The mean deviation is also known as the average deviation. As the name implies, it is the average of absolute amounts by which the individual items deviate from the mean.
Since the positive deviations from the mean are equal to the negative deviations, while computing the mean deviation, we ignore positive and negative signs.
Symbolically,
Where,
MD = mean deviation,
x = deviation of an item from the mean ignoring positive and negative signs,
n = the total number of observations.
Example 1:
Size of Item Frequency

24 
20 
46 
40 

68 
30 

810 
10 
Solution:

Merits of Mean Deviation
 A major advantage of mean deviation is that it is simple to understand and easy to calculate.
 It takes into consideration each and every item in the As a result, a change in the value of any item will have its effect on the magnitude of mean deviation.
 The values of extreme items have less effect on the value of the mean
 As deviations are taken from a central value, it is possible to have meaningful comparisons of the formation of different distributions.
Limitations of Mean Deviation
 It is not capable of further algebraic
 At times it may fail to give accurate results. The mean deviation gives best results when deviations are taken from the median instead of from the mean. But in a series, which has wide variations in the items, median is not a satisfactory
 Strictly on mathematical considerations, the method is wrong as it ignores the algebraic signs when the deviations are taken from the mean.
In view of these limitations, it is seldom used in business studies. A better measure known as the standard deviation is more frequently used.