Professional Documents
Culture Documents
Unit 1
Unit 2
Unit 3
Unit 4
Unit 5
Unit 6
Unit 7
Unit 8
Unit 9
Unit 10
Unit 11
Unit 12
Unit 13
1
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Objectives
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2
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3
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4
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YO
OLEUM &
n ~;
k~ e
k ; k kf D r o
ST U DI ES
fo
EN
GY
UNIV ER SIT
E TR
ER
FP
5
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6
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8
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10
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11
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After reading this unit, you will be able to:
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(Function Form)
(Function Form)
12
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13
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14
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the forms there. Now let us understand what are the different
forms that these mathematical functions can take up.
1.
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2.
3.
4.
5.
+ ..........
+
ex is always positive.
......
15
6.
7.
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16
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A dealer sells a table and seven chairs for Rs 6,000. The price
of the table is known to be Rs 2,500, what is the price of one
chair?
7X = 3,500
X = 3,500 / 7 = 500
This means that each chair costs Rs 500.
The number of variables in a linear equation can be one or
more than one. For example, if
Y = AX + B
17
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Y - AX - B = 0
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4000
3000
2000
1000
0
0
100
200
300
400
500
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18
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4000
3000
2000
1000
0
0
100
200
300
400
500
19
(1)
6 X + 17 Y = 300
(2)
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20
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Elimination Method:
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6 X + 22 Y = 360
This is then subtracted from equation (2) to eliminate the
terms involving X :
- 5 Y = -60
Y = 12
Substituting this value of Y in equation (1):
3 X + 132 = 180
X = 16
Substitution Method:
The second method of solution is by substitution. Equation
(1) is rearranged so that one of the unknowns is expressed
in terms of the other:
3 X = 180 - 11 Y
X=
This formula for X is then substituted in equation (2):
) + 17 Y = 300
21
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1.
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2.
Solve the resulting simple equation (to yield the value of the other
variable).
3.
Substitute this value back into one of the original equations, say
equation 1 ( to yield the value of the first variable).
4.
Check the solutions (by substituting both values into original equation
2).
(1)
6 X + 17 Y = 300
(2)
22
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Using any two of the given equations, eliminate one of the variables
(using the equation-manipulating techniques previously described)
to obtain an equation in two variables.
2.
3.
4.
Substitute into one of the three original equations to find the value of
the third variable.
5.
Representing the prices of one table, one chair and one stool
23
(1)
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2x + 5y + 7z = 148
(2)
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5x + 9y + 2z = 151
(3)
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8y + 6 = 214
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24
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(1)
(2)
25
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26
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This breakeven level can also be found from the graph where
your revenue and costs curves cross each other.
Alternatively, you can plot the equation (11x-32=0) and find
the value of x where the line meets the x-axis as at that point
the value of the function would be zero.
There are two possible ways in which you could have obtained
the information related to fixed and direct costs as the cost
accountant found. Either you take all the accounting records
and classify each cost into the two headings, a tedious and
time consuming process which is prone to error because of
limited accounting knowledge and problems of classification.
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27
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28
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X = 23P 86
For example, by substituting Rs 500 as price (P = 5) we get X
= 29 (i.e., 29,000 phones). This line represents the quantities
which will be produced at different prices provided all the
quantity produced can be sold. But to find out what can be
sold in the market we need look at the demand function of
the market. The demand function would indicate the total
quantity that will be purchased at a particular price and
therefore, represents the total individual demand functions
of all the individual buyers.
Normally, large quantities would be bought when the price
is lower and as the price goes up the quantities purchased
come down. In this particular case it was found that only
24,000 telephone pieces can be sold at Rs 700 per piece but
that the sales would increase to 35,000 and 46,000 pieces per
month at the prices of Rs 600 and Rs 500 respectively. These
three points can be plotted on the same graph as supply curve
so as to get the demand curve. The demand function is then
found to be:
X = 101 11P
It would be wrong to assume that we can extend these lines
on either side for supply and demand functions. It would be
absurd to assume that the demand is 2,000 pieces when the
price is Rs 900 and equally wrong to assume that demand is
approximately 90,000 pieces when price is Rs 100.
The reason for plotting supply and demand of the same graph
is to found out the point of market equilibrium, which is the
point of intersection of these two lines. It can also be find
out using simple equation solving techniques mentioned
29
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30
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31
10
8
6
4
2
0
0
10
20
30
40
50
60
70
80
90
100
X=Weight in gram s
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32
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33
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R = px
In order to find the breakeven point, it is simplest to express
p as a function of x; R then becomes a quadratic function of x:
p = 22 x from the equation x = 22 - p above
Substituting this value of p in R = px we get
R = px = (22 x) x = 22x x2
Assuming that the linear cost function to be 32 + 7x, as found
earlier, the gross profit G becomes a quadratic function of x:
G=RT
= (22x x2) (32 + 7x) = -x2 + 15x 32
This is the profit function for this manufacturer.
This quadratic function more closely approximates the real
life situation. Now the question comes, how do we solve these
quadratic functions/equations. There are three basic
methods:
1.
Factorization
2.
Using Graphs
3.
Using Formula
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34
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Either x 7 = 0
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x = 7 or x =
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or 2x 3 = 0
Let the factors be (px + q) and (rx + s), where p,q, r and s are
positive or negative integers and the product of the two
factors is ax2 + bx + c. Multiplying the factors we get:
prx2 + psx + qrx + qs = ax2 + bx + c
The coefficients must be the same on both sides as this must
be true for all values of x. This gives equations relating the
unknown quantities to the coefficients in the expression to
be factorized: pr = a; ps + qr = b; qs = c. It implies that the
product of ps and qr is ac and so the first task is to find these
two numbers whose sum and product are known.
35
Putting ps = 105 and using the fact that pr = 54, the highest
common factor 3 is then equated to p. Calculations would
show that s = 35, r = 18 and q = 20 and the factors of the
above equation are:
0.2 ( 3x + 20) (18x + 35)
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36
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Y = f(x)
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10
12
14
-32
12
22
24
18
18
37
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x=
38
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= 12.425 or 2.575.
This is the exact solution whereas from the graph we got an
approximate solution. The sum of the roots is always equal
to -b/ a and their product is always equal to c/ a. In this
illustration the sum 15.05 and the product 32.62 can be
checked with the original equation. This check makes it
unnecessary for you to check the roots separately by
substitution in the equation.
39
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(1)
(2)
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(3)
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(4)
(5)
40
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2.2
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41
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Objectives
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2]
[18 6]
[12 0]
[0 6]
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Here the first number stands for dozens of sheets and the
second number stands for pillowcases. The four brackets
denotes four different orders. As long as the zero is inserted
when necessary, there can be no confusion as to the meanings
of these figures. As the orders are packed, the quantities
can be added up.
These pairs of numbers are examples of vectors. A vector is
any row or column of figures in a specified sequence. The
fact that [12 0] is an order for 12 dozen sheets while [0 12]
would be an order for 12 dozen pillowcases indicates that
the numbers acquire meaning from their positions in the
sequence. A vector is normally printed between square or
curved brackets or between a pair of double vertical lines.
The sum of the four orders is an example of vector addition.
Two vectors are added together by adding the first number
in the first vector to the first number in the second vector,
the second number in the first vector to the second number
in the second vector and so on. Each number is called an
element of the vector. Vectors can have more than two
elements, but two vectors can only be added together if both
have the same number of elements. Clearly the sum of the
above four orders is [34 14], i.e., 34 dozen sheets and 14
dozen pillowcases.
If the firm started to sell blankets also, a new convention
would be needed by which [4 2 3] means 4 dozen sheets, 2
dozen pillowcases and 3 dozen blankets. The convention
would have to be adopted completely for all orders, inserting
0 whenever an order did not include any blankets. The total
quantities ordered would be given by the sum of these threeelement vectors, which would itself be a three-element
vector. Vectors are, thus, an ordered arrangement of
numbers it can be in a row or a column.
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LM1800OP
N700 Q
Then multiplying an order vector by this price vector can be
defined as multiplying the first element of the order vector
by 1,800 and the second element of the order vector by 700
and adding the results together:
LM1,800OP 8,600
N700 Q
L1,800OP 4,200
0 6 M
N700 Q
42
LM1,800OP 36,600
N700 Q
L1,800OP 71,000
34 14 M
N700 Q
18 6
12 0
LM1,800OP 21,600
N700 Q
It is obvious that (34 x 1800) is the total value of all the sheets
in the preceding four order vectors and (14 700) is the total
value of all the pillowcases, so that the sum of these products,
71000, must be the sum of all the separate orders:
8,600 + 36,600 + 21,600 + 4,200 = Rs.71,000
Two vectors can be multiplied together only if both have the
same number of elements. Multiplication of a row vector by
a column vector, which always results in a scalar, is called
the scalar multiplication of vectors.
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Note that the product has meaning in this case only because
the first element in both the order vector and the price vector
represents dozens of sheets and the second element in each
type of vector represents dozens of pillowcases. Yet they
are also distinctive; one vector gives the number of units
ordered and the other vector the price per unit, so that the
product gives the value of the units ordered. It would be
just as meaningless to add an order vector to a price vector
as it would be to multiply an order vector by another order
vector. Vectors have, in fact, been implicit in some of the
earlier examples in this book even though they were not
made explicit.
Now let us turn our attention to matrices.
Sewing
Folding
Sheets
38
14
Pillowcases
32
LM8 38 14OP
N6 32 4 Q
Activity 3A
Find out whether matrices are
used for production planning in
your organization.
