QAM

– II
Problem Set – 1
(Instructor: Gaurav Garg)

1) According to the U.S. department of Labour, private sector workers earned, on average, $354.32 a
week in 1991. A recently taken random sample of 400 private sector workers showed that they earn,
on average $362.50 a week with a standard deviation of $72. Find the p‐value for the test with an
alternative hypothesis that the current mean weekly salary of private sector workers is different from
$354.32. Give your conclusion at 5% level of significance.

2) The lottery commissioner's office in a state wanted to find if the percentage of men and women who
play the lottery often are different. A sample of 500 men showed that 165 of them play the lottery
often. Another sample of 300 women showed that 69 of them play the lottery often. Construct a 99%
confidence interval for the difference between the proportions of all men and women who play the
lottery often.

3) According to McKinsey Global Institute, the mean annual output per worker is $49,600 in the United
States. Assume that the mean output for all workers in the United States is $49,600 and its standard

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deviation is $7000. Let a and b be the sample means of two independent samples of 900 and 700
workers from United States. Find the mean and standard deviation of the sampling distributions of a,

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b and a ‐ b.

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4) A telephone company plans to ascertain the conditions of telephone poles in the region it services and
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the cost of their repair. There are altogether 10000 poles, a list of which is maintained by the company.
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From this list in a pilot survey, a simple random sample of 100 poles was selected without
replacement. Crews were sent out to examine the conditions of the poles selected, and to calculate the
cost of needed repairs. The results of the inspection were as follows: sample average repair cost = Rs.
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830; sample standard deviation of repair cost = Rs. 110. How many poles must be sampled if the
estimate of the total cost of repairing all telephone poles is to be within Rs. 100000 of the true total
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cost with probability 90%?

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5) Municipal board of a city wants to get the 15,000 faulty street lights of the city repaired. In order to get
the work done by a private contractor, it wishes to estimate the total expenditure. A pilot sample of
100 lights was collected which yielded an average repair cost of Rs. 1250 with a standard deviation of
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Rs. 250. What should be the appropriate sample size to obtain a reasonably good estimate of total
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expenditure within Rs. 250,000 of the true total cost with probability 90%?

6) A quality characteristic of interest for tea‐bag‐filling process is the weight of the tea in the individual
bags. If the bags are under filled, two problems arise. First, customers may not be able to brew the tea
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to be as strong as they wish. Second, the company may be in violation of the truth‐in‐labelling laws.
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For this product, the label weight on the package indicates that, on an average, there are 5.5 grams of
tea in a bag. If the mean amount of tea in a bag exceeds the label weight, the company is giving away
product. Getting an exact amount of tea in a bag is problematic because of variation in the temperature
and humidity inside the factory, differences in the density of the tea, and extremely fast filling
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operation of the machine (approximately 170 bags per minute). The data given below provide the
weight, in grams, of a sample of 50 tea bags produced in one hour by a single machine:
5.65 5.44 5.42 5.40 5.53 5.34 5.54 5.45 5.52 5.41
5.57 5.40 5.53 5.54 5.55 5.62 5.56 5.46 5.44 5.51
5.47 5.40 5.47 5.61 5.53 5.32 5.67 5.29 5.49 5.55
5.77 5.57 5.42 5.58 5.58 5.50 5.32 5.50 5.53 5.58
5.61 5.45 5.44 5.25 5.56 5.63 5.50 5.57 5.67 5.36
From this sample data, the management of the company is interested to ascertain that mean weight of
a tea bag is 5.5 grams. What decision rule should the analyst adopt if the company is willing to take 1%
risk of committing an error by concluding that mean weight of a tea bag is different from 5.5 grams
whereas actually it is 5.5 grams?

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 7) The Consumer Fraud Council claims that Skippy Foods does not put the required weight of peanut
butter in its 100 grams jar. In order to prove the claim the Council studied a sample of 25 jars and
found the average amount of peanut butter as 98 grams with a standard deviation of 4 grams. Using
the sample, can the Council prove their claim? Explain using the concept of Statistical Hypothesis.
Skippy Foods requests the Council to take a bigger sample and provides 25 more jars of 100 grams
peanut butter. Now the average amount of bigger sample is 99.5 grams with a standard deviation of 8
grams. Using this bigger sample, can the Council prove their claim? Explain the change in the
conclusions suggested by two samples.

