Introductory Statistics for Business

Past Exam Questions

Please note that the past exams for Introductory Statistics for Business are RESTRICTED USE, so are unavailable. Below are a set of relevant available questions that cover most of the course. Question 1. (a) (i) What is an interval estimate? (ii) Why is an interval estimate preferred to a point estimate? (b) In a test of the quality of two television commercials, each commercial was shown in a separate test area 6 times over a 1-week period. The following week a telephone survey was conducted to identify individuals who had seen the commercials. The individuals who had seen the commercials were asked to state the primary message in the commercial. The following results were recorded: Number Reporting Having Seen the Commercial Commercial A Commercial B (i) (ii) (iii) 150 200 Number Recalling Primary Message 63 60

Compute sample proportions estimates of pA and pB. Compute the sample variance of the difference between the two proportions. Provide a 95% confidence interval for the difference between the recall proportions for the populations. Explain your results. (Final exam 1996: Question 4.) Test at the 5% significance level whether or not Commercial A is more effective than commercial B. Commercial A is longer and hence more expensive to run. It is only considered viable if the proportion recalling the primary message from commercial A is 5% greater than that for commercial B. Test at the 5% level of significance level whether commercial A should be used.

(iv) (v)

Question 2. (a) Define the following: (i) Probabilities of Type I and Type II errors. (ii) One-tail and two-tail tests. (b) Safeway Foods Ltd. is redesigning the checkout lanes in its supermarkets throughout the country. Two designs have been suggested. Tests on customer checkout times have been collected at two stores where the two new systems have been installed. The sample data are as follows: Times for Checkout System A n1 = 120 x1 = 4.1 minutes s1 = 2.2 minutes (i) Compute the sample variance of ( X 1 X 2 ) .
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Times for Checkout System B n 2 = 100 x 2 = 3.3 minutes s 2 = 1.9 minutes

(ii)

Using the six-step hypothesis testing procedure, test at the 0.05 level of significance to determine if there is a difference in the mean checkout times for the two systems. Which system is preferred? (based on Final exam 1996: Question 6.)

Question 3. In a manufacturing process the assembly line speed (metres per minute) (x) was thought to affect the number of defective parts found (y) during the inspection process. To test this theory management devised a situation where the same batch of parts was inspected visually at a variety of line speeds. The data were collected and the following sample measures were computed:

x = 70 x

= 936

y = 102 xy = 1136 y

= 1768 n = 6

(a) Develop the estimated regression line that relates line speed to the number of defective parts found. (b) At the = 0.05 level of significance determine whether or not line speed and the number of defective parts found are related. (c) Did the estimated regression line provide a good fit to the data? (d) Develop a 95% confidence interval to predict the mean number of defective parts for a line speed of 17 metres per minute. (Final exam 1996: Question 8.) Question 4. The PJH & D Company is in the process of deciding whether or not to purchase a maintenance contract for its new word-processing system. They feel that maintenance expenses should be related to usage and have collected the following information on weekly usage (hours) and annual maintenance expense. Weekly Usage Annual Maintenance (hours) Expenses ($00s) 13 17.0 10 22.0 20 30.0 28 37.0 32 47.0 17 30.5 24 32.5 (i) (ii) (iii) (iv) Compute the sample mean and variances of these two variables. Draw a scatter diagram for the data with the Weekly Usage as the independent variable. Do these variables appear to be positively or negatively correlated? Compute the covariance and correlation between the above two variables. Comment on your results using nontechnical terms. (Special/Supplementary exam 1998: Question 1.)

Question 5. (b) During a water shortage, a water company randomly sampled residential water meters in order to monitor daily water consumption. On one particular day, a sample of 50 meters showed x = 1120 litres and a sample standard deviation of s = 20 litres. Provide a 90% confidence interval estimate of the mean water consumption for the population.
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(c) An estimate is required of the population mean of the widths of metal bars to an accuracy of 0.1 at the 95% confidence level. It is known that the standard deviation of the width of the bars is 0.5cm. What is the sample size necessary to achieve the required accuracy? Interpret the results. (Special/Supplementary exam 1998: Question 3.)

Question 6. (b) A firm is studying the delivery times for two raw material suppliers. The firm is basically satisfied with supplier A and will stay with this supplier provided that the mean delivery times are the same as or less than those of supplier B. However, if the firm finds that the mean delivery times from supplier B are less than those of supplier A, it will begin making raw material purchases from the supplier B. (i) What are the null and alternative hypotheses for this situation? (ii) Assume that an independent sample shows the following delivery time characteristics for the two suppliers: Supplier A n1 = 50 x1 = 14 days s1 = 3 days Supplier B n 2 = 30 x 2 = 12.5 days s 2 = 12 days

Show the sampling distribution of ( X1 X 2 ) . (iii) (iv) For = 0.05, what is the critical value and the decision rule for the test? What is your conclusion for the hypotheses from part (i)? What action do you recommend in terms of supplier selection? (based on Special/Supplementary exam 1998: Question 4.)

