STATS 191 Quantitative Methods for Business

Assignment 3, First Semester 2006

Due: 4pm Wednesday 24th May
Notes:
• Statistics is about summarising, analysing and communicating information. Communication is
an important part of statistics. For this reason you will be expected to write answers which
clearly communicate your thoughts. The mark you receive will be based on your written
English as well as your statistical/technical work.
• Assignment 3 will be marked out of 80 marks, 78 marks for the questions as shown below and 2
marks for communication and presentation. (Refer to questions in the Worked Examples under
assignment resources on the Course Resource CD-ROM for examples of how to set out your
assignment answers.) Your final mark will be converted to a mark out of 10 which will be
recorded towards your course work.
• This assignment is worth 8% of your final mark. Do not leave the assignment to the last few
days. Attempt:
- Questions 1 – 3 when chapter 9 has been covered.
- Questions 4 and 5 when the first half of chapter 10 has been covered.
- Question 6 when the second half of chapter 10 has been covered.
- Question 7 when all of chapter 10 has been covered.
• We encourage working together. Working together is discussing assignments and methods of
solution with other students or getting help in understanding from staff and tutors. If you work
with other students, you must write up your final assignment individually, in your own
words.
• We view cheating on assignment work seriously! Cheating is copying all or part of another
student’s assignment or allowing another student to copy all or part of your assignment.
Students who hand in substantially similar work will receive 0 marks for the assignment and, in
addition, will also lose ALL marks from Cecil tests. This means a loss of 12% from the final
mark. A student who allows someone else to copy their work is treated identically to the student
who did the copying. Taking a copy of another student’s work without their knowledge is theft
and will be referred to the University Discipline Committee.
HYPOTHESIS TESTS IN THIS ASSIGNMENT:
• By hand:
• You must follow all steps in the “Step-by-Step Guide to Performing a t-test by Hand”,
Lecture Workbook, Chapter 9, page 9.
• Using SPSS:
• You must follow steps 1, 2, 3, 8 and 9 in the “Step-by-Step Guide to Performing a t-test by
Hand”, Lecture Workbook, Chapter 9, page 9.
• Replace steps 4 – 7 in the “Step-by-Step Guide to Performing a t-test by Hand” with the
relevant computer output.
COMPUTER USE IN THIS ASSIGNMENT:
• Make sure you are prepared for questions 4 and 5 before you begin to use the computer.
• Hand in computer output for questions 4 and 5.
• Report P-values to 3 or 4 decimal places.
• When instructed to carry out a two sample t-test using SPSS do not assume equal variances.

© Department of Statistics STATS 10x – Assignment 3 Page 1

Question 1. [ 9 marks ] [Chapter 9]
A medical researcher is interested in investigating the effect of beta-blockers on the pulse rate
during heart surgery. Note: Beta-blockers are drugs that reduce the heart’s workload by
decreasing its need for blood and oxygen.
52 patients booked for the same type of heart surgery were randomly divided into two groups
of 26. Just prior to surgery one group of patients were each given a beta-blocker while the
other group were given a placebo. At a particular point during surgery the pulse rate (heart
beats per minute) of each patient was recorded. Summary statistics are displayed below:
Group Statistics

Std. Error
Drug N Mean Std. Deviation Mean
Pulse rate (beats/min) Beta-blocker 26 65.4581 5.95862 1.16858
Placebo 26 70.4304 6.39227 1.25363

By hand, carry out a t-test to investigate if there is a difference between the underlying mean
pulse rate for patients given a beta-blocker and that for patients given a placebo. Interpret
your results, including the 95% confidence interval.
Notes:
(i) Refer to the instructions on page 1 of this assignment: HYPOTHESIS TESTS IN THIS
ASSIGNMENT.
(ii) Once you have calculated your test statistic, it is necessary to use either a graphics
calculator, SPSS, Excel or t-tables to determine the P-value.

