FINAL EXAMINATION

JANUARY 2021 SEMESTER

SUBJECT CODE : MBS702

SUBJECT NAME : BUSINESS STATISTICS

LEVEL : MASTER'S DEGREE

TIME / DURATION :

DATE :

INSTRUCTIONS TO CANDIDATES

1. Please read the instructions given in the question paper CAREFULLY.

2. This question paper is printed on both sides of the paper.
3. This question paper consists of SIX (6) questions.
4. Answer any FOUR (4) questions ONLY.
5. Please write your answers in the answer booklet provided.
6. Answer all questions in English.

THERE ARE TWELVE (12) PAGES OF QUESTIONS, EXCLUDING THIS PAGE.

MBS702_BUSINESS STATISTICS Page 1

INSTRUCTION: Answer FOUR (4) Questions ONLY.
Please use the answer booklet provided.
QUESTION 1

(A) The U.S. Department of Energy provides fuel economy information for a variety of
motor vehicles. A sample of 10 automobiles is shown in Table (Fuel Economy website,
February 22, 2008). Data show the size of the automobile (compact, midsize, or large),
the number of cylinders in the engine, the city driving miles per gallon, the highway driving
miles per gallon, and the recommended fuel (diesel, premium, or regular).
a. How many elements are in this data set? ( 2 Marks )
b. How many variables are in this data set? ( 2 Marks )
c. Which variables are categorical and which variables are quantitative? ( 3 Marks )
d. What type of measurement scale is used for each of the variables? ( 3 Marks )

(B) CSM Worldwide forecasts global production for all automobile manufacturers. The
following CSM data show the forecast of global auto production for General Motors,
Ford, Daimler Chrysler, and Toyota for the years 2004 to 2007 (USA Today,
December 21, 2005). Data are in millions of vehicles.

MBS702_BUSINESS STATISTICS Page 2

(a) Construct a time series graph for the years 2004 to 2007 showing the number of
vehicle manufactured by each automotive company. Show the time series for all four
manufacturers on the same graph.
(4 Marks)

(b) General Motors has been the undisputed production leader of automobiles since 1931.
What does the time series graph show about who is the world’s biggest car company?
Discuss.
(3 Marks)

(c) Construct a bar graph showing vehicles produced by automobile manufacturer using
the 2007 data. Is this graph based on cross-sectional or time series data?
(3 Marks)

(C) A psychologist developed a new test of adult intelligence. The test was
administered to 20 individuals, and the following data were obtained.

(i) Construct a stem-and-leaf display for the data. (3 Marks)

(ii) Find the median if it exists. (2 Marks)

[TOTAL: 25 marks]
QUESTION 2

(A) The cost of consumer purchases such as single-family housing, gasoline, Internet
services, tax preparation, and hospitalization were provided in The Wall-Street Journal
(January 2, 2007). Sample data typical of the cost of tax-return preparation by services
such as H&R Block are shown below.

(i) Compute the mean, median, and mode. (9 Marks)

(ii) Compute the first and third quartiles. (4 Marks)
(iii) Compute and interpret the 90th percentile. (2 Marks)

(B) Show the five-number summary and the box plot for the following data:
5, 15, 18, 10, 8, 12, 16, 10, 6.
(10 Marks)

[TOTAL: 25 marks]

MBS702_BUSINESS STATISTICS Page 3

QUESTION 3

(A) The following 20 observations are for two quantitative variables, x and y.

(i) Develop a scatter diagram for the relationship between x and y. (4 Marks)

(ii) What is the relationship, if any, between x and y? (2 Marks)

(iii) Calculate Correlation Coefficient. (5 Marks)

(B) A Harris Interactive survey for Inter-Continental Hotels & Resorts asked respondents,
“When traveling internationally, do you generally venture out on your own to
experience culture, or stick with your tour group and itineraries?” The survey found that
23% of the respondents stick with their tour group (USA Today, January 21, 2004).

(a) In a sample of six international travelers, what is the probability that two will stick
with their tour groups? (2 Marks)
(b) In a sample of six international travelers, what is the probability that at least two will
stick with their tour group? (2 Marks)
(c) In a sample of 10 international travelers, what is the probability that none will stick
with the tour groups? (2 Marks)

(C) More than 50 million guests stay at bed and breakfasts (B&B s) each year. The
website for the Bed and Breakfast Inns of North America, which averages seven
visitors per minute, enables many B&Bs to attract guests (Time, September 2001).

a. Compute the probability of no website visitors in a one-minute period.

(2 Marks)
b. Compute the probability of two or more website visitors in a one-minute period.
(2 Marks)
c. Compute the probability of one or more website visitors in a 30-second period.
(2 Marks)

MBS702_BUSINESS STATISTICS Page 4

 d. Compute the probability of five or more website visitors in a one-minute period.
(2 Marks)

[TOTAL: 25 marks]

QUESTION 4

(A) For borrowers with good credit scores, the mean debt for revolving and installment
accounts is $15,015 (BusinessWeek, March 20, 2006). Assume the standard
deviation is $3540 and that debt amounts are normally distributed.

a. What is the probability that the debt for a borrower with good credit is more than
$18,000? (2 Marks)

b. What is the probability that the debt for a borrower with good credit is less than
$10,000? (2 Marks)

c. What is the probability that the debt for a borrower with good credit is between
$12,000 and $18,000? (2 Marks)
d. What is the probability that the debt for a borrower with good credit is no more than
$14,000? (2 Marks)

(B) The following data were collected on the height (inches) and weight (pounds) of
women swimmers.

(a) Develop a scatter diagram for these data with height as the independent variable.

