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Note : a city population less than 500.000 is considered medium, between 500.000 and one million is considered big, and equal or more than one million is considered huge
data US_Cities;
input Timezone $8. State $13. City $15.  Population ;
datalines;
Alaska	   Alaska	    Anchorage	      291826
Atlantic   Puerto Rico	San Antonio	     1327407
Atlantic   Puerto Rico	San Juan	      395326
Central	   Minnesota	Minneapolis	      382578
Central	   Texas	    Dallas	         1197816
Eastern    Florida	    Miami	          399457
Eastern	   Maryland  	Baltimore	      620961
Eastern	   Michigan	    Detroit	          713777
Eastern    New York	    New York	     8175133
Mountain   Arizona	    Phoenix	         1445631
Mountain   Colorado	    Denver	          600158
Mountain   Texas	    El Paso	          649121
Pacific	   California	Los Angeles	     3792621
Pacific	   California	Sacramento	      466488
Pacific	   California	San Francisco     805235
Pacific	   Nevada	    Las Vegas	      583756
;
run;
proc format ;
value $pop_cat  medium=>500.000
                big=between 500.000 to 1 million
                huge=> 1 million;
run;                
proc print data= US_Cities NOOBS ;
VAR TIMEZONE STATE  CITY POPULATION ;
BY CITY ;
SUM POPULATION;
RUN;
Hello @pavank 
I have corrected / updated your code to get the output you want.
data US_Cities;
	input Timezone $8. @11 State  & $13. @23 City $15. @41 Population;
	datalines;
Alaska	   Alaska       Anchorage	      291826
Atlantic   Puerto Rico  San Antonio	     1327407
Atlantic   Puerto Rico  San Juan	      395326
Central	   Minnesota	Minneapolis	      382578
Central	   Texas	    Dallas	         1197816
Eastern    Florida	    Miami	          399457
Eastern	   Maryland  	Baltimore	      620961
Eastern	   Michigan	    Detroit	          713777
Eastern    New York	    New York	     8175133
Mountain   Arizona	    Phoenix	         1445631
Mountain   Colorado	    Denver	          600158
Mountain   Texas	    El Paso	          649121
Pacific	   California	Los Angeles	     3792621
Pacific	   California	Sacramento	      466488
Pacific	   California	San Francisco     805235
Pacific	   Nevada	    Las Vegas	      583756
;
run;
proc format;
	value pop_cat 
	low -< 500000='Medium'
	500000 -< 1000000='Big' 
		1000000 -high='Huge';
run;
proc print data=US_Cities NOOBS;
	VAR CITY POPULATION;
	Format population pop_cat.;
RUN;
Maxim 2: Read the Log, especially that of the PROC FORMAT step.
Then apply Maxim 1: Read the Documentation, and study PROC FORMAT , particularly the VALUE statement, to see where you went wrong.
Additional hint: you want to format a numeric variable, so you want a numeric format.
Hello @pavank 
I have corrected / updated your code to get the output you want.
data US_Cities;
	input Timezone $8. @11 State  & $13. @23 City $15. @41 Population;
	datalines;
Alaska	   Alaska       Anchorage	      291826
Atlantic   Puerto Rico  San Antonio	     1327407
Atlantic   Puerto Rico  San Juan	      395326
Central	   Minnesota	Minneapolis	      382578
Central	   Texas	    Dallas	         1197816
Eastern    Florida	    Miami	          399457
Eastern	   Maryland  	Baltimore	      620961
Eastern	   Michigan	    Detroit	          713777
Eastern    New York	    New York	     8175133
Mountain   Arizona	    Phoenix	         1445631
Mountain   Colorado	    Denver	          600158
Mountain   Texas	    El Paso	          649121
Pacific	   California	Los Angeles	     3792621
Pacific	   California	Sacramento	      466488
Pacific	   California	San Francisco     805235
Pacific	   Nevada	    Las Vegas	      583756
;
run;
proc format;
	value pop_cat 
	low -< 500000='Medium'
	500000 -< 1000000='Big' 
		1000000 -high='Huge';
run;
proc print data=US_Cities NOOBS;
	VAR CITY POPULATION;
	Format population pop_cat.;
RUN;
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