8) ATMs must be stocked with enough cash to satisfy customers making withdrawals over an entire
weekend. But if too much cash is unnecessarily kept in the ATMs, the bank is forgoing the opportunity
to invest the money and earning interest. At a particular ATM in a colony, the average cash withdrawal
per customer over last 5 years during weekends is Rs. 1000 with a standard deviation of Rs. 1900. In
order to decide if there is any requirement to increase the cash stocked in the ATM, a sample of 130
customers is collected. Sample observations are summarized below:
Cash Withdrawal (Rs.) No. of Customers
0 – 500 5
500 – 1000 11

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1000 – 1500 12
1500 – 2000 15

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2000 – 3000 30
3000 – 4000 25

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4000 – 5000 rs e 20
5000 – 10000 12
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Sample Mean = 3025, Sample Standard Deviation= 1872.
Since standard deviation of above sample is very close to the standard deviation of the past 5 years’
population, it seems that the difference is because of sampling fluctuation only. So, we consider that
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population variance is still the same. Looking at the value of sample mean, it seems that average
withdrawal has become threefold. Using the concept of hypothesis testing, examine this claim. Sample
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is large enough to assume normality of the observations. Use 5% level of significance.

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9) Blue Ray Disk Players are getting popular. Tony Inc., a well‐known manufacturer of Blue Ray Disk
Players, claims that at least 5% upper middle class households in the metro cities of India have a Blue
Ray Disk Player. Audiocon Ltd., a manufacturer of DVD players, not manufacturing Blue Ray Disk
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Players, claims that DVD players are still very popular and there is no significant market for Blue Ray
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Disk Players. In order to disprove the claim of Tony Inc., officials at Audiocon Ltd. collected a sample
of 120 upper middle class households and found that only 5 households in the sample have Blue Ray
Disk Players. Using the sample and Prob {reject the claim of Tony Inc. given that it is true} = 0.05, can
the officials of Audiocon Ltd. prove the claim of Tony Inc. as wrong? Help them using the concept of p
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– value.
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10) One of the few negative effects of quitting smoking is weight gain. Suppose that the weight gain in the
12 months following a cessation in smoking is normally distributed with a standard deviation of 6
pounds. To estimate the mean weight gain a random sample of 13 quitters was taken and their gain in
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weights (in pounds) are listed here:

16 23 8 2 14 22 18 11 10 19 5 8 15
Determine the 90% confidence interval estimate of the mean 12‐months weight gain for all quitters.

11) In the last election a state representative received 52% of the votes cast. One year after the election
the representative organized a survey that asked a random sample of 300 people whether they would
vote for him in the next election. If we assume that his popularity has not changed, what is the
probability that more than half of the sample would vote for him?

12) A soft drink manufacturer is to decide about launching a new variety of soft drink. On the basis of his
past experience, he believed that at least 80% of the customers would like the new product. In order
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 to decide about the launching of the new product, the manufacturer collects the opinion of 400
customers selected by means of random sampling scheme. He further frames the decision rule of
rejecting the hypothesis of ≥ 0.8 in favour of the alternative < 0.8 if 308 or less customers favour
the new product. Thus, the new product would not be launched if on the basis of sample it is concluded
that < 0.8. Calculate the probability of concluding that less than 80% of the customers would like the
new product when actually 80% of the customers like the new product. Also, calculate the probability
of concluding that at least 80% of the customers would like the new product when actually 70% of the
customers like the new product.

13) A market research group wishes to estimate the average number of customers visiting a supermarket
per day in the month of December 2011. The group wants that its estimated value to be within 5% of
the actual value with a probability of 0.95. The earlier studies indicated that the coefficient of variation
of the number of customers visiting the supermarket in the given month was 24%. The cost of
collection of data is Rs. 125/‐ per day. Without ignoring finite population correction, calculate the cost
involved in estimating the required value. If the research group decides to settle for an estimate with
a probability of 0.90, how much reduction in cost can be achieved?

