that come off of a conveyor belt when everything is operating correctly) or whether the data are spread out over a wide range (as are house prices and income levels in the U.S.).
For example, if you are told that the average starting salary for someone working at Company Statistix is $70,000, you may think, “Wow! That’s great.” But if the standard deviation for starting salaries at Company Statistix is $20,000, that’s a lot of variation in terms of how much money you can make, so the average starting salary of $70,000 isn’t as informative in the end, is it?
On the other hand, if the standard deviation was only $5,000, you would have a much better idea of what to expect for a starting salary at that company. Which is more appealing? That’s a decision each person has to make; however, it’ll be a much more informed decision once you realize standard deviation matters.