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# Distribution, Confidence Interval, and Hypothesis testing:

(78) Let X 1 , X 2 ,......... be i.i.d. Poisson random variables with parameter 2 . Use Central Limit Theorem to
estimate P120 S n 160 . We also have S n X 1 X 2 ............... X n ; n 75

(79) A random sample of 500 pineapples was taken from a large consignment and 65 were found to be bad. Show that the standard
error of the proportion of bad ones in a sample of this size is 0.015 and deduce that the percentage of bad pineapples in the
consignment almost certainly lies between 8.5 and 17.5.

(80) A population consists of five numbers: 2, 3, 6, 8, and 11. Consider all possible samples of size two which can be drawn with
replacement from this population. Find (a) mean of the population (b) standard deviation of the population (c) mean of sampling
distribution of means (d) standard error of sampling distribution of means.
(e) Solve all the above points when sampling is without replacement.

(81) An automatic filling machine fills cola into 750 ml bottles. At the start of a shift an inspector will take a random sample of 50
bottles and measure the volume of cola in them accurately. After computing the sample mean, she will approve the machine
operation only if the sample mean falls between 749.5 and 750.5 ml. If she does not approve, the maintenance crew will be called to
check and rectify the machine setup. Assume that during a particular shift the population mean was 750.4 ml and the population
standard deviation was 1.2 ml. What is the probability that the inspector will approve the machine operation?

## (82) Ex 6-13 of text book.

(83) Ex 6-16 of text book.
(84) Ex 6-17 of text book.(85) Ex 6-37 of text book.
(86) Business Week reports that 51% of hedge-fund managers expected revelations of failure and scandal to hit their industry in
2004. Assume that this statistic is based on a random sample of 100 hedge-fund managers, and construct a 99% confidence interval
for the percentage of all hedge-fund managers who held this belief.
(87) Ex 6-91 of text book.
(88) Ex 6-92 of text book.
(89) Ex 6-93 of text book.
1 n 2
(90) Given: X 1 , X 2 ,......., X n is a random sample (i.i.d.) from a normal population N ,1 . Show that t xi is an unbiased
n i 1
estimator of 1
2

(91) A random sample X 1 ,........, X 5 of size 5 is drawn from a normal population with unknown mean 0 . Consider the
following estimators of :

X 1 ........ X 5 X X2 2 X 1 X 2 X 3
t1 ; t2 1 X 3 ; t3
5 2 3
(91a) Are t1 ,t 2 unbiased estimators?
(91b) Find so that t 3 is an unbiased estimator.

## (92c) Give an example of an estimator that is biased and consistent.

(93) Given: X 1 , X 2 , X 3 is a random sample (i.i.d.) of size 3 from a population with mean value and variance 2 . The following
are estimators of mean value :
X X2 X3
T1 X 1 X 2 X 3 ; T2 2 X 1 3 X 3 4 X 2 ; T3 1
3
(93a) Are they unbiased estimators?
(93b) Which one is best estimator based on minimum variance?

(94 a) In the manufacture of antibiotics in large vats, it is important to know the variability in potency of the product from location to
location in the vat. If the variability is too great, the antibiotic could be virtually useless because medical personnel would not be
able to judge its effectiveness in any given situation. The standard deviation provides one way of measuring this variability. If
potency readings at 12 randomly selected locations in the vat were:

8.9; 9.0; 9.1; 8.9; 9.1; 9.0; 9.0; 9.0; 8.9; 8.8; 9.1; 9.2

Find a 90% confidence interval for the true standard deviation in potency of the entire batch.

(94 b) A distributor of citrus fruit judges his stock not only by magnitude of weight but also by uniformity of weight. The standard
deviation is, as we know, an efficient way of measuring uniformity: The smaller the standard deviation, the less variation there is
from mean, and so the more uniform the weights are. If the distributor selects a random sample of 64 California grapefruits, and
these turn out to have sample mean of 11.36 ounces and sample standard deviation of 1.76 ounces, find a 95% confidence interval
for the true standard deviation of all California grapefruits.