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(4 8)
(2 6) = 44
minutes cutting
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(4 38) +
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(4 14) +
(2 4) = 64
minutes folding
216 64]
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LM4 2 OP
LM44 216 64 OP
MM18 6 PP LM8 38 14OP MM180 876 276 PP
96 456 168
MN012 60PQ N6 32 4 Q MN36
P
192 24 Q
It is often useful to represent a matrix by a single symbol. A
capital letter is usually printed in bold type to emphasize
that it is a matrix. Putting the matrix of the four orders as A
and the manufacturing time matrix as B, the product can be
written as:
AB = C
Therefore, C is a matrix giving the total production time on
each type of machine for each of the four orders.
The equation would no longer be true if B were written before
A. In fact, it is impossible to multiply B by A since B has
three columns while A has four rows. If the fourth row of A
was disregarded, there would then be two matrices which
could be multiplied in either order, but the results would be
different:
Notes
OR
4 2 O
LM8 38 14OP LM18
L884
6PM
M
P
N6 32 4 Q MN12 0PQ N648
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244
204
OP
Q
LM1,800OP
N 700Q
4 2
LM7,200 3,600OP
N2,800 1,400Q
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YO
UNIV ER SIT
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n ~;
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OLEUM &
fo
Notes
E TR
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FP
k~ e
k ; k k f D r o
LM 4 2OP LM 4k 2kOP
18 6P M18k 6k P
kM
MM12 0PP = MM 12k 0PP
N 0 6Q N 0 6 k Q
1
-3
1
2
-4
=
-8
0
0
0
0
30 9
25 2
3+5
8+30
5+9
2+4
7+25
2+2
YO
OLEUM &
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UNIT 3
k~ e
k ; k kf D r o
51
38 14
32
30
25
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LM
N
OP LM
Q MMN
OP L O
PP MN PQ
Q
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YO
UNIV ER SIT
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n ~;
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OLEUM &
fo
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FP
k~ e
k ; k k f D r o
7
3
12
12
28
13
LM2.5OP
LM46 7 12 28OP M0.3P = LM123.9OP
N16 3 12 13Q MM0.1PP N 44.7Q
N0.2Q
Any labour or other costs not already included in the
machine-cost and ingredient-cost vectors will be computed
for each product to form an additional cost vector e with m
elements. The total cost per unit for each product is then
obtained by adding together the three vectors each with m
elements:
Ac +
Bd +
9.6
123.9
5.6
44.7
e
+
2.0
1.5
135.5
51.8
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2]
LM9.6OP 49.6
N5.6Q
One would expect to obtain the same result if the productiontime vector x A is multiplied by the machine-cost vector c
and this is in fact the case:
4 4 216 64
LM0.2OP
MM00..31PP 49.6
N Q
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11y =
17y =
180
300
(1)
(2)
+ 3
0x +
y =
60
(3)
5y = - 60
(4)
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x + 0y = 16
(5)
0x + y = 12
(6)
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11
180
17
300
1
0
1
0
0
1
3 2/3
-5
60
-60
16
12
4
5
9
3
7
2
107
148
151
1 1/3
35 2/3
2 1/3
76 2/3
Notes
-1
6/
-8
1/
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2 1/7
32 6/7
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-8
-104
16
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13
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4y
3z
14
(1)
3x -
6y
2z
11
(2)
6x -
3y
(3)
-2
11 / 2
-21/2
- 10
-1
- 1/2
-5
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0 - 1.575
-0.75
-1.05
YO
OLEUM &
n ~;
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EN
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UNIV ER SIT
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UNIT 3
k~ e
k ; k kf D r o
59
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Illustration 3.2
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Solution
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3
6
11
17
x
y
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180
300
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3
2
5
4
5
9
3
7
2
x
y
z
107
148
151
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I2
L1 0O
M P
N0 1Q
I2
LM1 0 0OP
0 10
MM0 0 1PP
N Q
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I A =
I x =
Notes
Then:
B = BI = BAA-1 = IA-1 = A-1
Each step in this proof uses one of the results previously
obtained, including the associative property of matrix
multiplication mentioned earlier. Since two matrices are only
equal if they are identical in all respects, this proves that B
is identical to A-1 and therefore, that there is only one inverse
of A.
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YO
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11
17
3 2/3
1
3
-5
-2
17
- 15
11
15
2
5
1
-5
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k~ e
k ; k k f D r o
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n ~;
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GY
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OLEUM &
fo
Notes
E TR
ER
FP
11
15
180
2
5
1
-5
300
16
12
OP
Q
LM
N
1 17 11
15 6 3
LM
MM
N
53 19 13
1
31 9
15
56
7
7
7
OP
PP
Q
YO
OLEUM &
n ~;
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fo
EN
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UNIV ER SIT
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UNIT 3
k~ e
k ; k kf D r o
63
53
-19
-13
107
-31
15
148
-7
151
16
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5
13
16
13
107
=
148
151
(1)
a2x + b2y = h2
(2)
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a1 a2x + a2 b1y = a2 h1
(3)
a1 a2x + a1 b2 y = a1 h2
(4)
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y=
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a1 h2 - a2 h1
a1b2 - a2 b1
(5)
(6)
These two formulae are called the general formulae for the
solution of any pair of simultaneous linear equations.
The next important step is to introduce a particular way of
representing this solution so that it is easy to remember.
The method adopted is to write:
a1
b1
a2
b2
= a1b2 a2b1
b1
a2
b2
a1
b1
a2
b2
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a1
a2
b1
b2
a2
b2
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a1
b1
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b1
a2
b2
( a1 + qb1) b1
a2
b2
( a2 + qb2) b2
b1
b2
b1
b2
Notes
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Notes
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h1
a2
h2
y = a1
b1
a2
b2
(1)
(2)
(3)
ought to be:
h1
h2
h3
b1
b2
b3
c1
c2
c3
a1
a2
a3
b1
b2
b3
c1
c2
c3
x=
Notes
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Notes
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b1 c 1
a2
b2
c2 a1
a3
b3
c3
b2 c2
a2 c2
- b1
b 3 c3
a2 b2
+ c1
a3
c3
a3 b3
h1
h2
h3
c1
c2
c3
a1
a2
a3
b1
b2
b3
h1
h2
h3
a1
a2
a3
b1
b2
b3
c1
c2
c3
z=
y=
a1
a2
a3
b1
b2
b3
c1
c2
c3
c3 d3
a4 b4
c4 d4
a1
b2
c2
d2
a2
c 2 d2
b3
c3 d3
a3
c 3 d3
b4
c4 d4
a4
c 4 d4
a2
b2 d2
a2
b 2 c2
a3
b 3 c3
a4
b 4 c4
+ c1 a3 b3
d3
a4
d4
b4
-b1
-d1
a2
a3
a4
c2
c3
c4
d2
d3
d4
Notes
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Notes
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2.
3.
4.
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a1
b1
c1
pa2
pb2
pc2
a3
b3
c3
a1
b1
c1
a2
b2
c2
a3
b3
c3
5.
6.
Notes
Illustration 3.3
1
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Illustration 3.4
3
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is equal to
11
13
using (3)
3
-1
By subtracting twice the first row from the second row, the
numbers are made smaller and so easier to manipulate.
In evaluating a large determinant, property (4) is first applied
wherever possible. Then property (3) is used where possible
to make the numbers small and in particular to obtain as
many zeros as possible.
Illustration 3.6
12
11
9
13
17
13
15
5
36 19
12 17 36 19
28 14
11 13 28 14
3
12 6
3
5 4
2
8 11
13 5 8 11
12 17 9 19
12 1 9
1
11 13 7 14
11 1 7 0
12
12
3
5
1 2
3
3 1 0
13 5 2 11
13 1 2 15
13 1 9
1
12 1 9
1
10 1 7 0
10 1 7 0
12
12
0
3 1 0
0
3 1 0
14 1 2 15
1 1 2 15
Notes
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The numbers have now been reduced quite a lot and there is
a row which includes two zeros. The next step is to make a
third zero in this row. The third row is then interchanged
with the second row and again interchanged with the first
row. The fourth order determinant then reduces to a single
third order determinant.
12 28 9 1
10 22 7 0
12
12
0
0
1 0
1
5 2 15
12 28 9 1
0
0
1 0
10 22 7 0
1
5 2 15
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0
12
12
10
1
0
28
22
5
1
9
7
2
0
12
1
12 10
0
1
15
28
22
5
0
15
1
12
0 24 5
15
1
24 0
0
24
28 1
12
11 0 24 5
181 425 0
12
5
181
28
1 28
0 11
181 0 425
1
11 24 12
425
28
5
11
181
425
5 181
11 425
Notes
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7.
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-28 9
-22 7
0 1
5 -2
12
-28
-5
-11
-181 425
8.
1
0
0
1
0
0
15
= 1
1
0
0
12
-5
-181
0
12
-10
-1
0
-28
-22
5
1
9
7
-2
0
1
0
15
-28
-11
425
a f
11 10
28 1
28 1
5 11 0 12
(5)
1
5 15
5 15
11 0
1 5 15
9.
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Notes
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12 28
10 22
0
1
0
5
9
7
1
0
12 28 1
10 22 0
1 0
1
5 15
2 15
12
5
28 1
5 11
11 0
181 425
181 425 0
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2 7
1 3
4 2
5 4
0 5
2 7 5
0 4
7 1 3 4
0 2
4 2 2
7 1
Activity 3B
Illustration 3.7
In a petroleum engineering workshop there are seven
machines for drilling, two for turning, three for milling and
one for grinding. Four types of brackets are made. Type A is
found by work study to require 7 minutes drilling, 3 minutes
turning, 21/2 minutes milling, and 11/2 minutes grinding, and
the corresponding times in minutes for the other types are:
B: 5, 0, 1 1/2, 1/2; C: 14, 6, 9, 3 1/2; D: 26, 9, 11, 11/2. How many of
each type of brackets should be produced per hour in order
to keep all the machines fully occupied?
