STATS 191 Quantitative Methods for Business

Assignment 2, First Semester 2006

Due: 4pm Wednesday 12th April
Instructions for handing assignment in:
Use (standard) A4 sized paper. Number each page in the top centre and print your name legibly at
the top right hand corner of each page with the surname or family name underlined. Attach a
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assignment in to the appropriate hand-in box.
• Assignments handed in to the wrong place or received after the due time will not be marked.
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the cover sheet.
Notes:
• Statistics is about summarising, analysing and communicating information. Communication is an
important part of statistics. For this reason you will be expected to write answers which clearly
communicate your thoughts. The mark you receive will be based on your written English as well
as your statistical/technical work.
• Assignment 2 will be marked out of 40 marks, 38 marks for the questions as shown below and 2
marks for communication and presentation. (Refer to the Worked Examples under assignment
resources on the Course Resource CD-ROM for examples for examples of how to set out your
assignment answers.) Your final mark will be converted to a mark out of 10 which will be recorded
towards your course work.
• This assignment is worth 4% of your final mark. Do not leave it until the last day.
- Attempt questions 1 and 2 when chapter 4 has been covered.
- Attempt question 3 when chapter 6 has been covered.
- Attempt question 4 when chapter 7 has been covered.
- Attempt questions 5 and 6 when chapter 8 has been covered.
• We encourage working together. Working together is discussing assignments and methods of
solution with other students or getting help in understanding from staff and tutors. If you work with
other students, you must write up your final assignment individually, in your own words.
We view cheating on assignment work seriously! Cheating is: copying all or part of another
student’s assignment or allowing another student to copy all or part of your assignment. Students
who hand in substantially similar work will receive 0 marks for the assignment and, in addition, will
also lose ALL marks from CECIL tests. This means a loss of 8% from the final mark. A student who
allows someone else to copy their work is treated identically to the student who did the copying.
Taking a copy of another student's work without their knowledge is theft and will be referred to the
University Discipline Committee.

• COMPUTER USE IN THIS ASSIGNMENT:

• Question 3 and 4 will require use of either Excel, SPSS or a graphics calculator for calculating
probabilities from Normal distributions. Do not hand in any computer output for these questions.
Simply use the computer package (or graphics calculator) to find the solutions. DO NOT USE
TABLES.

© Department of Statistics STATS 10x - Assignment 1 Page 1

Question 1. [5 marks] [Chapter 4]

The New Zealand Department of Labour regularly collects data on employment in New
Zealand. The following table is based on the regional labour market summary, July 2003 – June
2004.

Working Age Population

Not in
Region Labour Force Employed Unemployed Total
Auckland 315700 604100 24200 944000
Wellington 118300 245700 12700 376700
Rest NI 336400 593200 29500 959100
Canterbur
y 142900 301600 12900 457400
Rest SI 124200 236600 9900 370700
Total 1037500 1981200 89200 3107900
Use the table above to answer the following:
(a) What percentage of the New Zealand working age population was in the Auckland region?
(b) Given that a working age person was from Wellington, what is the probability they were
unemployed?
(c) Of working age people who were unemployed, what proportion were from the Wellington
region?
(d) What proportion of working age people were in Wellington and unemployed?
(e) What is the probability that a working age person is from Wellington given that they were
unemployed?
Question 2. [6 marks] [Chapter 4]

Auditors developing systems to check the accuracy of regular tax returns for such taxes as GST
look at changes in the firms returns between tax periods. If the change is greater than some
threshold the firm’s return is tagged to be subject to rigorous audit. To check the accuracy of one
such system a large sample of returns were all audited. It was found that 23% of returns tagged
for audit by the system revealed tax evasion while only 1 out of 200 returns that were not tagged
for audit by the system revealed tax evasion.
The system was implemented at a tax department and run on a sample of 10,000 tax returns. Of
these, 600 were tagged for audit.

(a) (i) How many of the 600 returns tagged are estimated to be for firms trying to evade tax?
(ii) How many of the remaining returns are estimated to be for firms trying to evade tax?

(b) Use your answer from (a) to help construct a 2×2 table of counts displaying the results for this
sample. Complete the table.

(c) What is the estimated number of tax returns in this sample where the firm is trying to evade tax?

(d) What is the estimated proportion of firms that are trying to evade tax which have their return
tagged for audit?

© Department of Statistics STATS 10x - Assignment 1 Page 2

Question 3. [9 marks] [Chapter 6]
Reminder: When calculating Normal probabilities, use SPSS, Excel or a graphics calculator.
Do not use tables. Report any probabilities to 4 decimal places.
A lecturer in a large university was interested in how heavy students’ backpacks were. A sample
of students was recruited and the weights of their backpacks were recorded. The results were:
Male students’ backpacks had a mean weight of 5.4 kg and a standard deviation of 2.4 kg.
Female students’ backpacks had a mean weight of 4.9 kg and a standard deviation of 2.2 kg.
Assume that backpack weights for students in general are Normally distributed with means and
standard deviations as stated above.