TUTORIAL 7
(95)

(95a)

(95b)

(95c)

(95d)

(96)
(96a)

(96b)

(96c)

(96d)

(96e)

(96f)

(96g)

(96h)

(97) One manufacturer of pocket calculators advertises that its battery pack allows the calculator to operate continuously for 22
hours on the average without recharging. To check on the validity of the manufacturers claim, a prospective corporate customer
tested a sample of 50 calculators, and these turned out to have mean 21.8 hours with a standard deviation of 0.9 hour. If
significance level of 0.10 seems appropriate, is there sufficient evidence to indicate that the true mean duration of continuous
operation (without recharging) is actually less than the 22 hours claimed by the manufacturer?
(98) A medical doctor who is also an amateur anthropologist is interested in finding out whether the average body temperature of
0
Alaskan Eskimos is significantly lower than the usual American average, which is 98.6 F . Eight Eskimos selected at random from
the State of Alaska census lists had the following recorded body temperatures in degrees:

## 98.5; 98.1; 98.6; 98.7; 98.4; 98.9; 98.0; 98.4

At a significance level 0.05 , do the results of the study support the assertion that Eskimos really have lower body temperatures
than Americans who are natives of warmer climates?

(99)A psychologist, conducting a study of the average persons ability to judge distances, sets up a test of depth perception in which
randomly selected individuals attempt to estimate the distance between two markers. The markers were actually 2.5 feet apart,
while the 10 participants in the study gave the following estimates:

2.1; 1.8; 2.3; 2.3; 2.6; 2.5; 2.3; 2.5; 2.1; 2.5

At level 0.05 , do the results of the study indicate that persons have difficulty in accurately estimating the correct distance?

## (102) Ex 7-13 of text book

(103) Ex 7-59 of textbook
(104) Ex 7-57 of textbook
(105) Ex 7-21 of textbook
(106) Ex 7-12 of textbook

(107) Swetha, the Systems Analyst of Bilekahally Systems Software Ltd (BSSL) is evaluating an Interactive Voice Response System
which is being used by the call center set up by the Income Tax Department in Bangalore. She wants to estimate the real average
response time (). She decided to try a particular type of voice request to determine the average response time. She was told that the
variance of the response time for that particular type of request is 57,600 milliseconds2.
(107a) How many voice requests should she make if Swetha wants to estimate within 50 milliseconds, with 95% confidence?

(107b) If she hypothesizes that the value of is less than or equal to 682 milliseconds, what should be the highest possible value of
the sample mean for which she will not reject the hypothesis? (She decided on a value of 5% and a sample size of 64 requests)

(107c) Given the above sample size and, what is the probability of committing Type II error, if the value of is actually 760
milliseconds?

(107d) The mean response time for the 64 requests was 740.96 milliseconds. What can you say about the real value of? Assume =
0.025.

(108) Indian Institute of Public Policy and Management has designed a new training programme to improve the effectiveness of public
servants. Dr. Vaidyanathan who is the Joint Secretary, in charge for training agreed to experiment with the new method of training,
provided the effectiveness of the training can be measured. He decided to use a special questionnaire, which has to be administered to
the trainees before and after the training. Based on the scores of the instrument, before and after the training, an Effectiveness,
Capability and Motivation Improvement Index (ECAMI) can be computed for each of the trainees. He decided to use this index as a
measure for the effectiveness of the training and a positive value of the index (average/mean) indicates effectiveness of the new
method.

It was proposed that a sample of 20 employees would be selected for training under the new method. For obvious reasons,
Vaidyanathan decided to do a one sided hypothesis test. The sample standard deviation of the ECAMI obtained from these 20
observations was 12.5.

