STATISTICS FOR

MANAGEMENT
Hypothesis Testing One Sample
Tests
GOALS
2
Define hypothesis and hypothesis testing
Describe the five-step hypothesis-testing procedure
Distinguish between a one-tailed and a two-tailed
test of hypothesis
Conduct a test of hypothesis about a population
mean
Conduct a test of hypothesis about a population
proportion
Define Type I and Type II errors
Compute the probability of a Type II error

Illustration
Roofing contract for a new sports complex in San
Francisco has been awarded to Parkhill Associates.
Building specifications call for a movable roof covered
by approximately 10,000 sheets of 0.04 inch thick
aluminum. Aluminum sheets cannot be thicker than 0.04
inch because the structure could not support additional
weight, nor can the sheets be thinner than 0.04 inch
because the strength of the rood would be inadequate.
Because of these restrictions Parkhill carefully checks
the sheets from its supplier. Parkhill does not want to
measure each sheet, so it randomly samples 100. Sheets
in the sample have mean thickness of 0.0408 inch. From
past experience with this supplier, Parkhill believes that
these sheets come from a thickness population with a
standard deviation of 0.004 inch. On this basis decide
whether Parkhill must decide whether the 10000 sheets
meet specifications or not?
What is a Hypothesis?
4
A Hypothesis is a statement about the value
of a population parameter developed for the
purpose of testing
Examples of hypotheses made about a
population parameter are:
The mean monthly income for systems
analysts is $3,625
Twenty percent of all customers at Ohris,
Banjara return for another meal within a
month


What is Hypothesis Testing?
5
Hypothesis testing is a procedure, based
on sample evidence and probability
theory, used to determine whether the
hypothesis is a reasonable statement and
should not be rejected, or is unreasonable
and should be rejected
Hypothesis Testing Steps
6
Important Things to Remember about H
0

and H
1
7
H
0
: null hypothesis and H
1
: alternate hypothesis
H
0
and H
1
are mutually exclusive and collectively
exhaustive
H
0
is always presumed to be true
H
1
has the burden of proof
A random sample (n) is used to reject H
0

If we conclude 'do not reject H
0
', this does not
necessarily mean that the null hypothesis is true, it only
suggests that there is not sufficient evidence to reject
H
0
; rejecting the null hypothesis then, suggests that the
alternative hypothesis may be true
Equality is always part of H
0
(e.g. = , , )
< and > always part of H
1

Contd
In actual practice, the status quo is set up as H
0
If the claim is boastful the claim is set up as H
1

(we apply the Missouri rule show me).
Remember, H
1
has the burden of proof
In problem solving, look for key words and
convert them into symbols. Some key words
include: improved, better than, as effective as,
different from, has changed, etc.


8
Terminology
Null Hypothesis: assumption which we wish to test and
whose validity is tested for possible rejection on the
basis of sample information
Asserts that there is no significant difference between the
sample statistic & population parameter and the difference if
any, is due to chance and has arisen out of sampling
fluctuations
Denoted by H
0
Acceptance: Implies we have no evidence to believe otherwise
and indicates that the difference is not significant and is due to
sampling fluctuations
Rejection: Implies that the it is false and indicates that the
difference is significant
Example: Average age of PGDM student is 22yrs
H
0
: = 22

Alternative Hypothesis: Differs from Null hypothesis. It is not tested
It is denoted by H
1
Acceptance: depends on the rejection of the null hypothesis
Rejection: depends on the acceptance of the null hypothesis
Example: For previous example given it could be:
H
1
: 24yrs, H
1
: > 24yrs, H
1
: < 24yrs

Note: - H0 and H1 are mutually exclusive i.e., both cannot hold
good simultaneously

Level of Significance: is the maximum probability of rejecting the
null hypothesis when it is true. (OR) Percentage of sample means
that is outside certain limits
Usually expressed as % and denoted by (Alpha)
Example: 5% level of significance implies that there are about 5 chances in
100 of rejecting the H
0
when it is true or we are 95% confident that we will
make a correct decision
Contd
Alternative Hypothesis: Differs from Null hypothesis. It is not tested
It is denoted by H
1
Acceptance: depends on the rejection of the null hypothesis
Rejection: depends on the acceptance of the null hypothesis
Example: For previous example given it could be:
H
1
: 24yrs, H
1
: > 24yrs, H
1
: < 24yrs