© Department of Statistics STATS 10x – Assignment 3 Page 2

Question 2. [ 11 marks ] [Chapter 9]
400 people aged 16 years and older recently responded to an Auckland Regional Council
environmental awareness survey. Assume the 400 people form a random sample of all people
aged 16 years and older living in the Auckland Region. 299 of the 400 people responded that
they live in either Auckland City, Manukau City, North Shore City or Waitakere City.
One of the questions asked in the survey was:
“If you came across an environmental problem such as a toxic chemical spill into a
waterway or a factory emitting noxious fumes, which of the following would best
describe your reaction?”
The table below gives the responses of these 299 people to this question:
North
Waitakere Auckland Shore Manukau Total
I would definitely take
action of some sort 40 51 36 39 166

I would probably take

action of some sort 18 36 20 38 112

I probably wouldn't
take any action 6 4 5 1 16

I definitely wouldn't
take any action 1 1 0 2 4

Don't know 0 0 1 0 1

Total 65 92 62 80 299

(a) State the sampling situation for the difference between the estimated proportion of all
Manukau City residents who would probably take action of some sort and the corresponding
estimated proportion of Waitakere City residents.
(b) By hand, carry out a t-test to investigate if there is a difference between the proportion of all
Manukau City residents who would probably take action of some sort and the corresponding
proportion of Waitakere City residents. Interpret your results, including the 95% confidence
interval.
Notes:
(i) Refer to the instructions on page 1 of this assignment: HYPOTHESIS TESTS IN THIS
ASSIGNMENT.
(ii) Hint: Follow the step-by-step guide to performing a t-test by hand given in the Lecture
Workbook, Chapter 9.
(iii) Once you have calculated your test statistic, it is necessary to use either a graphics
calculator, SPSS, Excel or t-tables to determine the P-value.
(iv) You can check your calculations by using the Excel spreadsheet in the Assignment
Resources section of the Course CD-ROM.
(c) Does your confidence interval from part (b) contain the true difference? Briefly explain.

© Department of Statistics STATS 10x – Assignment 3 Page 3

Question 3. [ 10 marks ] [Chapter 9]
Read Confidence Intervals and P-values in Section C of your Lecture Workbook.
Consider a study by the management of a plastics manufacturing company to determine the
supplier of raw materials for manufacturing high quality plastic champagne glasses. The
champagne glasses are inspected after manufacture and any that do not meet standards are
rejected. Based on past data the current proportion of defective glasses produced is 0.012
(i.e., on average, 12 in every 1000 glasses are rejected).
A new supplier is offering a cheaper raw material, but management is concerned that this may
lead to more rejects. Therefore the question of interest is, does using the new supplier’s raw
material lead to an increase from the current rate of defective glasses? The management
consider an increase in rejection rate to at most 17 out of 1000 would be of no consequence,
whereas a rejection rate greater than this could result in substantial additional costs.
Some possible outcomes of the study (using the cheaper raw material) are:

p̂ se( p̂ ) P-value 95% CI

Case 1 0.009 0.0031 0.1666 [0.003, 0.015]
Case 2 0.021 0.0004 0.0000 [0.020, 0.022]
Case 3 0.019 0.0061 0.1256 [0.007, 0.031]
Case 4 0.011 0.0003 0.0004 [0.010, 0.012]
Case 5 0.022 0.0021 0.0000 [0.018, 0.026]

Note:
The hypotheses associated with the quoted P-values are:
H 0 : the proportion of rejects is 12 out of every 1000 champagne glasses.
H 1 : the proportion of rejects is not 12 out of every 1000 champagne glasses.
(a) (i) What is the hypothesised value?
(ii) In which direction and how far away, in terms of standard errors, is the estimated
rejection rate in Case 5 ( pˆ = 0.022 ) from the hypothesised value?
(b) Which case(s) demonstrates, at the 5% level, that the sample proportion, p̂ , is statistically
significant?
(c) For which case(s) have we been able to demonstrate that the rejection rate using the new
supplier’s raw material:
(i) is big enough to have practical significance?
(ii) is so small that it has no practical significance?
(d) In which case(s) have we learned nothing useful about the rejection rate using the new
supplier’s raw material?
(e) Suppose the actual outcome for the study is:

p̂ se( p̂ ) P-value 95% CI

Case 6 0.015 0.0004 0.0000 [0.014, 0.016]

Write 2-3 sentences interpreting this output. You need to refer to statistical significance and
practical significance. Which supplier, would you recommend? Give a reason(s) for your
choice.

