QAM – II

Problem Set – 2
Testing of Hypothesis (one sample)
(Course Instructor: Gaurav Garg)

1) According to the U.S. department of Labour, private sector workers earned, on average, $354.32 a
week in 1991. A recently taken random sample of 400 private sector workers showed that they earn,
on average $362.50 a week with a standard deviation of $72. Find the p-value for the test with an
alternative hypothesis that the current mean weekly salary of private sector workers is different from
$354.32. Give your conclusion at 5% level of significance.

2) A quality characteristic of interest for tea-bag-filling process is the weight of the tea in the individual
bags. If the bags are under filled, two problems arise. First, customers may not be able to brew the tea
to be as strong as they wish. Second, the company may be in violation of the truth-in-labelling laws.
For this product, the label weight on the package indicates that, on an average, there are 5.5 grams of
tea in a bag. If the mean amount of tea in a bag exceeds the label weight, the company is giving away
product. Getting an exact amount of tea in a bag is problematic because of variation in the temperature
and humidity inside the factory, differences in the density of the tea, and extremely fast filling
operation of the machine (approximately 170 bags per minute). The data given below provide the
weight, in grams, of a sample of 50 tea bags produced in one hour by a single machine:
5.65 5.44 5.42 5.40 5.53 5.34 5.54 5.45 5.52 5.41
5.57 5.40 5.53 5.54 5.55 5.62 5.56 5.46 5.44 5.51
5.47 5.40 5.47 5.61 5.53 5.32 5.67 5.29 5.49 5.55
5.77 5.57 5.42 5.58 5.58 5.50 5.32 5.50 5.53 5.58
5.61 5.45 5.44 5.25 5.56 5.63 5.50 5.57 5.67 5.36
From this sample data, the management of the company is interested to ascertain that mean weight of
a tea bag is 5.5 grams. What decision rule should the analyst adopt if the company is willing to take 1%
risk of committing an error by concluding that mean weight of a tea bag is different from 5.5 grams
whereas actually it is 5.5 grams?

3) The Consumer Fraud Council claims that Skippy Foods does not put the required weight of peanut
butter in its 100 grams jar. In order to prove the claim the Council studied a sample of 25 jars and
found the average amount of peanut butter as 98 grams with a standard deviation of 4 grams. Using
the sample, can the Council prove their claim? Explain using the concept of Statistical Hypothesis.
Skippy Foods requests the Council to take a bigger sample and provides 25 more jars of 100 grams
peanut butter. Now the average amount of bigger sample is 99.5 grams with a standard deviation of 8
grams. Using this bigger sample, can the Council prove their claim? Explain the change in the
conclusions suggested by two samples.

4) ATMs must be stocked with enough cash to satisfy customers making withdrawals over an entire
weekend. But if too much cash is unnecessarily kept in the ATMs, the bank is forgoing the opportunity
to invest the money and earning interest. At a particular ATM in a colony, the average cash withdrawal
per customer over last 5 years during weekends is Rs. 1000 with a standard deviation of Rs. 1900. In
order to decide if there is any requirement to increase the cash stocked in the ATM, a sample of 130
customers is collected. Sample observations are summarized below:
Cash Withdrawal (Rs.) No. of Customers
0 – 500 5
500 – 1000 11
1000 – 1500 12
1500 – 2000 15
2000 – 3000 30
3000 – 4000 25
4000 – 5000 20
5000 – 10000 12
Sample Mean = 3025, Sample Standard Deviation= 1872.
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 Since standard deviation of above sample is very close to the standard deviation of the past 5 years’
population, it seems that the difference is because of sampling fluctuation only. So, we consider that
population variance is still the same. Looking at the value of sample mean, it seems that average
withdrawal has become threefold. Using the concept of hypothesis testing, examine this claim. Sample
is large enough to assume normality of the observations. Use 5% level of significance.

5) Blue Ray Disk Players are getting popular. Tony Inc., a well-known manufacturer of Blue Ray Disk
Players, claims that at least 5% upper middle class households in the metro cities of India have a Blue
Ray Disk Player. Audiocon Ltd., a manufacturer of DVD players, not manufacturing Blue Ray Disk
Players, claims that DVD players are still very popular and there is no significant market for Blue Ray
Disk Players. In order to disprove the claim of Tony Inc., officials at Audiocon Ltd. collected a sample
of 120 upper middle class households and found that only 5 households in the sample have Blue Ray
Disk Players. Using the sample and Prob {reject the claim of Tony Inc. given that it is true} = 0.05, can
the officials of Audiocon Ltd. prove the claim of Tony Inc. as wrong? Help them using the concept of p
– value.