(3 Marks)
(b) Find correlation coefficient and coefficient of determination. Interpret the results
using the scattered diagram in part (a).
(3 Marks)
(c) What does the scatter diagram developed in part (a) indicate about the relationship
between the two variables?
(2 Marks)
(d) Try to approximate the relationship between height and weight by drawing a straight
line through the data.
(3 Marks)
(e) Develop the estimated regression equation by computing the values of b 0 and b1
(3 Marks)
(f) If a swimmer’s height is 63 inches, what would you estimate her weight to be?
(3 Marks)
[TOTAL: 25 marks]
QUESTION 5

MBS702_BUSINESS STATISTICS Page 5

(A) For the United States, the mean monthly Internet bill is $32.79 per household (CNBC,
January 18, 2006). A sample of 50 households in a southern state showed a sample mean
of $30.63. Use a population standard deviation of σ = $5.60.

a. Formulate hypotheses for a test to determine whether the sample data support the
conclusion that the mean monthly Internet bill in the southern state is less than the
national mean of $32.79. (2 Marks)
b. What is the value of the test statistic? (2 Marks)
c. What is the p-value? (2 Marks)
d. At α # .01, what is your conclusion? (2 Marks)

(B) Joan’s Nursery specializes in custom-designed landscaping for residential areas. The
estimated labor cost associated with a particular landscaping proposal is based on
the number of plantings of trees, shrubs, and so on to be used for the project. For
cost-estimating purposes, managers use two hours of labor time for the planting of
a medium-sized tree. Actual times from a sample of 10 plantings during the past
month follow (times in hours).
1.7 1.5 2.6 2.2 2.4 2.3 2.6 3.0 1.4 2.3
With a .05 level of significance, test to see whether the mean tree-planting time differs
from two hours.

a. State the null and alternative hypotheses. (1 Mark)

b. Compute the sample mean. (1 Mark)
c. Compute the sample standard deviation. (3 Marks)
d. What is the p-value? (3 Marks)
e. What is your conclusion? (1 Mark)

(C) In a cover story, BusinessWeek published information about sleep habits of Americans
(BusinessWeek, January 26, 2004). The article noted that sleep deprivation causes
a number of problems, including highway deaths. Fifty-one percent of adult drivers
admit to driving while drowsy. A researcher hypothesized that this issue was an even
bigger problem for night shift workers.

a. Formulate the hypotheses that can be used to help determine whether more
than 51% of the population of night shift workers admit to driving while drowsy.

MBS702_BUSINESS STATISTICS Page 6

 (3 Marks)
b. A sample of 400-night shift workers identified those who admitted to
driving while drowsy. See the Drowsy file. What is the sample
proportion? What is the p-value? (3 Marks)
c. At α # .01, what is your conclusion? (2 Marks)

[TOTAL: 25 marks]

QUESTION 6

(A) Set up the ANOVA table and test for any significant difference in the mean
examination score for the three plants. Use α = 0.05.
(10 Marks)

(B) One of the questions on the BusinessWeek Subscriber Study was, “In the past 12
months, when traveling for business, what type of airline ticket did you purchase most
often?” The data obtained are shown in the following contingency table.

Use α = 0.05 and test for the independence of type of flight and type of ticket. What is
your conclusion?
(10 Marks)

MBS702_BUSINESS STATISTICS Page 7

(C) Consider the following time series data.

(a) Construct a time series plot. What type of pattern exists in the data?
(b) Develop the three-week moving average forecasts for this time series.
Compute MSE and a forecast for week 7.
(5 Marks)
[TOTAL: 25 marks]

END OF QUESTION PAPER

MBS702_BUSINESS STATISTICS Page 8

 Required Formulae
Probability distributions
E(x) = ∑xi P(xi)

σ2 = ∑(xi) 2P(xi) – (µ) 2

P(r) = nCr prq(n-r)
P(x) = e-λ λx
x! where, e = 2.71828.….

Inferential statistics
Z= x-µ
σ
√n
t= x-µ
s
√n
x–E<μ<x+E where, E = z α/2 (σ/√n) or E = t α/2 (s/√n)

( fo − fe )2
 STAT
2
=  f
all cells e

MBS702_BUSINESS STATISTICS Page 9

Table 1 AREAS UNDER THE STANDARD
NORMAL CURVE

z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.2 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517
0.4 0.1554 0.1591 0.1628 0.1664 0.1700 0.1736 0.1772 0.1808 0.1844 0.1879

0.5 0.1915 0.1950 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.2190 0.2224
0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549
0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.2910 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389

1.0 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 0.4306 0.4319

1.5 0.4332 0.4345 0.4357 0.4370 0.4382 0.4394 0.4406 0.4418 0.4429 0.4441
1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 0.4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767

2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817
2.1 0.4821 0.4826 0.4830 0.4834 0.4838 0.4842 0.4846 0.4850 0.4854 0.4857
2.2 0.4861 0.4864 0.4868 0.4871 0.4875 0.4878 0.4881 0.4884 0.4887 0.4890
2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936

2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964
2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981
2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986

3.0 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990
3.1 0.4990 0.4991 0.4991 0.4991 0.4992 0.4992 0.4992 0.4992 0.4993 0.4993
3.2 0.4993 0.4993 0.4994 0.4994 0.4994 0.4994 0.4994 0.4995 0.4995 0.4995
3.3 0.4995 0.4995 0.4995 0.4996 0.4996 0.4996 0.4996 0.4996 0.4996 0.4997

MBS702_BUSINESS STATISTICS Page 10

Table 2 PERCENTAGE POINTS OF THE t-DlSTRlBUTlON

One tailed Two tailed

One tail  5% 2.5% 1% 0.5% 0.1% 0.05%
Two tails 10% 5% 2% 1% 0.2% 0.1%

1 6.314 12.706 31.821 63.656 318.289 636.578
2 2.920 4.303 6.965 9.925 22.328 31.600
3 2.353 3.182 4.541 5.841 10.214 12.924
4 2.132 2.776 3.747 4.604 7.173 8.610
5 2.015 2.571 3.365 4.032 5.894 6.869

6 1.943 2.447 3.143 3.707 5.208 5.959

7 1.895 2.365 2.998 3.499 4.785 5.408
8 1.860 2.306 2.896 3.355 4.501 5.041
9 1.833 2.262 2.821 3.250 4.297 4.781
10 1.812 2.228 2.764 3.169 4.144 4.587

11 1.796 2.201 2.718 3.106 4.025 4.437

12 1.782 2.179 2.681 3.055 3.930 4.318
13 1.771 2.160 2.650 3.012 3.852 4.221
14 1.761 2.145 2.624 2.977 3.787 4.140
15 1.753 2.131 2.602 2.947 3.733 4.073

16 1.746 2.120 2.583 2.921 3.686 4.015

17 1.740 2.110 2.567 2.898 3.646 3.965
18 1.734 2.101 2.552 2.878 3.610 3.922
19 1.729 2.093 2.539 2.861 3.579 3.883
20 1.725 2.086 2.528 2.845 3.552 3.850

21 1.721 2.080 2.518 2.831 3.527 3.819

22 1.717 2.074 2.508 2.819 3.505 3.792
23 1.714 2.069 2.500 2.807 3.485 3.768
24 1.711 2.064 2.492 2.797 3.467 3.745
25 1.708 2.060 2.485 2.787 3.450 3.725

