ASSIGNMENT DRIVE FALL 2013

PROGRAM MBADS / MBAHCSN3 / MBAN2 / PGDBAN2 / MBAFLEX SEMESTER I

SUBJECT CODE & NAME MB0040 STATISTICS FOR MANAGEMENT
Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400
words. Each question is followed by evaluation scheme.

Q1. A statistical survey is a scientific process of collection and analysis of numerical data. Explain the stages of
statistical survey. Describe the various methods for collecting data in a statistical survey. (Meaning of statistical
survey, Stages of statistical survey (Listing and Explanation), Methods for collecting data) 2, 4, 4
Answer:
Meaning of Statistical Survey
Surveys of human populations are common in government, health, social science and marketing sectors.
A Statistical Survey is a scientific process of collection and analysis of numerical data. Statistical surveys are used to
collect information about units in a population and it involves asking questions to individuals.
Stages of Statistical Survey
Statistical surveys involve two stages namely Planning and Execution. Figure shows the two broad stages of
Statistical Survey.
1. Planning a Statistical Survey
The relevance and accuracy of data obtained in a survey depends upon the care taken in planning. A properly planned
investigation can lead to the best results with least cost and time. Figure gives the explanation of steps involved in the
planning stage.

2. Execution of statistical survey

Controlled methods should be adopted at every stage of carrying out the investigation to check the accuracy, coverage,
methods of measurements, analysis and interpretation. The collected data should be edited, classified, tabulated and
presented in the form of diagrams and graphs. The data should be carefully and systematically analysed and
interpreted.
Methods for collecting data
Collection of data is done by a suitable method as per the following:
1. Direct personal observation
2. Indirect oral interview
3. Information through agencies
4. Information through mailed questionnaires
5. Information through a schedule filled by investigators
Q2 Analysis of daily wages of workers in two organizations A and B yielded the following results:

Obtain the average daily wages and the standard deviation of wages of all workers in the two organisations
taken together. Which organization is more equitable in regard to wages? (Formula and Computation of
Combined Mean, Formula and Computation of Combined Standard deviation, Formula and Computation of
Coefficient of Variation, Interpretation) 2, 4, 3, 1
Answer: Let x1 , x2 , n1, n2, 1 , 2 respectively denote mean, no. of workers and standard deviation of A

and B.
Then : x1 = 30 , x2 = 15, n1 = 10, n2 = 20 , 1= sqrt (25) = 5 , 2 = sqrt(100) = 10 (given)
So
Combined mean = x12 = (n1x1 + n2x2) / (n1 + n2)
= (30*10+15*20)/20+10
=20

Combined standard deviation = s12 = sqrt ((n1 12 + n2 22 + n1d12 + n2d22) / (n1 + n2)
= sqrt ((10*25+20*100+10*100 +20*25)/30
= sqrt(( 250+2000+1000+500/30
=sqrt((3750/300

d1 = x1 - x12
=30-20=10

d2 = x2 - x12
= -5
Coefficient of Variance Formula

The Equation or Formula to find out the Coefficient of Variation is given below
Coefficient of Variation Cv = Standard Deviation / Mean
= sqrt(3750/300) /20
3 a. State the addition and multiplication rules of probability giving an example of each case.( (Stating the
addition rule of probability and an example, Stating the multiplication rule of probability and an example)2, 2
Answer.
a) Addition rule
The addition rule of probability states that:
i) If A and B are any two events then the probability of the occurrence of either A or B is given by:
= +
ii) If A and B are two mutually exclusive events then the probability of occurrence of either A or B is given
by:
= +
iii) If A, B and C are any three events then the probability of occurrence of either A or B or C is given
by:
C= ++C C C+ C
iv) If A1, A2, A3, An are n mutually exclusive and exhaustive events then the probability of
occurrence of at least one of them is given by:

Multiplication rule
If A and B are two independent events then the probability of occurrence of A and B is given by:
=
b. In a bolt factory machines A, B, C manufacture 25, 35 and 40 percent of the total output. Of their total output
5, 4 and 2 percent are defective respectively. A bolt is drawn at random and is found to be defective. What are
the probabilities that it was manufactured by machines A, B and C? (Applying Bayes theorem and calculating
the probabilities) 6
Answer: Solution. Let E1, E2, E3 be the events that a bolt selected at random is manufactured by
the machines A, B, C respectively and let E denote the event of its being defective. Now P(E1) =
0.25, P(E2) = 0.35, P(E3) = 0.40
The probability of drawing a defective bolt manufactured by machine A is P(E/E1) = 0.05.
Similarly we have
P(E/E2) = 0.04, P(E/E3) = 0.02
Hence the probability that a defective bolt selected at random is manufactured by machine A is
given by

Similarly we get
P(E2/E) =28/69, P(E3/E) =16/69
4 a. What is a Chi-square test? Point out its applications. Under what conditions is this test applicable?
(Meaning of Chi-square test, Applications, Conditions)

