INDIAN INSTITUTE OF FOREIGN TRADE

MBA IB (22-24)
SUBJECT: BUSINESS STATISTICS
ASSIGNMENT- (Individual & Group)
Date of Submission-9/9/2022

Individual Submission

Sampling Methods & Sampling Distribution

1. International mutual funds reported weak returns in 2008. The population of

international mutual funds earned a mean return of -43.95% in 2008 (data extracted
from The Wall Street Journal, January 2, 2009, p. R6). Assume that the returns for
international mutual funds are distributed as a normal random variable, with a mean
of -43.95 and a standard deviation of 20. If you selected a random sample of 10 funds
from this population, what is the probability that the sample would have a mean return
a. less than -10
b. between 0 and -20

2. According to Business Week, profits in the energy sector have been rising, with one
company averaging $3.42 monthly per share. Assume this is an average from a
population with SD of $1.5. If a random sample of 30 months is selected, what is the
probability that its average will exceed $4?

3. A leading international publisher was interested in knowing the level of exposure a

book on job opportunities was receiving among management students. As part of an
important research study that looked into the marketing effectiveness program, a
sample survey of bookshops was carried out to estimate, on average, how many
copies of this book are displayed on shelves in various bookstores. The publisher
selected at random a sample of twenty universities and a further sample of five
colleges offering business management programs from each of these 20 universities.
Every bookstore in the vicinity of every sample college selected was personally
visited, and the number of books on shelves counted.
a. Label the sampling procedure adopted in this research study.
b. Critically examine the sampling procedure followed in this study and give views?

Confidence Interval Estimation

4. The U.S Department of Transportation requires tire manufacturers to provide tire

performance information on the sidewall of a tire to better inform prospective
customers as they make purchasing decisions. One critical measure of tire
performance is the tread wear index, with a tire graded with a base of 100. A tire with
a grade of 200 should last twice as long, on average, as a tire graded with a base of
100. A consumer organization wants to estimate the actual treadwear index of a brand
name of tires that claims “graded 200” on the sidewall of the tire. A random sample of
n= 18 indicates a sample mean treadwear index of 195.3 and a sample standard
deviation of 214
a. Assuming that the population of tread wear indexes is normally distributed, construct
a 95% confidence interval estimate for the population mean treadwear index for tires
produced by this manufacturer under this brand name.
b. Do you think that the consumer organization should accuse the manufacturer of
producing tires that do not meet the performance information provided on the sidewall
of the tire? Explain.

5. A group of investors wants to develop a chain of fast-food restaurants. In determining

potential costs for each facility, they must consider, among other expenses, the
average monthly electric bill. They decide to sample some fast-food restaurants
currently operating to estimate the monthly cost of electricity. They want the error of
the interval estimate to be no more than Rs100. They estimate that such bills range
from Rs.600 to Rs.2500.
a. If they want to be 90% confident of their results, how large a sample should they take?
b. If they want to be 95% confident of their results, how large a sample should they take?
c. What is your observation from the above two situations

Hypothesis Testing & ANOVA

6. Tata Steel Company manufactures steel bars. If the production process is working
properly, it turns out steel bars that are normally distributed with a mean length of at
least 2.8 feet. Longer steel bars can be used or altered, but shorter bars must be
scrapped. You select a sample of 25 bars; the mean length is 2.73 feet, and the sample
standard deviation is 0.20 feet.
a. Explain the risks associated with committing a Type 1 error in this case.
b. Explain the risks associated with committing a Type 2 error in this case.
c. Which type of error do you think the executives of Tata Steel want to avoid? Explain.

7. A coffee manufacturer is interested in knowing whether there is a significant

difference between the average daily coffee consumption of regular coffee drinkers &
decaffeinated coffee drinkers. Its researcher collects the following data:

Regular Coffee Drinkers Decaffeinated Coffee Drinkers

n1 = 13 n2 = 15
Mean = 4.35 cups Mean = 6.84 cups
Standard Deviation = 1.20 cups Standard Deviation = 1.42 cups
a. At α = 0.05, what is the conclusion obtained by the researcher?
b. At α = 0.01, what is the conclusion obtained by the researcher? Give your observations
about results obtained in (a) & (b)
c. What are the necessary assumptions to carry out the tests?

