On Mon, 29 Jan 2001, Chris wrote in part:
> My current job requires me to analyze margins from the sales of various
> products and provide an average for each during the quarter. I am using a
> very large sample of all product sales by month. (Margin, i.e. not markup.
> For those not familiar, markup is what a business does to receive Margin.
> Margin is a measure of profitability. A typical calculation for margin is,
> (Unit Resale Price - Unit Cost) / Unit Resale Price ).
< snip, sample data >
> Assuming a normal distribution, what method should I use to calculate
> my averages? Should I simply take the sample mean? Should I remove
> anomalies like 112% margins? Should I calculate upper and lower
> control limits and place my data into a normal curve?
As Rich Ulrich implied, why would you wish to assume a normal
distribution?
As to what kind of average to compute, what will you (or your superior,
or client, as the case may be) _do_ with the average once you have it?
If it is to be related to anything like total profit (or revenue?) during
the period represented in the data, you'd about have to multiply by sales
volume before averaging, for instance.
As to the 112% margin, I take it that you don't have the underlying
resale value or cost, else you could calculate the margin directly.
Basically, you have two choices: (1) discard the anomaly whenever you
encounter one; (2) guess what error in logic or arithmetic led to the
anomalous value, and correct it (112% might not be so unreasonable if
the denominator had been unit cost instead of unit resale price, for
example). Option (2) is _always_ chancy, but may be viable if you have
something better than a guess to go on.
-- DFB.
----------------------------------------------------------------------
Donald F. Burrill [EMAIL PROTECTED]
348 Hyde Hall, Plymouth State College, [EMAIL PROTECTED]
MSC #29, Plymouth, NH 03264 (603) 535-2597
Department of Mathematics, Boston University [EMAIL PROTECTED]
111 Cummington Street, room 261, Boston, MA 02215 (617) 353-5288
184 Nashua Road, Bedford, NH 03110 (603) 471-7128
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