STATISTICS FOR BUSINESS - CHAP08 - Comparison of Two Populations PDF

International University IU
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STATISTICS FOR BUSINESS
CHAPTER 08
COMPARISON OF TWO POPULATIONS

STRUCTURE OF PAPER
PART I - COMPARISON OF TWO POPULATION MEANS
METHOD 01
COMPARISON OF TWO POPULATION MEANS USING PAIRED-OBSERVATION
METHOD 02
COMPARISON OF TWO POPULATION MEANS USING INDEPENDENT RANDOM SAMPLES
PART II - COMPARISON OF TWO POPULATION PROPORTIONS
PART III - COMPARISON OF TWO POPULATION VARIANCES


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2

PART I
COMPARISON OF TWO POPULATION MEANS
METHOD 01
COMPARISON OF TWO POPULATION MEANS USING PAIRED-OBSERVATION
HYPOTHESIS TESTING
PROCESS
Two tailed Testing Right tailed Testing Left tailed Testing
Step 01
The population of
differences is normally
distributed

Step 02
Determine the null and
alternative hypotheses
(E
0
and E
1
)
E
0
:p
=p
0

E
1
:p
0

E
0
:p
0

E
1
: p
>p
0

E
0
: p
0

E
1
:p
<p
0

Step 03
Compute the test statistic
value (t
1
/ z
1
) and the
critical value(s) (t
C
/ z
C
)
Situation I: When n
<30, we use t Jistribution and S =s

n

The test statistic value:
t
1
=

0
s

The critical value(s): With J =n
1

t
C
=t
(d],
u
2
)
t
C
=t
(d],u)
t
C
=t
(d],u)


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Situation II: When n
30, we use z Jistribution and S =s

n

z
1
=

0
s

The critical value(s):

z
C
=z
u/ 2
z
C
=z
u
z
C
=z
u

Step 04
Make the decision
With the level of significance (o)
Situation I: We can reject E
0
when
t
1
[t
C
,t
C
] t
1
>t
C
t
1
<t
C

z
1
[z
C
,z
C
] z
1
>z
C
z
1
<z
C

Situation II: We cannot reject E
0
when
t
1
[t
C
,t
C
] t
1
<t
C
t
1
>t
C

z
1
[z
C
,z
C
] z
1
<z
C
z
1
>z
C

CONFIDENCE INTERVALS
Situation I: When n
<30, we use t Jistribution and S =s

n

CI ur
D
=D
t
(d,
u
2
)
x
D
n
D


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4

Situation II: When n
30, we use z Jistribution and S =s

n

CI ur
D
=D
zu
2
x
D
n
D

Sample:
PROBLEM 8.1:
(Situation I)
Recent advances in cell phone screen quality have enabled the showing of movies and commercials on cell
phone screens. But according to the New York Times, advertising is not as successful as movie viewing. Suppose
the following data are numbers of viewers for a movie (M) and for a commercial aired with the movie (C). Test
for equality of movie and commercial viewing, on average, using a two-tailed test at =0.05 (data in
thousands):

M: 15 17 25 17 14 18 17 16 14
C: 10 9 21 16 11 12 13 15 13

SOLUTION: M C Score Differences
15 10 5
17 9 8
25 21 4
17 16 1
14 11 3
18 12 6
17 13 4
16 15 1
14 13 1

n
=9,
=3.67, s
=2.45, o =0.05


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We assume that the population of score differences is normally distributed.

E
0
: p
=0
E
1
: p
0
t
1
=

0
s
=
3.67 0
2.45
9
4.49
t
C
=t
(d],
u
2
)
==t
(8,0.025)
=2.306

Thus, at 0.05 level of significance, we can reject E
0
since t
1
[t
C
,t
C
]. It means that based on the hypothesis
testing we have significant evidence to prove the differences between movie and commercial viewing.

PROBLEM 8.2:
(Situation II)
A study is undertaken to determine how consumers react to energy conservation efforts. A random group of 60
families is chosen. Their consumption of electricity is monitored in a period before and a period after the families
are offered certain discounts to reduce their energy consumption. Both periods are the same length. The
difference in electric consumption between the period before and the period after the offer is recorded for each
family. Then the average difference in consumption and the standard deviation of the difference are computed.
The results are
=0.2 kilowatt and sD =1.0 kilowatt. At =0.01, is there evidence to conclude that
conservation efforts reduce consumption?

