UNIT CODE: BAF2103

UNIT TITLE: QUANTITATIVE TECHNIQUES

CAT I & II
QUESTION ONE
a) State clearly what is meant by two events being statistically independent. (2 Marks)
SUGGESTED SOLUTION
Two events are said to be statistically independent if the occurrence of one event does not
influence the occurrence of the other event.

b) In a certain factory that employs 500 men, 2% of all employees have a minor accident in a
given year. Of these, 30% had safety instructions whereas 80% of all employees had no safety
instructions.
Required:
Find the probability of an employee being accident-free given that he had:
i) no safety instructions. (3 Marks)
ii) Safety instructions. (3 Marks)
SUGGESTED SOLUTION

Let
A = Minor Accident
NA = No minor accident
SI = had safety instructions
NSI = had no safety instructions

Men that had minor accident, equals to 0.02 x 500 = 10

Men that had safety instructions given they had minor accident, were equal to 0.3 x 10 = 3
Men that had no safety instructions given they had minor accident, were equal to 10 – 3 = 7
Overall number of men that had safety instructions was 0.2 x 500 = 100
Overall number of men that had no safety instructions was 0.8 x 500 = 400

SI NSI TOTAL
A 3 7 10
NA 97 393 490
Total 100 400
 (i) 
P NA NSI =  393
 0.9825
400

(ii) 
P NA SI   97
 0.97
100

 λ λ x  0.4 0.4 
0
(i) P(X = X) = P(X = 0) = = 0.6703
x! 0!
(ii) P(x ≤ 2) = P(x = 0, 1 or 2) = P(x = 0) + P(x = 1) + P(x = 2)

 0.4 0.4   0.4 0.4   0.4 0.4 

0 1 2
= + +
0! 1! 2!
= 0.6703 + 0.2681 + 0.0536
= 0.9920

c) James Mwebia stocks and sells, oranges and mangoes in his grocery at Nairobi city market.
On Monday last week he sold 100 oranges and 95 mangoes making a total sale of sh.1,625.
On Tuesday he sold 120 oranges and 80 mangoes making a total sale of sh.1,580. He buys
these items from a distributor at sh.2 and sh.6 for an orange and a mango respectively.
Required;

SUGGESTED SOLUTIONS
i) Formulate linear equations connecting the number of units sold and total sales. (2
Marks)
Day of the week Oranges(X) Mangoes(Y) Sales
Monday 100 95 1625
Tuesday 120 80 1580

100𝑥 + 95𝑦 = 1625 … … . . 𝑚𝑜𝑛𝑑𝑎𝑦 𝑒𝑞𝑢𝑎𝑡𝑖𝑜𝑛equatio

120𝑥 + 80𝑦 = 1580 … … . . 𝑡𝑢𝑒𝑠𝑑𝑎𝑦 𝑒𝑞𝑢𝑎𝑡𝑖𝑜𝑛

ii) The selling price for each item. (3 marks)

100𝑥 + 95𝑦 = 1625+95y=1625
1580
Solve the simultaneous equations:
100𝑥 1625 95𝑦
= −
100 100 100
𝑥 = 16.25 − 0.95𝑦.25-0.95y
16.25-0.95y+80y=1580
1950 − 114𝑦 + 180𝑦 = 1580080y=1580
=1580-1950
𝟑𝟕𝟎
𝒚= = 𝟔 𝒎𝒂𝒏𝒈𝒐𝒆𝒔
𝟔𝟔
100𝑥 + (95 ∗ 6) = 162500x+95*6=1625
100𝑥 + 532 = 1625+532=1625
.42
𝒙 = 𝟏𝟏 𝒐𝒓𝒂𝒏𝒈𝒆𝒔

iii) The profit that James Mwebia made on each of the three days. (2 marks)
𝑝𝑟𝑜𝑓𝑖𝑡 = 𝑠𝑎𝑙𝑒𝑠 − 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑐𝑜𝑠𝑡hase cos
𝑚𝑜𝑛𝑑𝑎𝑦 𝑝𝑟𝑜𝑓𝑖𝑡 = 1,625 − (2 ∗ 6 + 6 ∗ 11) = 𝒔𝒉. 𝟏, 𝟓𝟒𝟕
𝑇𝑢𝑒𝑠𝑑𝑎𝑦 𝑝𝑟𝑜𝑓𝑖𝑡 = 1,580 − (2 ∗ 6 + 6 ∗ 11) = 𝒔𝒉. 𝟏, 𝟓𝟎𝟐

