Case Studies/Problems in Bussiness Statistics By Prof Girish Phatak

Q.1 The following data are scores on a management examination taken by a group of
22 people.
88, 56, 64, 45, 52, 76, 54, 79, 38, 98, 69, 77, 71, 45, 60, 78, 90, 81, 87, 44, 80, 41
Find the mean, mode, median, and the 20 th, 30 th, 60 th and 90 th percentiles for
these data.

Q.2 The daily price of Brent crude oil in dollars per barrel in summer 2017 was as
follows: 17.5, 17.6, 18.3, 17.9, 17.4, 16.9, 17.1, 17.1, 18.0, 17.2, 18.3, 17.8, 17.1,
18.3, 17.5, 17.4
Find the mean, variance and standard deviation, mode, median, Q1, Q3, IQR,
Range, Coefficient of variation

Q.3 The following data are indexed prices of gold and copper over a 10 year period.
Assume that the indexed values constitute a random sample from the population of
possible values. Compute Pearson product moment correlation coefficient. Test for
the existence of a linear correlation between the indexed prices of the two metals at
alpha=0.05.

Gold 76 62 70 59 52 53 53 56 57 56
Copper 80 68 73 63 65 68 65 63 65 66

Q.4 Find out the coefficient of correlation and covariance between time spent in retail
outlet and amount of purchase made.
Time spent in minutes Amount of purchase in Rs.
45 700
50 750
36 800
70 1000
30 500
25 600
58 750
90 1200
80 800
15 300
12 400

Test for the existence of a linear correlation between them at alpha=0.05.

Q.5 Fit a straight line trend using the method of Linear regression for the sales in
thousand rupees as given below.
Year Sales in Thousands of Rupees
2010 204
2011 230
2012 192
2013 250
2014 274
2015 290
2016 315

Determine the forecast for year 2017 and year 2018. Also determine coefficient of
correlation and coefficient of determination.
Also conduct F Test and t Test at Alpha=0.01

Q.6 The demand for colour TV sets has been rising rapidly, The following data indicates
past sales for last nine years. Fit a staight line to the data and forecast the demand
during year 2017 and year 2018

Demand for
Colour TV
Year Sets
2008 2500
2009 3500
2010 5000
2011 6500
2012 8500
2013 11500
2014 15000
2015 20500
2016 28500

Also determine coefficient of correlation and coefficient of determination. And

comment on the result. Also conduct F Test and t Test at Alpha=0.05
Q.7 Sujata, owner of a business unit is concerned about the sales behaviour of her
product. She realizes that there are many factors that might help explain sales but
believes that advertising and prices are major determinants. She has collected the
following data.
Sales ( Units Sold ) No. of Advertisements Price in Rs.
33 3 125
61 6 115
70 10 140
82 13 130
17 9 145
24 6 140
Calculate the regression equation to predict the sales from advertising and price. If no. of
advertisements is 14 and price is Rs. 132, what sales would you predict.
Also compute adjusted R2. Also conduct F Test and t Test at Alpha=0.05

Q.8 A device has three components and the device stop working if any one of the
components is nonfunctional. The reliabilities of the components are 0.96, 0.91
and 0.8. What is the probability that the device will work when needed ?

Q.9 We are interested in finding out probability of electric supply availability of given
point of time. Let us consider state electricity board, generator and inverter as
three available sources of supply of electricity. Probability of electric supply
available from state electricity board is 0.6, probability of electric supply
available from generator is 0.95 and probability of electric supply available from
inverter is 0.85. What is the probability electric supply is available at given point
of time ?

Q.10 The recent census study derives that 0.6 of all Indian household have ceiling fans.
29 % of all households have an exhaust fans. Suppose 0.13 of all Indian households
have both a ceiling fan and an exhaust fan. If ahousehold is randomly selected, what
is probability that the householdhas a ceiling fan or an exhaust fan? What is the
probability that thehousehold has neither a ceiling fan nor an exhaust fan? What
is the probability that the household does have a ceiling fan and does not have an
exhaust fan?
Q.11 A movement of Food and Health department found approximately 0.27 of all ready
to eat food products did not carry nutritional labeling, Whereas 83 % of bakery
products did not carry nutritional labeling. Ifthese two categories combined, 60%
would be ready to eat food and40% would be bakery products. A researcher is
blindly given a productfrom these two categories and is told that the product does
not havenutritional labeling, revise the probability that the product is a ready to eat
product.
Q.12 An economist believes that during periods of high economic growth, the U.S dollar
appreciates with probability 0.70; in periods of moderate economic growth, the
dollar appreciates with probability 0.40; during period of low economic growth, the
dollar appreciated with the probability 0.20. During any period of time, the
probability of high economic growth is 0.30 the probability of moderate economic
growth is 0.50, and the probability of low economic growth is 0.20. Suppose the
dollar has been appreciating during the present periods, What is the probability we
are experiencing a period of high economic growth. ?