Solution
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14
26
7
3
0
6
9
31
1
1
2
1
9 11
45
2
2
1 1
1
1
3
1
3
1
2 2
2
2
5 14 26
0 2 3
3
3 18 22 4
1 7
3
0 5 0
1 0 2
0 3 8
5
3
7
0 1 1 6
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Activity 3C
W hy matrices have better
suitability for solving than
determinants?
1
3
1
0
8
1
0
4
-7
8
1
4
-7
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-15 (-14 1) =
-15
2
1
1
-7
225
5 14 26
7
0 6 9
2
60
3 9 11
3
1 3
1
1
3
2
15
0
2
5 14 26
7
0 6 9
2
50
3 9 11
6
1 3
1
2
5 14 26
0 6 9
3 18 22
1 7 3
0 21 11
3 21 11
0 6
9
15 2
6
9
0 3 13
0 3 13
1 7
3
3 7 11
45 2 2 9
0 1 13
3 7 16
45 2 2 35
0 1 9
225
45
3 80
2 35
3 16
2
7
= 225(-21+32) = 225 11
Since the denominator is 225, the number of brackets per
hour of type A in the solution is 11. There are no new
problems involved in finding the solution for the other three
types of bracket and so this task is left for you. You should
note that it has not been necessary either to introduce
symbols for the four unknowns or to write out the four
equations.
Notes
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0.10
0.05
40
0.15
0.60
0.10
50
0.35
0.30
0.85
10
25.5
=
37.0
37.5
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YO
UNIV ER SIT
ST U DI ES
n ~;
EN
GY
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OLEUM &
fo
Notes
E TR
ER
FP
k~ e
k ; k k f D r o
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0.50
0.10
0.05
25.5
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0.15
0.60
0.10
37.0
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0.35
0.30
0.85
37.5
18.325
=
29.775
51.900
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LM0.50
15
MM00..35
N
OP
PP
Q
LM
MM
N
OP
PP
Q
LM
MM
N
0.10 0.05
1 0 0
0.50 0.10 0.05
0.60 0.10 0 1 0 0.15 0.60 0.10
0.30 0.85
0 0 1
0.35 0.30 0.15
OP
PP
Q
0.10
-0.40
0.30
1
0.05
0.10
-0.15
1
0
0
0
100
Activity 3D
Can Markov chains be used in
petroleum industry? Explain.
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Notes
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16
48
8
12
14
62
Delhi
24
16
12
20
44
12
10
22
78
Delhi
14
8
10
Notes
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Notes
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Market
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Products
A
8,000
10,000
15,000
II
10,000
2,000
20,000
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Cost
(in Rs)
No. of Incoming
Electrodes To stress
relieving furnances
division
No. of Outgoing
electrodes From stress
Relieving furnaces
division
6,950
40
10
2.
6,725
35
3.
7,100
40
12
Mak
Castrol
0.9
0.1
Mak
0.3
0.7
a2 b2
c)
a1 b1
a2 b2
a1
a2
(b) a1
b1
b1
b2
a2
b2
a1 + pa2
b1 + pb2
a2
b2
a2
b1
a1
b1
a1 + qb1
b1
a2 + qb2
b2
(b) 1
(c ) 1
(e) 3
-1
(g ) 3
-3
(f)
(d)
(h)
11
13
Notes
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Notes
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(a) 3
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(b)
-2
-1
-6
(c)
9 21
11
-3
-2
21
5 15
-7
(e)
10
-5
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(d) 3
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-2
-8
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-1
-3
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-10 17
-3
1 (b)
12 24
35
(d) 1
-3
-44
30
32
35
-18
28
10
-63
34
40
(e)
(c)
6 12
12
-1
-3
12
-6
12
85
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Objectives
After reading this unit, you will be able to:
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86
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87
Notes
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88
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89
2.
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90
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Probability
Candidate A
0.18
Candidate B
0.42
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Candidate C
0.26
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Candidate D
0.14
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1.00
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P (A)
P (B)
91
Notes
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P (A)
P (B)
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P (A and B)
=x =
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92
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Illustration 4.2
Assume we have three boxes, which contain red and black
balls as follows:
Box 1 :
Box 2 :
Box 3 :
2.
3.
Suppose our first draw from box 1 was black; then the
conditional probability is 0.80. The draw from box 1 (the
conditioning event) is very important in determining
the probabilities of red (or black) on the second draw.
93
4.
Notes
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Figure 4.1
Table 4.2 shows the joint probability of two red balls as 0.18
[i.e., P(R and R) or more simply P(RR), the top branch of the
tree]. The joint probabilities may be summarized as follows:
Two red balls
P(RR) =
0.18
P(RB) =
0.12
P(BR) =
0.56
P(BB) =
0.14
1.00
Event
Marginal
Conditional
Joint
P(A)
P(BA)
P(A and B)
RR
P(R) = 0.30
P(R|R) = 0.60
P(RR) = 0.18
RB
P(R) = 0.30
P(B|R) = 0.40
P(RB) = 0.12
BR
P(B) = 0.70
P(R|B) = 0.80
P(BR) = 0.56
BB
P(B) = 0.70
P(B|B) = 0.20
P(BB) = 0.14
94
Notes
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2.
3.
Probability of red-black
= 0.12
Probability of black-black
= 0.14
= 0.26
95
Notes
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0.30
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Second
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Draw
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First
Draw
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R
__________________
P(RR)
P(RB)
0.18
0.12
P(BR)
P(BB)
0.56
0.14
0.70
0.74
0.26
1.00
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Marginal Probability of
outcome on Second Draw
0.30
Illustration 4.3
We give a further illustration of the basic probability
definitions. A survey is taken of 100 families; information is
obtained about family income and about whether the family
purchases a speciality food product. The results are shown
in Table 4.4.
Table 4.4: Survey of 100 Families, Classified by Income and
Buying Behaviour
Low Income
(family income
below Rs.30,000)
High Income
(family income
of Rs.30,000 or more)
Total
number of
Families
Buyer of speciality
food products
18
20
38
Non-buyer
42
20
62
60
40
100
Family is:
96
Notes
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2.
3.
4.
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97
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= 0.02
= 0.40
P(tail)
= 0.42
P(tail)
0.02
=
0.42
= 0.05
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98
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It will be seen that nCr works out the same as nCn-r. This is
reasonable, since the number of ways of selecting five cards
from a pack of 52 is obviously the same as the number of
ways of selecting 47 cards and leaving a hand of five cards
behind.
Illustration 4.5
In how many different ways three bolts can be selected from
a box containing eight bolts?
Solution
The answer is 8C3. It is convenient to adopt the practice of
using dots in place of multiplication signs when several
99
Notes
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Illustration 4.6
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Solution
The word random indicates that all the 56 different ways of
selecting three bolts from a total of eight bolts are equally
likely, and so the classical definition of probability can be
applied. The number of ways of obtaining three sound bolts
is 6C3, which is 20, and dividing this by 56 gives 0.357.
The number of ways of obtaining two sound bolts is 6C2, which
is 15. Each of these combinations can be associated with
either of the 2C1 ways of obtaining one faulty bolt, and so 15
is multiplied by two and divided by 56 to give 0.536.
Following the same principles, the probability of obtaining
one sound and two faulty bolts is:
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100
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101
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Discrete or
Continuous
Values of the
Random Variable
Discrete
2, 3, . . ., 12
Discrete
0, 1, 2, 3, 4, 5
Discrete
0, 1, 2, . . . 5
Continuous
0 to
Life of an electronic
component of a computer
Continuous
0 to
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102
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2.
3.
103
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104
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making no sales?
Solution
Here p = probability of sale = 0.2
And q = probability of no sale = 1 0.2 = 0.8
The various outcome possibilities are
Visit 1
Visit 2
Probabilities
Sale
Sale
Sale
No sale
No sale
Sale
No sale
No sale
105
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(p + q)n
Wherep = probability of an event occurring
q = probability of an event not occurring
and
n = number of trials
106
Notes
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107
Notes
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Solution
This is the same problem as in illustration 4.8 except that
the size of the batch must now be regarded as infinite. It is
not difficult to see that the previous approximate formula
now becomes exact, so that the answer is 0.0746.
The exact probability distribution for the number of faulty
components in illustration 4.8 is called the hyper geometric
distribution. It is not very important in practice. If a sample
is drawn from a large batch, the binomial distribution is
usually a good enough approximation. If only a small batch
is involved, it can be examined in its entirety and then no
probability problem arises.
In some type of problems the binomial distribution can be
derived directly from a consideration of probabilities without
reference to batch sizes.
Illustration 4.9
The probability of meeting the buyer at a random visit to a
certain firm is 0.05. If a salesman makes 10 random visits,
what is the probability that he will meet the buyer on two
occasions?
Solution
The probability that the salesman will meet the buyer on
both the first two visits is 0.05 multiplied by 0.05. The
probability law of multiplication states that the probability
that both of two events will occur is the product of their
separate probabilities, provided that the events are
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108
Notes
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(0.05)2 (0.95)8
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C2(0.95)8 (0.05)2
109
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110
Notes
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is:
= BINOMDIST(3,5,0.4,0), which equals 0.2304
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Illustration4.10
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a.
b.
c.
