Assignment 2

FA22-BBA-B31 Statistical Inference MTH 264

Q.1. A population has a mean of 200 and a standard deviation of 50. A sample of size
100 will be taken and the sample mean 𝑋̅ will be used to estimate the population mean.
a. What is the expected value of 𝑋̅?
𝐸(𝑋̅) = 𝜇𝑋̅ = 𝜇 = 200

b. What is the standard deviation of 𝑋̅?

𝜎 50
𝜎𝑋̅ = = =5
√𝑛 √100

Q.2. Assume the population standard deviation is 𝜎 = 25. Compute the standard error
of the mean, 𝜎𝑋̅ , for sample sizes of 50, 100, 150, and 200. What can you say about the
size of the standard error of the mean as the sample size is increased?
𝜎 25
𝜎𝑋̅ = = = 3.5355
√𝑛 √50

𝜎 25
𝜎𝑋̅ = = = 2.5
√𝑛 √100
𝜎 25
𝜎𝑋̅ = = = 2.0141
√𝑛 √150
𝜎 25
𝜎𝑋̅ = = = 1.7677
√𝑛 √200
As sample size increases the standard error of sample mean decreased.

Q.3. A sample of 5 months of sales data provided the following information:

Month January February March April May
Units Sold 94 100 85 94 92
a. How many samples of size n = 3 can be drawn without replacement?
𝑁=5 𝑛=3
𝑁 5
Total number of samples = ( 𝐶 ) = (𝐶 ) = 10
𝑛 3

b. Compute the sampling distribution of sample mean 𝑋̅.

No. of samples Samples 𝑋̅
1 (94,100,85) 93
2 (94,100,94) 96
3 (94,100,92) 95.333
4 (94,85,94) 91
5 (94,85,92) 90.333
6 (94,94,92) 93.333
7 (100,85,94) 93
8 (100,85,92) 92.333
9 (100,94,92) 95.333
10 (85,94,92) 90.33

𝑋̅ 𝑓(𝑋̅) 𝑋̅𝑓(𝑋̅) 𝑋̅ 2 𝑓(𝑋̅)

90.333 2 180.666 16320.1 /
10 / 10 10
91 1 91 / 10 8281 / 10
10
92.3333 1 92.3333 8525.438
10 / 10 / 10
93 2 186 / 10 17298 /
10 10
93.333 1 93.333 / 8711.049
10 10 / 10
95.333 2 190.666 18176.76
10 / 10 / 10
96 1 96 / 10 9216 / 10
10

𝜎 𝑁−𝑛
c. Verify that 𝜇𝑋̅ = 𝜇 𝑎𝑛𝑑 𝜎𝑋̅ = √
√𝑛 𝑁−1
94 + 100 + 85 + 94 + 92 465
𝜇= = = 93
5 5
929.998
𝜇𝑋̅ = ∑ 𝑋̅𝑓(𝑋̅) = = 92.9998
10

𝜇𝑋̅ = 𝜇
𝐿. 𝐻. 𝑆 = 𝑅. 𝐻. 𝑆

2
2
∑ 𝑋2 ∑𝑋 43361 465 2
𝜎 =( )−( ) =( )−( ) = 23.2
𝑁 𝑁 5 5
𝜎 = √23.2 = 4.8166

2 86528.347
𝜎𝑋2̅ = ∑ 𝑋̅ 2 𝑓(𝑋̅) − (∑ 𝑋̅𝑓(𝑋̅)) = − (92.9998)2 = 3.8718
10

𝜎𝑋̅ = √3.8718 = 1.9677

 𝜎 𝑁−𝑛
𝜎𝑋̅ = √
√𝑛 𝑁 − 1

4.8166 5 − 3
𝜎𝑋̅ = √ = (2.78088)(0.70716) = 1.9663
√3 5−1

d. Find the probability that sample mean lies between 92.69 and 95.48.
𝑃(92.69 < 𝑋̅ < 95.48)
92.69 − 93
𝑍1 = = −0.157
1.9663
95.48 − 93
𝑍2 = = 1.26
1.9663
𝑃(−0.16 < 𝑍 < 1.26)
= 𝑃(𝑍 < 1.26) − 𝑃(𝑍 < −0.16)
= 0.8962 − 0.4364 = 0.4599