(108a)Dr. Vaidyanathan felt that he can go ahead with the new method if the sample average of ECAMI is greater than or equal to
4.8327. Based on this decision, calculate the Type I error that Dr. Vaidyanathan is willing to tolerate.

TUTORIAL 8:
Hypothesis testing:

(109) NS Software Systems and Services (popularly known as N4S) have recently recruited Komala, a quality expert from Institute of
International Management, Bilekahalli (IIMB). She decided to train the employees of N4S in quality awareness as well as the
techniques to be used through a new innovative method, developed specially by her. Dr. Raghav who is the VP, Corporate Training
agreed to experiment with the new method of training, provided the effectiveness of the training can be measured. Komala and Dr.
Raghav agreed to use a special instrument (as some of the OB experts prefer to call it), which has to be administered to the trainees
before and after the training. Based on the scores of the instrument, before and after the training, a Quality Capability Motivation
Improvement Index (QCM) can be computed for each of the trainees. They have agreed to use this index as a measure for the
effectiveness of the training and a positive value of the index indicates effectiveness of the training.

I. It was proposed that a sample of 20 employees would be selected for training under the new method. For obvious reasons, they
decided to do a one sided hypothesis test. The sample standard deviation of the QCM obtained from these 20 observations was 12.5.

(109 a) Dr. Raghav informed Komala that he is willing to go ahead with the new method if the sample average of QCM is greater
than equal to 4.8327. Based on this decision, calculate the Type I error that Dr. Raghav is willing to tolerate.

(109 b) Based on the above, formulate the null and alternate hypothesis.

(109 c) At this stage, Dr. Rahav decided to change the value to 0.025 and suitably modified the decision rule. The average QCM of
the 20 trainees turned out to be 5.3. Should Dr. Raghav go ahead with the new method of training?

(109 d) Assume that the true average QCM is 0.4673. What is the Type II error that Dr. Raghav will be committing based on the
decision in question (109 c) above?

II. Dr. Raghav decided to compare the new method with the old method of training that the company had been using. He selected a
random sample of 60 employees for training based on the old method and obtained the QCM scores for these 60 employees. The
average for this sample was 0.1 with a sample standard deviation of 9.3. Dr. Raghav insisted that 0.025.

## (109 e)Test whether the old method is effective or not?

(109 f) Test whether there is a significant difference between the two methods.

(109 g) Consider the results from Question I part (109 c) and Question II parts (109 e) and (109 f). Are these results consistent?

(110)In a recent readership survey of business magazines, 200 business executives from Delhi, Mumbai, Calcutta, Chennai, and
Business Asia-Pacific (BAP) and Business Universe (BU). The survey reporter who does not believe is straight-forward reporting,
narrated the survey findings as:

1) 40% of the interviewed executives in Delhi prefer BFT; the same was the percentage of executives interviewed in
Calcutta who preferred BAP as well the percentage of executives interviewed in Chennai who preferred BU. The same
was the overall percentage of executives who preferred BAP.
2) The same number of executives was interviewed from Calcutta, Chennai and Bangalore and in each of these three
cities one-third of the executives interviewed preferred BFT.
3) 10 executives from each of the three cities Delhi, Mumbai and Bangalore preferred BU.
4) In Mumbai, the ratio of the number of executives who chose BAP to those who chose BFT was 3:2.
5) In Bangalore, the three magazines were in a deadlock for the most preferred spot.
6) The proportion of executives who were from Mumbai was the same as the proportion of executives who preferred BU.

(110 a) Let d m be the proportion of all executives in Delhi (Mumbai) whose first preference for Business magazines is BFT.
Find a 95% confidence interval for d m .
(110 b) Test the hypothesis d m at 5% level of significance against the alternative that d m.