6) A soft drink manufacturer is to decide about launching a new variety of soft drink. On the basis of his
past experience, he believed that at least 80% of the customers would like the new product. In order
to decide about the launching of the new product, the manufacturer collects the opinion of 400
customers selected by means of random sampling scheme. He further frames the decision rule of
rejecting the hypothesis of 𝝅 ≥ 0.8 in favour of the alternative 𝝅 < 0.8 if 308 or less customers favour
the new product. Thus, the new product would not be launched if on the basis of sample it is concluded
that 𝝅 < 0.8. Calculate the probability of concluding that less than 80% of the customers would like the
new product when actually 80% of the customers like the new product. Also, calculate the probability
of concluding that at least 80% of the customers would like the new product when actually 70% of the
customers like the new product.

7) A pharmaceutical manufacturer is concerned that the impurity concentration in pills on an average

does not exceed 3%. It is known from a particular run that impurity concentration follow normal
distribution with standard deviation of 0.4%. A random sample of 64 pills from a production run was
checked and the sample mean impurity was found to be 3.07%. Help the manufacturer in testing the
appropriate hypotheses using p-value approach. Obtain power of a 5% level test when true mean
impurity concentration is actually 3.10%.

8) A coin was tossed 400 times and the head turned up 216 times. Test at 5% level of significance that
the coin is unbiased.

9) A person throws 10 fair dice 500 times and obtains 2560 times 4, 5 or 6. Can this be attributed to
fluctuations of sampling?

10) In a hospital 480 female and 520 male babies were born in a week. Does this figure confirm the
hypothesis that males and females are born in equal number?

11) In a big city 325 men out of 600 men were found to be self‐employed. Does this information support
the conclusion that the majority of men in this city are self‐employed?

12) A machine puts out 16 imperfect articles in a sample of 500. After machine is overhauled, it puts out 3
imperfect articles in a batch of 100. Has the machine improved?

13) It is claimed that a random sample of 100 tires with a mean life of 15269kms is drawn from a
population of tires which has a mean life of 15200 kms and a standard deviation of 1248 kms. Test the
validity of the claim.

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14) A company producing light bulbs finds that mean life span of the population of bulbs is 1200 hrs with
a standard deviation of 125hrs. A sample of 100 bulbs produced in a lot is found to have a mean life
span of 1150hrs. Test whether the difference between the population and sample means is statistically
significant at 5% level of significance.

15) A manufacturing company produces bearings. One line of bearings is specified to be 1.64 cm in
diameter. A major customer requires that the variance of the bearings be no more than 0.001 cm
square. The producer is required to test the bearings before they are shipped, and so the diameters of
16 bearings are measured with a precise instrument, resulting in the following values:
1.69 1.62 1.63 1.70 1.66 1.63 1.65 1.71 1.64 1.69 1.57 1.64
1.59 1.66 1.63 1.65
Assume bearing diameters are normally distributed. Use the data and α=0.01 to test the data to
determine whether the population of these bearings is to be rejected because of too high variance.

16) A small business has 37 employees. Because of the uncertain demand for its product, the company
usually pays overtime on any given week. The company assumed that about 50 total hours of overtime
per week is required and that the variance on this figure is about 25. Company officials want to know
whether the variance of overtime hours has changed. Given here is a sample of 16 weeks of overtime
data (in hours per week). Assuming hours of overtime are normally distributed, can you help company
officials?
57 56 52 44 46 53 44 44 48 51 55 48
63 53 51 50

17) A political researcher wants to prove that a candidate is currently carrying more than 60% of the vote
in the state. She has her assistants randomly sample 200 eligible voters in the state by telephone and
only 90 declare that they support her candidate. Help the researcher in making conclusions.

18) The diameter of 3.5 inch diskettes is normally distributed. Periodically, quality control inspectors at
Dallas Diskettes randomly select a sample of 16 diskettes. If the mean diameter of the diskettes is too
large or too small the diskette punch is shut down for adjustment; otherwise, the punching process
continues. The last sample showed a mean and standard deviation of 3.55 and 0.08 inches,
respectively. Using α = 0.05, make the appropriate decision.

19) The executives of XYZ Insurance, Inc. feel that "a majority of our employees perceive a participatory
management style at XYZ." A random sample of 200 XYZ employees is selected to test this hypothesis
at the 0.05 level of significance. Eighty employees rate the management as participatory. What is the
appropriate decision?

20) ABC Components, Inc. manufactures a line of electrical resistors. Presently, the carbon composition
line is producing 100 ohm resistors. The population variance of these resistors "must not exceed 4"
to conform to industry standards. Periodically, the quality control inspectors check for conformity by
randomly select 10 resistors from the line, and calculating the sample variance. The last sample had a
variance of 4.36. Assume that the population is normally distributed. Using α = 0.05, make the
appropriate decision.

21) David D., VP of Human Resources of American First Banks (AFB), is reviewing the employee training
programs of AFB banks. Based on a recent census of personnel, David knows that the variance of teller
training time in the Southeast region is 8, and he wonders if the variance in the Southwest region is
the same number. His staff randomly selected personnel files for 15 tellers in the Southwest Region,
and determined that their mean training time was 25 hours and that the standard deviation was 4
hours. Assume that teller training time is normally distributed in the population. Using α = 0.10, help
David to make the appropriate decision.

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