Alex is a business analyst working for a retail company. He's tasked with analyzing the sales performance of different product categories over the past year to identify which categories have the most consistent sales performance. Which statistical measure should Alex use to determine the consistency or variability in sales performance across different product categories?
Options:
- Median
- Range
- Standard deviation
- Mode
Answer (2)
To assess the consistency of sales performance, Alex should use the standard deviation, as it measures how sales data varies from the average. This will help him identify product categories with steady sales versus those with fluctuating sales. Other measures like median, range, and mode do not provide sufficient insights into variability for his analysis.
;
To determine the consistency or variability in sales performance across different product categories, Alex should use 'Standard deviation' as the statistical measure.
The standard deviation is a statistical measure that quantifies the amount of variation or dispersion in a set of data values. A low standard deviation indicates that the data points tend to be close to the mean (average) of the data set, representing consistency in the sales performance. Conversely, a high standard deviation indicates that the data points are spread out over a wider range, suggesting more variability and less consistency in sales.
Here's a step-by-step explanation of why the standard deviation is the appropriate choice:
What is Standard Deviation? : Standard deviation measures how spread out the numbers in a data set are. It is a useful statistic for understanding whether the data points are close to the mean or spread out over a wide range.
Why Use Standard Deviation for Consistency? : When analyzing sales performance, consistency refers to how stable and predictable the sales numbers are over time. A consistent sales pattern would have a lower standard deviation because there is less fluctuation.
Comparison of Options :
Median : The median is the middle value when the data points are ordered. It does not provide information about consistency or variability.
Range : The range shows the difference between the highest and lowest values but lacks the ability to explain the distribution of the rest of the data points.
Mode : The mode is the most frequently occurring value in the data set and does not provide insights into the spread or consistency of the data.
Conclusion : By using the standard deviation, Alex can identify which product categories have more stable sales performances, which is helpful for decision-making and strategy planning.
Therefore, the correct choice is 'Standard deviation'.
