Pearson LCCI

Business Statistics
Level 3

Monday 2 November 2015 Paper Reference

Time: 3 hours ASE3009

You will need:

An answer book

Instructions
• Do not open this examination paper until you are told to do so by the supervisor.
• 
Use black/blue ink or ball-point pen
– pencil can only be used for graphs, charts, diagrams, etc.
• Ensure your answers are written clearly.
• Begin your answer to each question on a new page.
• Write on both sides of the page.
• All answers must be correctly numbered but need not be in numerical order.
• If you need more space, use the additional sheets provided. Write your name, candidate
number and question number on each sheet and attach them to the inside of your answer
book. State, on the front of your answer book, the number of additional sheets attached.
• Answer any five questions.
• Workings must be shown.

Information
• The total mark for this paper is 100.
• There are eight questions in this question paper
– each question carries equal marks.
• T he marks for each question are shown in brackets
– use this as a guide as to how much time to spend on each question.
• You may use a calculator provided the calculator gives no printout, has no word display
facilities, is silent and cordless. The provision of batteries and their condition is your
responsibility.
• There is a list of formulae on page 12.
• Graph paper is provided within the answer book.
• No marks will be awarded for extra questions answered.

Advice
• Read each question carefully before you start to answer it.
• Check your answers carefully if you have time at the end. Turn over

P47035A
©2015 Pearson Education Ltd.

1/1/1/1/1/1
*P47035A*
 Answer ANY FIVE questions.
1 (a) (i) Give two reasons why moving averages are used to analyse time series data.
(2)
(ii) State the effect that increasing the order of moving average has on the
analysis of the original data.
(1)
The table shows the number per quarter, in millions, of passengers on a UK city
centre light rail system from 2012 to 2014 inclusive.

Year 2012 2013 2014

Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Passenger
4.2 5.7 6.2 4.9 4.5 5.2 5.7 4.2 3.8 5.2 5.6 3.6
numbers (millions)

(b) Calculate, to 1 decimal place, values of a suitable moving average for the data.
(6)
(c) Calculate the average quarterly variations, using the additive model.
(4)
(d) Describe the trend and quarterly variation shown by the moving averages.
(2)
The equation of the least squares regression line for the moving average passenger
numbers, y, on time, x, to 1 decimal place is y = 5.4 – 0.1x where x represents time,
increasing by 1 for each quarter and starting at x=1 for Q3 of 2012.
(e) Calculate, using the given equation, and the quarterly variations found in (c),
estimates of passenger numbers for the first two quarters of 2015.
(4)
The actual passenger numbers for Q1 and Q2 of 2015 were 3.1 and 3.8 million
respectively.
(f ) Give one statistical reason why the actual passenger numbers for Q1 and
Q2 of 2015 do not match those given by your estimates in (e).
(1)

(Total for Question 1 = 20 marks)

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2 The Operations Manager of an engineering components company carries out, each
day, an inspection consisting of three stages: data collection, data input and data
processing.
The times for each stage are normally distributed and independent of each other.
Records show the following time summaries (in minutes) for each stage.

Mean time Standard deviation

Data collection 80 14

Data input 30 8

Data processing 20 6

(a) Calculate the probability that:

(i) the time needed for data collection is greater than 115 minutes
(3)
(ii) the combined time for data input and data processing is less than 45 minutes
(4)
(iii) all three stages are completed in less than 156 minutes.
(3)
In order to meet reporting requirements, the data collection stage should be
completed by 16.00 each day.
(b) Calculate the latest time that the data collection should start to be 95% sure of
completing this stage on time.
(4)

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 The company also monitors quality by taking samples at regular intervals from
the production line to check that the lengths of components are within agreed
tolerances.
The lengths of components are normally distributed with a mean of 140 cm and
standard deviation of 0.3 cm.
As a check on the process, samples of four components are taken at regular intervals
from the production line and measured.
(c) Calculate, to 2 decimal places, upper and lower warning (95%) and action (99.8%)
control limits for sample means.
(4)
You are not required to plot these limits.
The first eight samples taken from the production line yesterday had the following
mean lengths, in cm:

Sample number 1 2 3 4 5 6 7 8

Sample mean length 140.1 139.9 140.2 139.8 139.7 139.6 139.6 139.4

(d) Give two reasons why the process appears to be going out of control.
(2)

(Total for Question 2 = 20 marks)

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3 A recent survey, of a randomly selected group of investment analysts, examined
associations between length of service, annual number of days lost through stress-
related illness and responsibility grade.
The following table shows the results of the survey.