Q.4. Let 𝑋̅ be the mean of a random sample of size 50 drawn from a population with
mean 112 and standard deviation 40.
a. Find the mean and standard deviation of 𝑋̅.
𝜇𝑋̅ = 𝜇
𝜇𝑋̅ = 112
𝜎 40
𝜎𝑋̅ = = = 5.6568
√𝑛 √50
b. Find the probability that 𝑋̅ assumes a value between 110 and 114.
𝑃(110 < 𝑋̅ < 114)
110 − 112
𝑍1 = = −0.35
5.6568
114 − 112
𝑍2 = = 0.35
5.6568
𝑃(−0.35 < 𝑍 < 0.35)
= 𝑃(𝑍 < 0.35) − 𝑃(𝑍 < −0.35)
= 0.6368 − 0.3632 = 0.2736
c. Find the probability that 𝑋̅ assumes a value greater than 113.
𝑃(𝑋̅ > 113)
113 − 112
𝑍= = 0.176
5.6568
𝑃(𝑍 > 0.18)
= 1 − 𝑃(𝑍 < 0.18)
= 1 − 0.5714 = 0.4286
Q.5. A health researcher collected blood samples from a population of female medical
students. The following cholesterol measurements were obtained: μ = 211, σ = 44.
Assume the cholesterol measurement follows a normal distribution. If we select any
student at random, what is the probability that her cholesterol value (X) will be:
a. P(150 < X < 250)
𝑃(150 < 𝑋 < 250)
150 − 211
𝑍1 = = −1.386
44
250 − 211
𝑍2 = = 0.886
44
𝑃(−1.39 < 𝑍 < 0.89)
= 𝑃(𝑍 < 0.89) − 𝑃(𝑍 < −1.39)
= 0.8133 − 0.0823 = 0.7310

b. P(X < 140)

𝑃(𝑋 < 140)
140 − 211
𝑍= = −1.613
44
𝑃(𝑍 < −1.61) = 0.0537
c. P(X >300)
𝑃(𝑋 > 300)
300 − 211
𝑍= = 2.02
44
𝑃(𝑍 > 2.02)
= 1 − 𝑃(𝑍 < 2.02)
= 1 − 0.9783 = 0.0217
Q.6. Using the data from Exercise 5, for a sample of 25 female students, calculate the
standard error of the mean, draw the sampling distribution about μ, and find:
μ = 211, 𝜎 = 44 𝑛 = 25
𝜇𝑋̅ = 211
𝜎 44
𝜎𝑋̅ = = = 8.8
√𝑛 √25
a. 𝑃(200 < 𝑋̅ < 220)
𝑃(200 < 𝑋̅ < 220)
200 − 211
𝑍1 = = −1.25
8.8
220 − 211
𝑍2 = = 1.02
8.8
𝑃(−1.25 < 𝑍 < 1.02)
= 𝑃(𝑍 < 1.02) − 𝑃(𝑍 < −1.25)
= 0.8461 − 0.1056 = 0.7405

b. 𝑃(𝑋̅ < 196)

𝑃(𝑋̅ < 196)
196 − 211
𝑍= = −1.7045
8.8
𝑃(𝑍 < −1.70) = 0.0446

c. 𝑃(𝑋̅ > 224)

𝑃(𝑋̅ > 224)
224 − 211
𝑍= = 1.477
8.8
𝑃(𝑍 > 1.48)
= 1 − 𝑃(𝑍 < 1.48)
= 1 − 0.9306 = 0.0694

Q.7. What is the difference between the population standard deviation and the standard
error of the mean?

If the standard deviation in the population is 𝜎, the standard deviation of the sample
𝜎 𝜎
means is 𝑛 where n is the number of observations in each sample. We refer to 𝜎𝑋̅ =
√ √𝑛
as the standard error of the mean. Its longer name is actually “the standard deviation of
the sampling distribution of the sample mean”
Q.8. The manager of the Danvers-Hilton resort Hotel stated that the mean guest bill for
a weekend is $600 or less. a member of the hotel’s accounting staff noticed that the total
charges for guest bills have been increasing in recent months. The accountant will use a
sample of future weekend guest bills to test the manager’s claim.
a. Which form of the hypotheses should be used to test the manager’s claim?
explain.
𝐻0 : 𝜇 ≤ 600
𝐻1 : 𝜇 > 600

b. What conclusion is appropriate when 𝐻0 cannot be rejected?

The claim of the manager of the Danvers-Hilton resort Hotel that the mean guest
bill for a weekend is $600 or less is true.

c. What conclusion is appropriate when 𝐻0 can be rejected?

The claim of the manager of the Danvers-Hilton resort Hotel that the mean guest
bill for a weekend is $600 or less is not true.

