Final Exam (Take Home) Spring - 2020

Subject: Statistical Inference for Managers Submission Day: Tuesday

Instructor: Dr. Syed M Fahad Riaz Submission Date: 16-06-2020
Program: MBA Max. Marks: 40

Department of Business Administration

Please follow the instructions carefully:

1. Write your answers in a Word file and upload the file before the due date on VLE.
2. Name your Word file in the following format:
(StudentID_Student’sName_Coursename_Instructor’sname_ Spring2020.docx)
3. Use 12 pt. font size and Times New Roman font style along with 1-inch page margins.
4. Follow the requirements of the word limit and the marking criteria while writing your
answers.
5. Provide relevant, original and conceptual answers, as this exam aims to test your ability
to examine, explain, modify or develop concepts discussed in class.
6. Do not copy answers from the internet or other sources. The plagiarism of your answers
will be checked through Turnitin software.
7. Recheck your answers before the submission on VLE to correct any content or language
related errors.

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 Rubrics

S.No Criteria Marks %

1 Answer is complete and correct; all parts of the question are addressed. 100

Student gives a partially correct answer, or task is incomplete (i.e., one of two parts
2 50
answered correctly.

3 Does not address task, unresponsive, unrelated or inappropriate. 0

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Question Number 01 [04 Marks]

Consider the rates of children (under 18 years of age) living in New York with grandparents as
their primary caretakers. A sample of 13 New York counties yielded the following percentages of
children under 18 living with grandparents.

5.9 4.0 5.7 5.1 4.1 4.4 6.5 4.4 5.8 5.1 6.1 4.5 4.9

a) Obtain and interpret the quartiles.

b) Determine and interpret the interquartile range.
c) Find and interpret the five-number summary.

Question Number 02 [04 Marks]

a) Given the cumulative distribution function of the random variable X is,

0 𝑥<1
0.25 1≤𝑥<3
𝐹(𝑥) = 0.5 3≤𝑥<5
0.75 5≤𝑥<7
{ 1 𝑥≥7
Find

i) P(X=3)
ii) P(X>5)
iii) P(1.25<X<6.1)

b) Measurements of scientific systems are always subject to variation, some more than others.
There are many structures for measurement error, and statisticians spend a great deal of time
modelling these errors. Suppose the measurement error X of a certain physical quantity is
decided by the density function
2)
𝑓(𝑥) = {𝑘(3 − 𝑥 −1 < 𝑥 < 1
0 𝑒𝑙𝑠𝑒𝑤ℎ𝑒𝑟𝑒
i) Determine k that renders f(x) a valid density function.
ii) Find the probability that a random error in measurement is more than 0.3.

Question Number 03 [04 Marks]

a) The density function of coded measurements of the pitch diameter of threads of a fitting is

4
0<𝑥<1
𝑓(𝑥) = {𝜋(1 + 𝑥 2 )
0 𝑒𝑙𝑠𝑒𝑤ℎ𝑒𝑟𝑒
Find the expected value of X.

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b) A large industrial firm purchases several new word processors at the end of each year, the
exact number depending on the frequency of repairs in the previous year. Suppose that the
number of word processors, X, purchased each year has the following probability distribution:
X 1 2 3 4
f(x) 0.3 0.2 0.1 0.4

If the cost of the desired model is PKR 14500/= per unit and at the end of the year a refund of
32𝑋 2 rupees will be issued, how much can this firm expect to spend on new word processors
during this year?

c) Consider the density function:

6𝑥(1 − 𝑥) 0<𝑥<1
𝑓(𝑥) = {
0 𝑒𝑙𝑠𝑒𝑤ℎ𝑒𝑟𝑒
i) Find 𝜇 and 𝜎.
ii) Compute 𝑃(𝜇 − 𝜎 < 𝑋 < 𝜇 + 𝜎)

Question Number 04 [04 Marks]

a) A certain machine produces bulbs and were examined for the number of defectives in a sample
of 14. The following table shows the distribution the number of defective items contained in
139 samples:

Number of Defectives in a Sample of 14 Number of Samples

0 7

1 8

2 20

3 21

4 35

5 30

6 12

7 1

8 5
i) Fit a binomial distribution and find the expected frequencies if the chance of machine being
defective is 0.5
ii) Find the probability of that number of defectives are at least 3.
iii) Find the mean and standard deviation of the number of defectives.
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b) A new automated production process has an average of 1.5 breakdowns per day. Because of
the cost associated with a breakdown, management is concerned about the possibility of
having three or more breakdowns during a day. Assume that breakdowns occur randomly, that
the probability of a breakdown is the same for any two time intervals of equal length, and that
breakdowns in one period are independent of breakdowns in other periods. What is the
probability of having three or more breakdowns during a day?

