IIM Nagpur

Analysis of Data 2016

Weekly Assessment: Week 2
Full Marks: 25
Duration: 75 minutes
Instructions:
1. This paper contains 3 questions. Answer all questions for full credit.
2. The assessment is open book and open notes. You can use any calculator or your laptop computer. Tablets/ mobiles
are strictly prohibited.
3. Answer only in the answer script in the space provided. You need to provide brief but clear justification for
your answers for full credit.
4. If you need more space, use the blank page at the end.
5. If anyone is caught using unfair means, including copying from the others, they will be reported to the PGP
office. The minimum punishment for such an offence is a course “F”.
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1. For each of the following statements, answer TRUE or FALSE with brief reason:
a) [2 Marks] Performing a test of the null hypothesis H0: μ ≤ 10 against the alternative hypothesis H1: μ > 10, you have
failed to reject the null. It is later found out that the true mean of the process is 11. True or false: you have committed a
Type I error.
b) [2 Marks] Performing a test of hypothesis at a 5% level of significance, you have rejected the null. True or false: if the
test was performed at a 10% level of significance, you would still have rejected the null.

c) [2 Marks] A statistic T is unbiased for a parameter θ. True or false: for two constants a and b, if aT is unbiased for bθ,
then a = b.

d) [2 Marks] I want to reduce the margin of error of a confidence interval to half of what it is now. True or false: if I
leave the confidence level unchanged, I need to double the sample size.
2. Because of tough competition from the tablet and netbook segments, the sales of high end laptops are
declining and competition is increasing. Electronic stores nowadays do not want to store too many high end
laptops at the store. On the other hand stockout is also not desirable as it has been seen that a number of buyers
of such laptops do not like to wait: they tend to go to another store if a store does not have immediate stock.
Given this conundrum, a leading Indian electronic chain has approached a marketing farm to suggest the
monthly stock figures of high end laptops for its dedicated showrooms. The marketing farm, based on historical
data, has suggested that the chain should stock 90 high end laptops in each of its showrooms.
However, the chain’s sales records from 10 of its stores last month show the following sales numbers:

80 94 88 76 69 95 81 102 68 88

The chain needs to know whether they should trust the marketing farm’s advice. They do not want to store too
many high end laptops, but they do not want to store too few either. The chain has approached an analyst, who
wishes to conduct an appropriate test of hypothesis.

a) [2 Marks] Form the null and alternative hypotheses for the chain’s problem.

b) [2 Marks] State the assumption(s), if any, required by the analyst to proceed with the testing of hypotheses.
c) [6 Marks] Perform a test of hypothesis at a 5% level of significance using the p-value method. What is the
conclusion?
3. On a Monday morning, a new recruit in your data analysis team approaches you with a problem. One of
your largest clients is planning to launch a branch of their flagship garment store in N a g p u r , and they asked
you to perform a market survey of the performance of the similar outlets three months ago. In a report
submitted the client, a guy who just left your team last month has reported a confidence interval for the
average monthly sales of a similar sized store, reported as Rs. (3450753, 3549247). The new recruit, to his
horror, has found that several points are missing from the report. For example, the report does not include
either the mean or the standard deviation of the sample, and he feels that there is no way to get these
numbers as the original sample is also missing. However, you know at least that the previous guy always
preferred to report a 95% confidence interval. Also, you remember that he surveyed 99 people for this
particular market study, a number that you did not like as usually you prefer to interview a lot more people.

From the above, you need to help the new recruit to compute back the basic sample statistics.

a) [2 Marks] What is the margin of error of the estimated average monthly sales of a similar sized store
obtained by your ex-colleague?

b) [2+3 Marks] Find the sample average and the sample standard deviation of the sample that was collected.
Justify your answer.