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Handout Data Analysis

How to Use this Handout?


This handout is a supporting document of our presentation which has three sections as follows,
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Terminologies in Hypothesis Testing


Testing of Hypothesis
Probability Distribution Framework
Section 1 - Terminologies in Hypothesis Testing

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Probability Distribution : Its a spread over like a pattern of its numeric values when the
population is subjected to sampling
Discrete Random Variable: The outcomes of Probability distribution is counted (Whole
numbers) then it is called as Discrete Random Variable
Ex: Binomial Distribution, Poisson distribution
Binomial Distribution: Binomial Distribution is applicable when it satisfies the following
condition,
Each observation is classified as success & failure, If success is p =1, then failure is q = 0
The trials must be independent of each other
The description of event should remain the same
Poisson Distribution: It is an approximation of Binomial Distribution, use poisson when the
sample size is less than 30
Continuous Random Variable: the outcomes of probability distribution is measured(decimal
values) then it is called as Continuous Random Variable
Normal Distribution: When the spread is distributed like a bell curve then it is called as
Normal Distribution it holds good under following circumstances,
Mean = Median = Mode
The distribution is symmetrical on both sides and has a probability of 0.5 on both the sides
68% of population lies within 1 SD from mean, 95.5% of population lies within 2 SD from
mean, 99.7% of population lies within 3 SD from mean

Hypothesis : A Hypothesis is an assumption made about a population & tested on a sample


in which what holds good for the sample will also holds good for the whole population.
Null Hypothesis : If there is no significant difference between the population & the sample
size, the null hypothesis is true. If we reject the population when the null hypothesis is true then it
is called as Type I Error.
Alternative Hypothesis: There is a significant difference between the population & the sample
Size, then the alternative hypothesis is true.If we accept the population when the alternative
hypothesis is true, then it is called as Type 2 Error
Level of Significance: LOS is nothing but the Size of the Error in other words the tolerance
limit for the errors
Two Tailed Test: If we want to compare two mean how different they are then it is two tailed
test

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Right Hand Tailed Test: If the testing has to determine the computed value is greater than
compared to pre-determined value then it is called as Right Hand Tailed Test
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Left Hand Tailed Test: If the testing has to determine the computed value is lesser than
compared to pre-determined value then it is called as left Hand Tailed Test
Section 2 - Steps in Hypothesis Testing
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Set up the null hypothesis


Set up the alternate hypothesis
Set up the test statistic
Decide upon the level of significance and critical value using statistical tables.
Compute the value of statistic using the sample drawn from the population
Compare the computed statistics with the pre-determined statistic & come to a conclusion.

Sample Problem:
The mean life time of 100 picture tubes produced by a manufacturing company is estimated to be
5795 hours, with a standard deviation of 150 hours. Test the hypothesis that the mean life time of
picture tubes is 6000 hours at 5% level of significance.
Step 1: Determine the Type of problem and prefix the formulas
The problem is testing about a mean with two tailed test, refer Framework table and select
the suitable formula, S.No 2
Step 2: Take the data given in the question
The sample size = n = 100, The sample mean = x = 5796, The assumed mean = 0 = 6000,The
sample standard deviation == 150
Step 3: Frame the Hypothesis
H0:There is no significant difference between the sample mean and the assumed mean.
H1: There is a significant difference between the sample mean and the assumed mean.

Step 4: Set-up the LOS


Being a two tailed lest if we divide 5% LOS on both the sides we get 2.5% as rejection region &
47.5% as acceptance region on both the sides, at a mean value of 0.475 we get Z value as 1.96 , so
on both sides 1.96 ( Refer Standard Normal Table)
Step 5: Use the Formula from Framework Table
Let us now substitute the values in the Z equation and determine the calculated value of Z.

Step 6: Compare Calculated Z value with Z tab


Since the Zcal is lesser and fall beyond acceptance region, hence we are rejecting the null
hypothesis and accepting the alternative hypothesis ( i.e,there exist is s significant difference
between the sample mean and the assumed mean)