Problem Sheet – II

1. A candy company fills a 20-ounce package of Halloween candy with

individually wrapped pieces of candy. The number of pieces of candy per
package varies because the package is sold by weight. The company wants to
estimate the number of pieces per package. A random sample of 120 packages
of this candy was inspected and number of pieces in each package was
counted. Mean number of pieces in the sample was found to be 18.72.
Assuming a population standard deviation of 0.8735, construct 99%
confidence interval to estimate the mean number of pieces per package for the
population.
[ 18.52, 18.92 ]
2. A community health association is interested in estimating the average
number of maternity days women stay in the local hospital. A random sample
of 36 women is taken who had babies in the hospital during the past year. The
number of maternity days each woman stayed in the hospital is rounded to the
nearest integer and same are given below.

3, 3, 4, 3, 2, 5, 3 , 1, 4, 3, 4, 2, 3, 5, 3, 2, 4, 3, 2, 4, 1, 6, 3, 4, 3,
3, 5, 2, 3, 2, 3, 5, 4, 3, 5, 4

Assuming a population standard deviation of 1.17, construct 98% confidence

interval to estimate the average number of days of stay in the hospital for all
women who have babies in the hospital.
[2.86, 3.76]

3. A clothing company produces men’s jeans. The jeans are made and sold with
either a regular cut or a boot cut. In an effort to estimate the proportion of
their men’s jeans market in a city that prefers boot-out jeans, the analyst takes
a random sample of 212 jeans sales from the company’s two retail outlets.
Only 34 of the sales were for boot-out jeans. Construct a 90% confidence
interval to estimate the proportion of the population in the city who preferred
boot-out jeans.
[0.104, 0.217]

4. Suppose a survey of 275 executives is taken in an effort to determine what

qualities are most important for an CEO to possess. The survey participants
are suggested several qualities as options, one of which is “communication”.
One hundred twenty-one of the surveyed respondents select “communication”
as the most important quality for an effective CEO. Construct a 98%
confidence interval to estimate the population proportion of executives who
believe that “communication” is the most important quality of an effective
CEO.
[ 0.37, 0.51 ]
5. For planning the market opportunity and production levels, market size needs
to be estimated. Suppose a diaper manufacturer wants to know how many
Contd. . . . 2
 -2-

diapers a 1-month old baby used during a 24-hour period. To determine this
usage, the manufacturer’s analyst randomly selects 17 parents of 1-month-olds
and asks them to keep track of diaper usage for 24 hours. The results are given
below.

12, 8, 11, 9, 13, 14, 10, 10, 9, 13, 11, 8, 11, 15, 10, 7, 12

Assuming diaper usage is normally distributed, construct a 99% confidence

interval to estimate the average daily diaper usage of a 1-month-old baby.
Also, compute 99% confidence interval to estimate the population variance
for the number of diapers used during a 24-hour period for 1-month-olds.
How could information about the population variance be used by a
manufacturer or marketer in planning?
[9.19 ≤ μ ≤ 12.34; 2.31 ≤ σ2 ≤ 15.38]

6. An entrepreneur wants to open an appliance service repair shop. She would

like to know what the average home repair bill is, including the charge for the
service call for the appliance repair. She wants the estimate to be within $20
of the actual figure. She believes the range of such bills is between $30 and
$600. How large a sample should the entrepreneur take if she wants to be 95%
confident of the results?
[ 195 ]
7. Is the environment a major issue with Indians? To answer this question, a
researcher conducts a survey of 1,255 randomly selected Indians. Suppose 714
of the sampled people replied that the environment is a major issue with them.
Construct 99% confidence interval to estimate the proportion of Indians who
feel that the environment is a major issue with them.

[0.533, 0.605]
8. A sociologist has been asked to determine the proportion of all restaurants in
the state of Maharashtra that serve alcoholic beverages. She wishes to be 98%
confident of her results but has no idea of what the actual proportion is. How
large a sample she should take if she would like to report an error of no more
than 0.05?
[543]
9. A random sample of 50 stocks traded on the New York Stock Exchange
(NYSE) had a mean price of $57.42 and sample standard deviation was $6.28.
Construct a 90% confidence interval estimate of the mean price of all stocks
traded on NYSE.
[$55.96, $58.88]
10. An advertising thinks that the proportion of consumers who have seen his
Company’s advertising in newspapers is somewhere between 0.65 – 0.85. The
executive wants to estimate the consumer population proportion to be within ±
0.05 and have 95% confidence in the estimate. How large a sample should he
take? [ 350 ]
Contd. . . . 3
 -3-

11. Suppose you intend to estimate the average age of all Boeing 727 aircrafts
now in active domestic U.S. service. You wish to be 95% confident and want
your estimate to be within two years of the actual figure. The 727 was first
placed in service about 30 years ago, but you believe that no active 727s in the
U.S. domestic fleet is more than 25 years old. How large a sample should be
taken?
[ 38 ]

12. The proportion of all consumers favouring a new product might be as low as
0.20 or as high as 0.60. A random sample is to be used to estimate the
proportion of consumers who favour the product to within ± 0.05, with a
confidence coefficient of 0.90. How large the sample should be taken?
[ 260 ]

13. The owner of a restaurant that serves continental food wants to study
characteristics of her customers. She decides to focus on two variables: the
amount of money spent by customers and whether customers order dessert.
The mean and standard deviation of amount spent for a simple random sample
of 16 customers is found to be Rs 500 and Rs 20 respectively.

(a) Construct a 98% confidence interval estimate of the population mean

amount spent per customer in the restaurant. [ 486.56, 513.44 ]
(b) Based on past experience, the owner of restaurant believes that 80% of
customers order for dessert. If on a day 225 customers visit the restaurant,
what is the probability that at least 84% of them would order for dessert.
[ 0.0778 ]
The owner of a competing restaurant wants to conduct a similar survey in his
restaurant. He however does not have access to the information available with
the owner of the first restaurant.

(c) How large a sample is needed to have 90% confidence of estimating the
population mean amount spent in his restaurant to be within ± Rs 15,
assuming that population standard deviation is Rs 45? [ 25 ]
(d) How large a sample is needed to have 90% confidence of estimating the
population proportion of customers who order for dessert to within ± 0.04?
[ 423 ]

14. In segmenting the breakfast cereal market, a food manufacturer uses health and
diet consciousness as the segmentation variable. Following four segments are
developed:
1. Concerned about eating healthy foods
2. Concerned primarily about weight
3. Concerned about health because of illness, and,
4. Unconcerned.
Contd. . . . 4.
 -4-

To distinguish between groups, surveys are connected. On the basis of a

questionnaire, people are categorized as belonging to one of these groups. A
recent survey asked a random sample of 1,250 Indian adults (20 and over) from a
metro city to complete the questionnaire. The sample included 269 Indians who
belonged to category “1”. A most recent census revealed that there are
207,347,000 Indians in the metro who are 20 and over.

Estimate with 95% confidence, the range of the number of Indian adults who are
concerned about eating healthy foods.
[38,877,57 - 50,364,586]

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