111
Notes
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Illustration 4.11
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2.
3.
Solution
We can answer as follows. Let p = 0.10 and n = 20. Then:
a.
b.
c.
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112
Notes
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b)
c)
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b)
c)
113
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ac
e-a
C!
Prob
(c)=ace-a/c!
1.0
0.6065
0.6065
0.6065
0.5
0.6065
0.3033
0.9098
0.25
0.6065
0.0758
0.9856
0.125
0.6065
0.0126
0.9982
0.0625
0.6065
24
0.0016
0.9998
0.03125
0.6065
120
0.0002
1.0000
114
Notes
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a)
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b)
__________________
c)
d)
e)
The mean = np
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b)
c)
d)
Solution
The time interval to be used is one minute with a mean of 30/
115
Notes
60 = 0.5
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a)
b)
__________________
c)
P (2 or more)
__________________
= 1 - 0.9098
__________________
__________________
= 0.0902
__________________
P(3 or fewer)
= 0.9982
Illustration 4.14
A firm buys springs in very large quantities and from past
records it is known that 0.2% are defective. The inspection
department sample the springs in batches of 500. It is
required to set a standard for the inspectors so that if more
than the standard number of defectives is found in a batch
the consignment can be rejected with at least 90% confidence
that the supply is truly defective.
How many defectives per batch should be set as the standard?
Solution
With 0.2% defective and a sample size of 500 m= 500 X 0.2=1.
To find the probability of 0, 1, 2, 3, etc. or more defectives
the respective probabilities are deducted from 1.
P(0 or more defectives) = certainty
=1
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116
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2.
117
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118
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119
Illustration 4.16
An assembly line contains 2,000 components each one of
which has a limited life. Records show that the life of the
components is normally distributed with a mean of 900 hours
and a standard deviation of 80 hours.
a)
b)
c)
d)
Notes
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__________________
__________________
__________________
__________________
Solution
a)
b)
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120
Notes
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121
Notes
a)
b)
c)
d)
b)
b)
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122
Notes
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__________________
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Number of customers
No. of lubes
April
September
Less than 1
19
18
38
39
40
69
22
41
13
20
30 and over
Total
144
196
Required:
a) Calculate the arithmetic mean and standard
deviation order size for the April sample;
b) Find 95% confidence limits for the overall mean
order size for the April customers and explain their
meaning;
c) Compare the two distributions, given that the
arithmetic mean and standard deviation for the
September sample were 13.28 and 7.05 orders
respectively.
123
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Required:
a) Develop an expression for the average daily revenue
(R) from residents at the hotel, including both the
letting of rooms and evening meals in the restaurant.
Assume that:
i) the overall proportion of rooms occupied is p, and
ii) a proportion q of the rooms that are occupied are
let as single rooms.
b) The proportion (q) of rooms which are let as single
rooms is usually between 10% and 30%, and it can
be assumed that this is independent of the overall
proportion of rooms occupied (p).
Determine the average daily revenue (R) in terms of
the parameter p for values of q of 10%, 20% and 30%
and plot these three functions on a graph. What is
the lowest percentage occupancy (p) which will yield
an average daily revenue of Rs 8,000, and for which
of the given values of q does this occur?
c) What is the overall relationship between R and p if
the percentage of rooms let as single rooms is given
by the following probability distribution?
q
Probability
10%
0.3
20%
0.5
30%
0.2
124
Notes
d)
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__________________
b)
0-5
5-8
8-10
10-12
12-15
15-20
Probability
0.05
0.20
0.25
0.25
0.20
0.05
125
Notes
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126
Notes
__________________
__________________
Required:
Determine the probability that, under normal supply
conditions, the consignment is purchased.
__________________
__________________
__________________
__________________
__________________
__________________
c) Situation 3
Vehicles pass a certain point on a busy singlecarriageway road at an average rate of two per tensecond interval.
Required:
__________________
__________________
Age
position
Under 55
55 and older
Total
Finance
14
18
Marketing
Other
Total
21
30
127
Notes
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128
Notes
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129
Notes
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Watch
Watch Program A
Program B
__________________
Yes
No
__________________
Urban
Suburban
Urban
Suburban
Total
Yes
10%
14%
5%
1%
30%
No
15
21
20
14
70
25%
35%
25%
15%
100%
Total
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__________________
Accident
No
Marginal Probability of
Accident
Event in First Year
Accident
0.10
No Accident
0.90
Marginal Probability of
Event in Second Year
0.10
0.90
1.00
450
756
789
210
657
589
488
876
689
1450
560
469
890
987
559
788
943
447
775
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130
Notes
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__________________
4.77
6.11
6.11
5.05
5.99
4.91
5.27
6.01
__________________
5.75
4.89
6.05
5.22
6.02
5.24
6.11
5.02
131
Notes
No. of Tubes
300-400
14
__________________
400-500
46
__________________
500-600
58
__________________
600-700
76
__________________
700-800
68
__________________
800-900
62
900-1000
48
1000-1100
22
1100-1200
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133
Notes
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Objectives
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134
Notes
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(i)
Deterministic situation
Where the information is completely known and the
outcome of a specified decision can be
predetermined with certainty. Decision maker has
the complete information of impact of each course of
action. The techniques used under such situations
are: (i) Linear Programming, (ii) Input-output
135
Stochastic situation
Notes
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__________________
Situation of uncertainty
Wherein the probabilities associated with the states
of nature are unknown. For example, the success of
new product launched in the market or the success
of branch office opened abroad. Game Theory is used
to analyse such situations.
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__________________
136
Notes
State of nature
__________________
Courses of action
S1
S2
S3
Sn
__________________
O1
a11
a12
a13
__________________
O2
a21
a22
a23
a2n
O3
a31
a32
a33
a3n
..
..
..
..
am1
am2
am3
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__________________
.
Om
a1n
amn
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(i)
137
Notes
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(i)
(i)
138
Notes
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1.
__________________
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__________________
__________________
Tankers Sold
No. of Days
20
21
20
22
30
23
35
24
10
__________________
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__________________
24
25
26 27 28
29 30
31
Getting Oil
0.01
Go for Lease
Rs. 1,00,000
Rs. 1,00,000
Rs. 80,00,000
Rs. 0
139
4.
Possible Results
Notes
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__________________
Probability
Outcomes (US$)
__________________
Dry well
0.10
- 1,00,000
__________________
Oil well
0.20
45,000
0.40
98,000
0.30
1,99,000
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140
Notes
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20
25
40
60
15
25
__________________
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__________________
Number of weeks
7.
Technological
Changes
Course of action
Accept
Reject
Fast
Slow
None
-1
141
Notes
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Objectives
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142
Notes
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143
Notes
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144
Notes
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145
Notes
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146
Notes
__________________
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__________________
__________________
Step 3. Calculate Zj and then Cj and then calculate Cj-Zj. Select the pivot
column: Choose the positive number with the largest magnitude in the
index row. Its column is the pivot column. (If there are two candidates,
choose either one.) If all the numbers in the bottom row are zero or
negative (excluding the rightmost entry- Minimum Ratio), then the solution
obtained is the feasible solution.
__________________
__________________
__________________
__________________
Step 4. Select the pivot in the pivot column: The pivot must always be a
positive number. For each positive entry b in the pivot column, compute
the ratio a/b, where a is the number in the Answer column in that row. Of
these test ratios, choose the smallest one. The corresponding number b
is the pivot.
__________________
__________________
Step 5. Divide the pivot row by pivot element to make it unity. Construct
the new tableau by writing the previous pivot row first at the same position
(as it was having previously).
Step 6. Write the values of other rows so as the corresponding element in
the pivot column becomes zero. Again calculate Zj and Cj-Zj and iterate
step 3 onwards to reach the feasible solution.
The primal has m-constraints while its dual has munknowns and vice-versa.
147
Notes
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2X1 X2 + 3X3 + X4 = 10
__________________
X1 + X2 X3 + X4 = 11
__________________
-1
1]
[X 1]
[1
-1
1]
[X 2]
<=
[10]
[11]
1]
[-1
1]
[W1
W2]
<=
[ 3 1]
[1
[10]
[11]
1]
2W1 + W2 >= 3
W1 + W2 >= 1
3W1 W2 = 2
W1 + W2 = -1
148
Notes
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__________________
1.
2.
__________________
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__________________
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Product
Machine
M1
M2
Vitamin
10
100
10
10
50
10
100
10
10
Cost (Rs.)
40
90
20
149
4.
5.
Notes
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150
Notes
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-2X1 + X2 <= 1
__________________
4X12X2 <= 1
__________________
X1, X2 >= 0
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151
Notes
X1 <= 5
__________________
X2 >= 3
__________________
X1 + X 2 = 6
__________________
X1, X2 >= 0
__________________
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__________________
Sub. to:
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__________________
7.
__________________
152
Notes
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9.
153
Notes
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__________________
sub to:
__________________
W1 + 2W2 = 5
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155
Notes
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__________________
Objectives
After reading this unit you will be able to understang:
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__________________
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156
Notes
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__________________
Factory/
Warehouse
__________________
__________________
__________________
__________________
__________________
__________________
D1
D2
D3
D4
Supply
O1
C11
C12
C13
C14
A1
O2
C21
C22
C23
C24
A2
O3
C31
C32
C33
C34
A3
O4
C41
C42
C43
C44
A4
B1
B2
B3
B4
Total
Demand
2.
3.
157
Notes
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158
Notes
2.