(111)Upon taking the oath as the Head of the State of Shangla, Shuddhubabu sits down to identify the main problems of the State.
The work culture of the people of Shangla has been on the downswing for some time and now it has become a very serious issue.
Shuddhubabus own party may have contributed substantially to this; it made employees more aware of their rights for which now
they are prepared to fight, but adequate care has not been taken to teach them the associated responsibility. In any case,
Shuddhubabu decides to address this concern and take actions against government employees who routinely report to their work
late. Of course, the first problem was to identify if this indeed is a serious problem, and if so whether severity is more or less uniform
among different types of employees. To start with, he decides to limit his survey to secretaries and officers in government offices;
but decided to get comparable survey done among similar employees in non-government offices who are supposed to bear roughly
similar responsibilities. The survey is done on a fixed date (so that the effect of other factors will be removed to the extent possible)
from a randomly chosen selection on employees. To start with, it is noted if the person reported to his/her work in time; if (s) he did
not, the delay in reporting to work is recorded. The summary of the survey is included below:

Govt/ Employee No. of No. of Delay for those who came late
Non-Govt Type employees employees Mean Standard
checked reported in deviation
time
Government Secretaries 155 34 46 14
Offices Officers 150 69 43 15
Non-govt Secretaries 200 139 27 12
Offices Officers 40 15 20 16

Note: For questions (a), (b), and (c) you should consider only those who did not report in time.

(111 a)Based on the survey, calculate two-sided 95% confidence intervals for the population variance of delay in reporting to work of
the Officers in the non-government offices.

(111 b)Based on the survey, calculate two-sided 95% confidence intervals for the population variance of delay in reporting to work
of Secretaries in the government offices.

(111 c) From the above survey, can Shuddhubabu conclude that there is significant difference between the average delay in
reporting to work between the secretaries and officers in the non-government offices?

Shuddhubabu has decided that he would take disciplinary action against any employee if the sample attendance records provide
significant evidence that the employee comes late on more than 20% of the days. Shuddhubabu feels that he cannot afford to take
to chance of more than 1% to punish someone who is late on at most 20% of the days. At the same time, Shuddhubabu is adamant
to send a strong message that indeed he means business. Thus he wants the scheme to take disciplinary action at least 99% of the
times correctly against someone who is late on more days than (s) he is on time.

(111 d)Formulate Shuddhubabus problem as a Statistical testing of hypothesis problem, by clearly stating the null and the
alternative hypothesis. What are the roles/terminology for the boldfaced numbers given above, i.e. 20%, 1% and 99%, in your
formulation?

(112) Ruma, Asst. Marketing Manager of NS Chemicals, who is responsible for marketing of Softwhite detergent has been receiving
complaints about the half-kilo pack. It was felt that the filling machines are not filling the detergent powder very accurately. Ruma
asked Komal (from the Quality Control) to test a few packets. Komal selected 12 packets randomly and took the exact weight of the
powder in the packet. She calculated a 95% two-sided confidence interval for the variance ( ). Since the lower limit of this
2

interval was only 110 Gms2 she told Ruma that this is quite acceptable. When Ruma asked for the sample average, she did not
remember, but she did remember that the upper and lower limits of the confidence interval for . She told Ruma that these limits
are 499.452 and 516.548.

## (112 a) What is the sample variance of the detergent powder?

(112 b) Ruma feels that all the filling machines will have to be reset if the variance ( ) is more than 300 Gms2. Carry out the
2

appropriate hypothesis test to decide whether the filling machines need to be reset ( = 0.10).
(112 c) Komal felt that it is not enough to control the variance, but she needs to look at the average quantity of the detergent filled.
She decided to test a hypothesis that = 500 Gms. She takes another sample of 12 and gets a variance of 218 Gms2. What is the
conclusion if = 0.05 i.e. for what range of values of the sample mean should she accept the Null hypothesis?

(112 d) If the real value of is actually 510 gms, what is the probability of committing Type II error?

(112 e)Ruma felt that it is appropriate that they should carry out a one sided hypothesis test and that they should make sure that
the customers should not get less than 500 Gms. She wanted the decision rule to be such that the probability of the customers
getting less than 500 Gms should be retained at 0.05. For what range of values of the sample mean should she accept the Null
hypothesis?