26 1.706 2.056 2.479 2.779 3.435 3.707

27 1.703 2.052 2.473 2.771 3.421 3.689
28 1.701 2.048 2.467 2.763 3.408 3.674
29 1.699 2.045 2.462 2.756 3.396 3.660
30 1.697 2.042 2.457 2.750 3.385 3.646

60 1.671 2.000 2.390 2.660 3.232 3.460

120 1.658 1.980 2.358 2.617 3.160 3.373
∞ 1.645 1.960 2.326 2.576 3.091 3.291

MBS702_BUSINESS STATISTICS Page 11

Table 3 PERCENTAGE POINTS OF THE F DISTRIBUTION  = 5%

Numerator degrees of freedom

1 1 2 3 4 5 6 7 8 9
2
1 161.40 199.50 215.70 224.60 230.20 234.00 236.80 238.90 240.50
2 18.51 19.00 19.16 19.25 19.30 19.33 19.35 19.37 19.38
3 10.13 9.55 9.28 9.12 9.01 8.94 8.89 8.85 8081
4 7.71 6.94 6.56 6.39 6.26 6.16 6.09 6.04 6.00
5 6.61 5.79 5.41 5.19 5.05 4.95 4.88 4.82 4.77
6 5.99 5.14 4.76 4.53 4.39 4.28 4.21 4.15 4.10
7 5.59 4.74 4.35 4.12 3.97 3.87 3.79 3.73 3.68
8 5.32 4.46 4.07 3.84 3.69 3.58 3.50 3.44 3.39
9 5.12 4.26 3.86 3.63 3.48 3.37 3.29 3.23 3.18
10 4.96 4.10 3.71 3.48 3.33 3.22 3.14 3.07 3.02
Denominator degrees of freedom

11 4.84 3.98 3.59 3.36 3.20 3.09 3.01 2.95 2.90

12 4.75 3.89 3.49 3.26 3.11 3.00 2.91 2.85 2.80
13 4.67 3.81 3.41 3.18 3.03 2.92 2.83 2.77 2.71
14 4.60 3.74 3.34 3.11 2.96 2.85 2.76 2.70 2.65
15 4.54 3.68 3.29 3.06 2.90 2.79 2.71 2.64 2.59
16 4.49 3.63 3.24 3.01 2.85 2.74 2.66 2.59 2.54
17 4.45 3.59 3.20 2.96 2.81 2.70 2.61 2.55 2.49
18 4.41 3.55 3.16 2.93 2.77 2.66 2.58 2.51 2.46
19 4.38 3.52 3.13 2.90 2.74 2.63 2.54 2.48 2.42
20 4.35 3.49 3.10 2.87 2.71 2.60 2.51 2.45 2.39
21 4.32 3.47 3.07 2.84 2.68 2.57 2.49 2.42 2.37
22 4.30 3.44 3.05 2.82 2.66 2.55 2.46 2.40 2.34
23 4.28 3.42 3.03 2.80 2.64 2.53 2.44 2.37 2.32
24 4.26 3.40 3.01 2.78 2.62 2.51 2.42 2.36 2.30
25 4.24 3.39 2.99 2.76 2.60 2.49 2.40 2.34 2.28
26 4.23 3.37 2.98 2.74 2.59 2.47 2.39 2.32 2.27
27 4.21 3.35 2.96 2.73 2.57 2.46 2.37 2.31 2.25
28 4.20 3.34 2.95 2.71 2.56 2.45 2.36 2.29 2.24
29 4.18 3.33 2.93 2.70 2.55 2.43 2.35 2.28 2.22
30 4.17 3.32 2.92 2.69 2.53 2.42 2.33 2.27 2.21
40 4.08 3.23 2.84 2.61 2.45 2.34 2.25 2.18 2.12
60 4.00 3.15 2.76 2.53 2.37 2.25 2.17 2.10 2.04
120 3.92 3.07 2.68 2.45 2.29 2.17 2.09 2.02 1.96
 3.84 3.00 2.60 2.37 2.21 2.10 2.01 1.94 1.88

MBS702_BUSINESS STATISTICS Page 12

 Table 4 PERCENTAGE POINTS OF THE 2-D1STRIBUTION

 10% 5% 2 5% 1% 0.l%
1 2.706 3.841 5.024 6.635 10.83
2 4.605 5.991 7.378 9.210 13.82
3 6.252 7.816 9.351 11.35 16.27
4 7.780 9.488 11.14 13.28 18.47
5 9.236 11.07 12.83 15.08 20.51
6 10.64 12.59 14.45 16.81 22.46
7 12.02 14.07 16.02 18.49 24.36
8 13.36 15.51 17.53 20.09 26.13
9 14.68 16.92 19.02 21.67 27.89
10 15.99 18.31 20.48 23.21 29.59
11 17.28 19.68 21.92 24.72 31.26
12 18.55 21.03 23.34 26.22 32.91
13 19.81 22.36 24.74 27.69 34.51
14 21.06 23.68 26.12 29.14 36.12
15 22.31 25.00 27.49 30.58 37.70
16 23.54 26.30 28.85 32.00 39.25
17 24.77 27.59 30.19 33.41 40.79
18 25.99 28.87 31.53 34.81 42.31
19 27.20 30.14 32.85 36.19 43.82
20 28.41 31.41 34.17 37.57 45.32
21 29.62 32.67 35.48 38.93 46.80
22 30.81 33.92 36.78 40.29 48.27
23 32.01 35.17 38.08 41.64 49.73
24 33.20 36.42 39.36 42.98 51.18
25 34.38 37.65 40.65 44.31 52.62
26 35.56 38.89 41.92 45.64 54.05
27 36.74 40.11 43.19 46.96 55.48
28 37.92 41.34 44.46 48.28 56.89
29 39.09 42.56 45.72 49.59 58.30
30 40.26 43.77 46.98 50.89 59.70

MBS702_BUSINESS STATISTICS Page 13

 FINAL EXAMINATION
JANUARY 2024 SEMESTER

SUBJECT CODE : MBS702

SUBJECT NAME : BUSINESS STATISTICS

LEVEL : MASTER'S DEGREE

TIME / DURATION :

DATE :

INSTRUCTIONS TO CANDIDATES

1. Please read the instructions given in the question paper CAREFULLY.

2. This question paper is printed on both sides of the paper.
3. This question paper consists of SIX (6) questions.
4. Answer any FOUR (4) questions ONLY.
5. Please write your answers in the answer booklet provided.
6. Answer all questions in English.