Q.13 An advertisement for flurid claims a 40% end of treatment clinical success rate for
the treatment of influenza. 8 influenza patients are given flurid and are later checked to see
if treatment was successful. Let us assume that the claim is correct.
Find the probability that
1. Exact three patients are treated successfully
2. At the most five patients are treated successfully
3. Less than four patients are treated successfully
4. At least two patients are treated successfully
5. More than three patients are treated successfully
6. Between 3 and 5 ( Both 3 and 5 included )
7. Between 3 and 6 ( Both 3 and 6 excluded )

Q.14 The number breakdowns per week in machine shop follows Poisson distribution
Suppose there are on an average 5 break downs per week, what is the probability that
there are
1. Exact 8 breakdowns in a given week
2. Atleast 2 breakdowns in a given week
3. Atmost 2 breakdowns in a given week
4. Less than 3 breakdowns in a given week
5. More than 4 breakdowns in a given week
6. Between 3 and 6 breakdowns in a given week ( Both 3 and 6 included )
7. Between 3 and 7 breakdowns in a given week ( Both 3 and 7 excluded )
Q.15 At the beginning of the term, the amount of time a student waits in line at the campus
store is normally distributed with a mean of 5 minutes and a standard deviation of 2
minutes.
Let X = the amount of time, in minutes, that a student waits in line at the campus store at
the beginning of the term.
Because X ~ N(, ) then, X ~ N(5, 2) where the mean = 5 and the standard deviation
=2
Find the probability that one randomly chosen student waits in line at the campus store at
the beginning of the term.
1. More than 6 minutes
2. More than 3 minutes
3. Less than 3 minutes
4. Less than 6 minutes
5. Between 3 and 6 minutes
6. Between 3 and 4 minutes
7. Between 6 and 7 minutes

Q.16 The demand for unleaded gasoline at a service station is normally distributed with
mean 27,009 gallons per day and standard deviation 4,530. Find two values that
will give a symmetric 0.95 probability interval for the amount of unleaded gasoline
demanded daily.

Q.17 The Toyota Pirus uses both gasoline and electric power. Toyota claims its mileage
per gallon is 52. A random sample of 40 cars is taken and each sampled car is
tested for its fuel efficiency. Assuming that 52 miles per gallon is the population
mean and 2.4 miles per gallon is the population standard deviation, calculate the
probability that the sample mean will be between 51.4 and 53.

Q.18 Shimano mountain bikes are displayed in chic clothing boutiques in Milan, Italy
and the average price for the bike in the city is $700. Suppose that the standard
deviation of bike prices is $100. If a random sample of 60 boutiques is selected,
what is the probability that the average price for a Shimano mountain bike in this
sample will be between $680 and $720?

Q.19 A telephone company wants to estimate the average length of long distance calls
during weekends. A random sample of 50 calls gives a sample mean 14.5 minutes
and sample standard deviation 5.6 minutes. Give a 95% confidence interval and a
90% confidence interval for the average length of a long distance phone call during
weekends.

Q.20 Sonys new optical disk system prototype tested and claimed to be able to record an
average of 1.2 hours of high definition TV. Assume n=10 trials and s=0.2 hour.
Give a 90% confidence interval
Q.21 A transportation company wants to estimate the average length of time goods are
in transit across the country. A random sample of 20 shipments gives sample
mean 2.6 days and sample standard deviation 0.4 day. Give a 99% confidence
interval for the average transit time.

Q.22 An accountant wants to estimate the average amount of an account of a service

company. A random sample of 46 accounts yields a sample mean $16.50 and
sample standard deviation $2.20. Give a 95% confidence interval for the average
amount of an account.

Q.23 The engine of the Volvo model S70-T5, is stated to provide 246 horsepower. To test
this claim, believing it is too high, a competitor runs the engine n=60 times
randomly chosen, and gets a sample mean of 239 horse power and standard
deviation of 20 horse power. Conduct the test, using =0.01

Q.24 An investment services company claims that the average annual return on stocks
within a certain industry is 11.5%. An investor wants to test whether this claim is
true and collects a random sample of 50 stocks in the industry of interest. He finds
that the sample average annual return is 10.8%. and that the sample standard
deviation is 3.4%. Does the investor have enough evidence to reject the investment
companys claim? (Use = 0.05 )

Q.25 The average number of weeks that banner ads run at a web site is estimated to be
5.5. You want to check accuracy of this estimate. A sample of 50 ads reveals a
sample average of 5.1 weeks with a sample standard deviation of 2.3 weeks. State
the null and alternate hypotheses and carry out the test at the 0.05 level of
significance.

