CMA Final · Strategic Cost Management · Introduction to Tools for Data Analytics
A Pune retailer's analyst records the monthly sales (in ₹ lakh) of a store for five months as 40, 44, 46, 50 and 90 (the last due to a one-off bulk order). Which measure of central tendency is least distorted by the 90 and is therefore preferred to describe typical monthly sales?
The median is preferred because it is based on the middle position of the ordered data and is not pulled by the extreme value. Here the median is ₹46 lakh, while the mean of ₹54 lakh is inflated by the one-off 90.
- AArithmetic mean
- BMedianCorrect
- CRange midpoint
- DSum of values
Explanation
Ordered values are 40, 44, 46, 50, 90, so the median is 46. The mean is 270/5 = 54, pulled upward by the outlier 90. The median depends on position, not on extreme magnitude, so it is robust to outliers.
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