DECSCI2

Business Case # 1
Tests of Hypotheses
GENERAL DIRECTIONS: Provide your answers in typewritten format printed in short bond
papers, using font style Times New Roman, font size 12, and 1.5 line-spacing. Use PHStat2 to
answer the following questions and be able to provide outputs to support your answers
PAR, INC.
Par, Inc. is a major manufacturer of golf equipment. Management believes that Pars
market share could be increased with the introduction of a cut-resistant, longer-lasting golf ball.
Therefore, the research group at Par has been investigating a new golf ball coating designed to
resist cuts and provide a more durable ball.
One of the researchers voiced concern about the effect of the new coating on driving
distances. Par, Inc. would like the new cut-resistant ball to offer driving distances comparable to
those of the current-model golf ball. To compare the driving distances for the two balls, 40 balls
of both the new and current models were subjected to distance tests. The testing was performed
with a mechanical hitting machine so that any difference between the mean distances for the two
models could be attributed to a difference in the two models. The results of the tests, with
distances measured to the nearest yard, are given in the Golf.xlsx file.
MANAGERIAL REPORT:
1.) Formulate and present the rationale for a hypothesis test that Par, Inc. could use to compare
the driving distances of the current and new golf balls.
2.) Provide descriptive statistical summaries of the data for each model.
3.) Analyze the data to provide the hypothesis testing conclusion. Use a 5% level of significance.
What is the p-value for your test? What is your recommendation for Par, Inc.?
SUBMISSION DEADLINE: October 7, 2015 (C35); October 8, 2015 (C34)

Business Case Par, Inc.

In the given problem, Par, Inc. would like their new model golf balls driving distance to be
comparable or very similar to the current-model golf ball. So in order to test this, the null and
alternative hypotheses must be the following:
Ho: 1 - 2 = 0
Ha: 1 - 2 0
This is if we let 1 = be the mean driving distance of the current-model golf ball, while 2 = be
the mean driving distance of the new model golf ball.
In the problem it also says that they tested 40 of the old and new model golf balls, meaning this
are independent samples, with the significance level = 5% ( = 0.05). Moreover, to test the
hypotheses, we must use the two-tailed test, since we used the null hypotheses is equal to zero.
The problem did not state whether we should assume equal population variances or not, but since
the sample standard deviation are of the same magnitude and they have the same number of
sample size, we should assume equal population variances. After all of this assumption, the type
of test statistic we should use is the pooled t-test. The formula of this test statistic is as follows:
t=

( X 1X 2 ) X 0
S 2p

1
1
+
n1
n2

2
p

and S =

( n1 1 ) S 21+( n21 ) S 22
n1+ n22

The critical value approach tells us to reject the null hypothesis in favor of the alternative
hypothesis if: tstat -t/2,n1+n22 = -t0.025,78 = -t1.9908
Or if tstat t/2,n1+n22 = t0.025,78 = t1.9908
In the sample data given, we were able to derive the following:
Sample mean

Population 1 = Current Model

X1
270.275 yards =

Population 2 = New model

X2
267.5 yards =

Sample standard deviation

8.7529848
9.8969045
The two population used the same number of sample size, which is 40 golf balls.
After using PHStat to solve the problem, we were able to get the following answers:

Pooled-Variance t Test for the Difference Between Two Means

(assumes equal population variances)
Data
Hypothesized Difference
Level of Significance
Population 1 Sample
Sample Size
Sample Mean
Sample Standard Deviation
Population 2 Sample
Sample Size
Sample Mean
Sample Standard Deviation
Intermediate Calculations
Population 1 Sample Degrees of Freedom
Population 2 Sample Degrees of Freedom
Total Degrees of Freedom
Pooled Variance
Standard Error
Difference in Sample Means
t Test Statistic

0
0.05
40
270.275
8.7529848
40
267.5
9.8969045

39
39
78
87.2817
2.0890
2.7750
1.3284

Two-Tail Test
Lower Critical Value
Upper Critical Value
p-Value
Do not reject the null hypothesis

-1.9908
1.9908
0.1879

To summarize the results, we do not reject the null hypothesis. Since we were able to derive
tstat = 1.3284, 1.3284 is not less than -1.9908, or greater than 1.9908. Therefore we do not reject
the null hypothesis.
Not surprisingly, the decision is also the same using the p-value approach, which is reject null
hypothesis if p = 0.05. Therefore, because p = 0.1879 is not less than = 0.05, we do not
reject the null hypothesis. There is sufficient evidence at the = 0.05 level to conclude that the
average driving distance of the old model golf ball is comparable to the average driving distance
of the new-model golf ball.

After the conclusion, my recommendation for Par, Inc. is to continue making a new model-golf
ball with a coating designed to resist cuts and a more durable ball. Since after the test we were
able to find out that the driving distance of the new-model golf ball is still comparable to the old
model golf ball. Furthermore, it is believed that the market share of the company could be
increased with the introduction of the new golf balls.