© Department of Statistics STATS 10x – Assignment 3 Page 4

Question 4. [ 9 Marks ] [First half of Chapter 10]
A fisherman is interested in determining whether there is a difference in the time taken to
catch a fish at a particular lake when fishing from a boat or from the shore. A sample of
weeks throughout a year is randomly selected. During each of the weeks the average length of
time (in hours) it takes to catch a fish is calculated for people fishing from boats and people
fishing from the shore. The resulting data are shown below:
Sample Week 1 2 3 4 5 6 7 8 9 10
Time to catch: Boat 1.5 3.3 1.6 2.2 1.5 3.0 3.8 1.4 2.3 2.2
Time to catch: Shore 1.6 4.0 2.0 3.2 1.7 3.6 3.3 1.8 2.1 2.7

(a) By hand, draw the appropriate plot(s) for this data set. (You should consider the design of
this study to ensure the relevant plot(s) is drawn.) Comment on any features in the plot(s).
(b) Reminder: Refer to the instructions on page 1 of this assignment: HYPOTHESIS TESTS IN
THIS ASSIGNMENT.
(i) Is there an underlying mean difference in the time taken to catch a fish between fishing
from a boat or from the shore? Use SPSS to investigate this question. Interpret your
results.
(ii) Is there an underlying median difference in the time taken to catch a fish between
fishing from a boat or from the shore? Use SPSS to investigate this question. Interpret
your results.
(c) Which of the two tests from (b) is more appropriate for these data? Justify your answer.

Question 5. [ 6 Marks ] [First half of Chapter 10]

Of interest is whether a company’s success or failure depends on its ratio of current assets to
current liabilities. 30 successful companies and 25 failed companies were randomly chosen
and their ratio of current assets to current liabilities recorded. The data are given below:
Successful 2.50 1.80 1.80 0.23 2.16 2.02 1.44 0.93 0.89
1.76 1.39 1.50 1.03 1.11 2.44 2.73 2.73 1.87
2.08 1.43 2.12 0.95 1.52 1.56 2.03 1.93 2.80
2.05 1.02 0.10
Failed 1.45 0.51 1.17 0.92 0.82 0.88 2.03 0.88 0.13
1.15 0.62 0.09 1.31 1.68 0.83 0.13 0.05 1.16
0.89 0.19 1.10 1.32 1.11 0.42 0.52

(a) Using SPSS, draw the appropriate box plot(s) for this data set. (You should consider the
design of this study to ensure the relevant plot(s) is drawn.) Comment on any features in the
plot(s).
(b) Is there a difference between the underlying mean ratio of current assets to current liabilities
for successful companies and that for failed companies? Use SPSS to investigate this
question. Interpret your results.
Reminder: Refer to the instructions on page 1 of this assignment: HYPOTHESIS TESTS IN
THIS ASSIGNMENT.

© Department of Statistics STATS 10x – Assignment 3 Page 5

Question 6. [ 18 marks ] [Second half of Chapter 10]
Spatial-temporal reasoning skills are skills thought to be a main element for improved
performance in statistics, mathematics and science.
Of interest is whether piano lessons have an effect on the spatial-temporal reasoning skills of
children. 95 children of similar age were randomly allocated into 4 groups. Over a period of
6 months, 3 of the groups received weekly half-hour after-school lessons in one of: piano,
singing or computer tuition. The fourth group received no additional lessons. The spatial-
temporal reasoning skills of the children were tested at the beginning and end of the 6 month
period with the difference between the test results being recorded. SPSS output for analysing
the relationship between the change in test scores and the type of lessons received is shown
below and on the next page.
(a) Briefly compare the data sets in terms of the original story.
(b) State the assumptions of the F-test in terms of the original story.
(c) Calculate the ratio of the sample standard deviation of the most variable lesson type to the
sample standard deviation of the least variable lesson type.
(d) Comment on the validity of the F-test by briefly discussing each assumption.
(e) Assume that an F-test is an appropriate test to use here. (Note: It may not be.)
(i) State the null hypothesis for the test, both in words and using symbols.
(ii) State the alternative hypothesis for the test in words.
(iii) What does the result of the F-test tell you about the mean change in test score for the 4
lesson types? Explain your answer in 1-2 sentences.
(f) Assuming the Tukey’s pairwise comparisons are valid:
(i) Is there a difference between the underlying mean change in test score for children
receiving piano lessons and that for children receiving singing lessons? Interpret your
results, including the 95% confidence interval.
(ii) Between which pair (or pairs) of lesson types were there significant differences (at the
5% level) in the mean change in test score?
(iii) Are we able to determine which single lesson type has the largest underlying mean
change in test score? If so, name the lesson type.

