INFERENTIAL STATISTICS AND

HYPOTHESIS TESTING
Parametric Tests
 Inferential Statistics
Two main branches of statistics:
• Descriptive Statistics
• Inferential Statistics
Inferential statistics allows you to make predictions (“inferences”) from that data. It is a
statistical procedure used to draw inferences for the population on the basis of the
information obtained from the sample. Descriptive statistics summarize the characteristics of a
data set. 
Inferential statistics allow you to test a hypothesis or assess whether your data is generalizable
to the broader population.
Inferential statistics · making estimates about populations (for ex, the mean Mks score of all
11th graders 
Inferential statistics are methods for using sample data to make general conclusions
(inferences) about populations. As a result, sample statistics are generally imperfect
2
representatives of the corresponding population parameters.
Larson & Farber, Elementary Statistics: Picturing the World, 3e 2
Pasrametric Tests
Ex:

Hypothesis is Rejected
Ex:

Hypothesis is Rejected
How To Find T Alpha = 1-99/100 = 0.01
 Hypothesis Testing-Concept
1. What is a Hypothesis Testing?
Statistical Hypothesis – a conjecture about a population
parameter. This conjecture may or may not be true.
The purpose of hypothesis testing is to determine whether
there is enough statistical evidence in favor of a certain
belief, or hypothesis, about a parameter.
Examples:
Is there statistical evidence, from a random sample of
potential customers, to support the hypothesis that more
than 10% of the potential customers will purchase a new
product?
 Hypothesis Testing-Concept

In this chapter we will learn ….

• To use an inferential method called a hypothesis test
• To analyze evidence, that data provides
• To make decisions based on data
Major Methods for Making Statistical Inferences about
a Population
 The traditional Method
 The p-value Method
 Confidence Interval
 Hypothesis Testing-Concept
There are two types of statistical hypotheses:
Hypothesis: A premise or claim that we want to test
 Hypothesis Testing-Concept
There are two types of statistical hypotheses:

Null Hypothesis (H0) – Current accepted value for a parameter.

A statistical hypothesis that states that there is no difference
between a parameter and a specific value, or that there is no
difference between two parameters.
Alternative Hypothesis (H1) – Also called research hypothesis.
Involves the claim to be tested. a statistical hypothesis that states
the existence of a difference between a parameter and a specific
value, or states that there is a difference between two parameters.
Ex: We shall say that the process is in control if the mean is 100 and out of control if
the mean is not equal to 100. Thus

Null Hypothesis H0 : µ = 100

Alternate Hypothesis H1 : µ ≠ 100
The Critical Region: To construct a critical region of size α, we first examine our
alternative hypothesis.
• If our hypothesis is one-tailed, our critical region is either z ≥ zα (if the
hypothesis is right-handed) or z ≤ −zα (if the hypothesis is left-handed).
• If our hypothesis is two-tailed, then our critical region is |z| ≥ z .
Z Test Table
T Test Table
 More-Practice- Examples
Q. A production manager claims that an average of 50 boxes per hour are filled
with finished goods at a final stage of production line. A random sample of 48
different workers, at different times, working at the end of identical production
lines shows an average number of boxes filled as 47.5 with a standard deviation
of 0.7 boxes. Does this evidence support the assertion by the production
manager at the 5% level of significance ? = Cl= 95%
 
Sol : : = 50

:
 
= -24.744
Accept
 More-Practice- Examples
Q. A manufacturer of batteries has assumed that the average expected life is 299
hours. As a result of recent changes to the filling of the batteries, the
manufacturer now wishes to test if the average life has increased. A sample of 200
batteries was taken at random from the production line and tested.
Their average life was found to be 300 hours with a standard deviation of
of eight hours. You have been asked to carry out the appropriate hypothesis
test at the 10% significance level. CI = 90%
Sol: : = 299
:
 
= 1.77 =1.645
Reject
Ex:

Hypothesis is Rejected
How To Find T Alpha = 1-99/100 = 0.01
 More-Practice- Examples
Q. A lorry manufacturer claims that the average annual
maintenance cost for its vehicles is $500. The maintenance
department of one of their customers believes it to be
higher, and to test the suggestions randomly selects a
sample
of six lorries from their large fleet. From this sample, the
mean annual main-tenance cost was found to be $555,
with a standard deviation of $75.Use an appropriate
hypothesis test , at the 5% level, to find the manufacturer
claim is valid.
Sol: : = 500
:
 
= 1.796 =2.015
How To Find T Alpha = 1-99/100 = 0.01
How To Find T Alpha = 1-99/100 = 0.01
How To Find T Alpha = 1-99/100 = 0.01
 Two Tail Test
Null Hypothesis H0 : µ = 100
Alternate Hypothesis H1 : µ ≠ 100
Example:

Ex: We shall say that the process is in control if the mean is 100 and out of control if the mean is not
equal to 100. Thus
TEST Compairing Means
Tests comparing means
Q. A company has two factories, one in the UK and one in the Germany. There is a view that
the German factory is more efficient than the British one, and to test this, a random sample is
selected from each of the factories. The British sample consists of 20 workers who takes an
average of 25 minutes to complete a standard task. Their standard deviation is five minutes.
The German sample has ten workers who take an average of 20 minutes to complete the same
task, and the sample has a standard deviation of four minutes. Use appropriate hypothesis test,
at the one percent level of significance to find if the German workers are more efficient.
Sol: : - =0
: -
 
Calculated value of =4.70182 AND = 2.467
 
= = 2.746
Reject
REVISION
 A certain financial institution claims that 15% of the loan defaulters
will pay their loan before the dead line fixed by the government,
40% will request for rescheduling, 30% will remain untraceable 10%
will escape abroad and 5% will be arrested. A random sample of
180 loan defaulters after the expiry of dead line, shows that 30
defaulters have paid their loan, 80 requested for rescheduling 40
are untraceable, 20 escape from country and remaining 10
arrested. Test the claim at 5% level of significance.
 Q. National Accountability Bureau(NAB)claims that 12% of the loan defaulters will pay
their loan before the dead line fixed by the government, 48% will request for rescheduling,
20% will remain untraceable 14% will escape abroad and 6% will be arrested. A random
sample of 300 loan defaulters after the expiry of dead line, shows that 50 defaulters have
paid their loan, 120 requested for rescheduling 80 are untraceable, 40 escape from
country and remaining 10 arrested. Test the claim at 5% level of significance.
Q. Perform the test of hypothesis for the following data. Assume the population to be
normal.
where
Q. The manager of a college cafeteria claims that 15% students take only soft drink,35% tea only, 18% soft
drink with sandwich,20% tea with sandwich and 12% neither. A sample of 120 students show that 20 takes
only soft drink, 36 only tea, 14 soft drinks with sandwich, 18 tea with sandwich and remaining neither. Test
the manager’s claim at 5% level of significance.
A certain financial institution claims that 15% of the loan defaulters will pay
their loan before the dead line fixed by the government, 40% will request for
rescheduling, 30% will remain untraceable 10% will escape abroad and 5% will
be arrested. A random sample of 180 loan defaulters after the expiry of dead
line, shows that 30 defaulters have paid their loan, 80 requested for rescheduling
40 are untraceable, 20 escape from country and remaining 10 arrested. Test the
claim at 5% level of significance.
Tests comparing means
Q. A company has two factories, one in the UK and one in the Germany. There is a view that
the German factory is more efficient than the British one, and to test this, a random sample is
selected from each of the factories. The British sample consists of 20 workers who takes an
average of 25 minutes to complete a standard task. Their standard deviation is five minutes.
The German sample has ten workers who take an average of 20 minutes to complete the same
task, and the sample has a standard deviation of four minutes. Use appropriate hypothesis test,
at the one percent level of significance to find if the German workers are more efficient.
Sol: : - =0
: -
 
Calculated value of =4.70182 AND = 2.467
 
= = 2.746
Reject
Ex: We shall say that the process is in control if the mean is
100 and out of control if the mean is not equal to 100. Thus
Null Hypothesis H0 : µ = 100
Alternate Hypothesis H1 : µ ≠ 100