Note: - H0 and H1 are mutually exclusive i.e., both cannot hold
good simultaneously

Level of Significance: is the maximum probability of rejecting the
null hypothesis when it is true. (OR) Percentage of sample means
that is outside certain limits
Usually expressed as % and denoted by (Alpha)
Example: 5% level of significance implies that there are about 5 chances in
100 of rejecting the H
0
when it is true or we are 95% confident that we will
make a correct decision
Contd
Critical Region or Rejection Region: Critical region is
the region which corresponds to a pre-determined level
of significance
Set of values of the test statistic which leads to rejection of
the null hypothesis is called region of rejection or critical
region of test
The set of values of the test statistic which leads to
acceptance of the null hypothesis is called region of
acceptance

Critical value is the value of statistic which separates
the critical region from the acceptance region

Size of Critical region Probability of rejecting a true
null hypothesis
Contd
Area under Normal Curve: Critical region may be
represented by a portion of the area under the normal
curve in 2 ways:

By 2 tails (or 2 sides) Test of hypothesis which are
based on the critical region represented by both tails
under the normal curve are called Two-Tailed Tests.
Example: - A manufacturer of light bulbs wants to
produce bulbs with a mean life of =
H0
=
1000hrs. If the lifetime of the bulbs is longer, he will
have a very high production cost and if it is short he
will loose customers. So H
0
: = 1000; and H
1
:
1000.

Contd
By 1 tail (or 1 side) - Test of hypothesis which are
based on the critical region represented by one tail
(on right or left hand side) only under the normal
curve are called One-Tailed Tests.
Example 1: Wholesaler buys bulbs in large lots
and does not want to accept unless their mean life
is at least 1000hrs. So H
0
: = 1000; and H
1
: <
1000 (Left-tailed test or Lower tailed test).
Example 2: A sales manager has asked her
salespeople to observe a limit on traveling
expenses. Manager hopes to keep expenses to an
average of $100 per salesperson per day. So H
0
:
= $100; and H
1
: > $100 (Right tailed test or
Upper tailed test).

Contd
Type I and Type II errors: Decision to accept/ reject null
hypothesis H
0
made on the basis of information supplied by
sample data
There are 2 types of error in the test of hypothesis
1. Type I Error: Committed by the test in rejecting a true null
hypothesis. Probability of committing type I error is
denoted by , the significance level
2. Type II Error: Committed by the test in accepting a false
null hypothesis. Probability of committing type II error is
denoted by


True Situation Statistical Decision of the test
H
0
is True H
0
is False
H
0
is True
Correct Decision Type I Error
H
0
is False
Type II Error Correct Decision
Contd
Distribution in Hypothesis Testing
16
One-tail vs. Two-tail Test
17
Hypothesis Setups for Testing a Mean ()
18
Hypothesis Setups for Testing a
Proportion (t)
19
Testing for a Population Mean with a
Known Population Standard Deviation- Example 1
Jamestown Steel Company
manufactures and assembles
desks and other office equipment
at several plants in western New
York State. The weekly
production of the Model A325
desk at the Fredonia Plant follows
the normal probability distribution
with a mean of 200 and a
standard deviation of 16.
Recently, because of market
expansion, new production
methods have been introduced
and new employees hired. The
vice president of manufacturing
would like to investigate whether
there has been a change in the
weekly production of the Model
A325 desk at 1% confidence level

Step 1: State the null hypothesis and the
alternate hypothesis
H
0
: = 200
H
1
: 200
(note: keyword in the problem has changed)