(a) What proportion of :

(i) female students carry backpacks weighing more than 10 kg?
(ii) male students carry backpacks weighing less than 4 kg?
(iii) female students carry backpacks weighing between 5 and 7 kg?
(b) Between what two weights do the central 80% of female backpack weights fall?
(c) What weight do only the heaviest 5% of backpacks carried by male students exceed?
(d) State whether each of the statements below is true or false. You must justify each answer using
only z-scores, diagrams of Normal curves and/or the 68-95-99.7 rule. DO NOT calculate the
probabilities. All the marks are for the justifications.
Statement 1: Approximately 68% of male students have backpacks weighing between 2.7 and
7.1 kg.
Statement 2: The proportion of male students with backpacks lighter than 4 kg is greater than
the proportion of female students with backpacks heavier than 7 kg.
Statement 3: About 5% of male students have backpacks heavier than 10.2 kg.
Statement 4: The proportion of male students with backpacks lighter than 3 kg is greater than
the proportion of male students with backpacks heavier than 9 kg.

Question 4. [4 marks] [Chapter 7]

Specifications required the nickel content of manufactured stainless steel hydraulic valves to be
12.0g. The manufacturing plant is set up so that the nickel content of the valve is randomly
distributed with mean 12.8g and standard deviation 0.5g.
The quality controller of the plant sets up a monitoring process. Once each day, a sample of 48
valves is taken and the mean nickel content of the sample is measured.
(a) Can we calculate the probability that one randomly selected valve has less than 12.0g of nickel?
If you can, then calculate the probability (showing any working). If you can’t calculate it, then
explain why you can’t.

(b) Can we calculate the probability that a randomly selected sample of 48 valves has a mean of
less than 12.6g of nickel? If you can, then calculate the probability (showing any working). If
you can’t calculate it, then explain why you can’t.

© Department of Statistics STATS 10x - Assignment 1 Page 3

Notes for question 5 and 6:
When calculating confidence intervals by hand, follow the step-by-step guide to calculating a
confidence interval by hand given on page 2 of Chapter 8 of the Lecture Workbook. Show ALL
eight steps of the process.

Question 5. [6 marks] [Chapter 8]

A statistics student was interested in investigating how long it takes to get a pizza delivered
from the local pizzeria. Over a few weeks, a random sample of 9 delivery times (in minutes)
were recorded. The data are displayed below:
28.5, 36.7, 42.2, 31.8, 25.9, 30.8, 23.4, 42.2, 37.1, 23.6
(a) What is the sample mean and standard deviation of these 10 observations?
(b) By hand, calculate a 95% confidence interval for the mean delivery time. Interpret your results.

Question 6. [8 marks] [Chapter 8]

Just before Christmas in 2002, a Herald-DigiPoll was carried out asking about Christmas gifts
and Christmas shopping. A sample of 400 New Zealanders was questioned. Some of the
questions with number of responses to each answer are given below:

Question 1: Which one of the following Question 2: Have you given someone a gift
would you most like as a surprise gift? that you had received as a gift?
Answer Male Female Total All respondents: Yes (84) No (316)
Clothing 24 10 34
Tools 36 13 49 Question 3: Do you like Christmas shopping?
Book 37 41 78 Male respondents: Yes (41) No (151)
Jewellery 4 56 60
CD 17 10 27 Female respondents: Yes (74) No (134)
Perfume 5 22 27 Question 4: Are you going to give presents to
Cash 39 31 70 someone this Christmas?
Other 30 25 55
All respondents: Yes (370) No (30)
Total 192 208 400

(a) State the sampling situation for calculating the standard error of the difference in:
(i) estimating the difference between the proportion of New Zealanders that have given
someone a gift that they had received as a gift and the proportion of New Zealanders that
are going to give presents to someone this Christmas.
(ii) estimating the difference between the proportion of New Zealanders that would most like
jewellery as a surprise gift and the proportion of New Zealanders that would most like
cash as a surprise gift.
(iii) estimating the difference between the proportion of New Zealand males that would most
like clothing as a surprise gift and the proportion of New Zealand females that would most
like clothing as a surprise gift.

(b) By hand, calculate a 95% confidence interval for the difference between the proportion of New
Zealand males that like Christmas shopping and the proportion of New Zealand females that
like Christmas shopping.

© Department of Statistics STATS 10x - Assignment 1 Page 4