Annual number of days lost

Responsibility grade
Length of service through stress-related illness
(years)
0–6 7 – 10 11 or more Management Non-management

less than 2 35 28 21 21 63

between 2 and 5 26 21 28 26 49

more than 5 14 7 0 14 7

(a) Test whether there is a significant association between the length of service and
the annual number of days lost through stress-related illness.
(12)
(b) Identify, by examining the contributions to the chi-squared statistic, the largest
contribution and hence the length of service least likely to be associated with
stress-related illness.
(1)
The chi-squared value calculated for the association between length of service and
responsibility grade is 13.1
(c) Test whether there is a significant association between length of service and
responsibility grade.
(4)
It was later found that the data in the table had been mis-recorded and should have
been based on a sample of 360 respondents.
The proportions in each category had, however, been recorded correctly.
(d) State, for the test carried out in part (a), the effect, if any, this information would
have on the:
(i) null and alternative hypotheses
(1)
(ii) value of the test statistic
(1)
(iii)
conclusion.
(1)

(Total for Question 3 = 20 marks)

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4 The Production Manager at Bilkes plc operates a stock control system such that
materials arrive just when stock is scheduled to run out.
However, as a result of occasional delivery delays, the company has to allow each year
for material stocks to run out on 4% of production days.
Records, from last year, show that on 120 randomly selected production days, the
company ran out of material stocks on 8 of these days.
(a) Test whether the sample result suggests that the proportion of days last year
when material stocks ran out was more than the expected 4% of days when
production was scheduled to take place.
(5)
The company currently manufactures the same product at two factories, A and B.
The Production Manager is concerned that delays caused by running out of material
stocks at factory B may be significantly longer in terms of mean lost production time
per day than at factory A.
Details of the loss in production time at each factory (number of minutes per day)
due to running out of material stocks for a randomly chosen 10-day period at factory
A and a different randomly chosen 10-day period at factory B are shown below.

Lost production time (minutes per day)

Factory A 16 38 26 45 43 31 29 41 34 27

Factory B 42 41 40 46 50 46 38 37 36 44

(b) Test, using an independent-samples t-test at the 5% significance level, whether

the Production Manager’s concerns are justified.
(12)
(c) (i) State what is meant by a type II error.
(1)
Give one reason why the probability of a type I error occurring would be less
(ii)
if the test in (b) had been carried out at the 1% significance level.
(1)
(d) Explain why it would have been incorrect to have used a paired t-test in (b).
(1)

(Total for Question 4 = 20 marks)

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5 The following table shows the unemployment rate (Y%) and annual change in
consumer prices (X%) for nine countries in 2014.

Annual % change in
Unemployment rate (%)
Country consumer prices
(Y)
(X)

Austria 5.7 2.4

Belgium 8.5 1.1

Chile 5.7 1.8

Denmark 7.0 0.8

Japan 4.1 0.4

UK 7.6 2.4

Turkey 8.7 7.5

Greece 27.5 – 0.9

Germany 5.2 1.5

(Source: adapted from OECD Statistical Extract (February 2015))

(a) State what the annual percentage change in consumer prices for Greece shows.
(1)
(b) Calculate the product moment correlation coefficient (r) for the data shown in
the table.
(9)
(c) Test whether the correlation coefficient calculated in (b) differs significantly
from zero.
(5)
(d) (i) Calculate the coefficient of determination using your answer from (b).
(2)
(ii) Interpret, in context, what the value in (d)(i) shows.
(1)
The equivalent value for the correlation coefficient between unemployment
rate (%) and annual percentage change in Gross Domestic Product (GDP) for
2014 was r = +0.87
(e) Compare this value of r with that calculated in (b), commenting on which of
the two factors , percentage change in GDP or percentage change in consumer
prices, is the better indicator of unemployment rates.
(2)

(Total for Question 5 = 20 marks)

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6 A broadband speed of 7.5 mbs (megabits per second) is advertised by an internet
service provider.
A random sample of nine system users tested their computers and recorded the
following mean broadband speeds.

