Exercises: chapter 1-3

1. Over a nine-month period, OutdoorgearLab tested hardshell jackets designed for ice
climbing, mountaineering, and backpacking. Based on the breathability, durability,
versatility, features, mobility, and weight of each jacket, an overall rating ranging from
0 (lowest) to 100 (highest) was assigned to each jacket tested. The following data show
the results for 20 top-of-the-line jackets (OutdoorgearLab website, February 27, 2013).
42 66 67 71 78 62 61 76 71 67
61 64 61 54 83 63 68 69 81 53

a. Compute the mean, median, and mode.

b. Compute the first and third quartiles.
c. Compute and interpret the 90th percentile.
2. Approximately 1.5 million high school students take the SAT each year and nearly
80% of the college and universities without open admissions policies use SAT scores in
making admission decisions (College board, March 2009). The current version of the
SAT includes three parts: reading comprehension, mathematics, and writing. A perfect
combined score for all three parts is 2400. A sample of SAT scores for the combined
three-part SAT are as follows:
1665 1490 1680 1420 1485 1585
1275 1525 1560 1440 1755 1990
1650 2135 1355 940 1260 1375
1590 1560 1280 1645 1390 1730
1475 1880 1150 1060 1780 1175

a. Show a frequency distribution and histogram, begin with the first class starting
at 800 and use a class width of 200.
b. Show the relative frequency distribution and the cumulative percent frequency
distribution.
c. Comment on the shape of the distribution.
d. What other observations can be made about the SAT scores based on the tabular
and graphical summaries?
e. Compute the mean, median, and mode from raw data.
f. Compute the mean, median, and mode from frequency distribution.
g. Compare the results from (e) and (f).
3. Martinez Auto Supplies has retail stores located in eight cities in California. The price
they charge for a particular product in each city varies because of differing competitive
conditions. For instance, the price they charge for a case of a popular brand of motor oil
in each city follows. Also shown are the number of cases that Martinez Auto sold last
quarter in each city.
 City Price ($) Sales (cases)
Bakersfield 34.99 501
Los Angeles 38.99 1425
Modesto 36.00 294
Oakland 33.59 882
Sacramento 40.99 715
San Diego 38.59 1088
San Francisco 39.59 1644
San Jose 37.99 819

Compute the average sales price per case for this product during the last quarter
4. The following times were recorded by the quarter-mile and mile runners of a
university track team (times are in minutes).
Quarter-Mile times 0.92 0.98 1.04 0.90 0.99
Mile times 4.52 4.35 4.60 4.70 4.50

After viewing this sample of running times, one of the coaches commented that the
quartermilers turned in the more consistent times. Use the standard deviation and the
coefficient of variation to summarize the variability in the data. Does the use of the
coefficient of variation indicate that the coach’s statement should be qualified?
5. The National Association of Realtors reported the median home price in the United
States and the increase in median home price over a five-year period (The Wall Street
Journal, January 16, 2006). Use the sample home prices shown here to answer the
following questions.
995.9 48.8 175.0 263.5 298.0 218.0 209.0
628.3 111.0 212.9 92.6 2325.0 958.0 212.5

a. What is the sample median home price?