SOLUTION: n
=60,
=0.2, s
=1.0, o =0.01

We assume that the population of score differences is normally distributed.

E
0
: p
0
E
1
: p
<0


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6

z
1
=

0
s
=
0.20
1.0
60
1.5492
The critical value:
z
C
=z
u
=2.33

Thus, at 0.01 level of significance, we cannot reject E
0
since z
1
[z
C
,z
C
]. It means that with the hypothesis
testing we do not have sufficient evidence to prove that conservation efforts reduce consumption.


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7

PART I
COMPARISON OF TWO POPULATION MEANS
METHOD 02
COMPARISON OF TWO POPULATION MEANS USING INDEPENDENT RANDOM SAMPLES
HYPOTHESIS TESTING
PROCESS
Step 01
Two populations are
normally distributed

Step 02
(E
0
and E
1
)
E
0
:p
1
p
2
=(p
1
p
2
)
0

E
1
:p
1
p
2
(p
1
p
2
)
0

E
0
:p
1
p
2
(p
1
p
2
)
0

E
1
: p
1
p
2
>(p
1
p
2
)
0

E
0
: p
1
p
2
(p
1
p
2
)
0

E
1
:p
1
p
2
<(p
1
p
2
)
0

Step 03
value (z
1
/ t
1
) and the
critical value(s) (z
C
/ t
C
)
Situation I:

Condition: o
1
and o
2
are known (for all n
1
and n
2
)
Method: We use z Jistribution and S =(o
1
2
n
1
) +(o
2
2
n
2
)

z
1
=
(x
1
x
2
) (p
1
p
2
)
0
_
o
1
2
n
1
+
o
2
2
n
2


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z
C
=z
u/ 2
z
C
=z
u
z
C
=z
u

Situation II:

Condition: o
1
and o
2
are unknown
o
1
=o
2
(pooled variance)
J =(n
1
1) +(n
2
1) 30

Method: We use t Jistribution with J =(n
1
1) +(n
2
1)
And, S =S
P
2
(1 n
1
+1 n
2
) with

S
P
2
=
(n
1
1)S
1
2
+(n
2
1)S
2
2
(n
1
1) +(n
2
1)
(poolcJ :orioncc)

t
1
=
(x
1
x
2
) (p
1
p
2
)
0
_S
P
2
[
1
n
1
+
1
n
2

The critical value(s): With J =(n
1
1) +(n
2
1),

t
C
=t
(d],
u
2
)
t
C
=t
(d],u)
t
C
=t
(d],u)


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Situation III:

Condition: o
1
and o
2
are unknown
o
1
o
2

J =
(S
1
2
n
1
+S
2
2
n
2
)
2
(S
1
2
n
1
)
2
/ (n
1
-1)+(S
2
2
n
2
)
2
/ (n
2
-1)
30

Method: We use t Jistribution with

J =
(S
1
2
n
1
+S
2
2
n
2
)
2
(S
1
2
n
1
)
2
/ (n
1
1) +(S
2
2
n
2
)
2
/ (n
2
1)

And, S =(s
1
2
n
1
) +(s
2
2
n
2
)

t
1
=
(x
1
x
2
) (p
1
p
2
)
0
_
s
1
2
n
1
+
s
2
2
n
2

The critical values(s): With J =
(S
1
2
n
1
+S
2
2
n
2
)
2
(S
1
2
n
1
)
2
/ (n
1
-1)+(S
2
2
n
2
)
2
/ (n
2
-1)

t
C
=t
(d],
u
2
)
t
C
=t
(d],u)
t
C
=t
(d],u)


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Situation IV:

Condition: o
1
and o
2
are unknown
If o
1
=o
2
, J =(n
1
1) +(n
2
1) >30
If o
1
o
2
, J =
(S
1
2
n
1
, +S
2
2
n
2
, )
2
(S
1
2
n
1
, )
2
/ (n
1
1)+(S
2
2
n
2
, )
2
/ (n
2
1)
>30