Q.26 Certain eggs are stated to have reduced cholesterol content, with an average of only
2.5% cholesterol. A concerned health group wants to test whether the claim is true.
The group believes that more cholesterol may be found, on the average in the eggs.
A random sample of 100 eggs reveals a sample average content of 3.2% cholesterol,
a sample standard deviation of 1.8%. Does the health group have cause for action
? Use alpha= 0.05
Q.27 A company claims that a cars filled with Nitrogen in their tyres can increase the
mileage of cars. The mileages in km per litre before filling nitrogen in their tyres after
filling nitrogen in their tyres are recorded as follows:
CAR Before filling Nitrogen After filling
Nitrogen
1 16.1 16.5
2 16.9 17.6
3 17.6 17.2
4 16.2 16.8
5 17.2 17.0
6 17.5 18.0
7 16.0 17.3

Is it correct to conclude at 1% level of significance that the mileage of cars has

increased significantly after filling the tyres with nitrogen.

Q.28 The following data are independent random samples of sales of the FIAT Palio
model made in joint venture of FIAT Motors and GM Motors. The data represent
sales at dealership before and after the announcement of the Palio model will no
longer be made in FIAT Motors. Sales numbers are monthly.
Before : 329, 234, 423, 328, 400, 399, 326, 452, 541, 680, 456, 220

After : 212, 630, 276, 112, 872, 788, 345, 544, 110, 129, 776, 240

Conduct hypothesis testing for equality of sales. Use level of significance 0.01

Q.29 Two 12 meter boats, the K boat and the L boat, are tested as possible contenders in
the Americas Cup races. The following data represent the time, in minutes to
complete a particular track in independent random trials of the two boats:

K boat: 12.0, 13.1, 11.8, 12.6, 14.0, 11.8, 12.7, 13.5, 12.4, 12.2, 11.6, 12.9

L boat: 11.8, 12.1, 12.0, 11.6, 11.8, 12.0, 11.9, 12.6, 11.4, 12.0, 12.2, 11.7

Test the null hypothesis that the two boats perform equally well. Is one boat faster,
on average, than the other? Assume equal population variances. Take = 0.05
Q.30 The senior vice president for marketing at Westin Hotels believes that the
companys recent advertising of the Westin Plaza in New York has increased the
average occupancy rate at the hotel by at least 5%. To test the hypothesis, a random
sample of daily occupancy rates ( in percentages ) before the advertising is
collected. A similar random sample of daily occupancy rates is collected after the
advertising took place. The data are as follows.

Before Advertising ( % ) After Advertising ( % )

86, 92, 83, 88, 79, 81, 90, 88, 94, 97, 99, 89, 93, 92,
76, 80, 91, 85, 89, 77, 91, 83 98, 89, 90, 97, 91, 87, 80, 88, 96

Assume normally distributed populations, of occupancy rates with equal population

variances. Test the vice presidents hypothesis. Take = 0.05.

Q.31 In the theory of Finance, a market for any asset or commodity is said to be efficient
if items of identical quality and other attributes are sold at the same price. A Geneva
based oil industry analyst wants to test the hypothesis that the spot market for crude
oil is efficient. The analyst chooses the Rotterdam oil market, and he selects
Arabian Light as the type of oil to be studied. A random sample of eight
observations from each of four sources of the spot price of a barrel of oil during
February is collected. Data in U.S. Dollars per barrel are as follows :

U.K. Mexico UAE Oman

17.80 18.01 18.10 18.05
18.00 17.75 17.92 18.01
17.98 18.00 18.01 17.94
18.20 17.77 17.88 18.23
18.00 18.01 18.30 18.20
17.99 18.01 18.22 18.00
18.10 18.12 18.56 17.84
17.90 18.20 18.10 18.11