3.
(i)
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159
m = No. of rows
n = No. of columns
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
II
(II) Find out minimum of supply and demand i.e. Min. (ai,
bj).
(III) Allocate min.(ai, bj) in the north west cell and exhaust
the row (column) if supply(demand) is satisfied and
adjust the balance.
(IV) Repeat the steps I) onwards till all the supply and
demand are satisfied.
__________________
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__________________
160
Notes
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__________________
__________________
__________________
__________________
__________________
__________________
__________________
(I)
(II) Find out minimum of supply and demand i.e. Min. (ai,
bj).
(III) Allocate min.(ai, bj) in the north west cell and exhaust
the row (column) if supply(demand) is satisfied and
adjust the balance.
(IV) Repeat the steps I) onwards till all the supply and
demand are satisfied.
__________________
(I)
(II) Choose the highest penalty out of all the penalties and
choose the cell with minimum cost in the corresponding
row (column). In case of tie between two highest
penalties, choose arbitrarily.
(III) Find out minimum of supply and demand i.e. Min. (ai,
bj) corresponding to the chosen cell.
(IV) Allocate min.(ai, bj) in the cell with minimum cost and
exhaust the row (column) if supply(demand) is satisfied
and adjust the balance.
(V) Repeat the steps I) onwards till all the supply and
demand are satisfied.
Modi Method:
Prior to applying this method, the following condition must
be satisfied:
Co = m+n-1
If this condition is not satisfied, degeneracy occurs.
Degeneracy can be removed by putting Delta in the
unoccupied cell having minimum cost.
161
I.
II.
Notes
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__________________
__________________
__________________
Cij = Ui + Vj
III. Opportunity cost is computed for all the unoccupied cells
by using the following equation:
Dij = Cij (Ui + Vj)
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VI
162
Notes
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(i)
163
Notes
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__________________
I.
II.
VI
__________________
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164
Notes
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165
Notes
__________________
1.
__________________
__________________
__________________
Refineries
II
III
Oil produced
10
__________________
__________________
__________________
Each day, the refineries must satisfy the needs for their
distribution centres. Minimum requirement at each
centre is as under:
__________________
__________________
__________________
Distribution Centre
II
III
IV
Oil supply
D1
D2
D3
D4
R1
11
R2
R3
15
Distribution
D1
D2
D3
P1
16
20
12
P2
14
18
P3
26
24
16
Centres\Plants
166
Notes
3.
__________________
__________________
__________________
__________________
Depot/Town
__________________
160
130
175
190
200
__________________
135
120
130
160
175
__________________
140
110
155
150
185
__________________
150
50
80
80
110
__________________
55
35
70
80
105
__________________
4.
Worker/Jobs
11
10
11
12
14
10
(Ans.Rs.13,000)
5.
Machines
2.5
II
1.5
III
6.5
IV
3.5
4.5
(Ans. Rs.20,000)
167
6.
Notes
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__________________
__________________
Departure
from Delhi
Route
No.
Arrival
at
Ajmer
Arrival
at Delhi
Route
No.
Departure
from Ajmer
06.00
12.00
11.30
05.30
07.30
II
13.30
15.00
09.00
11.30
III
17.30
21.00
15.00
19.00
IV
01.00
00.30
18.30
__________________
00.30
06.30
06.30
00.00
__________________
__________________
__________________
__________________
__________________
__________________
169
Notes
__________________
__________________
__________________
__________________
__________________
Objectives
__________________
__________________
__________________
__________________
__________________
II
170
Notes
IV
VI
VI
II
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
VI
VI
171
Notes
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__________________
__________________
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172
Notes
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__________________
__________________
__________________
Solution:
Player B
Player A
[2
3]
Row min. 2
[5
4]
Row min. 4
Col. Max. 5
4 Minimax = 4
Maximin = 4
__________________
__________________
__________________
__________________
__________________
Formulate the pay off matrix
__________________
Yes
Is
there a saddle
point?
No
Yes
Is it
a 2 x 2 pay-off
matrix
game?
No
Use dominance rule to reduce the size
of the pay-off matrix to either 2 x 2.
2 x n or m x 2 size (order)
No
Yes
Is
pay-off matrix
reduced
to a 2 x 2
size?
No
Yes
Is
pay-off matrix
reduced to a
2 x n or m x 2
size?
No
Formulate and solve as an LP problem
173
Notes
(i)
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
1.
__________________
2.
__________________
a) Saddle Point
c) Zero sum game
3.
4.
5.
6.
Find out the value of the game, the payoff (in rupees) is
given in the following matrix:
Player A / Player B
Strategy I
Strategy II
Strategy I
10
14
Strategy II
12
7.
Association
Management Strategies
Strategies
M1
M2
M3
M4
A1
20
15
12
35
A2
25
14
10
A3
40
10
A4
-5
11
174
Notes
8.
__________________
__________________
__________________
Company Xs Gain
__________________
X\Y
__________________
__________________
__________________
Sales Promotion
Advertising
Exhibition
Sales Promotion
60
50
40
Advertising
70
70
50
Exhibition
80
60
75
__________________
__________________
__________________
9.
II
III
IV
II
III
IV
Player X
-1
-3
-4
-1
Player A
-3
-4
-6
-2
-7
-1
-9
175
Notes
__________________
__________________
__________________
__________________
__________________
Objectives
__________________
__________________
__________________
__________________
__________________
(i)
(i)
176
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
(i)
177
Notes
__________________
1.
__________________
__________________
__________________
__________________
A
[0.8
B
0.2]
[0.5
0.5]
__________________
__________________
From
__________________
__________________
From
Castrol
Castrol
[0.8
Elf
0.1
Mak
0.1]
Elf
[0.05
0.85
0.10]
Mak
[0.10
0.06
0.84]
__________________
179
Notes
__________________
__________________
__________________
__________________
__________________
__________________
Objectives
__________________
__________________
__________________
__________________
180
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
181
Notes
__________________
__________________
__________________
__________________
__________________
__________________
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__________________
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182
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Primary
(ii) Secondary
183
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
184
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Primary Data
Secondary Data
Source of Data
Original source
Secondary source
Observation method,
Questionnaire method, etc.
Statistical Processing
Not Processed
Usually processed
Contd...
185
Notes
Originality of Data
Original
First time collected by user
Use of Data
Incorporated
__________________
Included
Excluded
__________________
Given
__________________
Description of Sample
Selection
Given
__________________
Time Required
More
Less
__________________
Expensive
Comparatively cheaper
__________________
Efforts Spent
More
Less
__________________
Accuracy of Data
More accurate
Less accurate
__________________
Training
Economic Considerations:
(a) Data collection efforts cost money. The value of the
anticipated results must commensurate with the
efforts put in.
(b) Short-term data collection studies that can yield
appreciable dividends quickly should be preferred
to long term studies whose benefits may be difficult
to foresee.
__________________
__________________
186
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Observation method
2.
Personal interview
3.
Questionnaire method
4.
187
Notes
__________________
__________________
__________________
__________________
(i)
Limitations
Some events cannot be observed without biases. For example, it is not possible
to observe emotions and sentimental factors, like and dislikes without bias
about the degree of emotions.
__________________
__________________
__________________
__________________
__________________
__________________
188
Notes
Being a long drawn process, the techniques of observation are expensive and
time consuming.
Sometimes the atmosphere tends to become artificial and this leads to a sense
of self-consciousness among the individuals who are being observed. This
defeats the purpose of observation.
The final results of observation depend upon the interpretation and understanding of the observer, the defects of the subjectivity in the explanation creep in the
description of the observed and deductions from it.
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Controlled
Observation
Uncontrolled
Observation
Control Dimensions
No control. Observations
under natural conditions
Techniques of Control
Used
Planning of observations
situations, Use of mechanical
appliances such as recorders,
watch, etc.
Maps and sociometric scales
Hypothesis
Detailed notes
Group discussions
Contd...
189
Degree of Bias
Well established
Difficult to establish
Degree of Reliability
of Data
High
Notes
__________________
__________________
__________________
Low
__________________
__________________
__________________
__________________
__________________
__________________
__________________
190
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Demerits
If an interviewee is of low level intelligence he is usually unfit to give correct information. Same goes for interviewer also as interviewing is an
art rather than science and the art
has to be mastered
If the interviewer is unable to suppress his prejudices, his understanding and interpretation of data given in
the interview will be defective
191
Notes
__________________
__________________
__________________
(i)
According to Formalness:
(a) Formal Interview: In formal interviews, the
interviewer presents a set of well defined questions
and notes down the answers of informants in
accordance with the prescribed rules. Here,
emphasis is given on the order and on sequence of
question.
(b) Informal Interview: Here the interviewer has the
freedom of alterations in questions to suit a
particular situation in formal interview. He may
revise, re-order or re-phrase the questions to suit
the needs of the respondents. The emphasis is on
situation and questioning generally depends on the
situation and individual.