Question Number 05 [04 Marks]

a) The amount of time required for routine automobile transmission service is normally
distributed with the mean 35 min and the standard deviation 7.5 min. The service manager
plans to have work begin on the transmission of a customer’s car 10 min after the car is
dropped off, and the customer is told that the car will be ready within 1 hr total time. What is
the probability that the service manager will be wrong? Illustrate the proportion of area under
the normal curve which is relevant in this case.

b) A contractor claims that the cost of building a farm house is a normally distributed random
variable with a mean of $500,000 and a standard deviation of $50,000.
i) What is the probability that the cost of building a home will be between $460,000 and
$540,000?
ii) The probability is 0.2 that the cost of building will be less than what amount?

Question Number 06 [04 Marks]

a) Assume that for the population of MBA (Supply Chain Management), the average starting
salary is PKR 72,000/= and the standard deviation of PKR 20,000/=. What is the probability
that a simple random sample of MBA (Supply Chain Management) will have a sample mean
within PKR 68,000/= and PKR 74,000/= when sample is (i) n=50 and (ii) n=100. Conclude
your result.
b) From 1200 accounts receivable, an auditor randomly draws simple random sample of size 40.
The population mean of the accounts receivable $362, with the population standard deviation
of $50. What is the probability that the sample mean will be less than $350.00?

Question Number 07 [04 Marks]

a) During a laboratory analysis of human blood composition, tests are repeated and are known
to be normally distributed. Fifteen tests on a given sample of blood yielded the following
values

1.003 1.01 1.03 1.045 1.006

1.024 1.019 1.009 1.014 1.021

1.031 1.08 1.058 1.012 1.001

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 Calculate the 98% confidence interval for true composition of the blood in repeated tests of
the sample.

b) Data on investments in the high-tech industry by venture capitalists are compiled by

VentureOne Corporation. A random sample of 16 venture capital investments in the fiber
optics business sector yielded the following data, in millions of dollars.

5.60 6.27 5.96 10.51 2.04 5.48 5.74 5.58

8.63 5.95 6.67 4.21 7.71 9.21 4.98 8.64

Determine a 99% confidence interval for the mean amount, μ, of all venture-capital
investments in the fiber optics business sector. Assume that the population standard
deviation is $1.98 million.

Question Number 08 [04 Marks]

a) A famous welfare association in Karachi claims that it takes 9 minutes on average to reach its
destination in emergency situations. To test this claim, the agency which licences ambulance
services had them timed on 50 emergency calls, getting a mean of 10.4 minutes with a standard
deviation of 2 minutes. At the 5% significance level test the claim that the average time the
ambulance takes to reach its destination is 9 minutes.

b) It is believed in a renowned courier service that packages delivered at the beginning of the
month are lighter than those delivered at the end of the month. As an experiment a random
sample of 15 packages are weighed at the beginning of the month and it is found that mean
weight was 6.25 kgs with a standard deviation of 1.18 kgs. A random sample of 12 packages
have also been weighed at end of the month and it is found that mean weight was 4.86 kgs
with a standard deviation of 1.14 kgs. At the 99% level of significance, test the claim that
packages at the beginning of the month are lighter.

c) A developer is considering two alternative sites for a regional shopping center. Since
household income in the community is one important consideration in such site selection, the
developer wishes to test the null hypothesis that there is no difference between the mean
household income amounts in the two communities. Consistent with this hypothesis, it is
assumed that the standard deviation of household income is also the same in the two
communities. For a sample of 29 households in the first community, the average annual
income is $44,500 with the sample standard deviation $1,700. For a sample of 40 households
in the second community, average annual income is $43,200 and standard deviation is $2,250.
Test the null hypothesis at the 5 percent level of significance.

Question Number 09 [04 Marks]

Based on the specifications provided by the process designer, the standard deviation of casting
diameters is hypothesized to be no larger than 3.0mm. For a sample of 12 castings, the sample
standard deviation is 4.2 mm. The distribution of the diameters is assumed to be approximately
normal. Can the null hypothesis that the true standard deviation is no larger than 3.0 mm be rejected
at the 5 percent level of significance?

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Question Number 10 [04 Marks]

A small detergent company in Karachi is confident that their sales are growing significantly week
by week. Treating sales for the previous eight weeks as a typical example of this increasing trend,
they recorded them in PKR 1000’s and examined the results.

Week 1 2 3 4 5 6 7 8

Sales (in 2.59 2.55 2.63 2.68 2.74 2.83 2.86 2.99
PKR)

a) Plot a scatter diagram between week and sales.

b) Find the equation of regression line.
c) Find the expected sales for 12th week.
d) Find the correlation coefficient between the two variables.

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