Assignment – 01

Question – 01
Because of relatively high interest rates, most of the consumers attempt to pay off their credit
card bills promptly. However, this is not always possible. An analysis of the amount of interest
paid monthly by a bank's visa credit card holder reveals that the amount is normally distributed
with a mean of LKR 3285 and a standard deviation of LKR 865.

i. What proportion of the bank's Visa cardholders pay more than LKR 4000 as interest?
ii. What proportion of the bank's Visa Cardholders pay between LKR 3000 and LKR 4500
as interest?
iii. What proportion of the bank's Visa Cardholders pay less than LKR 2100 as interest?
iv. What is the amount of interest payment that is exceeded by 15% of the Visa
Cardholders?

Question – 02
i. “Statistical tools are useful in decision making while running a business” Comment on this
statement with examples.

ii. A tobacco company statistician wishes to know whether heavy smoking is related to
longevity. From a sample of recently deceased smokers, the number of cigarettes (estimated
per day for their last five years after visits with their surviving relatives) is paired with the
number of years that they lived.

Number of Years
Subject
Cigarettes per day Lived
1 23 58
2 34 50
3 12 71
4 38 50
5 31 52
6 26 55
7 27 54
8 33 45
9 16 60
10 27 50
11 23 60
12 29 62

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 a. Identify the predictor and the response variables.
b. Calculate the correlation coefficient between the variables Number of Cigarettes
and Years Lived and interpret the correlation coefficient.
c. Is it possible to develop the Least Square Regression Model, if possible, develop
the least square regression model?
d. If you know that a person smokes 20 Cigarettes a day, what would his expected
longevity be?
e. How much of the variability in longevity is predictable by the Number of Cigarettes
per day?
f. Can we conclude, based on this data, that Number of Cigarettes per day has an
impact on longevity? Why or why not?

Question – 03
i. In a production company the quality control manager asks his assistant to check the quality
of all the items produced by the three shifts at one of their factories during a certain day.
The production is carried out in three shifts namely shift P, shift Q and shift R. The products
are divided into three groups as Grade A, Grade B and Grade C according to the quality.
The summary of the observations produced to the manager is given below. The manager
needs your help to find the following probabilities

Shift P Shift Q Shift R

Grade A 86 74 59
Grade B 52 62 57
Grade C 19 15 12

If an item is selected at random from the days production what is the probability that
a. It was produced by shift Q.
b. It was produced by shift P or is grade C.
c. It is grade A, given that it was produced by shift R.
d. It is from shift P, given that it is grade B.
e. It is not Grade A.

ii. At a particular petrol station 20% of customers buy ‘Euro 4’ and 55% buy “Euro 3” and
25% diesel. When a customer buys Euro 4 there is a 60% chance that they will fill the tank.
Customers buying Euro 3 have a 45% chance of filling the tank. Those buying diesel, 80%
fill their tank. What is the probability that when a car leaves the petrol station it will have
a full tank?

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Question – 04
i. Executives in the Australian Forestry Industry claim that only 7.5% of all old sawmills sites
contain soil residuals of dioxin (an additive previously used for anti-sap-stain treatment in
wood) higher than the recommended level. If Environment Canterbury randomly selects 12
old saw mill sites for inspection, assuming that the executives’ claim is correct:

a. Calculate the probability that less than 2 site exceeds the recommended level of
dioxin.
b. Calculate the probability that more than or equal to 3 sites exceed the
recommended level of dioxin.
c. Calculate the probability that at least 2 sites exceed the recommended level of
dioxin.

ii. A radioactive source emits 8 particles on average during a five-second period.

a. Calculate the probability that it emits exactly six particles during a 5-second
period.
b. Calculate the probability that it emits at least three particles during a 5- second
period.
c. During a ten-second period, what is the probability that five particles are emitted?
(Total 20 marks)

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Assignment – 02

Question – 01
A particular brand of tires claims that its deluxe tire averages at least 98,000 kilometers before
it needs to be replaced. From past studies, the standard deviation is known to be 10,400
kilometers. A survey is conducted on 30 tires and the mean lifespan was found to be 94,850
kilometers. Using a 5% level of significance, can we conclude that the data is highly
inconsistent with the claim?

Question – 02
"Lak RAA" is a newly established beer production company in a well-known country in the
Asian region. The top management of the company is planning to perform a trend analysis on
the quarterly production. Since the company was established in July 2019, it has the quarterly
beer production data from the last quarter of 2019. The table given below provides the quarterly
production data. Since you are one of the officers in the Accounting and Trend analysis
department of the company, you are requested to analyze the data in such a way that it would
answer the questions given.

Year Quarter Production (million liters)

2019 Q4 46
2019 Q1 39
2019 Q2 36
2019 Q3 38
2020 Q4 51
2020 Q1 46
2020 Q2 38
2020 Q3 43
2021 Q4 43
2021 Q1 46
2021 Q2 35
2021 Q3 47
2022 Q4 49

i. Draw the Scatter plot and identify the type of trend pattern in the beer production data.
ii. Use an appropriate moving average technique to calculate the trend of production.

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 iii. By selecting an appropriate time series model compute the seasonal indices.
iv. Adjust the seasonal indices obtained in part (iii), showing all the details.
v. If the forecasted trends of the beer production for the first three quarters of the year
2023 are 57, 49, and 62 respectively forecast the bear production for the first three
quarters of the year 2023.

Question – 03
The Medical Rehabilitation Education Foundation reports that the average cost of rehabilitation
for stroke victims is LKR 256,980. To check whether the average cost of rehabilitation for
stroke victims is different at a particular hospital, a researcher selects a random sample of 28
stroke victims at the hospital and finds the average cost of their rehabilitation to be
LKR 264,790 with a standard deviation of LKR 31,430. Can we conclude that the average cost
of stroke rehabilitation at the particular hospital is more than LKR 256,980 at 5 percent level
of significance?

Question – 04
i. Officers in the Sri Lankan Forestry Department claim that only 4.2% of all old sawmill
sites contain soil residuals of dioxin (an additive previously used for anti-sap-stain
treatment in wood) higher than the recommended level. If Environment Authority of Sri
Lanka randomly selects 25 old saw mill sites for inspection, assuming that the officers’
claim is correct:

a. What would be the chance that less than 2 sites exceed the recommended level of
dioxin?
b. Is it abnormal that more than 23 sites exceeding the recommended level of dioxin.
c. what is the possible percentage that at most 5 sites exceed the recommended level
of dioxin.

ii. “Hardlog”, a leading company manufactures steel bolts for automobiles. From the past
experience the company management has identified that due to the quality of the raw
materials used, the defective percentage of the lot varies significantly. Therefore, the
management of “Hardlog” decided to get the raw material only from a specific supplier.
When the company uses the raw materials from this specific supplier there is a 5% lot of
size defectives. After the production of each lot the quality control department inspects

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samples from the production to check whether the defective percentage of the lot is less
than the expected. The entire lot will be inspected, if there are three or more defectives
bolts in a sample of size 10.

A new lot of the bolts are offered for inspection. The inspector picks up 10 bolts at random
and inspects. What is the chance that the entire lot has be inspected?

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