Interpolation

What is Interpolation?

Interpolation can be described as the mathematical procedure applied in order to derive value in between two points having a prescribed value. In simple words, we can describe it as a process of approximating the value of a given function at a given set of discrete points. It can be applied in estimating varied concepts of cost, mathematics, statistics, etc.

Interpolation can be said as the method of determining the unknown value for any given set of functions with known values. The unknown value is found out. If the given sets of values work on a linear trend, then we can apply linear Interpolation in excelLinear Interpolation In ExcelIn Excel, linear interpolation refers to forecasting or guessing the next value of any given variable based on current data. To execute a linear interpolation in Excel, we use the forecast function and the lookup function to create a straight line that connects two values and estimates the future value through it.read more to determine the unknown value from the two known points.

Interpolation Formula

The formula is as follows: –

Y = Y1 + (Y2 – Y1)/(X2 – X1) * (X * X1)

As we have learned in the definition stated above, it helps to ascertain a value based on other sets of value, in the above formula: –

• X and Y are unknown figures which will be ascertained on the basis of other values given.
• Y1, Y2, X1, and X2 are given sets of variables that will help in determining unknown value.

For example, A farmer engaged in farming of mango trees observes and collects the following data regarding the height of the tree on particular days shown as follows: –

No. of Days	Height of Tree (MM)
1	10
2	20
3	30
4	40

Based on the given set of data, farmers can estimate the height of trees for any number of days until the tree reaches its normal height. Based on the above data, the farmer wants to know the height of the tree on the 7^th day.

He can find it out by interpolating the above values. The height of the tree on the 7^th day will 70 MM.

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For eg:
Source: Interpolation (wallstreetmojo.com)

Examples of Interpolation

Now, let us understand the concept with the help of some simple and practical examples.

Example #1

Calculate the unknown value using the interpolation formula from the given set of data. Calculate the value of Y when X value is 60.

X	Y
10	0
30	40
50	80
70	120
90	160

Solution:

The value of Y can be derived when X is 60 with the help of Interpolation as follows: –

Here X is 60, Y needs to be determined. Also,

X1	50
Y1	80
X2	70
Y2	120

So, the Calculation of Interpolation will be –

• Y= Y1 + (Y2-Y1)/(X2-X1) * (X-X1)
• =80 + (120-80)/(70-50) * (60-50)
• =80 + 40/20 *10
• = 80+ 2*10
• =80+20

• Y = 100

Example #2

Mr. Harry shares details of Sales and profits. He is eager to know the profits of his business when the sales figure reaches $75,00,000. You are required to calculate profits based on the given data:

Sales	Profits
1,000,000	200,000
2,000,000	300,000
3,000,000	400,000
4,000,000	500,000
5,000,000	600,000

Solution:

Based on the above data, we can estimate the profits of Mr. Harry using the interpolation formula as follows:

Here

X	7,500,000
Y1	500,000
Y2	600,000
X1	4,000,000
X2	5,000,000

So, the Calculation of Interpolation will be –

• Y= Y1 + (Y2-Y1)/(X2-X1) * (X-X1)
• = $ 5,00,000 + ($6,00,000 – $5,00,000)/($50,00,000 – $40,00,000) * ($75,00,000 – $40,00,000)
• = $ 5,00,000 + $1,00,000 / $10,00,000 * $ 35,00,000
• = $5,00,000 + $ 3,50,000

• Y = $8,50,000

Example #3

Mr. Lark shares details of production and costs. In this era of global recessionGlobal RecessionGlobal recession refers to a condition when the countries across the globe experience an economic downturn for an extended period. It is a form of synchronized economic downfall encountered by the various interrelated economies throughout the world.read more fears, Mr. Lark is also having a fear of decreasing the demands of his product and eager to know the optimum production level to cover the total cost of his business. You are required to calculate the optimum quantity level of production based on the given data. Lark wants to determine the quantity of production required to cover the estimated costEstimated CostCost estimate is the preliminary stage for any project, operation, or program in which a reasonable calculation of all project costs is performed and thus requires precise judgement, experience, and accuracy.read more of $90,00,000.

Quantity	Cost ($)
10,000	4,000,000
200,000	4,500,000
300,000	5,000,000
400,000	5,500,000
500,000	6,000,000

Solution:

Based on the above data, we can estimate the quantity required to cover the cost of $90,00,00 using interpolation formula as follows:

Here,

Y	9,000,000
Y1	5,500,000
Y2	6,000,000
X1	400,000
X2	500,000

Y= Y1 + (Y2-Y1)/(X2-X1) * (X-X1)

To get the quantity of production required we have modified the above formula as follows

X = (Y – Y1) /[(Y2-Y1)/(X2-X1)] + X1

• X =(9,000,000 – 5,500,000) /[(6,000,000 – 5,500,000) / (500,000 – 400,000)] + 400,000
• = 3,500,000 /(5,00,000/1,00,000) + 400,000
• = 3,500,000 /5 + 400,000
• = 7,00,000 + 400,000
• = 11,00,000 Units

Interpolation Calculator

You can use the following calculator.

Relevance And Use

In the era where data analysis plays an important role in each and every business, an organization can make varied use of interpolation to estimate different values from the known set of values. Mentioned below are some of the relevance and uses of interpolation.

• Interpolation can be used by data scientists to analyze and derive meaningful results from a given set of raw values.
• It can be applied by an organization to determine any financial information which is based on a given set of function like the cost of goods soldCost Of Goods SoldThe cost of goods sold (COGS) is the cumulative total of direct costs incurred for the goods or services sold, including direct expenses like raw material, direct labour cost and other direct costs. However, it excludes all the indirect expenses incurred by the company.read more; profits earned, etc.
• Interpolation is being used in numerous statistical operations to derive meaningful information.
• This is being used by scientists to determine possible results out of numerous estimates.
• This concept can also be used by a photographer to determine useful information out of raw collected data.

Recommended Articles

This has been a guide Interpolation and its definition. Here we discuss the formula for the calculation of Interpolation along with examples and downloadable excel sheets. You may also have a look at the following articles –

• How to do Interpolation in Excel?
• Formula of Extrapolation
• How to do Forecast in Excel
• Non-Linear Excel Regression