__________________
__________________
__________________
__________________
__________________
__________________
__________________
192
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
193
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
194
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
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195
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196
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Merits
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Demerits
Lack of interest on the part of respondents lowers the number of responses, making the study unreliable
197
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198
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199
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200
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201
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202
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203
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1. Parts manufacturers
4,34,856
56,540
15,26,897
26,348
3. Taxis
11,32,560
42,685
1,09,805
13,684
22,25,960
15,008
12,35,200
12,048
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204
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1997-1998
1998-1999
1999-2000
15
21
10
14
20
30
40
Profit / (Loss)
(2)
Hint: Assume the sales price per bottle of rum equals to 100
and express the other figures in percentages as shown below:
Particulars
1997-98
1998-99
1999-2000
Wages
45.0
50.0
52.5
Other Costs
30.0
33.3
35.0
15.0
16.7
17.5
Total Cost
90.0
100.0
105.0
Sales
100.0
100.0
100.0
Profit/loss
+10.0
0.0
-5.0
205
Item
Expenditure %
Notes
Wages
25
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Bricks
15
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Cement
20
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Steel
15
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Wood
10
15
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20-25
21
60-65
36
25-30
29
65-70
45
30-35
19
70-75
27
35-40
39
75-80
48
40-45
43
80-85
21
45-50
94
85-90
12
50-55
73
90-95
55-60
68
10.8 IBM Computers (I) Ltd., has been entrusted with the
responsibility of developing a relationship between
number of employees and salary structure in Arian
Pharmaceuticals Ltd. . The statistics manager, Mr.Ayyar
has collected the following data. Draw the frequency
distribution and superimpose frequency polygon and
frequency curve on it.
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206
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Salary
No. of Employees
Salary
No. of Employees
300-400
20
700-800
115
400-500
30
800-900
100
500-600
60
900-1000
60
600-700
75
1000-1200
40
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207
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208
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209
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210
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211
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(c)
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212
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(c)
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213
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(i)
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214
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215
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216
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217
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218
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219
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220
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221
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222
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That the sample should be reliable and free from biases goes
without saying, but how that needs to be tested. The size of
the sample, its relevance and suitability to the problem, its
representation of the universe, etc., are some of the factors
that determine the reliability of the sample. Reliability may
be tested on the following parameters:
223
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224
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225
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227
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Objectives
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Understand the various types of averages that are used and their
applications in business
228
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The data that you have collected till now, either through
sampling or otherwise, is called raw data. Now this data can
be arranged in an array. For example, if you collected data
on electricity consumption for one day of 1000 households,
you would get an array with 1000 rows and two columns, 100
rows for the houses and the two columns for house numbers
and electricity consumption respectively. As it is very
difficult to draw inference from this raw data, we can process
this data so as to show the number of houses, which are using
electricity within a particular range, together. This table of
electricity consumption ranges and number of houses is
shown below:
Table 12.1 Frequency Distribution of Electricity
Consumption
Electricity Consumption (kilowatts)
Number of houses
0-9
10-19
20-29
30-39
10
40-49
20
50-59
35
60-69
50
70-79
70
80-89
100
90-99
130
100-109
130
110-119
100
120-129
70
130-139
50
140-149
35
150-159
20
160-169
10
170-179
180-189
190-199
229
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230
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ii)
iii) Ordinarily items with values less than the average cancel
out the items whose values are greater than the average.
The average of 4, 5, 6 is 5. The average 5 is less in value
and is more in value by one towards both the extremes.
Thus, the two deviations -1 and +1 cancel each other.
An average should be affected as little as possible by
sampling fluctuations, i.e., for different sample of same
population the variation in the average is very little. An
average should be capable of algebraic treatment so that it
can be used for further mathematical manipulation.
231
Notes
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Mathematical Averages:
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a) Arithmetic mean
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b) Geometric mean
ii)
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c) Harmonic average
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Positional Averages:
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a) Mode
b) Median
iii) Commercial Averages:
a) Moving average
b) Progressive average
c) Quadratic average
Mathematical averages are those which utilize mathematical
formula for the calculation of their values. Positional
averages do not use mathematical calculations but give you
an indication about the positional characteristics of certain
items. Commercial averages are the applications of averages
in commercial situations.
If so many varieties of averages are there, the question that
arises is which one to use. As we go ahead we would see that
each type has a specific application and should be used only
in that case.
Arithmetic Mean
Most of the time when we refer to the average we are talking
about arithmetic mean. This is true in cases like average
winter temperature in Delhi; average life of a flash light
battery, average working hours of an executive, etc. The
arithmetic mean (or simply mean) is the quantity obtained
by dividing the sum of the values of items (X) in a variable
by their number (n), i.e., number of items.
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232
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Here f stands for frequency of the class, x stands for midvalue of the class and n stands for total of all frequencies in
all classes.
Revised Table 12.1 is reproduced below as Table 12.2.
233
Notes
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Consumption
Electricity
Consumption
(kilowatts)
Mid-value (x)
0-9
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Number of
houses (f)
fx
10-19
15
45
20-29
25
125
30-39
35
10
350
40-49
45
20
900
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50-59
55
35
1925
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60-69
65
50
3250
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70-79
75
70
5250
80-89
85
100
8500
90-99
95
130
12350
100-109
105
130
13650
110-119
115
100
11500
120-129
125
70
8750
130-139
135
50
6750
140-149
145
35
5075
150-159
155
20
3100
160-169
165
10
1650
170-179
175
875
180-189
185
555
190-199
195
195
848
84800
Total Value
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234
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Merits
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Demerits
Here w1, w2, w3, stands for the respective weights of each
of the items.
Weighted averages have important applications in trend
analysis and forecasting. But it should be used when any of
the following conditions holds true:
i)
ii)
235
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236
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Merits
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It is reversible both ways and therefore, suitable for ratios and percentages
It is difficult to understand
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Demerits
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Mode
Mode is that value which has the maximum frequency (i.e.
occurs most often) in a given set of values. Thus the mode of
a set of data is simply the value that is repeated most often.
It is the most typical value and, therefore, the clearest
example of a measure of central tendency.
237
Notes
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8.30 8.25 8.35 8.29 8.31 8.30 8.32 8.31 8.31 8.31
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8.25 8.29 8.30 8.30 8.31 8.31 8.31 8.31 8.32 8.35
Here 8.31 occurs most frequently and is therefore the mode
of the given range.
You must be thinking that there usually be two items of
exactly the same size for a continuous variable, (if
measurements are made with sufficient precision), it is
apparent that our definition of the mode is somewhat vague.
For this we group the data and then use this simple equation:
C
Demerits
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238
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Merits
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Demerits
of mode
It is clearly and rigidly defined.
239
where,
L = Lower boundary of the median class
Notes
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N = Total frequency
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Moving Average
The moving average is an arithmetic average of data over a
period and is updated regularly by replacing the first item
in the average by the new item as it comes in. It is useful in
eliminating the irregularity of time series and is generally
computed to study the trend.
Suppose the prices for 12 months are given and a three
monthly average is to be computed. Then the first item in
the 3-month moving average would be the average [(a1+a2+a3)/
3], the second item would be the average of the next three
months [(a2+a3+a4)/3] and so on. The last item would be the
average [(a10+a11+a12)/3]. As the next month would come in
a10 would be dropped and a13 would be added in [(a11+a12+a13)/3]
and so on.
Progressive Average
Progressive average is also calculated with the help of simple
arithmetic mean. It is a cumulative average. In computation
of progressive average, figures of all previous years are added
and divided by the number of items. As the number of items
go up and reach a desired number, we switch to moving
average.
Quadratic Average
The quadratic mean or average is estimated by taking the
square root of the average squares of the items of a series.
240
Notes
Symbolically,
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Comparison
Average
Mean is a calculated average. Median and Mode are averages of positions. If all the items in a variable are the same,
then only AM=GM=HM otherwise AM > GM > HM
Calculation
Treatment
Items
All the items in a series are taken into account in the calculation of Mean. Median and Mode calculations do not consider all the items in a series.
Open-ended
distributions
Reliability
Mean is considered to be a more reliable measures of central tendency than Median and Mode.
Result
Use
241
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242
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2.
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3.
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Item number
Deviation from
mean
Absolute deviation
from mean
10
10
10
20
20
20
30
30
30
-10
-10
10
-20
-20
20
-30
-30
30
-25
-25
25
25
25
25
Total
170
243
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Item number
Deviation from
mean
Square of
Deviation
10
10
100
20
20
400
30
30
900
-10
-10
100
-20
-20
400
-30
-30
900
-25
-25
625
25
25
625
Total
4050
244
Notes
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When the mode is not clear or where there are two or three
modes, the following formula is used:
245
Notes
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Objectives
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246
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247
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248
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249
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250
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251
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252
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253
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254
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255
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256
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257
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[245 = 5a + 25b ] 5
1225 = 25a + 125b
= 8.5142
and
= 6.429
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258
Notes
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yc = 6.429+(8.5142) (8)
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= Rs 74.5426 million
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259
Notes
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Ho : b = 0
Ho : b > 0
or
B 0
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260
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III
261
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and
262
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=1.1977
If still interested, you may now construct the confidence
interval for the slope b. Finally
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= 7.11
__________________
yc Sd (t.0250)
Where Sd is the standard error for a certain yc value given
its corresponding x value.
This standard error is defined by
263
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=16.3464
the interval is
74.542 12.8650
or
(61.677, 87.407)
Remember that t is distributed with (n-m) or 3 degrees of
freedom and that, since an interval is involved with upper
and lower limits, the two-tailed MEV must be employed.