(112 f) The Consumer Rights Forum (CRF) did a sample test of 25 packets and got a variance of 400 Gms2. Is there a significant
difference at the 0.05 level between this and the variance in part (112 c)?

(113) The Indian army, after the recent clashes decided to evaluate a new gun called Bi-fours (it is so called because its range is
claimed to be at least 16 km). They have hired the services of Kanaka, who recently graduated from IIMB. Kanaka selected a simple
random sample of size 25 and calculated the sample average. Based on the sample average and the as given by the
manufacturers, she calculated a 90%, two sided confidence interval for . When she increased the confidence level to 95% the
width of the interval increased by 504 meters

## (113 b) What is the standard error of the sample mean?

(113 c)What should be sample size, if she wants to achieve a confidence level of 95% and at the same time retain the width of the
90% confidence interval that she got with a sample size of 25?

(113 d) What percentage of the sample means will fall within 1000 meters of the population mean ( ) (use sample size 25)?

(113 e) Kanaka decided to test the claim of the manufacturers using a one sided hypothesis test. If she has obtained a sample mean
(from the sample of 25 observations) of 17,600 meters, what is the maximum possible value for ? State clearly, your null and
alternate hypotheses?

(114) Pure Foods is facing allegations from the Consumer Forum that had tested 125 samples of their one kilo packets. They claimed
that the amount of adulteration was 7 unit (unit= parts per thousand per kilo). The Food Regulation Council, by regulation, allowed
at most 6.5 units of adulteration on average. Past data showed that the packets had a standard deviation of 2 units and both the
Consumer Forum and the Pure Foods authorities agreed to use this value, if required and you should also do that in Parts (a)-(e).

(114 a)Is Pure Foods following the Regulations if the Consumer Forums results are correct? Test at = 0.01. Clearly state the null
and the alternative hypothesis, critical region and your decision.

The Company hires a PR firm for damage control. After collecting the samples from the Consumer Forum, Pure Foods claims that of
the 125 samples, 25 packets had gone beyond the expiry date on the date of testing by the Consumer Forum. Hence these samples
should not be considered. The average adulteration in these 25 packets they said was 7.5 units and the standard deviation was 2.676
units.

(114 b) Once the packets beyond the expiry date are discarded from the consideration, can you conclude that the Pure Foods is not
following the regulations (at = 0.01)?

(114 c) The Consumer Forum counters and says that the Food Regulation Council specifies = 0.05 and hence Pure Foods is guilty.
Find the p-value (probability value) of the above test (in part b) to find the validity of the conclusion of the consumer forum.

The Consumer Forum decides that a Type II error is more serious as it is harmful for consumers.

(114 d) If the true average adulteration level of all Pure Foods products was 7 units, what is the probability of committing a Type II
error for the test carried at in Part (b)?
(114 e) If the Consumer Forum wants the Type II error to be less than 5% when the true average adulteration level of all Pure Foods
products was 7 units, then what is the minimum sample size it should take for future testing?

The Quality Control Manager knows that everyone has been using 2 as the standard deviation. However, he is not sure and wants to
check this. He is also curious about the adulteration level of packets which had gone beyond the expiry date. Refer to the data
summary before part (b).

(114 f) Assuming that the true standard deviation in adulteration level of packets which had gone beyond the expiry date is as
specified (assumed) for all packets (mentioned above), what is the probability of the sample standard deviation in adulteration level
of 25 packets which had gone beyond the expiry date exceeding the observed value (2.676 units)? (It would be acceptable to get an
approximate value of this probability.)
(114 g) Find a 90% confidence interval for the true standard deviation in adulteration level of packets which had gone beyond the
expiry date.

(114 h) Find a 95% confidence interval for the true average adulteration level of packets which had gone beyond the expiry date.