Answer: A chi-squared test, also referred to as chi-square test or test, is any statistical hypothesis test in which the
sampling distribution of the test statistic is a chi-squared distribution when the null hypothesis is true. Also considered
a chi-squared test is a test in which this is asymptotically true, meaning that the sampling distribution (if the null
hypothesis is true) can be made to approximate a chi-squared distribution as closely as desired by making the sample
size large enough.
The Chi-square test is one of the most commonly used non-parametric tests in statistical work. The Greek
Letter 2 is used to denote this test. 2 describe the magnitude of discrepancy between the observed and
the expected frequencies. The value of 2 is calculated as:

Where, O1, O2, O3.On are the observed frequencies and E1, E2, E3En are the corresponding
expected or theoretical frequencies.
Practical applications of Chi-Square test
In inferential statistics, the Chi-Square test can also be applied for the discrete distributions. In using ChiSquare test, we need no assumptions regarding the shape of sampling distributions. The applications of
ChiSquare test include testing:

the significance of sample variances

the goodness of fit of a theoretical distribution

the independence in a contingency table whether the observed results are consistent with the
expected segregations in breeding experiments of genetics

Where the first is a parametric test and the other two are nonparametric test.
Uses of Chi-Square test
The 2 test is used broadly to:
Test goodness of fit for one way classification or for one variable only

Test independence or interaction for more than one row or column in the form of a contingency table
concerning several attributes
Test population variance 2 through confidence intervals suggested by 2 test
Conditions for applying the Chi-Square test
The following are the conditions for using the Chi-Square test:
1. The frequencies used in Chi-Square test must be absolute and not in relative terms.
2. The total number of observations collected for this test must be large.
3. Each of the observations which make up the sample of this test must be independent of each other.
4. As 2 test is based wholly on sample data, no assumption is made concerning the population distribution.
In other words, it is a non parametric-test.
5. 2 test is wholly dependent on degrees of freedom. As the degrees of freedom increase, the Chi-Square
distribution curve becomes symmetrical.
6. The expected frequency of any item or cell must not be less than 5, the frequencies of adjacent items or
cells should be polled together in order to make it more than 5.
7. The data should be expressed in original units for convenience of comparison and the given distribution
should not be replaced by relative frequencies or proportions.
8. This test is used only for drawing inferences through test of the hypothesis, so it cannot be used for
estimation of parameter value.
b. Discuss the types of measurement scales with examples. (Types of measurement scales with examples) 4
Answer:
Nominal scales are naming scales. They represent categories where there is no basis for
ordering the categories.
Measurement Scales
Variables differ in how well they can be measured, that is, how much measurable information their
measurement scale can provide. There is obviously some measurement error involved in every
measurement, which determines the amount of information that we can obtain. Another factor that
determines the amount of information that can be provided by a variable is its type of measurement scale.
Specifically variables are classified under two categories qualitative and quantitative.
Nominal (purely categorical) data
Nominal variables allow for only qualitative classification. They can be measured only in terms of whether
the individual items belong to some distinctively different categories; however, we cannot quantify or even
rank order these categories. For example, 2 individuals are different in terms of a certain variable (for
example, they are of different race), we cannot say which one has more of the quality represented by the
variable. Typical examples of nominal variables are gender, race, colour, city, marital status, etc. Clearly, the
numbers associated with the options above have no numerical significance. Comparison between values is
impossible and also descriptive statistics like the mean and standard deviation would make no sense if
calculated.
Ordinal data
Ordinal variables allow us to rank order the items we measure in terms of which has less and which has
more of the quality represented by the variable, however they do not allow us to say how much more. A
typical example of an ordinal variable is the socioeconomic status of families. For example, we know that
upper-middle is higher than middle but we cannot say that it is, for example, 18% higher. Also, this very
distinction between nominal, ordinal, and interval scales itself represents a good example of an ordinal
variable.
Quantitative (numerical) data
Quantitative data can be easily measured on a numerical scale; variables which can be quantified in terms
of units are all quantitative. Examples of quantitative variables are number of students per class and height
(measured in centimeters). Again, these two variables differ in their nature; the first is said to be discrete
whereas the second is continuous.
Discrete data

Discrete data occur as definite and separate values; a discrete variable assumes values which are
countable so that there are gaps between its successive values.
class, we use numbers (0, 1, 2 n).
Continuous data
Continuous data occur as the whole set of real numbers or a subset of it. In other words, there are no gaps
between successive values so that a continuous variable assumes all the values (including all the decimals)
between given boundaries. Temperature is a good example of a continuous variable though thermometer
readings are recorded to the nearest tenth of a degree (Centigrade or Fahrenheit), temperature does not
jump from, for example, 17.10 C to 17.20 C. It passes through all the real numbers between these two
values. Height, weight and speed are also continuous variables.
Interval scale
Interval variables allow us not only to rank order the items that are measured, but also to quantify and
compare the sizes of differences between them. For example, temperature, as measured in degrees
Fahrenheit or Celsius, constitutes an interval scale. We can say that a temperature of 40 degrees is higher
than a temperature of 30 degrees, and that an increase from 20 to 40 degrees is twice as much as an
increase from 30 to 40 degrees.
Ratio scale
Ratio variables are very similar to interval variables. In addition to all the properties of interval variables, they
feature an identifiable absolute zero point, thus they allow for statements such as x is two times more than y.
Typical examples of ratio scales are measures of time or space. For example, as the Kelvin temperature
scale is a ratio scale, a temperature of 200 degrees is higher than 100 degrees, and it is twice as high.
Interval scales do not have the ratio property.