THERE ARE TWELVE (12) PAGES OF QUESTIONS, EXCLUDING THIS PAGE.

MBS702_BUSINESS STATISTICS Page 0

INSTRUCTION: Answer FOUR (4) Questions ONLY.
Please use the answer booklet provided.

QUESTION 1

A. Nixon Corporation manufactures computer terminals. The following data give the number
of computer terminals produced at the company for a sample of 30 days.
24 32 27 23 33 29 33 25 23 28
21 26 31 22 27 33 27 23 28 29
31 35 34 22 26 28 23 35 31 27

i. Construct a frequency distribution table using the classes 21 – 23, 24 – 26, 27 –

29, 30 – 32, and 33 – 35.
(2 Marks)
ii. Calculate the relative frequencies and percentages for all classes.
(3 Marks)
iii. Construct histogram and a polygon for the percentage distribution.
(3 Marks)
iv. For what percentage of the days is the number of computer terminals produced
in the interval 27 to 29?
(2 Marks)

B. All highway bridges are inspected periodically for structural deficiency by the Road
Development Authority (RDA). Some of the variables maintained by RDA are given
below:
i. Length of maximum span (meters)
ii. Number of vehicle lanes
iii. Toll bridge (yes or no)
iv. Average daily traffic (vehicles per hour)
v. Condition of bridge (good, fair or poor)

Name the types of variables and its level of measurement.

(10 Marks)

MBS702_BUSINESS STATISTICS Page 1

 C. A psychologist developed a new test of adult intelligence. The test was administered to
20 individuals, and the following data were obtained.

i. Construct a stem-and-leaf display for the data.

(3 Marks)
ii. Find the median if it exists.
(2 Marks)

(Total 25 Marks)

QUESTION 2

A. The following data give the 1989 production of corn (in millions of bushels) for seven
states. (Source: National Agricultural Statistics Service) The data, entered in that order,
are for the states of California, Indiana, Minnesota, Ohio, South Dakota, Texas, and
Wisconsin.

27 692 700 342 191 148 311

i. Calculate the mean and median.

(5 Marks)
ii. Is the mean or the median a better summary measure for these data? Why?
(2 Marks)
iii. Find the standard deviation, Variance and coefficient of Variation.
(8 Marks)

B. Show the five-number summary and the box plot for the following data:

5 15 18 10 8 12 16 10 6
(10 Marks)
(TOTAL: 25 Marks)

MBS702_BUSINESS STATISTICS Page 2

QUESTION 3
A. A department store manager wants to investigate whether the method of payment
chosen by customer is related to the size of the purchases. The manager analyzed a
sample of 250 customer purchases. The size of the purchases was categorized as value
of purchase above $ 2,000 or below $ 2,000. The method of payment was either cash or
credit card. There were 82 customers who had purchases less then Rs 2000. The
number of customers who paid through credit card was 134. There were 51 customers
having purchases less than $ 2,000 and also paid trough cash.

i. Present the above data using a suitable visualization method.

(5 marks)
ii. One of these 250 customers was selected randomly. What is the probability that
the selected customer had purchases more than $ 2,000?
(2 marks)
iii. A randomly selected customer was found to have paid through credit card. What
is the probability that his purchases were less than $ 2,000.
(3 marks)

B. The Commercial Bank has recently started a new credit program. Customers meeting
certain credit requirements can obtained a credit card accepted by participating area
merchants that carries a discount. Past numbers show that 20% of all applicants for this
card are rejected. If 10 applicants are selected, what is the probability that
i. Exactly 4 will be rejected?
(2 Marks)
ii. None of them are rejected?
(2 Marks)
iii. At least two are rejected?
(3 Marks)

MBS702_BUSINESS STATISTICS Page 3

 C. For borrowers with good credit scores, the mean debt for revolving and installment
accounts is $15,015 (BusinessWeek, March 20, 2006). Assume the standard deviation
is $3540 and that debt amounts are normally distributed.
i. What is the probability that the debt for a borrower with good credit is more than
$18,000?
(2 Marks)
ii. What is the probability that the debt for a borrower with good credit is less than
$10,000?
(2 Marks)
iii. What is the probability that the debt for a borrower with good credit is between
$12,000 and $18,000?
(2 Marks)
iv. What is the probability that the debt for a borrower with good credit is less than
$14,000?
(2 Marks)
(TOTAL: 25 Marks)

QUESTION 4

A. The following data were collected on the height (inches) and weight (pounds) of women
swimmers.

i. Develop a scatter diagram for these data with height as the independent
variable.

(5 Marks)
ii. Find correlation coefficient and coefficient of determination. Interpret the
results.

(5 Marks)
iii. Develop the estimated regression equation by computing the values of b 0
and b1.
(5 Marks)

MBS702_BUSINESS STATISTICS Page 4

 B. Joan’s Nursery specializes in custom-designed landscaping for residential areas. The
estimated labor cost associated with a particular landscaping proposal is based on the
number of plantings of trees, shrubs, and so on to be used for the project. For cost-
estimating purposes, managers use two hours of labor time for the planting of a
medium-sized tree. Actual times from a sample of 10 plantings during the past month
follow (times in hours).
1.7 1.5 2.6 2.2 2.4 2.3 2.6 3.0 1.4 2.3
With a .05 level of significance, test to see whether the mean tree-planting time differs
from two hours.
i. State the null and alternative hypotheses.
(2 Marks)
ii. Compute the sample mean.
(2 Marks)
iii. Compute the sample standard deviation.
(2 Marks)
iv. Derive conclusion.
(4 Marks)
[Total:25 marks]

QUESTION 5

A. For the United States, the mean monthly Internet bill is $32.79 per household (CNBC,
January 18, 2006). A sample of 50 households in a southern state showed a sample
mean of $ 30.63. Use a population standard deviation of σ = $5.60.
i. Formulate hypotheses for a test to determine whether the sample data support
the conclusion that the mean monthly Internet bill in the southern state is less
than the national mean of $32.79.
(2 Marks)
ii. What is the value of the test statistic?
(2 Marks)
iii. At 1 % level of significance, what is your conclusion?
(3 Marks)

B. Eight sales executive trainees are assigned selling jobs right after their recruitment. After
a fortnight they are withdrawn from their field duties and given a month’s training for
executive sales. Sales executed by them in thousands of rupees before and after the
training, in the same period are listed below:

MBS702_BUSINESS STATISTICS Page 5

 Sales before 23 20 19 21 18 20 18 17
training

Sales after 25 25 24 24 22 23 25 21
training

Do these data indicate that the training has contributed to their performance? Use 5% level of
significance.
(10 Marks)
C. A food company is planning to market a new kind of cereal. However, before marketing
this product, the company wants to find what percentage of people will like it. The
company’s research department selected a random sample of 500 persons and asked
them to taste this cereal. Of these 500 persons, 290 said they liked it.

i. What is the point estimate of the population proportion?

