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MB0042 Statistics for

Management

Question 1: Distinguish between Classification and Tabulation.


Explain the structure and components of a Table with an example.
Answer 1:
Meaning of Classification and Tabulation:
Classification:
Classification is a process of arranging things or data in groups and classes
according to their resemblances and affinities.
According to Secrist, Classification is the process of arranging data into
sequences and groups according to their common characteristics or
separating them into different but related parts.
Tabulation:
Tabulation follows classification. It is a logical or systematic listing of related
data in rows and columns. The row of a table represents the horizontal
arrangement of data and column represents the vertical arrangement of
data. The presentation of data in tables should be simple, systematic and
unambiguous.
Differences between Classification and Tabulation:
Classification
It is the basis for tabulation.
It is the basis for simplification.
Data is divided into groups and subgroups on the basis of similarities
and dissimilarities.

Tabulation
It is the basis for further analysis.
It is the basis for presentation.
Data is listed according to a logical
sequence of related characteristics.

Structure and Components of a Table with an example:

Table 1: Percentage of P.G. Employees based on their Age and Departments


(Age in Years)

9
3

Source: .

4
6

7
10100

1: Table number:
Table number is to identify the table for reference. When there are many
tables in an analysis, then table numbers are helpful in identifying the tables.
Tab 2: Title:
Title indicates the scope and the nature of contents in a concise form. Title
should not be lengthy.
Tab 3 and Tab 4: Captions
Captions are the headings and subheadings describing the data present in
the columns.
Tab 5 and Tab 6: Stubs

Stubs are the headings and subheadings of rows.


Tab 7: Body of the table
Body of the table contains numerical information.
Tab 8: Totals
The sub-totals for each separate classification and a general total for all
combined classes should be given at the bottom or right side of the figures
whose totals are taken. Ruling and spacing separate columns and rows.
Tab 9: Head note
Head note is given below the title of the table to indicate the units of
measurement of the data and is enclosed in brackets.
Tab 10: Source note
Source note indicates the source from which data is taken.
Question 2 : (a) Explain Arithmetic mean.
(b) The mean wage is Rs. 75 per day, SD wage is Rs. 5 per
day for a group of 1000 workers and the same is Rs. 60 and Rs. 4.5
for the other group of 1500 workers.
Find the mean and standard deviation for the entire group.
Answer 2:
Arithmetic mean :
Arithmetic mean can be defined as the sum of all values divided by number
of values and is represented by X. Arithmetic mean is also called average. It
is most commonly used measures of central tendency. Arithmetic Mean of a
series is the value obtained by adding all the observations of a series and
dividing this total by the number of observation.
Solution:
Group - 1
Mean wages
No. of workers
N1 = 1000 N2 = 1500
X1 = 75 & X2 = 60
1 = 5, 2 = 4.5

75
1000

Group -2
60
1500

Combined mean = X12 = N1 X1 + N1X2


N 1 + N2
= 1000 75 + 1500 60
1000 + 1500
X12 = Rs. 66
Now, Standard deviation
d1 = X1 X12, d2 = X2 X12
d1 = (75 65) = 9

d12 = (9)2 = 81

d2 = (60 66) = -6

d2 2 = (-6)2 = 36

2 (N1 + N2) = N1(2 + d1 2) + N2 (2 2 + d22)


2500 2 = 1000(52 + 81) + 1500(4.52 + 36)
2500 2 = 106000 + 84375
2500 2 = 190375
2 = 190375
2500
2 = 76.15
= 8.726
Question 3: Mr. Arun and Mr. Bhandari play a game. If Mr. Arun picks
up an even number from1 to 6, Mr. Bhandari will pay him double the
amount equal to picked up number. If Mr. Arun picks up an odd
number then he has to pay amount equal to double the picked up
number. What is Mr. Aruns expectation?
Answer 3:
Solution :
Let XI be the random variable and P(XI) be its probability. The probabilities are
indicated in the table.

Required Values for Calculating Mean and Variance for the Data

No.