Method: We use z Jistribution and S =_(s
1
2
n
1
) +(s
2
2
n
2
)

z
1
=
(x
1
x
2
) (p
1
p
2
)
0
_
s
1
2
n
1
+
s
2
2
n
2

The critical values(s):

z
C
=z
u/ 2
z
C
=z
u
z
C
=z
u

Step 04
Make the decision
0
when
t
1
[t
C
,t
C
] t
1
>t
C
t
1
<t
C

z
1
[z
C
,z
C
] z
1
>z
C
z
1
<z
C

0
when
t
1
[t
C
,t
C
] t
1
<t
C
t
1
>t
C

z
1
[z
C
,z
C
] z
1
<z
C
z
1
>z
C


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Situation I:
Condition: o
1
and o
2
are known (for all n
1
and n
2
)
Method: We use z Jistribution and S =(o
1
2
n
1
) +(o
2
2
n
2
)
CI ur (
1

2
) =(x
1
x
2
) z
u/ 2
_
o
1
2
n
1
+
o
2
2
n
2

Situation II:
Condition: o
1
and o
2
are unknown
o
1
=o
2

J =(n
1
1) +(n
2
1) 30
Method: We use t Jistribution with J =(n
1
1) +(n
2
1)
And, S =S
P
2
(1 n
1
+1 n
2
) with
S
P
2
=
(n
1
1)S
1
2
+(n
2
1)S
2
2
(n
1
1) +(n
2
1)
(poolcJ :orioncc)
CI ur (
1

2
) =(x
1
x
2
) t
d,u/ 2
_S
P
2
_
1
n
1
+
1
n
2
]


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Situation III:
Condition: o
1
and o
2
are unknown
o
1
o
2

J =
(S
1
2
n
1
, +S
2
2
n
2
, )
2
(S
1
2
n
1
, )
2
/ (n
1
1)+(S
2
2
n
2
, )
2
/ (n
2
1)
30
Method: We use t Jistribution with J =
(S
1
2
n
1
, +S
2
2
n
2
, )
2
(S
1
2
n
1
, )
2
/ (n
1
1)+(S
2
2
n
2
, )
2
/ (n
2
1)

And, S =(s
1
2
n
1
) +(s
2
2
n
2
)
CI ur (
1

2
) =(x
1
x
2
) t
d,u/ 2
_
x
1
2
n
1
+
x
2
2
n
2

Situation IV
Condition: o
1
and o
2
are unknown
If o
1
=o
2
, J =(n
1
1) +(n
2
1) >30
If o
1
o
2
, J =
(S
1
2
n
1
, +S
2
2
n
2
, )
2
(S
1
2
n
1
, )
2
/ (n
1
1)+(S
2
2
n
2
, )
2
/ (n
2
1)
>30
Method: We use z Jistribution and S =_(s
1
2
n
1
) +(s
2
2
n
2
)

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CI ur (
1

2
) =(x
1
x
2
) z
u/ 2
_
x
1
2
n
1
+
x
2
2
n
2

Sample:
PROBLEM 8.3:
(Situation I)
Suppose that the makers of Duracell batteries want to demonstrate that their size AA battery lasts an average of
at least 45 minutes longer than Duracells main competitor, the Energizer. Two independent random samples of
100 batteries of each kind are selected, and the batteries are run continuously until they are no longer
operational. The sample average life for Duracell is found to be x
1
=308 minutes. The result for the Energizer
batteries is x
2
= 254 minutes. Assume o
1
=84 minutes and o
2
=67 minutes. Is there evidence to substantiate
Duracells claim that its batteries last, on average, at least 45 minutes longer than Energizer batteries of the
same size?

SOLUTION: Duracell batteries Energizer batteries
(1) (2)
n
1
=100 n
2
=100
x
1
=308 x
2
=254
o
1
= 84 o
2
= 67
E
0
: p
1
p
2
45
E
1
:p
1
p
2
>45
z
1
=
(x
1
x
2
) (p
1
p
2
)
0
_
o
1
2
n
1
+
o
2
2
n
2
=
(308 254) 0
_
84
2
100
+
67
2
100
0.838
At o =0.05, the critical value:
z
C
=z
u
=z
0.05
=1.645

0
since z
1
<z
C
. It means that with the hypothesis testing
we do not have sufficient evidence to prove that Duracell batteries last, on average, at least 45 minutes longer
than Energizer batteries of the same size.