Step 2: Select the level of significance
= 0.01 as stated in the problem

Step 3: Select the test statistic
Use Z-distribution since is known

21
Contd
Step 4: Formulate the decision rule
Reject H
0
if |Z| > Z
o/2


58 . 2 not is 55 . 1
50 / 16
200 5 . 203
/
2 / 01 .
2 /
2 /
>
>

>

>
Z
Z
n
X
Z Z
o
o
o

Step 5: Make a decision and interpret the result

Because 1.55 does not fall in the rejection region, H
0
is not rejected
We conclude that the population mean is not different from 200. So we
would report to the vice president of manufacturing that the sample
evidence does not show that the production rate at the Fredonia Plant
has changed from 200 per week
Contd
Left-tail or Right-tail Test?
Keywords
Inequali
ty
Symbol
Part
of:
Larger (or more) than > H
1

Smaller (or less) < H
1

No more than s H
0

At least H
0

Has increased > H
1

Is there difference? H
1

Has not changed = H
0

Has improved, is
better than. is
more effective
See
right
H
1

23
The direction of the test
involving claims that use the
words has improved, is better
than, and the like will depend
upon the variable being
measured.
For instance, if the variable
involves time for a certain
medication to take effect, the
words better improve or more
effective are translated as <
(less than, i.e. faster relief).
On the other hand, if the
variable refers to a test score,
then the words better
improve or more effective are
translated as > (greater than,
i.e. higher test scores)
A manufacturer supplies the rear axles for U. S. Postal Service
mail trucks. These axles must be able to withstand 80,000
pounds per square inch in stress tests, but an excessively strong
axle raises production costs significantly. Long experience
indicates that the standard deviation of the strength of its axles
is 4,000 pounds per square inch. The manufacturer selects a
sample of 100 axles from production, tests them, and finds that
the mean stress capacity of the sample is 79,600 pounds per
square inch.

If the axle manufacturer uses a significance level of 0.05 in
testing, will the axles meet his stress requirements?
Testing for a Population Mean with a
Known Population Standard Deviation- Example 2
Interpretation
Given = 80000psi, = 4000psi, n = 100, x =
79600
= 0.05
Obviously the sample mean lies within the acceptance
region
The manufacturer should accept the null hypothesis
because there is no significant difference between the
hypothesized mean and the observed mean of the
sample axles

The manufacturer should accept the production
run as meeting the stress requirements
Testing for a Population Mean with a Known
Population Standard Deviation- Another Example 3
26
Suppose in the previous problem the vice president
wants to know whether there has been an increase in
the number of units assembled. To put it another way,
can we conclude, because of the improved production
methods, that the mean number of desks assembled in
the last 50 weeks was more than 200?

Recall: =16, n=200, =.01

Step 1: State the null hypothesis and the alternate
hypothesis
H
0
: 200
H
1
: > 200
(note: keyword in the problem an increase)
Step 2: Select the level of significance
= 0.01 as stated in the problem
Step 3: Select the test statistic
Use Z-distribution since is known
Step 4: Formulate the decision rule
Reject H
0
if Z > Z
o


27
Contd
28
Step 5: Make a decision and interpret the result

Because 1.55 does not fall in the rejection region, H
0
is not
rejected. We conclude that the average number of desks
assembled in the last 50 weeks is not more than 200
Contd
A hospital uses large quantities of packaged doses of a particular
drug. The individual dose of this drug is 100cc. the action of the
drug is such that the body will harmlessly pass off excessive
doses. On the other hand, insufficient doses do not produce the
desired medical effect, and they interfere with patient
treatment. The hospital has purchased this drug from the same
manufacturer for a number of years and knows that the
population standard deviation is 2cc. The hospital inspects 50
doses of this drug at random from a very large shipment and
finds the mean of these doses to be 99.75cc.

If the hospital sets a 0.10 significance level and asks us whether
the dosages in this shipment are too small, how can we find the
answer?
Testing for a Population Mean with a Known
Population Standard Deviation- Another Example 4
Interpretation
The hospital should accept the null hypothesis because
the observed mean of the sample is not significantly
lower than our hypothesized mean.

