Weighted Mean
Audio
Welcome to our video tutorial on the Weighted Mean.
Video
This video’s title, “The Weighted Mean,” is shown.
Weighted Mean
Page 1 of 8
Edward Volchok, PhD
Weighted Mean
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The Weighted Mean is similar to the Arithmetic Mean. But, unlike the Arithmetic
Mean, which gives each random variable equal weight, the Weighted Mean is used
in cases where the data have unequal weights.
The basic formula for the Weight Mean is the sum of the product of the weights, or
w, and the random variables, or X over the sum of the weights.
The Weighted Mean is used to calculate the “average” when data are unequally
weighted. A student’s Grade Point Average is calculated using a Weighted Mean as
2, 3, and 4 credits courses have different weights in the calculation. And, in
business the Weighted Mean is used frequently whenever the Mean for unequally
weighted data is needed.
Video
Video shows the formula for the Weighted Mean
Weighted Mean
Page 2 of 8
Edward Volchok, PhD
Weighted Mean
Audio
Microsoft Excel does not have a built-in function for calculating the Weighted
Mean. In this video, you will learn how easy it is to calculate the Weighted Mean
using Excel.
Video
Video displays the words, “Microsoft Excel does not have a Weighted Mean
function.”
Weighted Mean
Page 3 of 8
Edward Volchok, PhD
Weighted Mean
Audio
In our scenario, we have four brands, each with a different retail price and different
unit sales, and we want to calculate the Average Retail Price per Unit Sold.
The Arithmetic Mean of the four retail prices, $47.99, is not the correct Average
Retail Price per Unit Sold. This is true because each of the four brands has different
weights based on their different units sales.
Video
The video shows an Excel worksheet in which the Arithmetic Mean being
calculated is based on each of the four brands’ retail price.
Weighted Mean
Page 4 of 8
Edward Volchok, PhD
Weighted Mean
Audio
To calculate the Average Retail Price per Unit Sold, we must take into account the
different Unit Sales for each brand. To do this, we use the Weighted Mean formula.
In the context of this problem, the formula for the Average Retail Price per Unit
Sold is Total Dollar Sales (ΣwX) over Total Unit Sales (Σw). Dollars Sales are
calculated by multiplying a brand’s Units Sales, or w, by its Retail Price, or X.
Video
Video displays the calculation of the Dollar Sales for each of the four brands.
Weighted Mean
Page 5 of 8
Edward Volchok, PhD
Weighted Mean
Audio
Total Dollars Sales, $5,858.69, is the sum of each of the four brands’ Dollar Sales.
And, Total Units Sales, 131, is the sum of each of the four brands’ Unit Sales.
Video
The video now displays Total Dollar Sales, $5,858.69, along with the Total Unit
Sales, 131.
Weighted Mean
Page 6 of 8
Edward Volchok, PhD
Weighted Mean
Audio
We now have all the information to complete the formula. Total Dollar Sales,
$5,858.69, over Total Units Sales of 131, equals an Average Retail Price per Unit Sold
of $44.72. That is the correct answer. The Arithmetic Mean of the four retail prices,
$47.99, is the wrong answer because it fails to take into account each brand’s
different weights or different Unit Sales.
Video
The video displays the calculation of the Weighted Mean or Average Price per Unit
Sold.
Weighted Mean
Page 7 of 8
Edward Volchok, PhD
Weighted Mean
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This has been our video on the Weighted Mean.
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The video displays “The End.”
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Weighted Mean
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Page 8 of 8
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Edward Volchok, PhD