QUESTION TWO
a) A machine produces circular bolts and, as a quality control test, 250 bolts were selected
randomly and the diameter of their heads measured as follows:
Diameter of head (cm) Number of components
0.9747 - 0.9749 2
0.9750 - 0.9752 6
0.9753 - 0.9755 8
0.9756 - 0.9758 15
0.9759 - 0.9761 42
0.9762 - 0.9764 68
0.9765 - 0.9767 49
0.9768 - 0.9770 25
 0.9771 - 0.9773 18
0.9774 - 0.9776 12
0.9777 - 0.9779 4
0.9780 - 0.9782 1

Required:
Determine whether the customer is getting reasonable value if the label on the circular bolt
advertises that the average diameter of the head is 0.97642 cm. (4 Marks)
SUGGESTED SOLUTION

a) The data ensuring continuity and to assist in calculation of the mean is as follows
No. of component
(Diameter-0.97)  10000 X f Fx f (x  x) 2

46.5 - 49.5 48 2 96 522.5

49.5 - 52.5 51 6 306 1039.7
52.5 - 55.5 54 8 432 826.5
55.5 - 58.5 57 15 855 769.8
58.5 - 61.5 60 42 2520 728.2
61.5 - 64.5 63 68 4284 92.1
64.5 - 67.5 66 49 3234 165.2
67.5 - 70.5 69 25 1725 584.7
70.5 - 73.5 72 18 1296 1105.3
73.5 - 76.5 75 12 900 1409.0
76.5 - 79.5 78 4 312 765.7
79.5 - 82.5 81 1 81 283.5
250 16041 8292.3

Mean x  10 4  
 fx   0.97  10   16041  0.97  0.976416

4

 f 
   250 

4
 f x  x  4 8292
Standard deviation   10   0.97  10   0.97  0.973317
f 250

H0: =0.97642 customer is getting reasonable value

 H1: 0.97642 customer is not getting reasonable value
x 0.976416 0.97642
The test statistic is z    0.000065
 0.973317
n 250
From normal distribution tables z at 5% significance level (two tiled test) is 1.96. Since the
calculated z is less than 5% then H0 is accepted. That means the customer is getting
reasonable value when the diameter is indicated to be 0.97642 cms.

b)
i) In what situation would a weighted mean be used? (2 Marks)

SUGGESTED SOLUTION

Weighted mean can be used when the relative importance of different items is different. It is
commonly used where intervals are involved.

ii) Describe briefly how to estimate the median on a grouped frequency distribution
graphically. (2 Marks)
SUGGESTED SOLUTION

To estimate the median of a grouped frequency distribution graphically the following steps are
followed:
a) First find cumulative frequency at midpoints of class intervals.
b) Draw the curve of cumulative frequency as the midpoints o-give.
c) Get the middle part of frequency by dividing total frequency by 2.
d) Draw horizontal line from this point to o-give, then a perpendicular line to cross x-axis,
where it crosses the x-axis then read median from this point.

iii) Why is the mode not used extensively in statistical analysis? (2 Marks)
Mode represents the most typical value of a distribution and it should coincide with an existing
item. The mode is not affected by the presence of extremely large or small items. It is not used
extensively because of the following limitations:
a) It cannot be subjected to further algebraic treatment
b) It does not take into account extreme values
 iv) “The standard deviation is the natural partner to the mean”. Explain. (2 Marks)
The mean is the average of values being looked at while standard deviation is the square root of
the average of square of deviations from the mean. In that case standard deviation cannot be
obtained if the mean is not obtained first.