Q.9. A production line operation is designed to fill cartons with laundry detergent to a
mean weight of 32 ounces. a sample of cartons is periodically selected and weighed to
determine whether underfilling or overfilling is occurring. If the sample data lead to a
conclusion of underfilling or overfilling, the production line will be shut down and
adjusted to obtain proper filling.
a. Formulate the null and alternative hypotheses that will help in deciding whether to
shut down and adjust the production line.

𝐻0 : 𝜇 = 32
𝐻𝐴 : 𝜇 ≠ 32

b. What conclusion is appropriate when 𝐻0 cannot be rejected?

The production line operation is working properly.

c. What conclusion is appropriate when 𝐻0 can be rejected?

That leads to a conclusion of underfilling or overfilling, the production line will

be shut down and adjusted to obtain proper filling.

Q.10. Carpet land salespersons average $8000 per week in sales. Steve Contois, the
firm’s vice president, proposes a compensation plan with new selling incentives. Steve
hopes that the results of a trial selling period will enable him to conclude that the
compensation plan increases the average sales per salesperson.
 a. Develop the appropriate null and alternative hypotheses.
𝐻0 : 𝜇 ≤ 8000
𝐻𝐴 : 𝜇 > 8000
b. what is the type I error in this situation?

Truly, the carpet land salespersons average $8000 or less per week in sales but the firm’s
vice president concludes that the compensation plan increases the average sales per
salesperson.

c. what is the type II error in this situation?

The firm’s vice president wrongly conclude that the carpet land salespersons average
$8000 or less per week in sales but truly the compensation plan increases the average
sales per salesperson.

Q.11. Consider the following hypothesis test:

𝐻0 : 𝜇 ≥ 20
𝐻1 : 𝜇 < 20
A sample of 50 provided a sample mean of 19.4. The population standard deviation is 2.
a. compute the value of the test statistic.
𝑋̅ − 𝜇 19.4 − 20
𝑍= = = −2.121
𝜎𝑋̅ 2
√50
b. Find the critical value/s for 5% level of significance.
𝑍0.05 = −1.645
c. Draw the rejection region using the critical value? What is your
conclusion?
 𝑍 < 𝑍0.05
−2.121 < −1.64
We reject our 𝐻0 .
d. If 𝐻1 : 𝜇 ≠ 20 then what would be your conclusion? Would your
conclusion be changed?
𝑍0.05 = ±1.96
=0.025
2
−2.121 < −1.96

We reject our 𝐻0 . Our conclusion remains the same as in part c.

Q.12. Consider the following hypothesis test:

𝐻0 : 𝜇 ≤ 25
𝐻1 : 𝜇 > 25
A sample of 40 provided a sample mean of 26.4. The population standard deviation is 6.
a. compute the value of the test statistic.
𝑋̅ − 𝜇 26.4 − 25
𝑍= = = 1.475
𝜎𝑋̅ 6
√40

b. Find the critical value/s for 1% level of significance.

𝑍0.01 = 2.33

c. Draw the rejection region using the critical value? What is your
conclusion?

𝑍 ≯ 𝑍0.01
1.475 ≯ 2.33
We fail to reject our 𝐻0 .
d. If 𝐻1 : 𝜇 ≠ 25 then what would be your conclusion? Would your
conclusion be changed?
𝑍0.01=0.005 = ±2.58
2
1.475 ≯ 2.58
 We fail to reject our 𝐻0 . Conclusion remains same.

Q.13. Consider the following hypothesis test:

𝐻0 : 𝜇 = 15
𝐻1 : 𝜇 ≠ 15
A sample of 50 provided a sample mean of 14.15. The population standard deviation is 3.
a. compute the value of the test statistic.
𝑋̅ − 𝜇 14.15 − 15
𝑍= = = −2.003
𝜎𝑋̅ 3
√50

b. Find the critical value/s for 3.5% level of significance.

𝑍0.035 = ±2.11
=0.0175
2

c. Draw the rejection region using the critical value? What is your
conclusion?
 𝑍 ≮ 𝑍0.0175
−2.003 ≮ −2.11
We fail to reject our 𝐻0 .