14) A pharmaceutical manufacturer is concerned that the impurity concentration in pills on an average

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does not exceed 3%. It is known from a particular run that impurity concentration follow normal
distribution with standard deviation of 0.4%. A random sample of 64 pills from a production run was

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checked and the sample mean impurity was found to be 3.07%. Help the manufacturer in testing the
appropriate hypotheses using p‐value approach. Obtain power of a 5% level test when true

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mean impurity concentration is actually 3.10%.
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15) Some quality control experiments require destructive sampling. The test to determine whether the
item is defective destroys the item. The cost of destructive sampling often dictates small samples. For
example, suppose a manufacturer of printers for personal computers wishes to estimate the mean
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number of characters printed before the print‐head fails. Suppose the printer manufacturer tests n =
15 randomly selected print‐heads and records the number of characters printed until failure for each.
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These 15 measurements (in millions of characters) are listed below followed by EXCEL summary
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statistics:


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Mean 1.2387
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Standard Error 0.0499

Median 1.25
Mode #N/A
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Standard Deviation 0.1932

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Sample Variance 0.0373

Kurtosis 0.0636
Skewness ‐0.4913
Range 0.7
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Minimum 0.85
Maximum 1.55
Sum 18.58
Count 15

Making the appropriate assumptions, form a 99% confidence interval for the mean number of
characters printed before the print‐head fails. If population standard deviation is known as 0.2, form
a 99% confidence interval for the mean number of characters printed before the print‐head fails.
Compare the width of the two confidence intervals.

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 16) A company services home air conditioners. It has been found that times for service calls follow a
normal distribution with mean 60 minutes and standard deviation 10 minutes. A random sample of 4
service calls was taken. What is the probability that the sample mean service time is more than 65
minutes? What is the probability that more than two calls in the sample take more than 65 minutes?

17) Suppose 40% Lucknowites have enjoyed Tunde’s Kebab at least once. If a random sample of size 300
is drawn from the population, what is the probability that 44% or fewer in the sample have enjoyed
Tunde’s Kebab at least once?

18) A carload of steel rods has arrived at Cybermatic Construction Company. The car contains 50,000 rods.
Claude Ong, manager of Quality Assurance, directs his crew measure the lengths of 100 randomly
selected rods. If the population of rods has a mean length of 120 inches and a standard deviation of
0.05 inch, what is the probability that Claude's sample has a mean between 119.985 and 120.0125
inches?

19) Albert Abbasi, VP of Operations at Ingleside International Bank, is evaluating the service level provided

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to walk‐in customers. Accordingly, he plans a sample of waiting times for walk‐in customers. If the

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population of waiting times has a mean of 15 minutes and a standard deviation of 4 minutes, what is

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the probability that Albert's sample of 64 will have a mean less than 14 minutes?

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20) Pinky Bauer, Chief Financial Officer of Harrison Haulers, Inc., suspects irregularities in the pay roll
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system. If 10% of the 5,000 payroll vouchers issued since January 1, 2000, have irregularities, what is
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the probability that Pinky's random sample of 200 vouchers will have a sample proportion of between
.06 and .14?

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21) Catherine Chao, Director of Marketing Research, needs a sample of Kansas City households to
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participate in the testing of a new toothpaste package. If 40% of the households in Kansas City prefer
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the new package, what is the probability that Catherine's random sample of 300 households will have
a sample proportion between 0.35 and 0.45?

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22) Brian Vanecek, VP of Operations at Portland Trust Bank, is evaluating the service level provided to
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walk‐in customers. Accordingly, his staff recorded the waiting times for 64 randomly selected walk‐in
customers and determined that their mean waiting time was 15 minutes. Assuming the population
standard deviation to be 4 minutes, construct 90% confidence interval for the population mean of
waiting times.
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23) Elwin Osbourne, CIO at GFS, Inc., is studying employee use of GFS e‐mail for non‐business
communications. A random sample of 200 e‐mail messages was selected. Thirty of the messages were
not business related. Construct 90% confidence interval for the population pro portion.
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24) Brian Vanecek, VP of Operations at Portland Trust Bank, is evaluating the service level provided to
walk‐in customers. Brian would like to minimize the variance of waiting time for these customers,
since this would mean each customer received the same level of service. Accordingly, his staff recorded
the waiting times for 15 randomly selected walk‐in customers, and determined that their mean
waiting time was 15 minutes and that the standard deviation was 4 minutes. Assuming normal
distribution, construct 95% confidence interval for the population variance of waiting times.

25) If X1, X2, …, Xn is a random sample from a N(μ, σ) population, write the distribution of following
statistics:

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 a.

