Institut universitaire de la cote (IUC),Logbessou-Douala

Tutorial on quantitative methods (data analysis)

EXERCISE I
Individuals filing federal income tax returns prior to March 31 received an average refund
of $1056. Consider the population of “last-minute” filers who mail their tax return during
the last five days of the income tax period (typically April 10 to April 15).
a. A researcher suggests that a reason individuals wait until the last five days is that on
average these individuals receive lower refunds than do early filers. Develop appropriate
hypotheses such that rejection of H0 will support the researcher’s contention.
b. For a sample of 400 individuals who filed a tax return between April 10 and 15, the
sample mean refund was $910. Based on prior experience a population standard
deviation of 𝜎 =$1600 may be assumed. At α = .05, what is your conclusion?
c. Repeat the preceding hypothesis test using the critical value approach.

EXERCISE II
In an effort to estimate the mean amount spent per customer for dinner at a major Atlanta
restaurant, data were collected for a sample of 49 customers. Assume a population
standard deviation of $5.
a. At 95% confidence, what is the margin of error?
b. If the sample mean is $24.80, what is the 95% confidence interval for the population
mean?

EXERCISE III
A National Retail Foundation survey found households intended to spend an average of
$649 during the December holiday season. Assume that the survey included 600
households and that the sample standard deviation was $175.
a. With 95% confidence, what is the margin of error?
b. What is the 95% confidence interval estimate of the population mean?
c. The prior year, the population mean expenditure per household was $632. Discuss the
change in holiday season expenditures over the one-year period.

EXERCISE IV
CCN and ActMedia provided a television channel targeted to individuals waiting in
supermarket checkout lines. The channel showed news, short features, and
advertisements. The length of the program was based on the assumption that the
population mean time a shopper stands in a supermarket checkout line is 8 minutes. A
sample of actual waiting times will be used to test this assumption and determine whether
actual mean waiting time differs from this standard.
a. Formulate the hypotheses for this application.
b. A sample of 120 shoppers showed a sample mean waiting time of 8.5 minutes. Assume
a population standard deviation 𝜎 = 3.2 minutes.
c. At 𝛼 = .05, what is your conclusion?
d. Compute a 95% confidence interval for the population mean. Does it support your
conclusion?
Powered by B.W NKOMBOU. Associate Lecturer at IUC, Logbessou-Douala, Cameroon.
EXERCISE V
A National Retail Foundation survey found households intended to spend an average of
$649 during the December holiday season. Assume that the survey included 600
households and that the sample standard deviation was $175.
a. With 95% confidence, what is the margin of error?
b. What is the 95% confidence interval estimate of the population mean?
c. The prior year, the population mean expenditure per household was $632. Discuss the
change in holiday season expenditures over the one-year period.

EXERCISE VI
The mean number of hours of flying time for pilots at Continental Airlines is 49 hours per
month. Assume that this mean was based on actual flying times for a sample of 100
Continental pilots and that the sample standard deviation was 8.5 hours.
a. At 95% confidence, what is the margin of error?
b. What is the 95% confidence interval estimate of the population mean flying time for the
pilots?
c. The mean number of hours of flying time for pilots at United Airlines is 36 hours per
month. Use your results from part (b) to discuss differences between the flying times for
the pilots at the two airlines.

EXERCISE VII
Wall Street securities firms paid out record year-end bonuses of $125,500 per employee
for 2005 (Fortune, February 6, 2006). Suppose we would like to take a sample of
employees at the Jones & Ryan securities firm to see whether the mean year-end bonus
is different from the reported mean of $125,500 for the population.
a. State the null and alternative hypotheses you would use to test whether the year-end
bonuses paid by Jones & Ryan were different from the population mean.
b. Suppose a sample of 40 Jones & Ryan employees showed a sample mean year-end
bonus of $118,000. Assume a population standard deviation of 𝜎 =$30,000. Compute the
Z statistics
c. With 𝛼 = .05 as the level of significance, what is your conclusion?
d. Repeat the preceding hypothesis test using the critical value approach.