(XI)

P(XI
)

1
2
3
4
5
6
Total

-2
4
-6
8
-10
12

1/6
1/6
1/6
1/6
1/6
1/6
1

XI
P(XI)
-2/6
4/6
-1
8/6
-10/6
12/6
1

Expectation of Mr. Arun is E(X) = XI P (XI) = 1.


1.

E(X) = -2 1/6 = -2/6

2.

E(X) = 4 1/6 = 4/6

3.

E(X) = -6 1/6 = -1

4.

E(X) = 8 1/6 = 8/6

5.

E(X) = -10 1/6 = -10/6

6.

E(X) = 12 1/6 = 12/6.

Question 4:
The probability that an employee will get an
occupational disease is 20%. In a firm having five employees, what
is the probability that:
i)

None of the employees get the disease

ii)

Exactly two will get the disease.

iii)

More than four will contract the disease.

Solution 4 :
Given that :
P = 20/ 100 = 0.2
q = 1 0.2 = 0.8
n=5
Therefore, by binomial distribution, P(X = x) =
i)

Cx (0.8)5 x (0.2)x

The probability that none of the employees get the disease is given
by :

P(X = 0) = (0.8)5 = 0.3277


Therefore, the probability that none of the employees get the disease is
0.3277.
ii)

The probability that exactly two employees will get the disease is
given by:
P(X = 2)= 5C2 (0.8)3(0.2)2 = (10)(0.512)(0.04) = 0.2048.

Therefore, the probability that exactly two employees will get the disease is
0.2048.
iii)

The probability that more than four employees will get the disease
is given by:
P(X > 4) = P(X = 5) = (0.2)5 = 0.00032.

Therefore, the probability that more than four employees will get the disease
is 0.00032.
Question 5: Microsoft estimated that out of 10,000 potential software buyers,
35% wait to purchase the new OS Windows Vista, until an upgrade has been
released. After and advertising campaign to reassure the public was
released, Microsoft surveyed 3000 buyers and found 950 who are still
skeptical. At 5% level of significance, can the company conclude that the
population of skeptical people had decreased?
Solution 5 :
The procedure is explained in the following steps:
1. Null hypothesis Ho : p = 0.35
Alternate hypothesis H1 : p < 0.35
2. Level of significance = 0.05 = Ztab = -1.645 and R : Z < -1.645
3. Test statistics
Z = (P^ - P)
(pq) (N - n)
n
N1
4. Given p^ = 950/ 3000 = 19/60 = 0.317, p = 1 - p = 1 0.35 = 0.65,
N = 10,000 , n = 3000

(pq) (N n ) = (0.35 0.65)(10,000 - 3000)


n
N1
3000
10,000 1
Zcal = (0.317 - 0.35)
0.0073

= 0.0073

= -4.52

5. Conclusion : Since Zcal (-4.52) < Ztab (-1.645)and is in the rejection


region, HO is rejected. At 5% level of significance, we conclude that the
proportion of skeptical people has significantly decreased.
Question 6: Explain Chi-square test and the conditions for applying
chi-square test.
Answer 6:
Chi Square test:
The Chi-square test is one of the most commonly used non-parametric tests
in statistical work. The Greek Letter X2 is used to denote this test. X2
describe the magnitude of discrepancy between the observed and the
expected frequencies. The value of X2 is calculated as:

Where, O1, O2, O3.On are the observed frequencies and E1, E2, E3En are
the corresponding expected or theoretical frequencies.
Uses of Chi-Square test :
The X2 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 X2 through confidence intervals suggested by


X2 test.

Characteristics of Chi square test:

The X2 test is based on frequencies and not on parameters.

It is a non parametric test where no parameters regarding the rigidity


of populations are required.

Additive property is also found in X2 test.

While testing whether the observed frequencies of certain outcomes


fits with expected frequencies defined by a theoretical distribution, the
X2 value defined here follows X2 distribution:

Conditions for applying the Chi Square:


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 test is X2 based wholly on sample data, no assumption is made
concerning the population distribution. In other words, it is a non
parametric-test.
5. X2 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.

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