The collection and analysis of data is essential to businesses of all sizes. Businesses collect a wide variety of data, such as the amount of sales revenue they make from month to month and how much they spend on different expenses, which can impact the decisions managers make. Mean and standard deviation are common statistical concepts that can help managers analyze and describe data.
The mean value or score of a certain set of data is equal to the sum of all the values in the data set divided by the total number of values. A mean is the same as an average. For example, if a certain data set consists of the numbers 2, 5, 5, 8 and 10, the sum of the numbers is 30. Since there are five total numbers in the data set, the mean of the set is equal to 6 because 30 divided by 5 equals 6.
Standard deviation is a statistical measurement of the variation in a set of data. Standard deviation indicates how much the values of a certain data set differ from the mean on average. In a normal distribution -- where data is roughly equally distributed -- about 68 percent of data points lie within one standard deviation of the mean and 95 percent of values lie within two standard deviations of the mean. For example, if the mean score on a certain standardized test is 1,200 and the standard deviation of scores is 100, you would expect 95 percent of test takers to get a score within two standard deviations of the mean, or between 1,000 and 1,400.
Median is another common statistical value that describes the data point in the exact middle of all data values. In sets of data with an even number of values, the median is the lesser of the two middle values. For example, in a data set consisting of the numbers 1, 2, 2, 6, 7, 8, and 10, the median is 6.
Outliers are data values that differ significantly from the mean. For example, if a data set consisted of the numbers 2, 5, 8, 10 and 25, 25 might be considered an outlier. Outliers can have a large impact on the mean. For instance the mean of 2, 5, 8, 10 and 25 is 10, but if the 25 is dropped out of the data set, the mean would fall to 6.25.
- Jupiterimages/Polka Dot/Getty Images