5. Explain the Components of Time series. (Meaning of Time series, Components of Time series) 5, 5
Answer:
Time series
A time series is a set of numerical values of a given variable listed at successive intervals of time, which
means that, data regarding the variable is listed in chronological order. Usually, the interval of time is taken
as uniform. Yearly production of wheat in the country, hourly temperature of a city, bimonthly electricity bills
are all examples of time series. Almost all data like industrial production, agricultural production, exports,
imports, dairy products can be arranged in chronological order.
Components of Time Series
The behaviour of a time series over periods of time is called the movement of the time series. The time
series is classified into the following four components:
i) Long term trend or secular trend
ii) Seasonal variations
iii) Cyclic variations
iv) Random variations
i) Long term trend or secular trend
This refers to the smooth or regular long term growth or decline of the series. This movement can be
characterized by a trend curve. If this curve is a straight line, then it is called a trend line. If the variable
increases over a long period of time, then it is called an upward trend. If the variable decreases over a long
period of time, then it is called a downward trend. If the variable moves upward or downward along a
straight line then the trend are called a linear trend, otherwise it is called a non-linear trend.
ii) Seasonal variations

Variations in a time series that are periodic in nature and occur regularly over short periods of time during a
year are called seasonal variations.
These variations are precise and can be forecasted.
The following are examples of seasonal variations in a time series.
i. The prices of vegetables drop down after rainy season or in winter months and they go up during summer,
every year. ii. The prices of cooking oils reduce after the harvesting of oil seeds and go up after some time.
iii) Cyclic variations
The long-term oscillations that represent consistent rise and decline in the values of the variable are called
cyclic variations. Since these are long-term oscillations in the time series, the period of oscillation is usually
greater than one year. The oscillations are either a trend curve or a trend line. The period of one cycle is the
time-distance between two successive peaks or two successive troughs.
iv) Random variations
Random variations are called irregular movements. Movements that occur usually in brief periods of time,
without any pattern and which are unpredictable in nature are called irregular movements. These
movements do not have any regular period or time of occurrences. For example, the effect of national
strikes, floods, earthquakes, etc. It is very difficult to study the behaviour of such a time series.
6 a. What is analysis of variance? What are the assumptions of the technique?
b. Three samples below have been obtained from normal populations with equal variances. Test the hypothesis
at 5% level that the population means are equal.

(Meaning of Analysis of Variance, Assumptions, Formulas/Calculation/Solution to the problem) 2, 1, 7

Answer:
Analysis of variance (ANOVA)

Analysis of variance (ANOVA) is a collection of statistical models used to analyze the differences between
group means and their associated procedures (such as variation among and between groups). In ANOVA
setting, the observed variance in a particular variable is partitioned into components attributable to different
sources of variation. In its simplest form, ANOVA provides a statistical test of whether or not the means of
several groups are equal, and therefore generalizes t-test to more than two groups.
It is a collection of statistical models used to analyze the differences between group means and their associated
procedures (such as "variation" among and between groups). In ANOVA setting, the observed variance in a particular
variable is partitioned into components attributable to different sources of variation. In its simplest form, ANOVA
provides a statistical test of whether or not the means of several groups are equal.
Assumptions for study of ANOVA
The underlying assumptions for the study of ANOVA are:

i) Each of the samples is a simple random sample

ii) Population from which the samples are selected are normally distributed
iii) Each of the samples is independent of the other samples
iv) Each of the population has the same variation and identical means
v) The effect of various components are additive
b) Answer: Let H0: There is no significant difference in the means of three samples

8
10
7
14
11

7
5
10
9
9

12
9
13
12
14

A = 50

B = 40

C = 60

T= Sum of all observations = 150

Correction factor =

T 2 150 2
=
= 1500
N
15

T2

SST (Total Sum of the Squares)= Sum of squares of all observations N

= 82 + 72 +122 +102 + .......... +142 1500 1600 -1500 = 100

(A )2
SSC =

( B )2
+

n1
=

n2

( C)2
+

2
( D )

n3

+,,,,,,+

2
2
( N ) T

n4

nn

50 2 40 2 60 2
1500 = 1540 1500 40
+
+
5
5
5

Sum of the squares of the Error within columns (samples): SSE = SST SSC = 100 40 = 60

Variance between samples:

SSC

40

40

MSC = k 1 =3 1 = 2 = 20
Variance within the samples:

SSE
60
MSE = (n k) = (15 3) = 5
The degree of freedom = (k 1, n k) = (2, 12).
[ k is the number of columns and n is the total number of observations]