(2 Marks)
ii. Calculate the standard error of sample proportion.
(2 Marks)
iii. Find, with a 95% confidence level, what percentage of all people will like this cereal.
(4 Marks)
(Total = 25 Marks)

QUESTION 6

A. Write the assumptions required to apply ANOVA. From time to time, unknown to its
employees, the research department at Post Bank observes various employees for work
productivity. Recently this department wanted to check whether the four tellers at a
branch of this Bank serve, on average, the same number of customers per hour. The
research manager observed each of the four tellers for a certain number of hours. The
following table gives the number of customers served by the four tellers during each of
the observed hours.
Teller A Teller B Teller C Teller D
19 14 11 24
21 16 14 19
26 14 21 21
24 13 13 26

MBS702_BUSINESS STATISTICS Page 6

 18 17 16 20
13 18
At the 5% level of significance, test the null hypothesis that the mean number of
customers served per hour by each of these four tellers is same.
(15 Marks)
B. One of the questions on the BusinessWeek Subscriber Study was, “In the past 12
months, when traveling for business, what type of airline ticket did you purchase most
often?” The data obtained are shown in the following contingency table.

Use α = 0.05 and test for the independence of type of flight and type of ticket.

What is your conclusion?

(10 Marks)

(Total = 25 Marks)

END OF QUESTION PAPER

MBS702_BUSINESS STATISTICS Page 7

 Required Formulae
Probability distributions
E(x) = ∑xi P(xi)

σ2 = ∑(xi) 2P(xi) – (µ) 2

P(r) = nCr prq(n-r)
P(x) = e-λ λx
x! where, e = 2.71828.….

Inferential statistics
Z= x-µ
σ
√n
t= x-µ
s
√n
x–E<μ<x+E where, E = z α/2 (σ/√n) or E = t α/2 (s/√n)

( fo − fe )2
 STAT
2
=  f
all cells e

MBS702_BUSINESS STATISTICS Page 8

 Table 1 AREAS UNDER THE STANDARD
NORMAL CURVE

z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.2 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517
0.4 0.1554 0.1591 0.1628 0.1664 0.1700 0.1736 0.1772 0.1808 0.1844 0.1879

0.5 0.1915 0.1950 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.2190 0.2224
0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549
0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.2910 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389

1.0 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 0.4306 0.4319

1.5 0.4332 0.4345 0.4357 0.4370 0.4382 0.4394 0.4406 0.4418 0.4429 0.4441
1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 0.4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767

2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817
2.1 0.4821 0.4826 0.4830 0.4834 0.4838 0.4842 0.4846 0.4850 0.4854 0.4857
2.2 0.4861 0.4864 0.4868 0.4871 0.4875 0.4878 0.4881 0.4884 0.4887 0.4890
2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936

2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964
2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981
2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986

3.0 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990
3.1 0.4990 0.4991 0.4991 0.4991 0.4992 0.4992 0.4992 0.4992 0.4993 0.4993
3.2 0.4993 0.4993 0.4994 0.4994 0.4994 0.4994 0.4994 0.4995 0.4995 0.4995
3.3 0.4995 0.4995 0.4995 0.4996 0.4996 0.4996 0.4996 0.4996 0.4996 0.4997

Two tailed One tailed

MBS702_BUSINESS STATISTICS Page 9

Table 2 PERCENTAGE POINTS OF THE t-DlSTRlBUTlON

One tail  5% 2.5% 1% 0.5% 0.1% 0.05%

Two tails 10% 5% 2% 1% 0.2% 0.1%

1 6.314 12.706 31.821 63.656 318.289 636.578
2 2.920 4.303 6.965 9.925 22.328 31.600
3 2.353 3.182 4.541 5.841 10.214 12.924
4 2.132 2.776 3.747 4.604 7.173 8.610
5 2.015 2.571 3.365 4.032 5.894 6.869

6 1.943 2.447 3.143 3.707 5.208 5.959

7 1.895 2.365 2.998 3.499 4.785 5.408
8 1.860 2.306 2.896 3.355 4.501 5.041
9 1.833 2.262 2.821 3.250 4.297 4.781
10 1.812 2.228 2.764 3.169 4.144 4.587

11 1.796 2.201 2.718 3.106 4.025 4.437

12 1.782 2.179 2.681 3.055 3.930 4.318
13 1.771 2.160 2.650 3.012 3.852 4.221
14 1.761 2.145 2.624 2.977 3.787 4.140
15 1.753 2.131 2.602 2.947 3.733 4.073

16 1.746 2.120 2.583 2.921 3.686 4.015

17 1.740 2.110 2.567 2.898 3.646 3.965
18 1.734 2.101 2.552 2.878 3.610 3.922
19 1.729 2.093 2.539 2.861 3.579 3.883
20 1.725 2.086 2.528 2.845 3.552 3.850

21 1.721 2.080 2.518 2.831 3.527 3.819

22 1.717 2.074 2.508 2.819 3.505 3.792
23 1.714 2.069 2.500 2.807 3.485 3.768
24 1.711 2.064 2.492 2.797 3.467 3.745
25 1.708 2.060 2.485 2.787 3.450 3.725

26 1.706 2.056 2.479 2.779 3.435 3.707

27 1.703 2.052 2.473 2.771 3.421 3.689
28 1.701 2.048 2.467 2.763 3.408 3.674
29 1.699 2.045 2.462 2.756 3.396 3.660
30 1.697 2.042 2.457 2.750 3.385 3.646

