Quantitative Analysis

Assignment

Note:

Students are advised to write their answers in their own language.

Questions:

1. The below relate to the IQ of a special group of an organisation's employees. Calculate the middle point
of the company’s employees from the given data. 10

IQ level 98-106 107-115 116-124 125-133 134-142 143-151 152-160

Number of 3 5 9 12 5 4 2
employees

Further draw your references on the structure of frequency distribution.

Answer :-

Employees Employees Employees interval

Cumulative Frequency
( inclusive ) frequency
( Exclusive )

98-106 97.5−106.5 3 3
107-115 106.5−115.5 5 8
116-124 115.5−124.5 9 17
125-133 124.5−133.5 12 29
134-142 133.5−142.5 5 34
143-151 142.5−151.5 4 38
152-160 151.5−160.5 2 40

N=40

N=40

So, N/2= 20

Thus, the cumulative frequency just greater than 20 is 29 and the corresponding class is 125-133.

Therefore 125-133 is the median class. Where l= 125, f= 12, F=17 and h= 8

Median= l+ (N/2-F)/f*h
Median = 127.

2. Below is the personal incomes of people in a township. Calculate the mean and the mode from below
table. Also basis these statistical numbers, explain how a car dealer who has various car for varied
income levels, would make relevant business decisions in terms of inventory and sales. 10

Total annual 675- 1000- 1500- 2000- 3000- 4000- 6000- 8000- 10,000-
income (‘000) 1000 1500 2000 3000 4000 6000 8000 10000 12,000
Number of 1230 2500 2660 5190 4320 4470 970 300 330
Persons (‘000)

Answers
Total Number of Midpoint (X) fX (‘000000)
annual persons (‘000) (‘000)
income
(‘000)
675-1000 1230 837.5 1030125

1000-1500 2500 1250 3125000

 1500-2000 2660 1750 4655000

2000-3000 5190 2500 12975000

3000-4000 4320 3500 15120000

4000-6000 4470 5000 22350000

6000-8000 970 7000 6790000

8000-10000 300 9000 2700000

10000- 330 11000 3630000

12000
N= 21970 ΣfX =
72375125

The formula M = ΣfX/ N is used, N is equal to 21970 . M = ΣfX/ N

M = 72375125 * 10^6 /21970 * 10^3 = 3294271

Thus, the mean obtained is 3294271.

Now let us compute mode with the help of the formula

Mo= L + [d1/ d1 +d2] x i

L = 1999.5 + [ -1000/ (-750-1000)] * 1000

= 770.92

3.Calculate median without using complex calculations wherein mode is 6700 and mean is 5600. What kind of
distribution is represented through these data points? 10

Answers

Median = (Mode + 2Mean)/3

= (6700+ 2*5600)/3 = 5966.67
All the three values are not close to each other indicating that the distribution of the data
may not be normal as the values do not fall in the central area of the distribution. If the
values of mean, median and mode were similar, then we could have said that the data is
normally distributed.

3. A manufacturer sets up the following sampling scheme for accepting or rejecting large crates of identical
items of raw material received. He takes a random sample of 20 items from the crate.
If he finds more than two defective items in the sample, he rejects the crate; otherwise he accepts it. It
is known that approximately 5% of these types of items received are defective.
a) Calculate the proportion of crates that will be rejected,
b) Calculate the mean of the number of defectives in a sample of 20.
 4. ABC Ltd. is a company manufacturing skincare products. It was found that the business is at the maturity
stage, demanding some change. After rigorous research, management came up with the following
alternatives. 20
First alternative – Expansion of Business Unit:
a. 40% possibility that the market share will hike, increasing the overall profitability of the
company by Rs. 2500000;
b. 60% possibility that the competitors would take over the market share and the company may
incur a loss of Rs. 800000.
Second alternative - New Product Line of Shower Gel:
c. 50% chances are that the project would be successful and yield Rs. 1800000 as profit;
d. 50% possibility of failure persists, leading to a loss of Rs. 800000.
Third alternative Do Nothing:
e. 40% chances are there that yet, the organization can attract new customers, generating a profit
of Rs. 1000000;
f. 60% chances of failure are there due to the new competitors, incurring a loss of Rs. 400000.
Using decision tree analysis, evaluate the management’s course of action.

5. What are the scenarios in which marginal analysis is most useful?

Using any production/sales examples, explain the concept along with
possible considerations.
Answers: -
Marginal analysis may also be applied in a situation where an investor is faced
with two potential investments but with the resources to only invest in one. The
investor can use marginal analysis to compare the costs and the benefits of both
investments to determine the option with the highest income potential.
Example of Marginal Cost
Production costs consist of both fixed costs and variable costs. Fixed costs do not
change with an increase or decrease in production levels, so the same value can
be spread out over more units of output with increased production.
Variable costs refer to costs that change with varying levels of output. Therefore,
variable costs will increase when more units are produced.

For example, consider a company that makes hats. Each hat produced requires
$0.75 of plastic and fabric. Plastic and fabric are variable costs. The hat factory
also incurs $1,000 dollars of fixed costs per month.

If you make 500 hats per month, then each hat incurs $2 of fixed costs ($1,000
total fixed costs / 500 hats). In this simple example, the total cost per hat would be
$2.75 ($2 fixed cost per unit + $0.75 variable costs).

If the company boosted production volume and produced 1,000 hats per month,
then each hat would incur $1 dollar of fixed costs ($1,000 total fixed costs / 1,000
hats), because fixed costs are spread out over an increased number of units of
output. The total cost per hat would then drop to $1.75 ($1 fixed cost per unit +
$0.75 variable costs). In this situation, increasing production volume causes
marginal costs to go down.

6. A machine produces four types of products in a sequential order. A new

customer order is received subject to quality evaluations. The customer
wants to select a sample of the produced goods for sample evaluation before
placing orders and deciding other commercial terms. What factors should be
considered by the customer’s management in making decisions regarding the
sample of the new order.

Answers
 Quality and Reliability of all the 4 types of products
 Compatibility and Integration of all the 4 types of products
 Pricing and Value for Money of all the 4 types of products
 Functionality and Features of all the 4 types of products
 Performance of all the 4 types of products
 Efficiency of all the 4 types of products
10

7. The age and weekly maintenance cost of 10 machines is as below. Using line of best fit, calculate the
weekly maintenance for machine with age being 40 years 10

Age Weekly
Maintenance
5 190
10 240
15 250
20 300
30 310
30 335
30 300
50 300
50 350
60 395

8. Comment on significant features of the following time series illustrating quarterly sales over a period.
Further also talk of the various adjustments that may be required for time series analysis over a period.

10

Year Qtr1 Qtr2 Qtr3 Qtr4

1982 19 31 62 9
1983 20 32 65 17
1984 24 36 78 14
1985 24 39 83 20
1986 25 42 85 24