EXERCISE VIII
The National Association of Professional Baseball Leagues, Inc., reported that
attendance for 176 minor league baseball teams reached an all-time high during the 2001
season (NewYork Times, July 28, 2002). On a per-game basis, the mean attendance for
minor league baseball was 3530 people per game. Midway through the 2002 season, the
president of the association asked for an attendance report that would hopefully show
that the mean attendance for 2002 was exceeding the 2001 level.
a. Formulate hypotheses that could be used determine whether the mean attendance per
game in 2002 was greater than the previous year’s level.
b. Assume that a sample of 92 minor league baseball games played during the first half
of the 2002 season showed a mean attendance of 3740 people per game with a sample
standard deviation of 810. What is the t statistics test?
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c. At 𝛼 = .01, what is your conclusion?

EXERCISE IX :

How well do airline companies serve their customers? A study showed the following
customer ratings: 3% excellent, 28% good, 45% fair, and 24% poor (BusinessWeek,
September 11, 2000). In a follow-up study of service by telephone companies, assume
that a sample of 400 adults found the following customer ratings: 24 excellent, 124 good,
172 fair, and 80 poor. Is the distribution of the customer ratings for telephone companies
different from the distribution of customer ratings for airline companies? Test with α = .01.
What is your conclusion?

EXERCISE X:

The Wall Street Journal’s Shareholder Scoreboard tracks the performance of 1000 major
U.S. companies (The Wall Street Journal,March 10, 2003). The performance of each
company is rated based on the annual total return, including stock price changes and the
reinvestment of dividends. Ratings are assigned by dividing all 1000 companies into five
groups from A (top 20%), B (next 20%), to E (bottom 20%). Shown here are the one-year
ratings for a sample of 60 of the largest companies.

companies A B C D E

frequencies 5 8 15 20 12

Do the largest companies differ in performance from the performance of the 1000
companies in the Shareholder Scoreboard? Use α = .05.

EXERCISE XI:

With double-digit annual percentage increases in the cost of health insurance, more and
more workers are likely to lack health insurance coverage (USA Today, January 23,
2004). The following sample data provide a comparison of workers with and without
health insurance coverage for small, medium, and large companies. For the purposes of
this study, small companies are companies that have fewer than 100 employees. Medium
companies have 100 to 999 employees, and large companies have 1000 or more
employees. Sample data are reported for 50 employees of small companies, 75
employees of medium companies, and 100 employees of large companies.

Health Insurance

Powered by B.W NKOMBOU. Associate Lecturer at IUC, Logbessou-Douala, Cameroon.

 Size of company Yes No Total

Small 36 14 50

Medium 65 10 75

Large 88 12 100

a. Conduct a test of independence to determine whether employee health insurance

coverage is independent of the size of the company. Use α =.05. What is the p-value, and
what is your conclusion?

b. The USA Today article indicated employees of small companies are more likely to lack
health insurance coverage. Use percentages based on the preceding data to support this
conclusion.

EXERCISE XII:

Businesses are increasingly placing orders online. The Performance Measurement

Group collected data on the rates of correctly filled electronic orders by industry
(Investor’sBusinessDaily,May8, 2000). Assume as ample of 700 electronic orders
provided the following results.

Industry

Order Pharmaceutical Consumer Computer telecommunication

Correct 207 136 151 178

Incorrect 3 4 9 12

a. Test a hypothesis to determine whether order fulfillment is independent of industry.

Use α = .05. What is your conclusion?

b. Which industry has the highest percentage of correctly filled orders?

EXERCISE XIII:

In an experiment designed to test the output levels of three different treatments, the
following results were obtained: SST = 400, SSTR = 150,Nt = 19. Set up the ANOVA

Powered by B.W NKOMBOU. Associate Lecturer at IUC, Logbessou-Douala, Cameroon.

table and test for any significant difference between the mean output levels of the three
treatments. Use α= .05

EXERCISE XIV :

Three different methods for assembling a product were proposed by an industrial

engineer. To investigate the number of units assembled correctly with each method, 30
employees were randomly selected and randomly assigned to the three proposed
methods in such a way that each method was used by 10 workers. The number of units
assembled correctly was recorded, and the analysis of variance procedure was applied
to the resulting data set. The following results were obtained: SST = 10,800; SSTR =4560.

a. Set up the ANOVA table for this problem.

b. Use α= .05 to test for any significant difference in the means for the three assembly
methods.