Construct an ANOVA table. Based on these data, what should the analyst conclude
about whether the market for crude oil is efficient ? i.e. Is there any evidence of
differences in the average price per barrel of oil from the four sources? Take =
0.01
Q.32 Research has shown that in the fast paced world of electronics, the key factor that
separates the winners from losers is actually how slow a firm is in making decisions.
The most successful firms take longer to arrive at strategic decisions on product
development, adopting new technologies, or developing new products. The
following values are the number of months to arrive at a decision for firms ranked
high, medium, and low in terms of performance:
High Medium Low
3.5 3 1
4.8 5.5 2.5
3.0 6 2
6.5 4 1.5
7.5 4 1.5
8 4.5 6
2 6 3.8
6 2 4.5
5.5 9 0.5
6.5 4.5 2
7 5 3.5
9 2.5 1
5 7 2
10
6
Do an ANOVA. Can you say there is a difference in the length of time it takes to
make a decision? Use =0.05

Q.33 The company conducted tread wear tests on the tire to determine whether there is
a significant difference in tread wear if the average speed with which automobile
driven varies. Company uses 5 suppliers to provide tires. Analyze randomized
block design at alpha=0.01.

Supplier Slow speed Medium speed High speed

1 3.7 4.5 3.1
2 3.4 3.9 2.8
3 3.5 4.1 3.0
4 3.2 3.5 2.6
5 3.9 4.8 3.4
Q.34 A shoe retailer conducted a study to determine whether there is a difference in the
number of pairs of shoes sold per day by stores according to the number of
competitors within a 1-mile radius and the location of the store. The company
researches selected three types of stores for consideration of study: stand-alone
suburban stores, mall stores, and downtown stores. These stores vary in the
number of competing stores within a 1-mile radius, which have been reduced to
four categories: 0 competitors, 1 competitor, 2 competitor, and 3 or more
competitors. Suppose the following data represent the number of pairs of shoes
sold per day for each of these types of stores with the given numbers of
competitors. Use alpha=0.05 and a two-way ANOVA to analyze the data
No of No of No of No of
competitors competitors competitors competitors
0 1 2 3 or more
Stand- 41 38 59 47
Alone
30 31 48 40
45 39 51 39
Store Mall 25 29 44 43
Location
31 35 48 42
22 30 50 53
Downtown 18 22 29 24
29 17 28 27
33 25 26 32

Q.35 The following table describes the recent purchases of US stocks by individual or
institution as well as domestic or foreign. Is there evidence of a dependence of
institutional buying on whether the buyer is foreign or domestic? Use alpha=0.05
Domestic Foreign
Individual 25 32
Institution 30 13

Q.36 An article in the wall street journal reports a comparison between gold jewelry and
platinum jewelry by well known designers versus simply made. The following table
represents the results of random samples of sales of gold and platinum jewelry by
well known designers versus not made by designers. Test the null hypothesis that
the publics preference for the gold and platinum jewelry is the same or not the
jewelry is designed by well known designers. Use alpha=0.05

Gold Jewelry Platinum Jewelry

Well-known designer 76 108
Not by Designer 54 19
Q.37 A company is considering five possible names for its new product. Before
choosing a name, the firm decides to test whether all five names are equally
appealing. A random sample of 100 people is chosen, and each person is asked to
state her or his choice of the best name among the five possibilities. The numbers
of people who choose each one of the names are as follows

Product A B C D E
Name
Number of 4 12 34 40 10
Choices

Conduct the Chi square test. Use alpha= 0.05

Q.38 The following data are a random sample of consumers income and expenditure on
certain luxury items. Compute Spearman rank correlation coefficient and test for
the existence of population correlation.

Income($1000s/year) 48 39 65 80 73 60 52 120 100 60 53

LuxuryItem 10 50 120 225 90 60 55 340 170 25 80
spending( $ / month)

Q.39 Production task completion time for the 11 workers by using Method A and Method
B is given below.

Worker Method A Method B

1 10.2 9.5
2 9.6 9.8
3 9.2 8.8
4 10.6 10.1
5 9.9 10.3
6 10.2 9.3
7 10.6 10.5
8 10 10
9 11.2 10.6
10 10.7 10.2
11 10.6 9.8
Use Wilcoxon signed rank test for the significant difference between median
completion time for the two production methods. Use alpha= 0.05 and comment on the
results
Q.40 Bank account balances of randomly selected accounts of two different branches of
National Bank are shown below

Branch A Branch B
Account Balance in $ Account Balance in $
A1 1095 B1 885
A2 955 B2 850
A3 1200 B3 915
A4 1195 B4 950
A5 925 B5 800
A6 950 B6 750
A7 805 B7 865
A8 945 B8 1000
A9 875 B9 1050
A10 1055 B10 935
A11 1025
A12 975

Use Mann Whitney Wilcoxon (MVW) test for the significant difference
between median Account balance for the two branches. Use alpha= 0.05 and comment on
the results