Uses: could be used for stock ordering.Advantage: easily observedDisadvantage: fairly complex calculation for grouped dataMedian: Uses: could be used in wage negotiationsAdvantage: less influenced by extreme resultsDisadvantage: cannot be used for further statistical analysis.27.4 Measures of dispersion27.4.1 The rangeThe range refers t the difference between the highest value and the lowestvalue in a distributionThis measure can be distorted by extreme resultsThe Butler Range can be used in such cases, where the highest value andthe lowest value are excluded27.4.2 The inter-quartile range Measures the range of the middle half of the data and therefore ignores thelowest 25% of the results and the highest 25% of the resultsCalculated by dividing the data into quartiles - or quarter sections27.8 Cost-benefit analysis (A-level)In a free market over which government has no control, economic decisionsare taken by private individuals and businesses solely on the basis of privatecosts and private benefitsThese are costs that are paid for by the producer or consumer and benefitsobtained by the producer or consumerPrivate benefits to the firm exceed the private costs
BUSINESS STUDIES MS.VIMALA N.KPrivate benefits to the consumer exceed the private costsIn both cases above, the external effects on other people on society in generalare ignored! The cost has to be paid by societyAll costs are not paid for by the consumers or producers in an economicactivity are called external costsHowever, external benefits do result from an economic activity, e.g. creation ofjobsCBA is a process that takes all costs and benefits of an economic activity intoaccount. It is used to evaluate the social costs and benefits27.9 Operational Research (A-level)OR approach to decision making uses models of real world situations toinvestigate solutions to business problemsAim of OR is to construct a model of this real-world decision-making situationand to manipulate this model to attempt to find the best possible solutionThe most commonly used quantitative or mathematical models are:-27.10Linear programming -blending (A-level)Lays out business problems as a series of linear or mathematical expressionsBlending is a model that is used to assist firms in deciding the best possibleuse of limited resourcesEach resource constraint is represented by a mathematical formula orequation that, when plotted on a graph, will give a straight line. By usinganother line on the graph representing the objectives of the firm, the best oroptimal use of resources can be foundBlending can be very useful when firms are deciding on the best use ofavailable resourcesComputer models can be used to speed up the techniqueHowever, this simple version only allows for two products to be consideredIt ignores the market demand for the products - the assumption being that theoptimum output levels can all be sold profitablyTechnique assumes that resources can be switched between the two productsat a constant rate of productivity27.11 Making decisions - the use of decision trees (A-level)
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