And now our final answer to the company: we tell the
controller that we are 95% certain that with an advertising
264
Notes
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Where
is the variance of the y values. But since these yvalues are part of a regression problem, n m degrees of
freedom apply. Therefore, in the case of the straight line,
m=2 previously discussed and
265
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Figure 13.4
266
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267
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coefficients, or r
__________________
This was simplified and in a form that uses totals rather than
deviations. The matter was discussed in the preceding
chapter, formula for the variance. Remember? Now let us
take one step back and show the formulae for b and b in
deviation form.
and
then
and
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268
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Variation
269
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2
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where
270
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Without
Stool
Rank
With
Rank
Without
d2
21
21
2.0
3.0
-1.0
1.00
24
23
7.0
0.0
0.5
0.25
28
27
10.0
10.0
0.0
0.00
22
24
4.5
8.0
-3.5
12.25
22
21
4.5
3.0
1.5
2.25
25
25
8.5
9.0
-0.5
0.25
21
20
2.0
1.0
1.0
1.00
21
23
2.0
6.5
-4.5
20.25
23
21
6.0
3.0
3.0
9.00
10
25
22
8.5
5.0
3.5
12.25
Cashier
Total
Therefore,
58.5
271
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272
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II
P .05
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III
Note that this t-value is exactly equal to the t-value that was
obtained before when testing the significance of b. Minor
rounding errors may be expected.
EOV > MEV or 7.11> 2.353 (one-tailed)
or 7.11> 3.182 (two-tailed)
The correlation coefficient is not zero.
There is a statistically significant correlation between
advertising expenditures and sales revenues.
The direct relationship between r and b was noted. Therefore
the equality of the t value for both r and b in Step 3 of the
algorithm does not come as a complete surprise. Obviously
if b is known to be significant, r is also significant and vice
versa. You notice that the significance test for r is much easier
to perform manually than the test for b. It may pay therefore
to test the significance of r if you want to find out the
significance of b. Similarly, as seen in the multiple
regression case many computer programs provide only
the significance for b. If you happen to be interested only
in a correlation analysis, run the regression equation
to obtain b, test its significance and you know whether the r
in which you are interested is significent or insignificent.
273
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274
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Decline
Growth
275
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276
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277
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278
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YEAR
Code for
an Even
Series X
1990
-9
1991
-7
1991
-4
2.2
-8.8
16
1992
-5
1992
-3
2.4
-7.2
1993
-3
1993
-2
3.0
-6.0
1994
-1
1994
-1
5.0
-5.0
1995
1995
6.8
1996
1996
8.1
8.1
1997
1997
9.0
18.0
1998
1998
9.5
28.5
1999
1999
9.9
39.6
16
Total
55.9
67.2
60
YEAR
Code for
an Odd
Series X
Dividend
payments
in Rs Y
XY
X2
= .
279
Notes
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Thus, we know that for 1995, x=1; and since we must use x=2
units for each year, the code value for 2001 would be x=13.
Once the y c value has been obtained, b is tested for
significance and the 95% confidence interval constructed as
previously shown.
Time series analysis is a long-term forecasting tool. Hence,
it addresses itself to the trend component T in our time
series equation TS = T + S. In the dividend forecast, b=1.120
was calculated which means that in the environment that is
reflected in the set, Smart increased the dividend payments
on an average by Rs 1.12 per year. Let us now turn out
attention to the seasonal variation component, that may be
present in a time series. A products seasonality is shown by
the regularly recurring increases or decreases in sales or
production that is caused by seasonal influences. In the case
of some products, their seasonality is quite apparent. As an
obvious example virtually all non-animal agricultural
commodities may be cited. Seasonality of other products may
be more difficult to detect. Take hogs in order to stay on the
farm. Are they seasonal? They are lusty breeders and could
not care less about seasonal influences. Yet, there is an
induced season by the corn harvest. If corn is plentiful and
cheap, farmers raise more hogs. This is known as the cornhog cycle. Or take automobiles, Indian manufacturers are
used to introduce major design or technological changes once
every generation. This season has now been shortened
somewhat. How about computers? There the season even has
a special name. It is called a generation and prior to increased
competitive pressures within the industry it used to be about
280
Notes
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seven years long. Our stock market investor knows that stock
trades on the Stock Exchanges are seasonal. The daily season
is V-shaped starting the trading with a relatively high
volume which tapers off toward the lunch hour to pick up
again in the afternoon. And so it goes with many other
products, not ordinarily thought of as being seasonal.
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Hour
Column (2)
(3)
(4)
(5)
Total
Variation
(TS)
Trend
Variation
(T)
Seasonal Seasonal
Variation Index
TS-T
(6)
(7)
(8)
(9)
(10)
7/2
7/3
7/6
7/7
Avg.
10-11
0.965
0.965
110.6
12.00 12.25
15.44
16.72
14.10
11-12
0.245
0.159
0.086
103.7
10.40 11.75
15.04
16.32
13.38
12-13
-0.885
0.318
-1.117
94.2
10.55 10.06
13-14
-1.555
0.477
-2.032
87.1
14-15
0.395
0.636
-0.241
15-16
0.835
0.795
0.040
Average
-0.383
12.95
15.44
12.25
9.46
12.05
15.24
11.58
101.1
11.02 11.55
14.82
16.73
13.53
103.3
11.58 12.25
15.38
16.69
13.97
600
10.85 11.22
14.28
16.19 13.135
9.55
281
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282
Notes
Table 13.5
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Day
Code
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x1
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7/1
7/5
7/6
7/7
Total
-3
-1
1
3
Average Hourly
Trading Volume
Per Day
y
xy
x2
10.85
11.22
14.28
16.19
52.54
-32.55
-11.22
14.28
48.57
19.08
9
1
1
9
20
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283
Notes
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284
Notes
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285
Setting
Notes
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as previously explained,
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Earnings
Per
Share
y
xy
x2
x 2y
x4
1993
-3
0.39
-1.17
3.51
81
1994
-2
0.54
-1.08
2.16
16
1995
-1
1.13
-1.13
1.13
1996
1.58
1997
1.72
1.72
1.72
1998
2.50
5.00
10.00
16
1999
1.84
5.52
16.56
81
Total
9.70
8.86
28
35.08
196
Then
Code
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286
Notes
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Therefore,
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and specifically,
287
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Total
Quarter Since
Initial
Navy
Contract
Code
Shipments
in Thousands
of Units
y
log y
x log y
x2
-5
0.30103
-1.50515
25
-3
0.60206
-1.80618
-1
0.954243 -0.954243
20
1.30103
1.30103
55
1.740363
5.221089
110
2.041393 10.206965
25
7.241149 12.463511
70
288
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The regression
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289
Notes
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Figure 8.16
290
Notes
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-1
-1
- 1)(
- 1)
-1
)
-1
-1)(
-1)
291
Code
Sales Units
Notes
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1995
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100
1996
160
1997
200
1998
230
1999
245
2000
250
1 = 260
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2 = 430
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3 = 495
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Then
and
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292
Notes
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293
+ 2 12
1-
13 23
Notes
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294
Notes
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295
Notes
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296
Notes
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Take
yc = a + b1 x1 + b2 x2
Where yc is sales revenue, b1 advertising expenditures and
b2 gender. In this equation yc and x1 are quantitative and x2
qualitative in nature. Now setting
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297
Sales
Rs lacs
Advertising
Rs lacs
Per cent
Allocated
x2
x3
30
2.8
13.8
40
4.2
55
Year
Time
Code
Notes
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x4
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1995
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12.2
1996
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5.0
15.0
1997
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50
5.5
16.0
1998
70
7.5
18.0
1999
Let us mention the caveat again: this data set lands us in the
dog house rather than on the fast-track because of its paucity.
But we are interested only in an illustration of the
procedures. Note that the dependent and three independent
variables are called y and x respectively and x variable are
numbered consecutively. This is for data input purposes. Thus
the multiple regression equation is
and you see how nice and easy life is for the quantitative
decision maker.
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298
Notes
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and
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299
Constant is Zero
Notes
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Click to insert a new worksheet in the current worklook and past the result starting at
cell A1 os the new worksheet. To name of new worksheet, type a name in the box.
__________________
New Workbook
__________________
Click to create a new workbook and past the results on a new worksheet in the new
workbook.
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Residuals
Select to include standardized residuals in the residuals output table.
Standardized Residuals
Select to include standardized residuals in the residuals output table.
Residual lots
Select to generate a chart for each independent variables versus the residual.
Line Fit plots
Select to generate a chart for predicted values versus the observed values.
Normal Probability Plots
Select to generate a chart that plots normal probability.
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300
Notes
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301
Notes
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302
Notes
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303
Notes
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304
Notes
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305
Notes
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YEAR
1999
1998
1997
1996
1995
1994
1993 1992
1991 1990
PER SHARE
19.0
17.5
20.7
28.4
27.4
23.9
21.1
16.1
8.5
11.1
DIVIDENDS
9.9
9.5
9.0
8.1
6.8
5.0
3.0
2.4
2.2
1.9
2.1
2.0
3.1
4.9
5.4
5.7
5.8
5.8
3.3
5.3
EARNINGS
__________________
PER SHARE
PRE-TAX
__________________
MARGIN
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306
Notes
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YEAR
1994
1995
1996
1997
1998
1999
2000
NYC
64.1
60.2
59.2
59.0
57.6
54.4
50.9
SUB
20.7
21.4
22.1
23.8
24.5
26.3
26.5
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Shown below are data sets that have been compiled by the
Reserve Bank of India and The Department of Commerce.
All amounts are in billions of rupees. Perform the following
analysis:
(1) Fit a modified exponential trend to Other Checkable
Deposits such as NOW accounts and predict the 2002
value. Compare this value to the actual one.
(2) Is there a significant difference in the Percent Cash
Purchases when comparing the first half of the series
against the second half?
(3) Predict Personal Consumption on the basis of Consumer
Credit in the amount of Rs 500 billion and test the
significance of the slope b.
(4) Predict Demand Deposits for 2002 by linear trend.
