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Manufacturers often need to calculate a measure of center to find a value that best represents the amount of production of their manufactured products. This value assists manufacturers in creating a production standard for the materials they are producing. A production standard is a benchmark used for measuring the production of the company. The unit of measurement used in a production standard indicates the normal level of performance for an industrial operation and is expressed as units per hour or units per day.
Companies use the Mean Absolute Deviation to assist in calculating an accurate measure of center with upper and lower thresholds. These thresholds allow manufacturers to consider modern production variations. By using MAD to calculate the thresholds, manufacturers offer a method to take the causes of different fluctuations in their hourly or daily production standards into account. This video and lesson show how companies calculate production standards and how they use measures of center and variation to create those standards.