Q.14. The Internal Revenue Service (IRS) provides a toll-free help line for taxpayers to
call in and get answers to questions as they prepare their tax returns. in recent years, the
IRS has been inundated with taxpayer calls and has redesigned its phone service as well
as posted answers to frequently asked questions on its website (the Cincinnati Enquirer,
January 7, 2010). According to a report by a taxpayer advocate, callers using the new
system can expect to wait on hold for an unreasonably long time of 12 minutes before
being able to talk to an IRS employee. Suppose you select a sample of 50 callers after the
new phone service has been implemented; the sample results show a mean waiting time
of 10 minutes before an IRS employee comes on the line. Based upon data from past
years, you decide it is reasonable to assume that the standard deviation of waiting time is
8 minutes. Using your sample results, can you conclude that the actual mean waiting time
turned out to be significantly less than the 12-minute claim made by the taxpayer
advocate?
𝐻0 : 𝜇 ≥ 12
𝐻𝐴 : 𝜇 < 12
𝛼 = 0.05
𝑍0.05 = ±1.96
=0.025
2
𝑋̅ − 𝜇 10 − 12
𝑍= = = −1.7677
𝜎𝑋̅ 8
√50

𝑍 ≮ 𝑍0.025
−1.7677 ≮ −1.96
 Fail to reject 𝐻0
Conclusion: The report by a taxpayer advocate is true that the callers using
the new system can expect to wait on hold for an unreasonably long time
of 12 minutes before being able to talk to an IRS employee.

Q.15. a production line operates with a mean filling weight of 16 ounces per container.
Overfilling or underfilling presents a serious problem and when detected requires the
operator to shut down the production line to readjust the filling mechanism. from past
data, a population standard deviation 𝜎 = 0.8 ounces is assumed. A quality control
inspector selects a sample of 30 items every hour and at that time makes the decision of
whether to shut down the line for readjustment. the level of significance is 𝛼 = 0.01
a. State the hypothesis test for this quality control application.
𝐻0 : 𝜇 = 16
𝐻𝐴 : 𝜇 ≠ 16

b. If a sample mean 𝑋̅ = 16.32 ounces were found, what is the p-value? What action
would you recommend?
𝑋̅ − 𝜇 16.32 − 16
𝑍= = = 2.19
𝜎𝑋̅ 0.8
√30
𝑃 − 𝑉𝑎𝑙𝑢𝑒 = 2[𝑃(𝑍 > 2.19)] = 2[1 − 𝑃(𝑍 < 2.19)] = 2(1 − 0.9857)
= 2(0.0143) = 0.0286
For 𝛼 = 0.01
𝛼 < 𝑃 − 𝑉𝑎𝑙𝑢𝑒
0.01 < 0.0286
Fail to reject 𝐻0 . The process is under control.
 For 𝛼 = 0.05, 0.10
𝛼 > 𝑃 − 𝑉𝑎𝑙𝑢𝑒
0.05 > 0.0286
We reject 𝐻0 . Production manager must shut down the production line.
𝛼 > 𝑃 − 𝑉𝑎𝑙𝑢𝑒
0.10 > 0.0286
We reject 𝐻0 . Production manager must shut down the production line.

c. If a sample mean 𝑋̅ = 15.82 ounces were found, what is the p-value? What action
would you recommend?
𝑋̅ − 𝜇 15.82 − 16
𝑍= = = −1.23
𝜎𝑋̅ 0.8
√30
𝑃 − 𝑉𝑎𝑙𝑢𝑒 = 2[𝑃(𝑍 < −1.23)] = 2(0.1093) = 0.2186
For 𝛼 = 0.01
𝛼 < 𝑃 − 𝑉𝑎𝑙𝑢𝑒
0.01 < 0.2186
Fail to reject 𝐻0 . The process is under control.

For 𝛼 = 0.05, 0.10

𝛼 < 𝑃 − 𝑉𝑎𝑙𝑢𝑒
0.05 < 0.2186
Fail to reject 𝐻0 . The process is under control.
𝛼 < 𝑃 − 𝑉𝑎𝑙𝑢𝑒
0.10 < 0.2186
Fail to reject 𝐻0 . The process is under control.

d. Use the critical value approach. What is the rejection rule for the preceding
hypothesis testing procedure? repeat parts (b) and (c). Do you reach the same
conclusion?
𝑍0.01=0.005 = ±2.58
2
a)
𝑋̅ − 𝜇 16.32 − 16
𝑍= = = 2.19
𝜎𝑋̅ 0.8
√30
 𝑍 ≯ 𝑍0.005
2.19 ≯ 2.58
We fail to reject our 𝐻0 .
b)
𝑋̅ − 𝜇 15.82 − 16
𝑍= = = −1.23
𝜎𝑋̅ 0.8
√30
𝑍 ≮ 𝑍0.005
−1.23 ≮ −2.58
We fail to reject our 𝐻0 .
Q.16. Explain with examples the difference between
a. Null hypothesis and alternative hypothesis.
b. Acceptance region and Rejection region
c. Type I error and Type II error.
d. One tail and two tail test.