EXERCISE XV :

To study the effect of temperature on yield in a chemical process, five batches were
produced at each of three temperature levels. The results follow. Construct an analysis
of variance table. Use a .05 level of significance to test whether the temperature level has
an effect on the mean yield of the process.

Temperature

50°C 60°C 70°C

34 30 23

24 31 28

36 34 28

39 23 30

32 27 31

EXERCISE XVI :

The following data are from a completely randomized design.

Powered by B.W NKOMBOU. Associate Lecturer at IUC, Logbessou-Douala, Cameroon.
 Treatments

A B C

162 142 126

142 156 122

165 124 138

145 142 140

148 136 150

174 152 128

Sample mean 156 142 134

Sample Variance 164.4 131.2 110.4

a. Compute the sum of squares between treatments.

b. Compute the mean square between treatments.

c. Compute the sum of squares due to error.

d. Compute the mean square due to error.
e. Set up the ANOVA table for this problem.
f. At the 𝛼 = .05 level of significance, test whether the means for the three treatments
are equal.

EXERCISE XVII :

In a completely randomized design, 12 experimental units were used for the first
treatment, 15 for the second treatment, and 20 for the third treatment. Complete the
following analysis of variance. At a .05 level of significance, is there a significant
difference between the treatments?

(SS) (df) MS F

Treatments ( Between samples) 1200

Error ( Within samples)

Total 1800

EXERCISE XVII :

Powered by B.W NKOMBOU. Associate Lecturer at IUC, Logbessou-Douala, Cameroon.

Three different methods for assembling a product were proposed by an industrial
engineer.
To investigate the number of units assembled correctly with each method, 30 employees
were randomly selected and randomly assigned to the three proposed methods in such
a way that each method was used by 10 workers. The number of units assembled
correctly was recorded, and the analysis of variance procedure was applied to the
resulting data set. The following results were obtained: SST = 10,800; SSTR = 4560.
a. Set up the ANOVA table for this problem.
b. Use 𝛼 = .05 to test for any significant difference in the means for the three assembly
methods.

EXERCISE XIX :

Develop the analysis of variance computations for the following completely randomized
design. At 𝛼 =.05, is there a significant difference between the treatment means?
Treatments

A B C

136 107 92

120 114 82

113 125 85

107 104 101

131 107 89

114 109 117

129 97 110

102 114 120

104 98
89
106

Sample mean 119 107 100

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 Sample 146.86 96.44 173.78
Variance

EXERCISE XX :

The following data were collected on the height (inches) and weight (pounds) of women
swimmers.

Height 68 64 62 65 66

Weight 132 108 102 115 128

Develop a scatter diagram for these data with height as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship
between the two variables?
c. Try to approximate the relationship between height and weight by drawing a straight
line through the data.
d. Develop the estimated regression equation by computing the values of b0 and b1.
e. If a swimmer’s height is 63 inches, what would you estimate her weight to be?

EXERCISE XXI :

A sociologist was hired by a large city hospital to investigate the relationship between
the number of unauthorized days that employees are absent per year and the distance
(miles) between home and work for the employees. A sample of 10 employees was
chosen, and the following data were collected.

Distance to work Number of days absent

1 8

3 5

4 8

6 7

8 6

10 3

12 5

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 14 2

14 4

18 2

a. Develop a scatter diagram for these data. Does a linear relationship appear
reasonable? Explain.
b. Develop the least squares estimated regression equation.
c. Is there a significant relationship between the two variables? Use α =.05.
d. Did the estimated regression equation provide a good fit? Explain.
e. Use the estimated regression equation developed in part (b) to develop a 95%
confidence interval for the expected number of days absent for employees living 5 miles
from the company.