b. In January 2001, the National Association of Realtors reported the median home
price of $139.300 in the United States. What was the percentage increase in the
median home price over the five-year period?
c. What are the first quartile and the third quartile for the sample data?
d. Show the boxplot for the data.
e. Do the data contain any outliers?
f. What is the mean home price for the sample? Why does the National Association
of Realtors prefer to use the median home price in its reports?
 Exercises: Chapter 4
1. The 92 million Americans of age 50 and over control 50 percent of all discretionary
income. AARP estimates that the average annual expenditure on restaurants and
carryout food was $1873 for individuals in this age group. Suppose this estimate is based
on a sample of 80 persons and that the sample standard deviation is $550.
a. At 95% confidence, what is the margin of error?
b. What is the 95% confidence interval for the population mean amount spent on
restaurants and carryout food?
c. What is your estimate of the total amount spent by Americans of age 50 and over
on restaurants and carryout food?
d. If the amount spent on restaurants and carryout food is skewed to the right, would
you expect the median amount spent to be greater or less than $1873?
2. A survey of 750 likely voters in Ohio was conducted by the Rasmussen Poll just prior
to the general election. The state of the economy was thought to be an important
determinant of how people would vote. Among other things, the survey found that 165
of the respondents rated the economy as good or excellent and 315 rated the economy
as poor.
a. Develop a point estimate of the proportion of likely voters in Ohio who rated the
economy as good or excellent.
b. Construct a 95% confidence interval for the proportion of likely voters in Ohio
who rated the economy as good or excellent.
c. Construct a 95% confidence interval for the proportion of likely voters in Ohio
who rated the economy as poor.
d. Which of the confidence intervals in parts (b) and (c) is wider? Why?
3. Although airline schedules and cost are important factors for business travelers when
choosing an airline carrier, a USA today survey found that business travelers list an
airline’s frequent flyer program as the most important factor. From a sample of n = 1993
business travelers who responded to the survey, 618 listed a frequent flyer program as
the most important factor.
a. What is the point estimate of the proportion of the population of business
travelers who believe a frequent flyer program is the most important factor when
choosing an airline carrier?
b. Develop a 95% confidence interval estimate of the population proportion.
c. How large a sample would be required to report the margin of error of .01 at 95%
confidence? Would you recommend that USA today attempt to provide this
degree of precision? Why or why not?
4. Members of the millennial generation are continuing to be dependent on their parents
(either living with or otherwise receiving support from parents) into early adulthood (the
Enquirer, March 16, 2014). A family research organization has claimed that, in past
generations, no more than 30% of individuals aged 18 to 32 continued to be dependent
on their parents. Suppose that a sample of 400 individuals aged 18 to 32 showed that
136 of them continue to be dependent on their parents.
a. Develop hypotheses for a test to determine whether the proportion of millennials
continuing to be dependent on their parents is higher than for past generations.
b. What is your point estimate of the proportion of millennials that are continuing
to be dependent on their parents?
c. What is the p-value provided by the sample data?
d. What is your hypothesis testing conclusion? use a =.05 as the level of
significance.
5. In Hamilton county, Ohio, the mean number of days needed to sell a house is 86 days
(Cincinnati Multiple Listing Service, April, 2012). Data for the sale of 40 houses in a
nearby county showed a sample mean of 80 days with a sample standard deviation of
20 days. Conduct a hypothesis test to determine whether the mean number of days until
a house is sold is different than the Hamilton county mean of 86 days in the nearby
county. use a = .05 for the level of significance, and state your conclusion.
6. At Western University the historical mean of scholarship examination scores for
freshman applications is 900. A historical population standard deviation s = 180 is
assumed known. each year, the assistant dean uses a sample of applications to determine
whether the mean examination score for the new freshman applications has changed.
a. State the hypotheses.
b. What is the 95% confidence interval estimate of the population mean
examination score if a sample of 200 applications provided a sample mean x =
935?
c. Use the confidence interval to conduct a hypothesis test. using a = .05, what is
your conclusion?
d. What is the p-value?
 Exercise: Chapter 5

