THE OPEN UNIVERSITY OF SRI LANKA

BACHELOR OF MANAGEMENT STUDIES DEGREE PROGRAMME – LEVEL 05

FINAL EXAMINATION – 2018
QUANTITATIVE TECHNIQUES FOR MANAGEMENT II – MCU 3209
DURATION THREE (03) HOURS

DATE: TIME:

Answer 5 questions only.

Non programmable calculators are allowed.

Question 1
a. Describe the characteristics of binomial distribution and provide an example of a variable
you find binomially distributed. (5 marks)

b. Describe the characteristics of poisson distribution and provide 3 examples of variables you
find poisson distributed. (5 marks)

c. The number of traffic accidents that occur on a particular stretch of road during a month
follows a Poisson distribution with a mean of 4. Find the probability of observing less than
three accidents on this stretch of road next month. (5 marks)

d. An examination consists of 5 multi-choice questions, in each of which a candidate has to

deduce which one of four suggested answers is correct. A completely unprepared student
may be assumed to guess each answer completely randomly. What is the probability that this
student gets 3 or more questions correct? (5 marks)

(Total 20 Marks)

Question 2

a. Describe characteristics of normal distribution and normal distribution curve and provide 2
examples of variables you find normally distributed. (5 marks)
b. The management of a restaurant has been studying whether or not new customers return
within a month. The collected data reveal that 70% of the new customers have returned. If 50
new customers dine at this restaurant this month, what is the probability that at least 40 will
return next month? Use Normal approximation to Binomial distribution. (5 marks)

c. Home loan applications are normally distributed with a mean Rs. 1,500,000 and a standard
deviation of Rs 500,000 at a bank. The bank policy requires that applications involving loan

1
 amounts more than Rs. 1,000,000 should be submitted to a director in charge. What is the
proportion of home loan requests are submitted to this director? (5 marks)
d. The annual number of earthquakes registering at least 2.5 on the Richter Scale and having an
epicenter within 40 miles of a country follows a Poisson distribution with mean 6.5. What is
the probability that at least 9 such earthquakes will strike next year? Use Normal
approximation to Poisson distribution. (5 marks)

(Total 20 Marks)

Question 3
a. Using suitable illustrations, describe the following terms:

i. Simple Random Sampling (2 marks)

i. Stratified Sampling (2 marks)
ii. Multistage Sampling (2 marks)
iii. Quota Sampling (2 marks)
iv. Systematic Sampling (2 marks)

b. The operations manager of a large production plant thinks that the mean amount of time a
worker takes to assemble a new electronic component is 15 minutes. Assume that the
standard deviation of this assembly time is 3.6 minutes. After observing 120 workers
assembling similar devices, the manager noticed that their average time was 16.2 minutes.

i. Is this a sufficient evidence to indicate that the true mean assemble time has increased? Use
5% significant level.

ii. Develop a 99% confidence interval to estimate the mean assemble time of the workers.
(10 marks)

(Total 20 marks)
Question 4

A milk producers union wishes to test whether the preference pattern of consumers for its
product types (A, B, C) is dependent on the place where they stay (whether urban, semi urban or
rural). A random sample of 500 individuals were considered to collect data.

Product types
Place of stay Total
A B C
Rural 170 30 80 280
Semi urban 50 25 60 135
Urban 20 10 55 85
Total 240 65 195 500

2
Can we infer at 5% significance level that the product preference is associated with the place of
stay?
(Total 20 marks)
Question 5
A researcher wishes to investigate the relationship between the number of hours of exercise per
week and systolic blood pressure in males 50 years of age. A sample of 10 males 50 years old
was selected. The number of hours of vigorous exercise in a typical week and the systolic blood
pressure was recorded for each person. The sample data is given in the table below.

No. of hours of exercise per Systolic blood

week pressure
4 120
10 110
2 130
3 135
3 140
5 115
1 150
2 145
2 160
0 180

a. Plot the data on a scatter diagram and interpret the relationship you can observe. (5 marks)

b. Calculate the correlation between blood pressure and hours of exercise. Interpret the
correlation between the two factors? (6 marks)

c. Calculate the regression equation (use number of hours to predict blood pressure). (5 marks)

d. If the number of exercising hours is 5 per week, what amount of blood pressure would you
predict? Compare that result with 5 hours of exercise in table. Why doesn’t the regression
equation predict the exact value? (4 marks)

(Total: 20 marks)
Question 6
a. The management of a chain of stores would like to develop a model for predicting the weekly
sales (in thousands) for individual stores based on the advertising expenditure and the
attendance of the sales staff. A random sample of 15 stores was selected from among all
stores in the chain. The data was analysed using SPSS. The outputs are as follows.
Model Summary

3
 Adjusted R Std. Error of the
Model R R Square Square Estimate
a
1 .950 .902 .894 5.31530

a. Predictors: (Constant), Advertising, Attendance

b
ANOVA
Model Sum of Squares df Mean Square F Sig.
a
1 Regression 3373.255 1 3373.255 119.397 .000
Residual 367.282 13 28.252

Total 3740.537 14

a. Predictors: (Constant), Advertising, Attendance

b. Dependent Variable: Weekly sales (‘000)

a
Coefficients
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 27.445 5.497 4.992 .000

Advertising .082 .008 .950 10.927 .000

Attendance .786 .006 .986 11.2 .000
a. Dependent Variable: Weekly sales (‘000)
i. Determine the regression equation based on the given outputs. (3 marks)

ii. The management of the company claims that the sales increase with the total advertising
cost. Is this statement correct? Justify your answer. (2 marks)
iii. Interpret the coefficient of the variable of ‘staff attendance’. (Its strength and how it may
affect the sales value) (3 marks)
iv. Estimate the sales value if the advertising cost is Rs 150000 and staff attendance is 10.
(2 marks)
b. Comment on the following scatter plots. (i.e. the relationship and its strength) . (8 marks)

4
 (i) (ii)

(iii) (iv)

c. Briefly describe the difference of correlation analysis and regression analysis. (2 marks)
(Total: 20 marks)

Question 7
a. The quarterly sales of a company have to be analysed to develop a forecast. The data are as
follows:

Period Year Quarter Sales Centered Moving Averages

1 2014 1 75
2 2 60
3 3 54 63.375
4 4 59 65.375
5 2015 1 86 67.125
6 2 65 70.875
7 3 63 74
8 4 80 75.375
9 2016 1 90 76.625
10 2 72 77.625
11 3 66 79.5
12 4 85 81.5
13 2017 1 100 83
14 2 78 84.75
15 3 72
16 4 93

i. Find the seasonal index values using the moving averages. (8 marks)

5
 ii. Explain the concept of centered moving average. (3 marks)
iii. Explain how to calculate the trend line for the above data. (No need to calculate)
(3 marks)
iv. If the trend line equation is, Sales = 0.62 + 0.017*Period, find the forecasted sales for
the four quarters of year 2018. (4 marks)

b. What is the purpose of smoothing a time series data? (2 marks)

(Total: 20 marks)
-----Copyrights Reserved-----

Cumulative Binomial Probabilities

6
7
P(r) = nCrprq(n-r)
P(x) = e-λλx
x!where, e = 2.718

x –E < μ < x + E where, E = 𝑍 / or E = 𝑡 /

√ √

( )
p - E < p < p + E where, E =𝑍

( fo  fe )2
 STAT
2
 
all cells fe

8
9
10