EXERCISE XXII :

The regional transit authority for a major metropolitan area wants to determine whether
there is any relationship between the age of a bus and the annual maintenance cost. A
sample of 10 buses resulted in the following data.

Age of bus Maintenance cost (Cfa)

1 350

2 370

2 480

2 520

2 590

3 550

4 750

4 800

5 790

5 950

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a.Develop the least squares estimated regression equation.
b. Test to see whether the two variables are significantly related with α = .05.
c. Did the least squares line provide a good fit to the observed data? Explain.
d. Develop a 95% prediction interval for the maintenance cost for a specific bus that is 4
years old.

EXERCISE XXIII :

ANOVA

𝒅𝒇 𝑺𝑺 𝑴𝑺 𝑭

Regression * 1612 * *
REGRESSION STATISTICS
Residual 12 * *
Multiple R *
Total * *
R –square 92.3%

Adjusted R- *%
square

Standard error 3.335

Observation *

Coefficients Standard error t-statistic

Intercept * 2.667

𝒙𝟏 * 2.105

𝒙𝟐 * 0.613

a. Compute the appropriate t-ratios.

b. Test for the significance of 𝛽1and 𝛽2at α = .05.
c. Compute the entries in the DF, SS, and MS columns.
d. Compute Adjusted R-square
f. Test for the significance of the model.

EXERCISE XXIV :

Powered by B.W NKOMBOU. Associate Lecturer at IUC, Logbessou-Douala, Cameroon.

 The estimated regression equation for a model involving two independent variables
and 10 observations follows.
̂ 1 + 0.4980𝑥2
𝑦̂ = 29.1270 + 0.5906𝑥
 Interpret b1 and b2 in this estimated regression equation.
 Estimate y when x1 = 180 and x2 =310.

The values of SST and SSR are 6724.125 and 6216.375, respectively.

 Find SSE.
 Compute R2.
 Compute 𝑅𝑎2 .
 Comment on the goodness of fit.

Here SST = 6724.125, SSR = 6216.375, 𝑠𝑏1 = .0813, and 𝑠𝑏2 = .0567.

 Compute MSR and MSE.

 Show the ANOVA table
 Compute F and perform the appropriate F test. Use α = .05.
 Perform a t test for the significance of 𝛽 1. Use α = .05.
 Perform a t test for the significance of 𝛽 2. Use α =.05.
 Develop a point estimate of the mean value of y when x1 = 180 and x2 = 310.
 Develop a point estimate for an individual value of y when x1 =180 and x2 = 310.

EXERCISE XXV :

A shoe store developed the following estimated regression equation relating sales to
inventory investment and advertising expenditures.

𝑦̂ = 25 +̂
106𝑥1 + 8𝑥2

Where 𝑥1 = 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 ($1000𝑠),𝑥2 =

𝑎𝑑𝑣𝑒𝑟𝑡𝑖𝑠𝑖𝑛𝑔 𝑒𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒($1000𝑠) 𝑦 = 𝑠𝑎𝑙𝑒𝑠($1000𝑠)

 Estimate sales resulting from a $15,000 investment in inventory and an

advertising budget of $10,000.
 Interpret b1 and b2 in this estimated regression equation.

The data used to develop the model came from a survey of 10 stores; for those
data, SST = 16,000 and SSR = 12,000.
For the estimated regression equation given,

 compute R2.
Powered by B.W NKOMBOU. Associate Lecturer at IUC, Logbessou-Douala, Cameroon.
  Compute 𝑅𝑎2 .
 Does the model appear to explain a large amount of variability in the data?
Explain

The data used to develop the model came from a survey of 10 stores; for these data
SST = 16,000 and SSR = 12,000.

 Compute SSE, MSE, and MSR.

 Use an F test and a .05 level of significance to determine whether there is a
relationship among the variables.

Powered by B.W NKOMBOU. Associate Lecturer at IUC, Logbessou-Douala, Cameroon.