Results 1 to 5 of 5

Math Help - What is a good standard deviation??

  1. #1
    Newbie
    Joined
    Oct 2010
    Posts
    4

    What is a good standard deviation??

    Hi All,

    I am working on an analysis of new delivery charges and and comparing existing pricing with a proposed new pricing.

    I have 84k orders which I have calculated the average and standard deviation of difference in pricing between current/proposed pricing.

    avg = =1.03
    stdDev = 40.25

    80k of my order fall within 1 stdDev and in terms of value its 150k positive.

    Is a stdDev of 40.25 good or bad? high or low? should it be closer to the avg in order to be more useful as info??

    Thanks
    Follow Math Help Forum on Facebook and Google+

  2. #2
    Junior Member RHandford's Avatar
    Joined
    Sep 2010
    From
    N.E. Lincolnshire
    Posts
    70
    Hi

    Am I missing something here but how can you have an average price of 1.03 with a SD of 40.25 - This would mean delivery on some items is -39.22?
    Follow Math Help Forum on Facebook and Google+

  3. #3
    MHF Contributor Unknown008's Avatar
    Joined
    May 2010
    From
    Mauritius
    Posts
    1,260
    I wouldn't say there is such a thing such as a 'good' or 'bad' standard deviation.

    A high standard deviation usually means that the value that you can obtain (here the charges) are not easily predictable.

    It's like I tell you that I'll give you 100 dollars with a standard deviation of 50 dollars each day.

    This means that one day, you might get 0 dollars (in fact -50 dollars) and on other days, 250 dollars. Those are not so close to the average, 100 dollars.

    Whereas if I tell you I'll give you 80 dollars with a standar deviation of 1 dollar, you can get 77 dollars or 83 dollars so you can predict the value that you'll get with some accuracy.

    Of course, I'm taking the standard deviations from a normal distribution where 3 standard deviations fall within 99.72% of all possible outcomes.
    Follow Math Help Forum on Facebook and Google+

  4. #4
    Newbie
    Joined
    Oct 2010
    Posts
    4
    Thanks both,

    RHandford...
    I am trying to figure out how much we stand to gain or lose with a new delivery pricing model. I have 84k orders which i have applied the existing and proposed pricing to. Its the difference between these two charges that i'm working with and the price often shows a loss so the stdDev goes into minus figures.

    Unknown008...
    94.68% of my data fall in the first stdDev (33.53% negative, 61.16% positive)
    3.82% fall in the second stdDev (1.30% negative, 2.52% positive)
    1.46% fall in the third stdDev (1.46% negative, 0.03% positive)

    now i can see that 94.68% of my differences in charges are between -41.28 and 39.22 but how does that help me?? the difference of 40(ish) is significant so is the result that under the proposed charging the recovery is, on the whole, very different to existing charges? is that all i can assume?

    spin.
    Follow Math Help Forum on Facebook and Google+

  5. #5
    MHF Contributor Unknown008's Avatar
    Joined
    May 2010
    From
    Mauritius
    Posts
    1,260
    I wouldn't say it is very different to existing charges, but it can be very different.

    Taking my previous example as a sort of 'bet'.

    Some people would rather bet on more money even if there is greater risks!
    Others will tend to bet on smaller sums which they can better predict and perhaps win on the long term.

    From those figures that you gave, I would say that you are like the person who is taking much risk where you can suddenly win big, or lose a heap at once.

    This all concerns probability but in reality, it doesn't necessarily be that way.
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Replies: 5
    Last Post: May 18th 2009, 04:14 AM
  2. Any one good with standard deviations please help
    Posted in the Advanced Statistics Forum
    Replies: 8
    Last Post: January 17th 2009, 01:45 PM
  3. standard deviation and mean deviation
    Posted in the Statistics Forum
    Replies: 1
    Last Post: March 16th 2008, 05:09 AM
  4. standard deviation
    Posted in the Statistics Forum
    Replies: 1
    Last Post: December 5th 2007, 05:18 AM
  5. mean and standard deviation
    Posted in the Advanced Statistics Forum
    Replies: 1
    Last Post: September 12th 2007, 07:31 PM

Search Tags


/mathhelpforum @mathhelpforum