60 1.671 2.000 2.390 2.660 3.232 3.460

120 1.658 1.980 2.358 2.617 3.160 3.373
∞ 1.645 1.960 2.326 2.576 3.091 3.291

MBS702_BUSINESS STATISTICS Page 10

 Table 3 PERCENTAGE POINTS OF THE F DISTRIBUTION  = 5%

1 Numerator degrees of freedom

2 1 2 3 4 5 6 7 8 9
1 161.40 199.50 215.70 224.60 230.20 234.00 236.80 238.90 240.50
2 18.51 19.00 19.16 19.25 19.30 19.33 19.35 19.37 19.38
3 10.13 9.55 9.28 9.12 9.01 8.94 8.89 8.85 8081
4 7.71 6.94 6.56 6.39 6.26 6.16 6.09 6.04 6.00
5 6.61 5.79 5.41 5.19 5.05 4.95 4.88 4.82 4.77
6 5.99 5.14 4.76 4.53 4.39 4.28 4.21 4.15 4.10
7 5.59 4.74 4.35 4.12 3.97 3.87 3.79 3.73 3.68
8 5.32 4.46 4.07 3.84 3.69 3.58 3.50 3.44 3.39
9 5.12 4.26 3.86 3.63 3.48 3.37 3.29 3.23 3.18
10 4.96 4.10 3.71 3.48 3.33 3.22 3.14 3.07 3.02
Denominator degrees of freedom

11 4.84 3.98 3.59 3.36 3.20 3.09 3.01 2.95 2.90

12 4.75 3.89 3.49 3.26 3.11 3.00 2.91 2.85 2.80
13 4.67 3.81 3.41 3.18 3.03 2.92 2.83 2.77 2.71
14 4.60 3.74 3.34 3.11 2.96 2.85 2.76 2.70 2.65
15 4.54 3.68 3.29 3.06 2.90 2.79 2.71 2.64 2.59
16 4.49 3.63 3.24 3.01 2.85 2.74 2.66 2.59 2.54
17 4.45 3.59 3.20 2.96 2.81 2.70 2.61 2.55 2.49
18 4.41 3.55 3.16 2.93 2.77 2.66 2.58 2.51 2.46
19 4.38 3.52 3.13 2.90 2.74 2.63 2.54 2.48 2.42
20 4.35 3.49 3.10 2.87 2.71 2.60 2.51 2.45 2.39
21 4.32 3.47 3.07 2.84 2.68 2.57 2.49 2.42 2.37
22 4.30 3.44 3.05 2.82 2.66 2.55 2.46 2.40 2.34
23 4.28 3.42 3.03 2.80 2.64 2.53 2.44 2.37 2.32
24 4.26 3.40 3.01 2.78 2.62 2.51 2.42 2.36 2.30
25 4.24 3.39 2.99 2.76 2.60 2.49 2.40 2.34 2.28
26 4.23 3.37 2.98 2.74 2.59 2.47 2.39 2.32 2.27
27 4.21 3.35 2.96 2.73 2.57 2.46 2.37 2.31 2.25
28 4.20 3.34 2.95 2.71 2.56 2.45 2.36 2.29 2.24
29 4.18 3.33 2.93 2.70 2.55 2.43 2.35 2.28 2.22
30 4.17 3.32 2.92 2.69 2.53 2.42 2.33 2.27 2.21
40 4.08 3.23 2.84 2.61 2.45 2.34 2.25 2.18 2.12
60 4.00 3.15 2.76 2.53 2.37 2.25 2.17 2.10 2.04
120 3.92 3.07 2.68 2.45 2.29 2.17 2.09 2.02 1.96
 3.84 3.00 2.60 2.37 2.21 2.10 2.01 1.94 1.88

MBS702_BUSINESS STATISTICS Page 11

 Table 4PERCENTAGE POINTS OF THE 2-D1STRIBUTION

 10% 5% 2 5% 1% 0.l%
1 2.706 3.841 5.024 6.635 10.83
2 4.605 5.991 7.378 9.210 13.82
3 6.252 7.816 9.351 11.35 16.27
4 7.780 9.488 11.14 13.28 18.47
5 9.236 11.07 12.83 15.08 20.51
6 10.64 12.59 14.45 16.81 22.46
7 12.02 14.07 16.02 18.49 24.36
8 13.36 15.51 17.53 20.09 26.13
9 14.68 16.92 19.02 21.67 27.89
10 15.99 18.31 20.48 23.21 29.59
11 17.28 19.68 21.92 24.72 31.26
12 18.55 21.03 23.34 26.22 32.91
13 19.81 22.36 24.74 27.69 34.51
14 21.06 23.68 26.12 29.14 36.12
15 22.31 25.00 27.49 30.58 37.70
16 23.54 26.30 28.85 32.00 39.25
17 24.77 27.59 30.19 33.41 40.79
18 25.99 28.87 31.53 34.81 42.31
19 27.20 30.14 32.85 36.19 43.82
20 28.41 31.41 34.17 37.57 45.32
21 29.62 32.67 35.48 38.93 46.80
22 30.81 33.92 36.78 40.29 48.27
23 32.01 35.17 38.08 41.64 49.73
24 33.20 36.42 39.36 42.98 51.18
25 34.38 37.65 40.65 44.31 52.62
26 35.56 38.89 41.92 45.64 54.05
27 36.74 40.11 43.19 46.96 55.48
28 37.92 41.34 44.46 48.28 56.89
29 39.09 42.56 45.72 49.59 58.30
30 40.26 43.77 46.98 50.89 59.70

MBS702_BUSINESS STATISTICS Page 12

1. The U.S. Department of Energy provides fuel economy information for a variety of motor
vehicles. A sample of 10 automobiles is shown in Table (Fuel Economy website, February 22,
2008). Data show the size of the automobile (compact, midsize, or large), the number of
cylinders in the engine, the city driving miles per gallon, the highway driving miles per
gallon, and the recommended fuel (diesel, premium, or regular).
a. How many elements are in this data set? (2 Marks)
b. How many variables are in this data set? (2 Marks)
c. Which variables are categorical and which variables are quantitative? (3 Marks)
d. What type of measurement scale is used for each of the variables? (3 Marks)

1. A department store manager wants to investigate whether the method of payment chosen
by customer is related to the size of the purchases. The manager analyzed a sample of 250
customer purchases. The size of the purchases was categorized as value of purchase above
Rs 2,000 or below Rs 2,000. The method of payment was either cash or credit card. There
were 82 customers who had purchases less then Rs 2000. The number of customers who
paid through credit card was 134. There were 51 customers having purchases less than Rs
2,000 and also paid trough cash.

i. Present the above data using a suitable visualization method. (5 marks)

ii. One of these 250 customers was selected randomly. What is the probability that the
selected customer had purchases more than Rs 2,000? (2 marks)
 iii. A randomly selected customer was found to have paid through credit card. What is
the probability that his purchases were less than Rs 2,000. (3 marks)
2. A manufacturing firm produces steel pipes in three plants with daily production volume of
500, 1000, and 2000 units respectively. According to the past experience, it is known that
the fraction of defective outputs produced by the three plants are respectively 0.005, 0.008
and 0.010. If pipe is selected from a day’s total production and found to be defective. From
which plant the defective pipe is expected to have been produced? (10 marks)