System user A B C D E F G H I

Broadband
7.2 9.6 8.2 10.8 7.6 11.2 8.5 6.1 11.8
speed (mbs)

(a) Test whether the mean broadband speed recorded by the sample of users is
significantly higher than the mean speed quoted by the service provider.
(8)
After an upgrade to the internet service, the provider conducted a survey of a
random sample of users, by age, to find out if they thought broadband speeds had
improved since the upgrade.
The results were summarised as follows:

Age of user

Under 25 25 and over

Speeds improved 42 36

Speeds not improved 238 264

Sample size 280 300

(b) Test, at the 5% level, whether the proportions of those aged under 25 who
thought that the broadband speed had improved since the upgrade were
significantly higher than those in the sample aged 25 and over who also thought
broadband speeds had improved.
(10)
(c) Explain how your conclusions in (b) may change if a two-tail test had been
carried out.
(2)

(Total for Question 6 = 20 marks)

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7 A large retailer has to decide in which newspapers to advertise its forthcoming
‘mega-sale’.
A recent readership survey showed that 35% of the population read the Daily Post,
30% read the Gazette and 22% read the Graphic.
The survey also showed that 4% read all three newspapers, 20% read exactly two
newspapers,12% read only the Daily Post and Gazette and 5% read only the Gazette
and the Graphic.
The retailer decides that the advertisement should be placed in all three national
newspapers.
(a) Calculate, using a Venn diagram or otherwise, the percentage of the population
that would have:
no opportunity to see the advertisement
(i)
(6)
exactly one opportunity to see the advertisement.
(ii)
(2)
(b) Calculate the probability that a reader sees the advertisement in the Graphic,
given that they only read one of these three newspapers.
(2)
Later the retailer realises that budgetary constraints mean he has only sufficient
funds to advertise in two out of the three newspapers, but still wishes to reach the
maximum readership possible.
(c) (i) Calculate for each pair of newpapers the percentage of the population that
would be able to read the advertisement.
(2)
State which two newspapers he should choose.
(ii)
(1)
The first month after the advertisement was placed resulted in the company receiving
500 sales orders. Each order was numbered in the range 051 to 550 and then
processed in either Department A or Department B.
Orders numbered 051 to 400 were processed by the trainee in Department A and
orders numbered 401 to 550 were processed by the trainee in Department B.
(d) Select a proportional stratified random sample of 10 sales orders using the
information given above and the set of random number tables shown below.
34582 71280 54444 84483
35132 18653 33668 00088
68371 75082 02187 80370
76166 47031 53514 71624
Read the random number tables by starting at the top left-hand corner of the table
and moving from left to right across each row.
(7)

(Total for Question 7 = 20 marks)

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8 Box plc assembles agricultural equipment. At present, the company uses five types
of components in the assembly process. As a budgetary check, the Finance Director
records the number of components purchased each year, together with the total
annual purchase cost of each component type.
Details for the past two years are shown in the table.

Components Total cost of

purchased component purchases
(units) (£)

Component type 2013 2014 2013 2014

C1 300 300 4200 3600

C2 240 220 3480 3500

C3 225 240 5175 5450

C4 200 260 840 700

C5 360 480 1656 1820

(a) Calculate a Paasche cost index for the total cost of all component purchases for
2014 based on 2013.
(7)
(b) Comment on the change in total component purchase costs, given that the
increase in the Retail Price Index over the period was 2.4%.
(1)

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 Due to the need for frequent resetting of machines, there is variation in the time
taken to complete the assembly of a standard item of agricultural equipment.
The table shows the distribution of times, rounded to the nearest minute, to complete
the assembly of a random sample of 170 such items at the company’s factory X.

Assembly times Number of items

(minutes) completed
5–6 12

7–8 22

9 44

10 50

11–12 20

13–15 12

16–20 10

(c) Draw a histogram to represent the distribution of times shown in the table.
(5)
(d) Estimate, using data from the table, the median assembly time.
(2)
The company also assembles the same agricultural equipment at another one of its
factories, Y.
A summary of the assembly times for equivalent samples of output taken from each
of the two factories (X and Y) is as follows:

Assembly times
Factory X Factory Y
(minutes)
Mean 10.03 10.53

Median ....................... 10.52

Standard deviation 2.37 2.90

(e) (i) Calculate the coefficient of skewness for both factories, using information
given in the table above, and your answer in (d), for the median time for
factory X.
(3)
(ii) Explain what the two measures calculated in (e)(i) show.
(2)
(Total for Question 8 = 20 marks)
TOTAL FOR PAPER = 100 MARKS

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 FORMULAE
BUSINESS STATISTICS

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