Year
Demand
Deposits
(Rs bn)
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
53.6
58.6
65.4
70.1
73.3
78.0
82.6
91.0
97.4
99.2
102.4
86.6
Other
Ccheckable
Extensions
(Rs bn)
0.4
0.5
0.6
0.8
0.9
1.6
3.2
4.8
7.8
17.7
27.4
74.4
Consumer
Personal
Credit
Consumption
Expenditures Purchases
(Rs bn)
(Rs bn)
187.1
215.8
240.8
269.0
269.4
280.7
318.2
373.5
424.2
465.8
449.3
477.2
634.1
692.6
767.0
834.3
914.1
1016.9
1127.9
1254.5
1416.6
1582.3
1751.0
1909.5
Percent
Cash
(Rs bn)
70.5%
68.8
68.6
67.8
70.5
72.4
71.8
70.2
70.1
70.6
74.3
74.1
307
Notes
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Q1
Q2
Q3
Q4
1981
10
14
16
1982
18
16
22
24
1983
20
30
27
35
What was the seasonal index adjusted for trend for each
quarter?
308
Notes
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Hours of Training
Units Produced
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309
Q2
Q3
Q4
1998
1999
10
2000
10
10
12
20
40
70 150 200
Notes
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310
Notes
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3-wheeler
20
40
60
30
20
70
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2-wheeler
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2000
1999 1998
1997
1996
1995
1994
1993
1992
1991
EARNINGS
PER SHARE
1.25
2.89
2.81
3.09
3.52
2.97
2.71
2.13
1.59
1.77
1.36
1.36
1.28
1.20
1.07
1.00
0.90
0.80
0.72
0.72
1.1
4.6
5.2
5.5
8.9
7.2
10.1
7.9
7.3
9.7
DIVIDENDS
PER SHARE
PRE-TAX
MARGIN%
311
Notes
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33865
04131
78302
22688
79034
01358
61724
98286
97086
21376
__________________
09356
09387
52825
93134
21731
93956
85324
68767
49490
11449
__________________
98243
37636
64825
43091
24906
13545
90172
31265
81457
93108
99052
61857
33938
86339
63531
77146
33252
81388
28302
18960
00713
24413
36920
03841
48047
04207
50930
84723
07400
81109
__________________
34819
80011
17751
03275
92511
70071
08183
72805
94618
46084
__________________
20611
34975
96712
32402
90182
94070
94711
94233
06619
34162
64972
86061
04685
53042
82685
45992
19829
45265
85589
83440
15857
73681
24790
20515
01232
25302
30785
95288
79341
54313
80276
67053
99022
36888
58643
96111
77292
03441
52856
95035
30548
51156
63914
64139
14596
35541
70324
20789
29139
66973
53530
79354
75099
89593
36449
66618
32346
37526
20084
52492
77012
18480
61852
82765
29602
10032
78925
71953
21661
95254
04304
40763
24847
07724
99223
77838
09547
47714
13302
17121
76953
39588
90708
67618
45671
19671
92674
22841
84231
59446
34479
85938
26363
12025
70315
58971
28991
35990
23542
74794
28421
16347
66638
25578
70404
67367
14730
37662
64669
16752
58160
17725
97075
99789
24304
63100
22123
83692
92997
58699
96701
73743
82979
69917
34993
36495
47023
48869
50611
61534
55600
61672
99136
73925
30250
12533
46280
03865
88049
13080
55850
38966
46303
37073
42347
36157
44357
52065
66913
06284
47089
83871
51231
32522
41543
22675
89316
38451
78694
01767
26035
86173
11115
22083
12083
43374
66542
23518
05372
33892
74920
35946
21149
70861
13235
02729
57485
23895
80607
11299
44498
00498
31354
39787
65919
61889
17690
10176
94138
95650
80045
71846
17840
23670
77769
84062
52850
20241
06073
20083
15828
95852
12124
95053
09924
91562
09419
27747
84732
81927
04100
75759
37926
70040
80884
48939
65228
60075
45056
56399
69257
48373
58911
78549
63693
43727
81058
53301
85945
54890
33915
26034
08166
59242
03881
88690
92298
48628
02698
94249
83497
62761
68609
85811
40695
08342
67386
63470
85643
68568
46466
15977
69989
90106
01432
59700
13163
56521
96687
41390
03573
87778
27696
35147
54639
20489
03688
72254
28402
98954
02046
44774
31500
30232
27434
14925
65901
34521
94104
54935
68736
12912
02579
34719
09568
21571
91111
81307
97866
76483
10817
35729
44825
67304
40180
51054
06745
35539
82764
44618
36715
32588
87768
70033
79187
69967
26494
01600
32800
03147
39125
18169
75335
47246
79137
87167
59804
25724
83782
55780
75285
49456
79438
45855
07117
62301
42452
12294
43591
83547
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312
Notes
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313
Notes
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314
Notes
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315
Notes
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z
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.0
0.0000
0.0040
0.0080
0.0120
0.0160
0.0199
0.0239
0.0279
0.0319
0.0359
0.1
0.0398
0.0438
0.0478
0.0517
0.0557
0.0596
0.0636
0.0675
0.0714
0.0753
0.2
0.0793
0.0832
0.0871
0.0910
0.0948
0.0987
0.1026
0.1064
0.1103
0.1141
0.3
0.1179
0.1217
0.1255
0.1293
0.1331
0.1368
0.1406
0.1443
0.1480
0.1517
0.4
0.1554
0.1591
0.1628
0.1664
0.1700
0.1736
0.1772
0.1808
0.1844
0.1879
0.5
0.1915
0.1950
0.1985
0.2019
0.2054
0.2088
0.2123
0.2157
0.2190
0.2224
0.6
0.2257
0.2291
0.2324
0.2357
0.2389
0.2422
0.2454
0.2486
0.2517
0.2549
0.7
0.2580
0.2611
0.2642
0.2673
0.2704
0.2734
0.2764
0.2794
0.2823
0.2852
0.8
0.2881
0.2910
0.2939
0.2967
0.2995
0.3023
0.3051
0.3078
0.3106
0.3133
0.9
0.3159
0.3186
0.3212
0.3238
0.3264
0.3289
0.3315
0.3340
0.3365
0.3389
1.0
0.3413
0.3438
0.3461
0.3485
0.3508
0.3531
0.3554
0.3577
0.3599
0.3621
1.1
0.3643
0.3665
0.3686
0.3708
0.3729
0.3749
0.3770
0.3790
0.3810
0.3830
1.2
0.3849
0.3869
0.3888
0.3907
0.3925
0.3944
0.3962
0.3980
0.3997
0.4015
1.3
0.4032
0.4049
0.4066
0.4082
0.4099
0.4115
0.4131
0.4147
0.4162
0.4177
1.4
0.4192
0.4207
0.4222
0.4236
0.4251
0.4265
0.4279
0.4292
0.4306
0.4319
1.5
0.4332
0.4345
0.4357
0.4370
0.4382
0.4394
0.4406
0.4418
0.4429
0.4441
1.6
0.4452
0.4463
0.4474
0.4484
0.4495
0.4505
0.4515
0.4525
0.4535
0.4545
1.7
0.4554
0.4564
0.4573
0.4582
0.4591
0.4599
0.4608
0.4616
0.4625
0.4633
1.8
0.4641
0.4649
0.4656
0.4664
0.4671
0.4678
0.4686
0.4693
0.4699
0.4706
1.9
0.4713
0.4719
0.4726
0.4732
0.4738
0.4744
0.4750
0.4756
0.4761
0.4767
2.0
0.4772
0.4778
0.4783
0.4788
0.4793
0.4798
0.4803
0.4808
0.4812
0.4817
2.1
0.4821
0.4826
0.4830
0.4834
0.4838
0.4842
0.4846
0.4850
0.4854
0.4857
2.2
0.4861
0.4864
0.4868
0.4871
0.4875
0.4878
0.4881
0.4884
0.4887
0.4890
2.3
0.4893
0.4896
0.4898
0.4901
0.4904
0.4906
0.4909
0.4911
0.4913
0.4916
2.4
0.4918
0.4920
0.4922
0.4925
0.4927
0.4929
0.4931
0.4932
0.4934
0.4936
2.5
0.4938
0.4940
0.4941
0.4943
0.4945
0.4946
0.4948
0.4949
0.4951
0.4952
2.6
0.4953
0.4955
0.4956
0.4957
0.4959
0.4960
0.4961
0.4962
0.4963
0.4964
2.7
0.4965
0.4966
0.4967
0.4968
0.4969
0.4970
0.4971
0.4972
0.4973
0.4974
2.8
0.4974
0.4975
0.4976
0.4977
0.4977
0.4978
0.4979
0.4979
0.4980
0.4981
2.9
0.4981
0.4982
0.4982
0.4983
0.4984
0.4984
0.4985
0.4985
0.4986
0.4986
3.0
0.4987
0.4987
0.4987
0.4988
0.4988
0.4989
0.4989
0.4989
0.4990
0.4990
0.09
To find the area under the curve between the mean and point 2.25 on the right, just look at value
under z of 2.2 and then 0.05 on the right. The value at the intersection of these two values is
0.4878. If we want to know the total are a under the curve to the left of this then we add this
value to 0.5 and if we want to know the area on the right we subtract it from 0.5. The method is
the same when the value of Z is negative. Therefore if Z = -2.25 then the value would be located
in the same way to get 0.4878 but the (-) sign would also come in to give you the value -0.4878.
The value to the left would still be found by adding 0.5 to it to give you 0.0228 and to the right
by subtracting it from 0.5 to give 0.9772.
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