INTRODUCTION TO INFERENCE, MODELLING &
FORECASTING:
ASSIGNMENT 1:
Question 1:
A company claims that it puts an average of 750ml in its soft drink bottles labelled as such.
A random sample of 40 bottles revealed an average content of 748.6ml with a standard
deviation of 2.5ml.
(a). Based on this sample, do you believe the company’s claim at α= 0.05.
(b). Check your results in (a) using the Excel function to compute the margin of error.
Based on the margin of error, construct a 95% confidence interval of the:
Answer:
𝜇𝜊 750
𝓃 40
𝑥̄ 748.6
𝑠 2.5
Η𝜊 𝜇 = 750
Η1 𝜇 ≠ 750
Where:
"𝜇𝜊" is the “Population Mean”.
"𝓃" is the “Sample Size”.
"𝑥̄” is the “Sample Mean”.
"𝑠" is the “Standard Deviation of the Sample”.
Η𝜊 is the “Null Hypothesis”.
Η1 is the “Alternative Hypothesis”.
Solution (a):
Based on the information provided we shall use the below test statistics:
Since we have the values for “𝑠" and the sample size is greater than 25, we use the below
𝓏 − 𝑡𝑒𝑠𝑡 𝑠𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑠.
𝓏 = (𝑥̄ − 𝜇𝜊) ÷ (𝑠 ÷ √𝓃) = (748.6 − 750) ) ÷ (2.5 ÷ √40)= (-1.40 ) ÷ (0.395) = ≈-3.544
Initially we calculate the critical value for a 95% confidence interval with 9 degrees of
freedom by using the formula in Microsoft Excel the value is: “=NORM.S.INV(0.05/2)” is -
1.833112933.
Therefore, Critical value @ 0.05 = -1.959.
For larger sample size the critical value is “-1.959”.
As the −𝑡𝑒𝑠𝑡 𝑠𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑠 lies in critical region, so we reject Η𝜊. Hence, we can conclude
that the company's claim is False.
Solution (b):
To calculate Margin of Error and construct the 95% confidence interval of the average
content we shall use the below formula:
Standard Error of Mean (SEM) = (𝑠 ÷ √𝓃) = 2.5 ÷ √40 = ≈0.395
Margin of Error (MOE) = (𝓏 × SEM) = (-3.544 × 0.395) = ≈-1.399
̄ ± MOE) =
Confidence Interval = (𝑥
Lower Bound = 748.6 – (-1.399) = 749.999
Upper Bound = 748.6 + (-1.399) = 747.201
Therefore, the 95% confidence interval for the average content is approximately 747.201
ml to 749.999 ml.
Question 2 (12 points)
A charcoal chicken establishment advertises that its chickens have an average weight of
1.8kg. A random sample of 10 chickens purchased by a customer over the past few weeks
had a mean weight of 1.65kg with a standard deviation of 0.60kg. If chicken weights are
normally distributed, is it possible that the establishment is being truthful? Test at α= 0.05.
(a). Construct a 95% confidence interval of the average weight.
(b). Use the critical value approach.
(c). Use the p-value approach.
Answer:
𝜇𝜊 1.8
𝓃 10
𝑥̄ 1.65
𝑠 0.6
𝛼 0.05
Η𝜊 𝜇 = 1.8
Η1 𝜇 < 1.8
Where:
"𝜇𝜊" is the “Population Mean”.
"𝓃" is the “Sample Size”.
"𝑥̄” is the “Sample Mean”.
"𝑠" is the “Standard Deviation of the Sample”.
Η𝜊 is the “Null Hypothesis”.
Η1 is the “Alternative Hypothesis”.
Solution (a):
To construct a 95% confidence interval, we shall use the below formula:
Initially we calculate the critical value for a 95% confidence interval with 9 degrees of
freedom by using the formula in Microsoft Excel the value is: “=T.INV(0.05, 9)” is -
1.833112933.
Therefore, Critical value @ 0.05 = -1.833112933.
𝑥̄ ± 𝓏 (𝑠 ÷ √𝑛) = 1.65 ± (-1.833) (0.60 ÷ √10) = 1.65 ± (-1.833) (0.189) = 1.65 ± (-
0.346)
Lower Bound = 1.65 - (-0.346) = 1.996
Upper Bound = 1.65 + (-0.346) = 1.303
Therefore, the 95% confidence interval for the average weight is approximately 1.303kg
to 1.996kg.
Solution (b):
To calculate the critical value approach, we shall perform hypothesis tests:
Null Hypothesis (Η𝜊): Average Weight of Chickens = 1.8 kg
Alternative Hypothesis (Η1): Average Weight of Chickens ≠ 1.8 kg
Since the sample size is smaller than 25 and the population standard deviation is
unknown, we use the below 𝓉 − 𝑡𝑒𝑠𝑡 𝑠𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑠.
𝓉 = (𝑥̄ − 𝜇𝜊) ÷ (𝑠 ÷ √𝓃) = (1.65 − 1.8) ÷ (0.60 ÷ √10)= (-0.15 ) ÷ (0.189) = ≈-0.791
For smaller sample size the critical value is “-1.833”.
Since, the 𝓉 − 𝑡𝑒𝑠𝑡 𝑠𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑠 does not lies in the critical region, we cannot reject the Η𝜊.
Hence, we conclude that the establishment is truthful.
Solution (c):
The 𝓅-value is the probability of observing a test statistic as extreme as, or more
extreme than, the one observed, under the null hypothesis.
We shall use the 𝓉 − 𝑡𝑒𝑠𝑡 𝑠𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑠 score ≈-0.791
The 𝓅-value according to the standard normal distribution calculation is 0.224.
Since the 𝓅-value is greater than the significance level (0.05), we fail to reject the null
hypothesis. Hence, we conclude that the establishment is truthful.