8. The American Society for Quality (ASQ) conducted a salary survey of all its
members. ASQ members work in all areas of manufacturing & service related
institutions, with a common theme of an interest in quality. Two job titles are black
belt & green belt (as a part of Six Sigma quality improvement). Descriptive statistics
concerning salaries for these two job titles are given in the following table:

Job Title Sample Size Mean Standard

Deviation
Black belt 141 88,945 21,791
Green belt 26 64,794 25,911
 . [Source: Data extracted from “QP Salary Survey”, Quality Progress, December2011,
p.33.]

a. Using a 0.05 level of significance, what can you conclude about the consistency of the
salaries between black belt & green belt

9. For fast food restaurants, the drive-through window is an increasing source of revenue.
The chain that offers the fastest service is likely to attract additional customers.
According to a recent study based on 20 customers for each fast food chain, the
average time was 145.5 seconds for Wendy’s, 146.7 seconds for KFC, 171.1 seconds
for Burger King, 184.2 seconds for McDonald’s, 178.9 seconds for Chick- fill-A.
After collecting data, the resulting incomplete one way ANOVA table is shown
below:

Source of Sum of Squares Degrees of Mean Squares F-value

Variation Freedom
Among Chains 26,276.16 50.2989
Within Chains 130.60
Total

a. Complete the ANOVA table

b. At the 0.05 level of significance, is there evidence of a difference in the mean drive-
through service times of the 5 chains?
c. Use Tukey’s Criterion to determine whether the mean drive through service time for
McDonald’s is slower than Burger King

Regression

10. Having survived recent economic showdowns that have diminished their competitors,
Zara, a chain of upscale fashion stores, is in the midst of a companywide review that
includes researching the factors that make their stores successful. Until recently,
Zara’s managers had no data analyses to support store location decisions, relying
instead on subjective factors, such as the availability of an inexpensive lease or the
perception that a particular location seemed ideal for one of their stores.
As the new director of planning, you have already consulted with marketing data
firms that specialize in using business analytics to identify & classify groups of
consumers. Based on such preliminary analyses, you have tentatively discovered that
the profile of Zara’s shoppers may not only be the upper middle class long suspected
of being the chain’s clientele but may also include younger, aspirational families with
young children & surprisingly, urban hipsters that set trends & mostly single. You
seek to develop a systematic approach that will lead to making better decisions during
the site selection process. As a starting point, you have asked one marketing data firm
to collect & organize data for the number of people in the identified categories within
a fixed radius of each Zara store. You believe that the more significant numbers of
profiled customers contribute to store sales, & you want to explore the possible use of
this relationship in the decision-making process. Data were collected from a sample of
14 stores to examine the relationship between the number of profiled customers who
live within a fixed radius from a Zara store & its annual sales. How can you use
statistics so that you can predict the annual sales of a proposed store based on the
number of profiled customers that reside within a fixed radius of a Zara store?
 Store Profiled Annual Sales
Customers (millions) ($millions)
1 3.7 5.7
2 3.6 5.9
3 2.8 6.7
4 5.6 9.5
5 3.3 5.4
6 2.2 3.5
7 3.3 6.2
8 3.1 4.7
9 3.2 6.1
10 3.5 4.9
11 5.2 10.7
12 4.6 7.6
13 5.8 11.8
14 3.0 4.1

Regression was run on MS Excel, and the partial result below was extracted from the Excel
result.

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.9208
R Square 0.8479
Adjusted R Square 0.8352
Standard Error 0.9993
Observations 14

ANOVA
df SS MS F Significance F
Regression 1 66.7854 66.7854 66.8792 0.0000
Residual 12 11.9832 0.9986
Total 13 78.7686

Coefficients Standard Error T Stat p- Lower Upper

value 95% 95%
Intercept -1.2088 0.9949 -1.2151 0.2477 -3.3765 0.9588
Coeff of x 2.0742 0.2536 8.1780 0.0000 1.5216 2.6268
By using the results above & α=0.05, answer the following questions.
a. Develop a linear regression model to analyze the relationship between the annual
sales & the number of profiled customers
 b. Interpret the coefficients (in units) of the linear regression model..
c. Obtain the coefficient of determination & interpret it.
d. Obtain the Standard Error of Estimate & interpret it. In which unit will you measure
it?
e. Comment on the t-test for the slope of the regression line using the critical value
method.
f. Interpret the confidence interval of the population slope coefficient.

Group Submission
Hypothesis test (Two-Sample Test and Confidence Interval)

1. a. Compare average net sales (average of last five years) of two firms ( Compare firm1
vs. firm 2, firm 1 vs. firm 3….,firm 1 vs. firm 8, firm2 vs. firm 3,… firm 2 vs. firm 8, and
so on
b. Report the 95% confidence interval estimation for µi- µj

2. a. Compare average profit of firms taken two at a time

b. Report the 95% confidence interval estimation for µi- µj

ANOVA

1. Compare average accounts receivable of all the eight firms of a group

2. Compare average accounts payable of all the eight firms of a group
3. Compare the average Inventory of all the eight firms of a group

Interpret the result