CHAPTER 2

A REVIEW OF BASIC STATISTICAL CONCEPTS

ANSWERS TO ODD-NUMBERED PROBLEMS AND CASES
1. Descriptive Statistics

Variable N Mean Median StDev SE Mean
Orders 28 21.32 17.00 13.37 2.53
Variable Min Max Q1 Q3
Orders 5.00 5.00 11.25 28.75
a. X ! 21.32
b. S ! 13.37
c. S
2

! 178.7"
d. #$ t%e p&lic' is s(ccess$(l) s*aller &rders +ill be eli*inated and t%e *ean +ill
increase.
e. #$ t%e c%an,e ca(ses all c(st&*ers t& c&ns&lidate a n(*ber &$ s*all &rders int&
lar,e &rders) t%e standard deviati&n +ill pr&babl' decrease. Ot%er+ise) it is ver'
di$$ic(lt t& tell %&+ t%e standard deviati&n +ill be a$$ected.
$. -%e best $&recast &ver t%e l&n,.ter* is t%e *ean &$ 21.32.
3. a. /&int esti*ate0 1 7" . 10 = X
b. 1 ! .25 Z ! 1.2") n ! 30)
71 . 13 ) 7" . 10 = = S X
( ) ( ) 21 . 7" . 10 30 3 71 . 13 2" . 1 7" . 10 3 2" . 1 = = n S X
45.851) 15."715
c. d$ ! 301 ! 22) t ! 2.05
( ) ( ) 12 . 5 7" . 10 30 3 71 . 13 05 . 2 7" . 10 3 05 . 2 = = n S X
45."1) 15.8815
d. 6e see t%at t%e 251 c&n$idence intervals in b and c are n&t *(c% di$$erent beca(se
t%e *(ltipliers 1.2" and 2.05 are nearl' t%e sa*e *a,nit(de.
-%is explains +%' a sa*ple &$ si7e n ! 30 is &$ten ta8en as t%e c(t&$$ bet+een
lar,e and s*all sa*ples.
5. 900 ! 12.1 n ! 100 ! .05
910 : 12.1 S ! 1.7 X ! 13.5
1
;e<ect 90 i$ = : 1."5
= !
100
7 . 1
1 . 12 5 . 13
! 8.235
;e<ect 90 since t%e c&*p(ted = 48.2355 is ,reater t%an t%e critical = 41."55. -%e *ean %as
increased.
7. n ! "0)
87 . ) "0 . 5 = = S X

2 . 5 0
2 . 5 0
1
0

H
H
t+&.sided test) ! .05) critical val(e0 >Z>! 1.2"
-est statistic0
"7 . 2
"0 3 87 .
2 . 5 "0 . 5
3
2 . 5
=

=
n S
X
Z

Since >2."7> ! 2."7 : 1.2") re<ect 0
H
at t%e 51 level. -%e *ean satis$acti&n ratin, is
di$$erent $r&* 5.2.
p.val(e0 /4Z ? 2."7 &r Z : 2."75 ! 2 /4Z : 2."75 ! 24.00385 ! .007") ver' str&n,
evidence a,ainst
0
H
.
9. 900 ! 700 n ! 50 ! .05
910 700 S ! 50 X ! 715
;e<ect 90

i$ = ? .1.2" &r = : 1.2"
= !
50
50
700 715
! 2.12
Since t%e calc(lated = is ,reater t%an t%e critical = 42.12 : 1.2"5) re<ect t%e n(ll %'p&t%esis.
-%e $&recast d&es n&t appear t& be reas&nable.
p.val(e0 /4Z ? 2.12 &r Z : 2.125 ! 2 /4Z : 2.125 ! 24.0175 ! .03) str&n, evidence
a,ainst
0
H

11. a.
2

b. /&sitive linear relati&ns%ip
c. @ ! "058 @
2

! )722)72 A ! 52
A
2

! 513 A@ ! 8)""5 r ! .238
13. -%is is a ,&&d p&p(lati&n $&r s%&+in, %&+ rand&* sa*ples are ta8en. #$ t%ree.di,it
rand&* n(*bers are ,enerated $r&* Minitab as de*&nstrated in /r&ble* 10) t%e selected
ite*s $&r t%e sa*ple can be easil' $&(nd. #n t%is p&p(lati&n) ! 0.0" s& *&st
st(dents +ill ,et a sa*ple c&rrelati&n c&e$$icient r cl&se t& 0. -%e least sB(ares line +ill) in
*&st cases) %ave a sl&pe c&e$$icient cl&se t& 0) and st(dents +ill n&t be able t& re<ect t%e
n(ll %'p&t%esis 900 C1 ! 0 4&r) eB(ivalentl') D ! 05 i$ t%e' carr' &(t t%e %'p&t%esis test.
15. n ! 175)
3 . 10 ) 2 . 5 = = S X
/&int esti*ate0 2 . 5 = X
281 c&n$idence interval0 1 ! .28 Z ! 2.33
( ) ( ) 8 . 1 2 . 5 175 3 3 . 10 33 . 2 2 . 5 3 33 . 2 = = n S X 43.) 7.05
9'p&t%esis test0