Question 7. The owner of a chain of fast-food restaurants would like to investigate the relationship between daily sales volume of a company restaurant and the number of competitor restaurants within a 1-kilometre radius of the firms restaurant. The following data has been collected. Number of Competitors Within I Kilometre (x) 2 3 4 5 5 Sales ($100s) (y) 35 32 29 27 23

(a) Compute the least squares estimates of the parameters 0 and 1 in the regression line y = 0 + 1x + that relates daily sales volume to the number of competitor restaurants within a 1-kilometer radius. (b) Is there a significant relationship between the two variables? Use significance level = 0.05. (c) Did the estimated regression line provide a good fit? Briefly explain. (Special/Supplementary exam 1998: Question 5.)
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Question 8. In a manufacturing process the assembly line speed (meters per minute) (x) was thought to affect the number of defective parts found (y) during the inspection process. To test this theory management devised a situation where the same batch of parts was inspected visually at a variety of line speeds. The data were collected and the following sample measures were computed:

x = 140 x

= 2500

y = 130 xy = 130 y

= 7847 n = 10

(a) Develop the estimated regression line that relates line speed to the number of defective parts found. (b) At = 0.05 level of significance determine whether or not line speed and number of defective parts found are related. (c) Did the estimated regression line provide a good fit to the data? (d) Develop a 90% confidence interval to predict the mean number of defective parts for a line speed of 17 metres per minute. (Special/Supplementary exam 1998: Question 6.) Question 9. A Business Statistics lecturer at the Northern Rivers University is interested in the relation between hours spent studying and total marks earned in the course. Data collected on 7 students who took the course last semester are given below: Hours spent Total marks Studying Earned 45 40 30 35 90 75 60 65 65 50 50 60 55 65 (a) Compute the sample means and variances. (b) Compute the covariance and correlation between two variables. (c) What does the correlation coefficient computed in (b) above indicate about the relationship between hours spent studying and total marks earned in the course? (d) Develop a scattergram and justify your answer in (c). (Final exam 1999: Question 1.) Question 10. (i) In order to obtain cost savings, a company is considering offering an early retirement incentive for its older management personnel. The consulting firm that designed the early retirement program has found that approximately 22% of the employees qualifying for the program will select early retirement during the first year of eligibility. Assume that the company offers the early retirement program to 50of its management personnel. (a) What is the expected number of employees who will select early retirement in the first year? (b) What is the probability at least 8 but not more than 12 employees will select early retirement in the first year? (ii) Suppose that 54% of a large population of registered voters favour the Liberal Party candidate. A public opinion poll uses randomly selected samples of voters and asks
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each person in the sample his or her preference: the Liberal candidate or the Labour candidate. The weekly poll is based on the response of 100 voters. (a) What is the expected number of voters who will favour the Liberal candidate? (b) What is the variance in the number of voters who will favour the Liberal candidate? (c) What is the probability that 49 or fewer individuals in the sample express support for the Liberal candidate? (Final exam 1999: Question 2.)

Question 11. A national survey research firm has past data that indicate that the interview time for a consumer opinion study has a standard deviation of 6 minutes. (a) How large a sample should be taken if the firm desires a 0.98 probability of estimating the mean interview time to within 2 minutes or less? Interpret the result. (b) Assume that the simple random sample you recommended in part (a) is taken and that the mean interview time for the sample is 32 minutes. What is the 98% confidence interval estimate for the mean interview time for the population of interviews? Interpret the result. (Final exam 1999: Question 3.) (c) Test at the 1% level of significance whether the mean interview time is greater than 30 minutes. (d) What is the p-value for the test in part (c)? Question 12. (i) Briefly explain the following: (a) Central limit theorem (b) A point estimate (c) An interval estimate (ii) Forester Company is a distributor of timber supplies throughout southeast Australia. Management of G.H. Forester would like to check a shipment of over one million pine boards in order to determine if excessive warpage exists for the boards. A sample of 50 boards resulted in the identification of 7 boards with excessive warpage. (a) With these data develop a 95% confidence interval estimate of the proportion of boards defective in the whole shipment and interpret it. (b) Develop a 99% confidence interval estimate of the proportion of boards defective in the whole shipment and interpret it. (c) Explain the difference between the results in (a) and (b). (Final exam 1999: Question 4.) (d) Test at the 5% level of significance to see if the proportion of defective boards is less than 15%.

Question 13. (i) Explain the following: (a) Null hypothesis (b) Type I error (ii) In a study of job attitudes and job satisfaction, a sample of 50 men and 50 women were asked to rate their overall job satisfaction on a 1 to 10 scale. A high rating indicates a higher degree of job satisfaction. The sample results are shown as follows:
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Men x1 = 7.2 s1 = 2.0

Women x 2 = 6.4 s 2 = 1.8

(a) Compute the sample value and the sample variance of ( X1 X 2 ) . (b) Using the six-step hypothesis testing procedure, test at = 0.05 to determine if there is significant difference in the level of job satisfaction of men and women? (based on Final exam 1999: Question 5.) (c) Construct a 95% confidence interval for the difference between the mean level of job satisfaction of men and women. Question 14. The owner of Hoyts Movie Theatres would like to investigate the effect of television advertising on weekly gross revenue for special promotion films. The following historical data were developed: Weekly revenue Television advertising ($1000s) ($1000s) 96 5.0 90 2.0 95 4.0 92 2.5 95 3.0 94 3.5 (a) Using these data, estimate the parameters of the regression equation relating weekly gross revenue (y-variable) to television advertising expenditure (xvariable). Regression: y = 0 + 1x + (b) Interpret the estimated coefficient. (c) Compute the goodness of fit measure (R2). Does the estimated regression provide a good fit to the data? (d) Estimate the weekly gross revenue in any week in which $3500 is spent on television advertising. Construct 95% confidence interval for the estimate. (Final exam 1999: Question 6.)