∑
b. ∑
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c.

d.


26) A coin was tossed 400 times and the head turned up 216 times. Test at 5% level of significance that
the coin is unbiased.

27) A person throws 10 fair dice 500 times and obtains 2560 times 4, 5 or 6. Can this be attributed to
fluctuations of sampling?

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28) In a hospital 480 female and 520 male babies were born in a week. Does this figure confirm the
hypothesis that males and females are born in equal number?

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29) In a big city 325 men out of 600 men were found to be self‐employed. Does this information support

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the conclusion that the majority of men in this city are self‐employed?
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30) A machine puts out 16 imperfect articles in a sample of 500. After machine is overhauled, it puts out 3
imperfect articles in a batch of 100. Has the machine improved?

31) It is claimed that a random sample of 100 tires with a mean life of 15269kms is drawn from a
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population of tires which has a mean life of 15200 kms and a standard deviation of 1248 kms. Test the
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validity of the claim.

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32) A company producing light bulbs finds that mean life span of the population of bulbs is 1200 hrs with
a standard deviation of 125hrs. A sample of 100 bulbs produced in a lot is found to have a mean life
span of 1150hrs. Test whether the difference between the population and sample means is statistically
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significant at 5% level of significance.

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33) A manufacturing company produces bearings. One line of bearings is specified to be 1.64 cm in
diameter. A major customer requires that the variance of the bearings be no more than 0.001 cm
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square. The producer is required to test the bearings before they are shipped, and so the diameters of
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16 bearings are measured with a precise instrument, resulting in the following values:
1.69 1.62 1.63 1.70 1.66 1.63 1.65 1.71 1.64 1.69 1.57 1.64
1.59 1.66 1.63 1.65
Assume bearing diameters are normally distributed. Use the data and α=0.01 to test the data to
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determine whether the population of these bearings is to be rejected because of too high variance.









34) A small business has 37 employees. Because of the uncertain demand for its product, the company
usually pays overtime on any given week. The company assumed that about 50 total hours of overtime
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 per week is required and that the variance on this figure is about 25. Company officials want to know
whether the variance of overtime hours has changed. Given here is a sample of 16 weeks of overtime
data (in hours per week). Assuming hours of overtime are normally distributed, can you help company
officials?
57 56 52 44 46 53 44 44 48 51 55 48
63 53 51 50

35) A political researcher wants to prove that a candidate is currently carrying more than 60% of the vote
in the state. She has her assistants randomly sample 200 eligible voters in the state by telephone and
only 90 declare that they support her candidate. Help the researcher in making conclusions.

36) The diameter of 3.5 inch diskettes is normally distributed. Periodically, quality control inspectors at
Dallas Diskettes randomly select a sample of 16 diskettes. If the mean diameter of the diskettes is too
large or too small the diskette punch is shut down for adjustment; otherwise, the punching process
continues. The last sample showed a mean and standard deviation of 3.55 and 0.08 inches,
respectively. Using α = 0.05, make the appropriate decision.

37) The executives of XYZ Insurance, Inc. feel that "a majority of our employees perceive a participatory

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management style at XYZ." A random sample of 200 XYZ employees is selected to test this hypothesis
at the 0.05 level of significance. Eighty employees rate the management as participatory. What is the

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appropriate decision?

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38) ABC Components, Inc. manufactures a line of electrical resistors. Presently, the carbon composition
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line is producing 100 ohm resistors. The population variance of these resistors "must not exceed 4"
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to conform to industry standards. Periodically, the quality control inspectors check for conformity by
randomly select 10 resistors from the line, and calculating the sample variance. The last sample had a
variance of 4.36. Assume that the population is normally distributed. Using α = 0.05, make the
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appropriate decision.

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39) David D., VP of Human Resources of American First Banks (AFB), is reviewing the employee training
programs of AFB banks. Based on a recent census of personnel, David knows that the variance of teller
training time in the Southeast region is 8, and he wonders if the variance in the Southwest region is
the same number. His staff randomly selected personnel files for 15 tellers in the Southwest Region,
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and determined that their mean training time was 25 hours and that the standard deviation was 4
hours. Assume that teller training time is normally distributed in the population. Using α = 0.10, help
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David to make the appropriate decision.

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