Dot plot of change in test score

Lesson Type
Singing

Piano

None

Computer

-5 0 5
Change in score

© Department of Statistics STATS 10x – Assignment 3 Page 6

 9

Change in test score

3

-3

-6

Piano Singing Computer None

Lesson type
Descriptives

Score
95% Confidence Interval for
Mean
N Mean Std. Deviation Std. Error Lower Bound Upper Bound Minimum Maximum
Piano 34 3.62 3.055 .524 2.55 4.68 -3 9
Singing 18 -.56 1.580 .372 -1.34 .23 -4 1
Computer 20 .45 2.212 .495 -.59 1.49 -3 4
None 23 .26 2.942 .613 -1.01 1.53 -6 7
Total 95 1.35 3.124 .321 .71 1.98 -6 9

ANOVA

Score
Sum of
Squares df Mean Square F Sig.
Between Groups 283.678 3 94.559 13.575 .000
Within Groups 633.859 91 6.965
Total 917.537 94

Multiple Comparisons

Dependent Variable: Score

Tukey HSD

Mean
Difference 95% Confidence Interval
(I) Lessons (J) Lessons (I-J) Std. Error Sig. Lower Bound Upper Bound
Piano Singing 4.173* .769 .000 2.16 6.19
Computer 3.168* .744 .000 1.22 5.11
None 3.357* .713 .000 1.49 5.22
Singing Piano -4.173* .769 .000 -6.19 -2.16
Computer -1.006 .857 .646 -3.25 1.24
None -.816 .831 .759 -2.99 1.36
Computer Piano -3.168* .744 .000 -5.11 -1.22
Singing 1.006 .857 .646 -1.24 3.25
None .189 .807 .995 -1.92 2.30
None Piano -3.357* .713 .000 -5.22 -1.49
Singing .816 .831 .759 -1.36 2.99
Computer -.189 .807 .995 -2.30 1.92
*. The mean difference is significant at the .05 level.

© Department of Statistics STATS 10x – Assignment 3 Page 7

Question 7. [ 15 marks ] [Chapters 9 and 10]
A direct marketing company collected data on a random sample of their customers. The
following information was collected:
Variable Type
AmountSpent The amount spent by the customer this year ($)
Salary The combined salary of the customer and their partner:
< $45,000, $45,000 - $75,000 or > $75,000
Children The number of children living with the customer
Gender The customer's gender: Female or Male
OwnHome Whether the customer owned their own home: Yes or No
Close Whether there is a shop selling similar products close by: Yes or No
Age The customer’s age group: ≤ 30, 31 – 55 or ≥ 56
History The amount spent by the customer last year ($)

(a) For each of the scenarios 1 to 5 below, write down the name of the variable(s) (given in the
table above) needed to examine the question and for each variable, write down its type
(qualitative or quantitative) next to it.
(b) What tool(s) should you use to begin to investigate the scenarios 1 to 5 below? Hint: Refer to
the notes in Chapter 2 and Chapter 3 in the Lecture Workbook. Write down the scenario
number 1 to 5 followed by the appropriate tool.
(c) Given that the underlying assumptions are satisfied, which form of analysis below should be
used in the investigation of each of the scenarios 1 to 5 below? Write down the scenario
number 1 to 5 followed by the appropriate Code A to F.
Scenario 1: Do we expect that the amount spent this year is related to a customer’s age?
Scenario 2: Do we expect the amount spent this year to be different to the amount spent last
year?
Scenario 3: Do we expect the amount spent this year to be different between a customer who
has a shop selling similar products close by and one who does not?
Scenario 4: Is there a difference between the proportion of males who own their own home
and the proportion of females who own their own home?
Scenario 5: Do we expect that the amount spent this year is related to a customer’s salary?

Code Form of analysis

A One sample t-test on a mean
B One sample t-test on a proportion
C One sample t-test on a mean of differences
D Two sample t-test on a difference between two means
E Two sample t-test on a difference between two proportions
F One-way analysis of variance F-test

© Department of Statistics STATS 10x – Assignment 3 Page 8