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PROBLEM 8.4:
(Situation II)
The power of supercomputers derives from the idea of parallel processing. Engineers at Cray Research are
interested in determining whether one of two parallel processing designs produces faster average computing
time, or whether the two designs are equally fast. The following are the results, in seconds, of independent
random computation times using the two designs.
Design 1 Design 2
2.1, 2.2, 1.9, 2.0, 1.8, 2.4,
2.0, 1.7, 2.3, 2.8, 1.9, 3.0,
2.5, 1.8, 2.2
2.6, 2.5, 2.0, 2.1, 2.6, 3.0,
2.3, 2.0, 2.4, 2.8, 3.1, 2.7,
2.6
Assume that the two populations of computing time are normally distributed and that the two population
variances are equal. Is there evidence that one parallel processing design allows for faster average computation
than the other?

SOLUTION: Design 1 Design 2
(1) (2)
n
1
=15 n
2
=13
x
1
=2.173 x
2
=2.515
o
1
= 0.375 o
2
= 0.351

E
0
: p
2
p
1
=0
E
1
:p
2
p
1
0

S
P
2
=
(n
1
1)S
1
2
+(n
2
1)S
2
2
(n
1
1) +(n
2
1)
=
(15 1)0.375
2
+(131)0.351
2
(15 1) +(131)
0.1326

t
1
=
(x
2
x
1
) (p
2
p
1
)
0
_S
P
2
[
1
n
1
+
1
n
2
=
(2.515 2.173) 0
_0.1326[
1
15
+
1
13
2.4785

At o =0.05, J =(n
1
1) +(n
2
1) =(151) +(13 1) =26, the critical value(s):
t
C
=t
(d],
u
2
)
=t
(26,0.025)
=2.056

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15

0
since t
1
[t
C
,t
C
]. It means that based on the hypothesis
testing we have sufficient evidence to prove that one parallel processing design allows for faster average
computation than the other.

PROBLEM 8.5:
(Situation III)
Air Transport World recently named the Dutch airline KLM Airline of the Year. One measure of the airlines
excellent management is its research effort in developing new routes and improving service on existing routes.
The airline wanted to test the protability of a certain transatlantic ight route and offered daily ights from
Europe to the United States over a period of 6 weeks on the new proposed route. Then, over a period of 9 weeks,
daily ights were offered from Europe to an alternative airport in the United States. Weekly protability data for
the two samples were collected, under the assumption that these may be viewed as independent random
samples of weekly prots from the two populations (one population is ights to the proposed airport, and the
other population is ights to an alternative airport). Data are as follows. For the proposed route, x
1
=$96,540 per
week and s
1
=$12,522. For the alternative route, x
2
=$85,991 and s
2
= $19,548. Test the hypothesis that the
proposed route is more protable than the alternative route. Use a signicance level of your choice.

SOLUTION: Proposed Route Alternative Route
(1) (2)
n
1
=6 n
2
=9
x
1
=96,540 x
2
=85,991
o
1
= 12,522 o
2
= 19,548

We assume that two populations are normally distributed.

E
0
: p
1
p
2
0
E
1
:p
1
p
2
>0

t
1
=
(x
1
x
2
) (p
1
p
2
)
0
_
s
1
2
n
1
+
s
2
2
n
2
=
(96,540 85,991) 0
_
(12,522)
2
6
+
(19,548)
2
9
1.2737


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16

At o =0.05
J =
(S
1
2
n
1
+S
2
2
n
2
)
2
(S
1
2
n
1
)
2
/ (n
1
1) +(S
2
2
n
2
)
2
/ (n
2
1)

J =
(12,522
2
6 +19,548
2
9 )
2
(12,522
2
6 )
2
(61)
+
(19,548
2
9 )
2
(9 1)
12.9993 13

the critical value(s): t
C
=t
(d],u)
=t
(13,0.05)
=1.771

0
since t
1
<t
C
. It means that with the hypothesis testing
we do not have sufficient evidence to prove that the proposed route is more profitable than the alternative
route.