3. The following are the scores of two batsmen A and B in a series of innings: (10 marks)
A: 58 59 60 54 65 66 52 75 69 52
B: 84 56 92 65 86 78 44 54 78 68
i. Who is better?
ii. Who is more consistent?
4. Nixon Corporation manufactures computer terminals. The following data give the number
of computer terminals produced at the company for a sample of 30 days.
24 32 27 23 33 29 33 25 23 28
21 26 31 22 27 33 27 23 28 29
31 35 34 22 26 28 23 35 31 27
i. Construct a frequency distribution table using the classes 21 – 23, 24 – 26, 27 – 29,
30 – 32, and 33 – 35. (2 Marks)
ii. Calculate the relative frequencies and percentages for all classes. (3 Marks)
iii. Construct histogram and a polygon for the percentage distribution. (3 Marks)
iv. For what percentage of the days is the number of computer terminals produced in
the interval 27 to 29? (2 Marks)
5.All highway bridges are inspected periodically for structural deficiency by the Road
Development Authority (RDA). Some of the variables maintained by RDA are given
below:
i. Length of maximum span (meters)
ii. Number of vehicle lanes
iii. Toll bridge (yes or no)
iv. Average daily traffic (vehicles per hour)
 v. Condition of bridge (good, fair or poor)
Name the types of variables and its level of measurement. (10 Marks)

6. A psychologist developed a new test of adult intelligence. The test was administered to 20
individuals, and the following data were obtained.

i. Construct a stem-and-leaf display for the data. (3 Marks)

ii. Find the median if it exists. (2 Marks)

7. The following data give the 1989 production of corn (in millions of bushels) for seven
states. (Source: National Agricultural Statistics Service) The data, entered in that order, are
for the states of California, Indiana, Minnesota, Ohio, South Dakota, Texas, and Wisconsin.
27 692 700 342 191 148 311
i. Calculate the mean and median. (5 Marks)
ii. Is the mean or the median a better summary measure for these data? Why?
(2 Marks)
iii. Find the standard deviation, Variance and coefficient of Variation. (8 Marks)

8. Show the five-number summary and the box plot for the following data: (10 Marks)
5 15 18 10 8 12 16 10 6

9. The Commercial Bank has recently started a new credit program. Customers meeting
certain credit requirements can obtained a credit card accepted by participating area
merchants that carries a discount. Past numbers show that 20% of all applicants for this
card are rejected. If 10 applicants are selected, what is the probability that
i. Exactly 4 will be rejected? (2 Marks)
ii. None of them are rejected? (2 Marks)
iii. At least two are rejected? (2 Marks)
10. For borrowers with good credit scores, the mean debt for revolving and installment
accounts is $15,015 (BusinessWeek, March 20, 2006). Assume the standard deviation is
$3540 and that debt amounts are normally distributed.
i. What is the probability that the debt for a borrower with good credit is more than
$18,000? (3 Marks)
ii. What is the probability that the debt for a borrower with good credit is less than
$10,000? (3 Marks)
iii. What is the probability that the debt for a borrower with good credit is between
$12,000 and $18,000? (3 Marks)
11. The following data were collected on the height (inches) and weight (pounds) of women
swimmers.

i. Develop a scatter diagram for these data with height as the independent
variable. (3 Marks)
ii. Find correlation coefficient and coefficient of determination. Interpret the
results. (5 Marks)
iii. Develop the estimated regression equation by computing the values of b0 and
b1. (5 Marks)
iv. If a swimmer’s height is 63 inches, what would you estimate her weight to be?
(2 Marks)
12. Joan’s Nursery specializes in custom-designed landscaping for residential areas. The
estimated labor cost associated with a particular landscaping proposal is based on the
number of plantings of trees, shrubs, and so on to be used for the project. For cost-
estimating purposes, managers use two hours of labor time for the planting of a
medium-sized tree. Actual times from a sample of 10 plantings during the past month
follow (times in hours).
1.7 1.5 2.6 2.2 2.4 2.3 2.6 3.0 1.4 2.3
With a .05 level of significance, test to see whether the mean tree-planting time differs from
two hours.
i. State the null and alternative hypotheses. (2 Marks)
ii. Compute the sample mean. (2 Marks)
iii. Compute the sample standard deviation. (2 Marks)
iv. What is your conclusion? (4 Marks)
13. For the United States, the mean monthly Internet bill is $32.79 per household (CNBC,
January 18, 2006). A sample of 50 households in a southern state showed a sample mean
of $30.63. Use a population standard deviation of σ = $5.60.
i. Formulate hypotheses for a test to determine whether the sample data support the
conclusion that the mean monthly Internet bill in the southern state is less than the
national mean of $32.79. (2 Marks)
ii. What is the value of the test statistic? (2 Marks)
iii. At 1 % level of significance, what is your conclusion? (3 Marks)
14. Eight sales executive trainees are assigned selling jobs right after their recruitment. After
a fortnight they are withdrawn from their field duties and given a month’s training for
executive sales. Sales executed by them in thousands of rupees before and after the training,
in the same period are listed below:

Sales before 23 20 19 21 18 20 18 17
training

Sales after 25 25 24 24 22 23 25 21
training

Do these data indicate that the training has contributed to their performance?
Use 5% level of significance. (10 Marks)
15. A food company is planning to market a new kind of cereal. However, before marketing
this product, the company wants to find what percentage of people will like it. The
company’s research department selected a random sample of 500 persons and asked them
to taste this cereal. Of these 500 persons, 290 said they liked it.
i. What is the point estimate of the population proportion? (2 Marks)
ii. Calculate the standard error of sample proportion. (2 Marks)
iii. Find, with a 95% confidence level, what percentage of all people will like this
cereal. (4 Marks)
 16. From time to time, unknown to its employees, the research department at Post Bank
observes various employees for work productivity. Recently this department wanted to
check whether the four tellers at a branch of this Bank serve, on average, the same number
of customers per hour. The research manager observed each of the four tellers for a certain
number of hours. The following table gives the number of customers served by the four
tellers during each of the observed hours.
Teller A Teller B Teller C Teller D
19 14 11 24
21 16 14 19
26 14 21 21
24 13 13 26
18 17 16 20
13 18
Perform ANOVA, at the 5% level of significance, to test the null hypothesis that the mean
number of customers served per hour by each of these four tellers is same. (15 Marks)
17. One of the questions on the BusinessWeek Subscriber Study was, “In the past 12 months,
when traveling for business, what type of airline ticket did you purchase most often?” The
data obtained are shown in the following contingency table.