1. In a manufacturing process the assembly line speed (feet per minute) was thought to
affect the number of defective parts found during the inspection process. To test this
theory, managers devised a situation in which the same batch of parts was inspected
visually at a variety of line speeds. They collected the following data.
Line speed Number of Defective
Parts Found
20 21
20 19
40 15
30 16
60 14
40 17
a. Develop the estimated regression equation that relates line speed to the number
of defective parts found.
b. Provide an interpretation for the slope and y-intercept of the estimated regression
equation.
c. Use the estimated regression equation to predict number of defective
parts found for a line speed of 35 feet per minute.
d. Develop a 95% confidence interval for the slope of regression model.
e. At a 0.05 level of significance, determine whether line speed and number of
defective parts found are related.
f. Did the estimated regression equation provide a good fit to the data? Explain
g. Test for a significant relationship using the F test. What is your conclusion? Use
a 0.05 level of significance.
h. Develop a 95% confidence interval to predict the mean number of defective parts
for a line speed of 50 feet per minute
2. Is the number of square feet of living space a good predictor of a house’s selling price?
The following data show the square footage and selling price for fifteen houses in
Winston Salem, North Carolina (Zillow.com, April 5, 2015).
Size (1000's sq. ft.) Selling Price ($1,000s)
1.26 117.5
3.02 299.9
1.99 139.0
0.91 45.6
1.87 129.9
2.63 274.9
2.60 259.9
2.27 177.0
2.30 175.0
 2.08 189.9
1.12 95.0
1.38 82.1
1.80 169.0
1.57 96.5
1.45 114.9
a. Develop a scatter diagram with square feet of living space as the independent
variable and selling price as the dependent variable. what does the scatter
diagram indicate about the relationship between the size of a house and the
selling price?
b. Develop the estimated regression equation that could be used to predict the
selling price given the number of square feet of living space.
c. At the .05 level, is there a significant relationship between the two variables?
d. Use the estimated regression equation to predict the selling price of a 2000 square
foot house in winston Salem, North Carolina.
e. Do you believe the estimated regression equation developed in part (b) will
provide a good prediction of selling price of a particular house in winston Salem,
North Carolina? Explain.
f. Would you be comfortable using the estimated regression equation developed in
part (b) to predict the selling price of a particular house in Seattle, washington?
why or why not?
3. One of the biggest changes in higher education in recent years has been the growth of
online universities. The Online Education Database is an independent organization
whose mission is to build a comprehensive list of the top accredited online colleges. The
following table shows the retention rate (%) and the graduation rate (%) for 29 online
colleges.
College RR (%) GR (%)
Western International University 7 25
South University 51 25
University of Phoenix 4 28
American InterContinental University 29 32
Franklin University 33 33
Devry University 47 33
Tiffin University 63 34
Post University 45 36
Peirce College 60 36
Everest University 62 36
Upper Iowa University 67 36
Dickinson State University 65 37
Western Governors University 78 37
Kaplan University 75 38
Salem International University 54 39
 Ashford University 45 41
ITT Technical Institute 38 44
Berkeley College 51 45
Grand Canyon University 69 46
Nova Southeastern University 60 47
Westwood College 37 48
Everglades University 63 50
Liberty University 73 51
LeTourneau University 78 52
Rasmussen College 48 53
Keiser University 95 55
Herzing College 68 56
National University 100 57
Florida National College 100 61
a. Develop a scatter diagram with retention rate as the independent variable. what
does the scatter diagram indicate about the relationship between the two
variables?
b. Develop the estimated regression equation.
c. Test for a significant relationship. Use a = .05.
d. Did the estimated regression equation provide a good fit?
e. Suppose you were the president of South University. After reviewing the results,
would you have any concerns about the performance of your university as
compared to other online universities?
f. Suppose you were the president of the University of Phoenix. After reviewing
the results, would you have any concerns about the performance of your
university as compared to other online universities?
 Exercises: Chapter 6
1. The Costello Music company has been in business for five years. During that time,
sales of pianos increased from 12 units in the first year to 76 units in the most recent
year. Fred costello, the firm’s owner, wants to develop a forecast of piano sales for the
coming year. The historical data follow.
Year 1 2 3 4 5
Sales 12 28 34 50 76
a. Construct a time series plot. What type of pattern exists in the data?
b. Develop the linear trend equation for the time series. What is the average increase
in sales that the firm has been realizing per year?
c. Forecast sales for years 6 and 7.
2. Consider the Costello Music company problem in exercise 1. The quarterly sales data
follow.
Year Quarter Sales
1 1 4
2 2
3 1
4 5
2 1 6
2 4
3 4
4 14
3 1 10
2 3
3 5
4 16
4 1 12
2 9
3 7
4 22
5 1 18
2 10
3 13
4 35
a. Using time series decomposition, compute the seasonal indexes for the four
quarters.
b. When does Costello Music experience the largest seasonal effect? Does this
result appear reasonable? Explain.
3. Refer to the Costello Music company time series in exercise 2.
 a. Deseasonalize the data and use the deseasonalized time series to identify the
trend.
b. Use the results of part (a) to develop a quarterly forecast for next year based on
trend.
c. Use the seasonal indexes developed in exercise 50 to adjust the forecasts
developed in part (b) to account for the effect of season.
4. The weekly demand (in cases) for a particular brand of automatic dishwasher
detergent for a chain of grocery stores located in Columbus, Ohio, follows
Week Demand
1 22
2 18
3 23
4 21
5 17
6 24
7 20
8 19
9 18
10 21

a. Construct a time series plot. What type of pattern exists in the data?
b. Use a three-week moving average to develop a forecast for week 11.
c. Use exponential smoothing with a smoothing constant of α = .2 to develop a
forecast for week 11.
d. Which of the two methods do you prefer? Why?
 Exercises: Chapter 7
1. Nickerson Manufacturing Company has the following data on quantities shipped and
unit costs for each of its four products.
Products Base-Period Mean Shipping Cost per Unit ($)
Quantities (2005) Year 1 Year 5
A 2000 10.50 15.90
B 5000 16.25 32.00
C 6500 12.20 17.40
D 2500 20.00 35.50
a. Compute the price relative for each product.
b. Compute a weighted aggregate price index that reflects the shipping cost change
over the four-year period.
c. Compute a Paasche index for the shipping cost if Year 5 quantities are 4000,
3000, 7500, and 3000 for each of the four products.
2. Actuaries are analysts who specialize in the mathematics of risk. Actuaries often work
for insurance companies and are responsible for setting premiums for insurance policies.
Below are the median salaries for actuaries for four years. The CPI for each of the years
is also given (U.S. Census Bureau). Use the CPI to deflate the salary data to constant
dollars. Comment on the salary when viewed in constant dollars.
Year Annual Median Salary ($1000) CPI (%)
1 84,810 215.3
2 87,210 214.5
3 87,650 218.1
4 91,060 224.9