PROBLEM 8.6:
(Situation IV)
The photography department of a fashion magazine needs to choose a camera. Of the two models the
department is considering, one is made by Nikon and one by Minolta. The department contracts with an agency
to determine if one of the two models gets a higher average performance rating by professional photographers,
or whether the average performance ratings of these two cameras are not statistically different. The agency asks
60 different professional photographers to rate one of the cameras (30 photographers rate each model). The
ratings are on a scale of 1 to 10. The average sample rating for Nikon is 8.5, and the sample standard deviation is
2.1. For the Minolta sample, the average sample rating is 7.8, and the standard deviation is 1.8. Is there a
difference between the average population ratings of the two cameras? If so, which one is rated higher?

SOLUTION: Nikon Minolta
(1) (2)
n
1
=30 n
2
=30
x
1
=8.5 x
2
=7.8
o
1
= 2.1 o
2
= 1.8


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17

We assume that two populations are normally distributed

E
0
: p
1
p
2
=0
E
1
:p
1
p
2
0

z
1
=
(x
1
x
2
) (p
1
p
2
)
0
_
s
1
2
n
1
+
s
2
2
n
2
=
(8.5 7.8) 0
_
(2.1)
2
30
+
(1.8)
2
30
1.3862
At o =0.05, the critical value(s):
z
C
=z
u/ 2
=1.96

0
since z
1
[z
C
,z
C
]. It means that with the hypothesis
testing we do not have sufficient evidence to prove the difference between the average population ratings of
two cameras.


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18

PART II
COMPARISON OF TWO POPULATION PROPORTIONS
HYPOTHESIS TESTING
PROCESS
Step 01
Two populations are

Step 02
(E
0
and E
1
)
E
0
: p
1
p
2
=(p
1
p
2
)
0

E
1
:p
1
p
2
(p
1
p
2
)
0

E
0
: p
1
p
2
(p
1
p
2
)
0

E
1
:p
1
p
2
>(p
1
p
2
)
0

E
0
:p
1
p
2
(p
1
p
2
)
0

E
1
: p
1
p
2
<(p
1
p
2
)
0

Step 03
value (t
1
/ z
1
) and the
critical value(s) (t
C
/ z
C
)
For all instances, we always use z Jistribution (z
o/ 2
) and S =_
p
1
(1p
1
)
n
1
+
p
2
(1p
2
)
n
2

z
1
=
(p
1
p
2
) (p
1
p
2
)
0
_
p
1
(1 p
1
)
n
1
+
p
2
(1 p
2
)
n
2


z
C
=z
u/ 2
z
C
=z
u
z
C
=z
u

Step 04
Make the decision
0
when
z
1
[z
C
,z
C
] z
1
>z
C
z
1
<z
C

0
when
z
1
[z
C
,z
C
] z
1
<z
C
z
1
>z
C


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19

For all instances, we always use z Jistribution (z
o/ 2
) and S =_
p
1
(1p
1
)
n
1
+
p
2
(1p
2
)
n
2

CI ur (p
1
p
2
) =(p
1
p
2
) z
u/ 2
_
p
1
(1 p
1
)
n
1
+
p
2
(1 p
2
)
n
2

Sample:
PROBLEM 8.7:

A physicians group is interested in testing to determine whether more people in small towns choose a physician
by word of mouth in comparison with people in large metropolitan areas. A random sample of 1,000 people in
small towns reveals that 850 chose their physicians by word of mouth; a random sample of 2,500 people living in
large metropolitan areas reveals that 1,950 chose a physician by word of mouth. Conduct a one-tailed test aimed
at proving that the percentage of popular recommendation of physicians is larger in small towns than in large
metropolitan areas. Use =0.01.