QUESTION THREE
a) A transport company has two types of trucks, Type A and Type B. Type A has a refrigerated
capacity of 20 m3 and a non-refrigerated capacity of 40 m3 while Type B has the same
overall volume with equal sections for refrigerated and non-refrigerated stock. A grocer
needs to hire trucks for the transport of 3,000 m3 of refrigerated stock and 4,000 m3 of non-
refrigerated stock. The cost per kilometre of a Type A is Sh.30 and Sh.40 for Type B.
Required
i) Formulate the above problem into a suitable linear programming model (2 Marks)

ii) Determine how many trucks of each type the grocer should rent to achieve the minimum
total cost. (5 Marks)

SUGGESTED SOLUTION

Let x = Type A trucks and y = Type B trucks

Objective function:

f(x,y) = 30x + 40y

Constraints as a system of inequalities

A B TOTALS
Refrigerated 20 30 3000
Non-refrigerated 40 30 4000

20x + 30y ≥ 3 000

40x + 30y ≥ 4 000

x≥0

y≥0

Finding set of feasible solutions that graphically represent the constraints.

5Calculate the coordinates of the vertices from the compound of feasible solutions.

(Lambert, A. J. D. (1999).
Calculate the value of the objective function at each of the verticals to determine which of them
has the maximum or minimum values:

f(0, 400/3) = 30*0 + 40*400/3 = 5,333.332

f (150, 0) = 30*150 + 40*0 = 4,500

As x and y must be natural numbers round the value of y

f(50, 67) = 30*50 + 40*67 = 4,180

By default, we see what takes the value x to y = 66 in the equation 20x + 30y = 3,000. x =
51 which it is within the feasible solutions.

F (51, 66) = 30*51 + 40*66 = 4,170

Therefore the minimum cost is Sh.4, 170 to achieve these 51 trucks of Type A and 66 trucks of
Type B are needed.

QUESTION FOUR
An analyst is considering two categories of company, X and Y, for possible investment. One of
her assistants has compiled the following information on the price–earnings ratios of the shares
of companies in the two categories over the past year.

Price–earnings ratios Number of category X Number of category Y

Companies companies
4.95–under 8.95 30 40
8.95–under 12.95 50 80
12.95–under 16.95 70 80
16.95–under 20.95 60 30
20.95–under 24.95 30 30
24.95–under 28.95 10 40

Required;
Compute the standard deviations of these two distributions and comment (10 Marks)
 Company X Company Y
P/E Ratios X x2 f Fx fx2 f Fx2
for for
X y Fx
4.95- 8.95 6.95 48.3025 30 208.5 1449.075 40 278 1932.1
8.95–12.95 10.95 119.9025 50 547.5 5995.125 80 876 9592.2
12.95– 16.95 14.95 223.5025 70 1046.5 15645.175 80 1196 17880.20
16.95-20.95 18.95 359.1025 60 1137.0 21546.150 30 568.5 10773.075
20.95– 24.95 22.95 526.7025 30 688.5 15801.075 30 688.5 15801.075
24.95–28.95 26.95 726.3025 10 769.5 70263.025 40 1078 29052.10
Totals 250 4,397.50 130,699.625 4685 85030.75

The standard deviation:

𝜺𝒇𝒙𝟐 𝜺𝒇𝒙 𝟐
𝒔𝒕𝒂𝒏𝒅𝒂𝒓𝒅 𝒅𝒆𝒗𝒊𝒂𝒕𝒊𝒐𝒏 = √ −( )
𝜺𝒇 𝜺𝒇

𝟏𝟑𝟎,𝟔𝟗𝟗.𝟔𝟐𝟓 𝟒,𝟑𝟗𝟕.𝟓𝟎 𝟐
𝒔𝒕𝒂𝒏𝒅𝒂𝒓𝒅 𝒅𝒆𝒗𝒊𝒂𝒕𝒊𝒐𝒏 𝒇𝒐𝒓 𝒄𝒐𝒎𝒑𝒂𝒏𝒚 𝑿 = √ −( ) viation for company
𝟐𝟓𝟎 𝟐𝟓𝟎

X=&130,699.625/250-(4,397.50/250)^2
𝒔𝒕𝒂𝒏𝒅𝒂𝒓𝒅 𝒅𝒆𝒗𝒊𝒂𝒕𝒊𝒐𝒏(𝑿) = √𝟓𝟐𝟐. 𝟕𝟗𝟖𝟓 − 𝟑𝟎𝟗. 𝟒𝟎𝟖𝟏 = √𝟐𝟏𝟑. 𝟑𝟗𝟎𝟒 = 𝟏𝟒. 𝟔𝟏