0
0
1
0

H
H
t+&.sided test) ! .02) critical val(e0 >Z>! 2.33
-est statistic0
5 . 1
175 3 3 . 10
2 . 5
3

=
n S
X
Z
Since >Z> ! 1.5 ? 2.33) d& n&t re<ect
0
H
at t%e 21 level.
Es expected) t%e res(lts &$ t%e %'p&t%esis test are c&nsistent +it% t%e c&n$idence
3
interval $&r F ! is n&t r(led &(t b' eit%er pr&ced(re.
17. Gar,e sa*ple 251 c&n$idence interval $&r *ean *&nt%l' ret(rn H0

5 78 . ) 28 . 2 4 88 . 1 10 . 1
32
22 . 5
2" . 1 10 . 1 =
H ! .2 415 is n&t a realistic val(e $&r *ean *&nt%l' ret(rn &$ clientIs
acc&(nt since it $alls &(tside t%e 251 c&n$idence interval. Jlient *a' %ave a
case.
CASE 2-1: ALCAM ELECTRONICS
#n &(r c&ns(ltin, +&r8) b(siness pe&ple s&*eti*es tell (s t%at b(siness sc%&&ls teac% a ris8.
ta8in, attit(de t%at is t&& c&nservative. -%is is &$ten re$lected) +e are t&ld) in st(dents c%&&sin, t&&
l&+ a si,ni$icance level0 s(c% a c%&ice reB(ires extre*e evidence t& *&ve &ne $r&* t%e stat(s B(&.
-%is case can be (sed t& ,enerate a disc(ssi&n &n t%is p&int as David c%&&ses ! .01 and ends (p
Kacceptin,K t%e n(ll %'p&t%esis t%at t%e *ean li$eti*e is 5000 %&(rs.
EliceLs p&int is valid0 t%e c&*pan' *a' be p(t in a bad p&siti&n i$ it insists &n ver' dra*atic
evidence be$&re aband&nin, t%e n&ti&n t%at its c&*p&nents last 5000 %&(rs. #n $act) t%e indi$$erence
4p.val(e5 is ab&(t .0375F at an' %i,%er level t%e n(ll %'p&t%esis &$ 5000 %&(rs is re<ected.
CASE 2-2: MR. TUX
#n t%is case) M&%n M&sb' tries s&*e pri*itive +a's &$ $&recastin, %is *&nt%l' sales. -%e
t%in,s %e tries *a8e s&*e s&rt &$ sense) at least $&r a $irst c(t) ,iven t%at %e %as %ad n& $&r*al
trainin, in $&recastin, *et%&ds. St(dents s%&(ld %ave n& tr&(ble $indin, $la+s in %is e$$&rts) s(c%
as0
1. -%e *ean val(e $&r eac% 'ear) i$ pr&<ected int& t%e $(t(re) is &$ little val(e since
*&nt%.t&.*&nt% variabilit' is *issin,.
N&t% t%e %and.$it re,ressi&n line and M&%nLs interest in dealin, +it% t%e *&nt%l' seas&nal
$act&r s(,,est tec%niB(es t& be st(died in later c%apters. 9is e$$&rts als& p&int &(t t%e val(e &$
learnin, ab&(t +ell.establis%ed $&r*al $&recastin, *et%&ds rat%er t%an rel'in, &n int(iti&n and ver'
si*ple *et%&ds in t%e absence &$ 8n&+led,e ab&(t $&recastin,. 6e %&pe st(dents +ill be,in t&
appreciate t%e val(e &$ $&r*al $&recastin, *et%&ds a$ter learnin, ab&(t M&%nLs initial e$$&rts.
CASE 2-3: ALOMEGA FOOD STORES
M(lieIs initial l&&8 at %er data (sin, re,ressi&n anal'sis is a ,&&d start. S%e $&(nd t%at t%e
r.sB(ared val(e &$ 3"1 is n&t ver' %i,%. Osin, *&re predict&r variables) al&n, +it% exa*inin,
t%eir si,ni$icance in t%e eB(ati&n) see*s li8e a ,&&d next step. -%e case s(,,ests t%at &t%er
tec%niB(es *a' pr&ve even *&re val(able) tec%niB(es t& be disc(ssed in t%e c%apters t%at $&ll&+.

Exa*inin, t%e resid(als &$ %er eB(ati&n *i,%t pr&ve (se$(l. Eb&(t %&+ lar,e are t%ese
err&rsP Ere $&recast err&rs in t%is ran,e acceptable t& %erP D& t%e resid(als see* t& re*ain in t%e
sa*e ran,e &ver ti*e) &r d& t%e' increase &ver ti*eP Ere a strin, &$ ne,ative resid(als $&ll&+ed
b' a strin, &$ p&sitive resid(als &r vice versaP -%ese B(esti&ns inv&lve a deeper (nderstandin, &$
$&recastin, (sin, %ist&rical val(es and t%ese *atters +ill be disc(ssed *&re $(ll' in later c%apters.
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