Use α = 0.05 and test for the independence of type of flight and type of ticket. What is
your conclusion? (10 Marks)
18. The cost of consumer purchases such as single-family housing, gasoline, Internet services,
tax preparation, and hospitalization were provided in The Wall-Street Journal (January 2,
2007). Sample data typical of the cost of tax-return preparation by services such as H&R
Block are shown below.
 i. Compute the mean, median, and mode. (9 Marks)
ii. Compute the first and third quartiles. (4 Marks)
iii. Compute and interpret the 90th percentile. (2 Marks)
19. The following 20 observations are for two quantitative variables, x and y.

i. Develop a scatter diagram for the relationship between x and y. (4 Marks)

ii. What is the relationship, if any, between x and y? (2 Marks)
iii. Calculate Correlation Coefficient. (5 Marks)
20. A Harris Interactive survey for Inter-Continental Hotels & Resorts asked respondents,
“When traveling internationally, do you generally venture out on your own to experience
culture, or stick with your tour group and itineraries?” The survey found that 23% of the
respondents stick with their tour group (USA Today, January 21, 2004).
i. In a sample of six international travelers, what is the probability that two will
stick with their tour group (2 Marks)
ii. In a sample of six international travelers, what is the probability that at least
two will stick with their tour group? (2 Marks)
 iii. In a sample of 10 international travelers, what is the probability that none will
stick with the tour groups? (2 Marks)
21. More than 50 million guests stay at bed and breakfasts (B&B s) each year. The website for
the Bed and Breakfast Inns of North America, which averages seven visitors per minute,
enables many B&Bs to attract guests (Time, September 2001). Calculate
i. The probability of no website visitors in a one-minute period. (2 Marks)
ii. The probability of two or more website visitors in a one-minute period. (2 Marks)
iii. The probability of one or more website visitors in a 30-second period. (2 Marks)
iv. The probability of five or more website visitors in a one-minute period. (2 Marks)
22. In a cover story, BusinessWeek published information about sleep habits of Americans
(BusinessWeek, January 26, 2004). The article noted that sleep deprivation causes a
number of problems, including highway deaths. Fifty-one percent of adult drivers admit
to driving while drowsy. A researcher hypothesized that this issue was an even bigger
problem for night shift workers.
i. Formulate the hypotheses that can be used to help determine whether more than
51% of the population of night shift workers admit to driving while drowsy.
(3 Marks)
ii. A sample of 400-night shift workers identified those who admitted to driving while
drowsy. See the Drowsy file. What is the sample proportion? (3 Marks)
iii. At α = 0.01, what is your conclusion? (2 Marks)
23. Set up the ANOVA table and test for any significant difference in the mean examination
score for the three plants. Use α = 0.05. (10 Marks)

24. A manufacturer would like to survey users to determine the demand potential for a new
power press. The new press has a capacity of 500 tons and costs Rs. 225,000. It is used for
forming products from lightweight and heavyweight steel and can be used by automobile,
construction equipment, and major appliance manufacturers.
i. Identify the population and sampling frame that could be used. (1 mark)
ii. Describe how a simple random sample can be drawn using the identified sampling
frame. (4 marks)
iii. Could a stratified sample be used? If yes, explain. (4 marks)
iv. Could a cluster sample be used? If yes, explain. (3 marks)
v. Which sampling method would you highly recommend? Why? (3 marks)
25. A certain type of light bulb is advertised to have an average lifetime of 1,000 hours. Assume
the lifetimes of these bulbs are approximately normally distributed with a standard
deviation of 250 hours. Find the proportion of light bulbs that will fail during their first 350
hours of use.
26. A student majoring in accounting is trying to decide on the number of firms to which she
should apply. Given her work experience, grades and extra-curricular activities, she has
been told by a placement counselor that she can expect to receive a job offer from 80% of
the firms to which she applies. Hence, to save time the student applies to only five firms.
 Assuming the counselor’s estimate is correct, find the probability that the student receives
at least three offers.
27. A major car manufacturer wants to test a new engine to determine whether it meets new
air pollution standards. The mean emission µ of all engines of type must be less than 20
parts per million of carbon. Ten engines are manufactured for testing purposes and the
emission level of each is determined. The data (in parts per million) are listed below:
15.6, 16.2, 22.5, 20.5, 16.4, 19.4, 16.6, 17.9, 12.7, 13.9
Do the data supply sufficient evidence to allow the manufacturer to conclude that this type
of engine meets the pollution standard? Use a significance level of 5%.
28. A random sample of 50 university students enrolled in a business statistics course was
drawn. At the course’s completion each student was asked how many hours he or she spent
doing homework in statistics. The sample mean was computed to be 33 hours and the
sample standard deviation was 8 hours.
i. At 95% level of confidence, find the interval estimate for the mean number of hours
studied by the students. (3 marks)
ii. The instructor has recommended that students devote 3 hours per week for the
duration of the 12-week semester, which totals to 36 hours. Considering your
answer to (i) do you have sufficient evidence to conclude that the students devote
the required duration of time? (4 marks)

29. During the past decade many cigarette smokers have attempted to quit. Unfortunately,
nicotine is highly addictive. Smokers employ large number of different methods to help
themselves quit. A researcher for the addiction Research Council planned to determine why
some people are able to quit while others who attempted to quit are failed. He surveyed
1,000 people who planned to quit smoking. He determined their educational level and
whether one year later they continued to smoke. The survey results are in the table below.
 smoker

Education level Continued to smoke Quit smoking Total

Did not finish school 34 23 57

O/L and A/L 251 212 463

Graduate or professionally qualified 175 305 480

Total 460 540 1000

Can we infer at 5% significance level that the level of education is a factor in determining
whether a smoker will quit?
30. The supervisor of an assembly line process believed that assembly–line speed (feet/minute)
affects the number of defective parts found during on line inspection. To test this theory,
the management inspected the production at different line speeds. The following data were
collected.

Line speed No. of defective parts.

20 21
20 19
40 15
30 16
60 14
40 17

i. Calculate the correlation coefficients and interpret. (3 marks)

ii. Calculate the coefficient of determination and interpret. (2 marks)
iii. Develop the line of best fit using least squares method of regression that best
describes the relationship between the two variables. (1 mark)
iv. Interpret the slope of the line. (2 marks)
v. Predict the number of defective parts if the line speed is 50 feet/minute. (2 marks)