SOLUTION: Small Towns Large metropolitan areas
(1) (2)
p
1
=x
1
/ n
1
=850/ 1000=0.85 p
2
=x
2
/ n
2
=1,950/ 2,500=0.78
n
1
=1,000 n
2
=2,500

E
0
: p
1
p
2
0
E
1
:p
1
p
2
>0

z
1
=
(p
1
p
2
) (p
1
p
2
)
0
_
p
1
(1p
1
)
n
1
+
p
2
(1p
2
)
n
2
=
(0.85 0.78) 0
_
0.85(1 0.85)
1,000
+
0.78(1 0.78)
2,500
4.9982


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20

At o =0.01, the critical value: z
C
=z
u
=z
0.01
=2.33

0
since z
C
<z
1
. It means that based on the hypothesis testing
we have sufficient evidence to prove that the percentage of popular recommendation of physicians is larger than
in small towns rather than in large metropolitan areas.


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21

PART III
COMPARISON OF TWO POPULATION VARIANCES
HYPOTHESIS TESTING
PROCESS
Step 01
Two populations are

Step 02
(E
0
and E
1
)
E
0
: o
1
2
=o
2
2

E
1
: o
1
2
o
2
2

E
0
: o
1
2
o
2
2

E
1
:o
1
2
>o
2
2

E
0
: o
1
2
o
2
2

E
1
:o
1
2
<o
2
2

Step 03
value (F
1
) and the critical
value(s) (F
C
)
For all instances, we always use F Jistribution
The test statistic
value (F
1
)
F
1
(L)
=
s
1
2
s
2
2
(s
1
2
<s
2
2
)
F
1
(R)
=
s
2
2
s
1
2
(s
1
2
<s
2
2
)
F
1
(R)
=
s
2
2
s
1
2
(s
1
2
<s
2
2
) F
1
(L)
=
s
1
2
s
2
2
(s
1
2
<s
2
2
)
The test statistic
value (F
C
)
F
C
(L)
=
1
F
(n
1
-1,n
2
-1)

F
C
(R)
=F
(n
2
-1,n
1
-1)

F
C
(R)
=F
(n
2
-1,n
1
-1)
F
C
(L)
=
1
F
(n
1
-1,n
2
-1)


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22

Step 04
Make the decision

0
when
F
1
(L)
jF
C
(L)
,F
C
(R)
[
F
1
(R)
jF
C
(L)
,F
C
(R)
[
F
C
(R)
>F
C
(R)
F
C
(L)
<F
C
(L)

0
when
F
1
(L)
jF
C
(L)
,F
C
(R)
[
F
1
(R)
jF
C
(L)
,F
C
(R)
[
F
C
(R)
<F
C
(R)
F
C
(L)
>F
C
(L)

Sample:
PROBLEM 8.8:

The following data are independent random samples of sales of the Nissan Pulsar model made in a joint venture
of Nissan and Alfa Romeo. The data represent sales at dealerships before and after the announcement that the
Pulsar model will no longer be made in Italy. Sales numbers are monthly.

Before: 329, 234, 423, 328, 400, 399, 326, 452, 541, 680, 456, 220
After: 212, 630, 276, 112, 872, 788, 345, 544, 110, 129, 776

Do you believe that the variance of the number of cars sold per month before the announcement is equal to the
variance of the number of cars sold per month after the announcement?

SOLUTION: Before After
(1) (2)
n
1
=12 n
2
=11
s
1
= 128.03 s
2
= 294.70
s
1
2
=16,384 s
2
2
=86,849.09


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23

We assume that two populations are normally distributed

E
0
: o
1
2
=o
2
2

E
1
:o
1
2
o
2
2

F
1
(R)
=
s
2
2
s
1
2
=
86,849.09
16,384
5.3
At o =0.05, the critical value(s):
F
C
(R)
=F
(n
2
-1,n
1
-1)
=F
(10,11)
=2.86

0
since SF
C
(R)
>F
C
(R)
. It means that based on the hypothesis
testing we have sufficient evidence to prove that the variance of the number of cars sold per month before the
announcement is different from the variance of the number of cars sold per month after the announcement.

STATISTICS FOR BUSINESS - CHAP08 - Comparison of Two Populations PDF

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<30, we use t Jistribution and S =s

30, we use z Jistribution and S =s

<30, we use t Jistribution and S =s

30, we use z Jistribution and S =s

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