𝟖𝟓, 𝟎𝟑𝟎. 𝟕𝟓 𝟒𝟔𝟖𝟓 𝟐

𝒔𝒕𝒂𝒏𝒅𝒂𝒓𝒅 𝒅𝒆𝒗𝒊𝒂𝒕𝒊𝒐𝒏 𝒇𝒐𝒓 𝒄𝒐𝒎𝒑𝒂𝒏𝒚 𝑿 = √ −( )
𝟐𝟓𝟎 𝟐𝟓𝟎

𝒔𝒕𝒂𝒏𝒅𝒂𝒓𝒅 𝒅𝒆𝒗𝒊𝒂𝒕𝒊𝒐𝒏(𝑿) = √𝟑𝟒𝟎. 𝟏𝟐𝟑 − 𝟑𝟓𝟏. 𝟏𝟖𝟕𝟔 = √𝟐𝟏𝟑. 𝟑𝟗𝟎𝟒 =

Comment
The standard deviation pf the P/E ratio for category X is 14.61
QUESTION FIVE
a) In the just concluded higher education exhibition in Nairobi, Mount Kenya University states
in some of its promotional materials that the average graduates of the college earn over Sh.3
 million a year. Assume for simplicity, that only four people have graduated to date, John,
Mary, Dave and Dennis who earns Sh.1.6 million, Sh.1.8 million, Sh.1.8 million and Sh.2
million respectively in a year.
Required:
Compute the mean, median and the mode. Is the University claim correct? (3 marks)
SUGGESTED SOLUTION

Mean =(1,600,000) + 2(1,800,000) + 2,000,000]/4 = 1.8 million

Median is (35,000 + 35,000)/2 = Shs. 1,800,000
Mode is Shs. 1,800,000
The claim is not correct, the mean, median or mode earnings are all below Shs. 3,000,000.
b) Let us change our assumption about the number of graduates in (a) above and instead assume
that five people have graduated. They consist of the four above and Caroline who earn Sh.5.3
million per year.
Required:
Compute the mean, median and the mode for the five graduates. Is the University claims
correct? (3 marks)
SUGGESTED SOLUTION

Mean = (1,600,000 + 1,800,000 + 2,000,000 + 5,300,000)/5 = Shs. 2,500,000

Median = Shs. 1,800,000
Mode = Shs. 1,800,000
The college’s claim is not correct – the amounts are all below, on the average Shs. 3,000,000.
c) Changing the assumption one more time about the number of graduates. Let us assume that
six people have graduated. They consist of the four original ones, Caroline who earns Sh.5.3
million a year and James who earns Sh.6.7 million a year.
Required:
i) Compute the mean, median, and mode for the six graduates. Is the college’s claim correct?
(2 marks)
SUGGESTED SOLUTION

Mean = (1,600,000 + 2(1,800,000) + 2,000,000 + 5,300,000 + 6,700,000)/6 = 3,200,000

Median = (1,800,000 + 2,000,000)/2 = Shs. 1,900,000
Mode = Shs. 1,800,000
Using the mean, college’s claim is correct, however using the median or the mode, the college’s
claim is not correct.
ii) Comment on what happen to the mean, median and mode as you move from part (a) to (b)
to (c) of this problem. (2 marks)
SUGGESTED SOLUTION

Each time, the mean was affected by the new values. Median was marginally affected whereas
mode was not affected.
iii) What do the results in (ii) above suggest about the relative stability of the mean, median
and the mode? (2 marks)
SUGGESTED SOLUTION

Mean is easily affected by extreme values while the mode and the median are not affected.

iv) How do you feel about the ethics of this college in claiming that their average graduates
earn over Sh.3 million a year (2 marks)
SUGGESTED SOLUTION

The claim is far-fetched. Median which is a better measure in this case is about Shs.1, 900,000
even with the one earning Shs.6, 700,000. The college is giving the wrong impression of its
graduates.

REFERENCE
Lambert, A. J. D. (1999). Linear programming in disassembly/clustering sequence generation. Computers
& Industrial Engineering, 36(4), 723-738.