The hospital should conclude that the doses in the
shipment are sufficient

p-Value in Hypothesis Testing
31
p-VALUE is the probability of observing a sample value
as extreme as, or more extreme than, the value
observed, given that the null hypothesis is true
P-value is the probability of getting evidence that is
equally or more unfavorable to H
0

In testing a hypothesis, we can also compare the p-
value to with the significance level (o)
If the p-value < significance level, H
0
is rejected, else
H
0
is not rejected

P-value not only results in a decision regarding H
0
,
but it gives us additional insight into the strength of
the decision

p-Value in Hypothesis Testing Example
1
32
Recall the last problem where
the hypothesis and decision
rules were set up as:
H
0
: 200
H
1
: > 200
Reject H
0
if Z > Z
o
where Z = 1.55 and Z
o
=2.33

Reject H
0
if p-value < o

0.0606 is not < 0.01

Conclude: Fail to reject H
0



What does it mean when p-value < o?
33
(a) .10, we have some evidence that H
0
is not true.

(b) .05, we have strong evidence that H
0
is not true.

(c) .01, we have very strong evidence that H
0
is not
true.

(d) .001, we have extremely strong evidence that H
0
is
not true.

Testing for the Population Mean: Population Standard
Deviation Unknown
34
When the population standard deviation () is
unknown, the sample standard deviation (s) is used in
its place
The t-distribution is used as test statistic, which is
computed using the formula:
Testing for the Population Mean: Population Standard
Deviation Unknown Example 1
The McFarland Insurance Company Claims Department
reports the mean cost to process a claim is $60. An industry
comparison showed this amount to be larger than most other
insurance companies, so the company instituted cost-cutting
measures. To evaluate the effect of the cost-cutting measures,
the Supervisor of the Claims Department selected a random
sample of 26 claims processed last month. The sample
information is reported below.

At the .01 significance level is it reasonable a claim is now less
than $60?
35
Step 1: State the null hypothesis and the alternate
hypothesis
H
0
: $60
H
1
: < $60
(note: keyword in the problem now less than)

Step 2: Select the level of significance
= 0.01 as stated in the problem

Step 3: Select the test statistic
Use t-distribution since is unknown

Step 4: Formulate the decision rule
Reject H
0
if t < -t
o,n-1



36
Contd
t-Distribution Table (portion)
37
38
Step 5: Make a decision and interpret the result

Because -1.818 does not fall in the rejection region, H
0
is not rejected
at the .01 significance level. We have not demonstrated that the cost-
cutting measures reduced the mean cost per claim to less than $60.
The difference of $3.58 ($56.42 - $60) between the sample mean and
the population mean could be due to sampling error
Contd
Testing for a Population Mean with an Unknown
Population Standard Deviation- Example 2
39
The current rate for producing 5 amp fuses at Neary Electric
Co. is 250 per hour. A new machine has been purchased
and installed that, according to the supplier, will increase
the production rate. A sample of 10 randomly selected
hours from last month revealed the mean hourly
production on the new machine was 256 units, with a
sample standard deviation of 6 per hour.

At the .05 significance level can Neary conclude that the
new machine is faster?

40
Step 1: State the null and the alternate hypothesis
H
0
: 250; H
1
: > 250

Step 2: Select the level of significance
It is .05.

Step 3: Find a test statistic. Use the t distribution because
the population standard deviation is not known and the
sample size is less than 30

Contd
41
Step 4: State the decision rule
There are 10 1 = 9 degrees of freedom. The null
hypothesis is rejected if t > 1.833





Step 5: Make a decision and interpret the results
The null hypothesis is rejected. The mean number
produced is more than 250 per hour


162 . 3
10 6
250 256
=

=
n s
X
t

Contd
A personnel specialist of a major corporation is recruiting a
large number of employees for an overseas assignment.
During the testing process, management asks how things
are going, and she replies, Fine. I think the average score
on the aptitude test will be around 90. When
management reviews 20 of the test results compiled, it
finds that the mean score is 84, and the standard
deviation of this score is 11.

If management wants to test her hypothesis at the 0.10
level of significance, what is the procedure?
Testing for a Population Mean with an Unknown
Population Standard Deviation- Example 3
The sample mean falls outside the acceptance region

Management should reject the null hypothesis, that is, the
personnel specialists assertion that the mean score of the
employees being tested is 90
Contd
Tests Concerning Proportion
44
A Proportion is the fraction or percentage that indicates
the part of the population or sample having a particular
trait of interest.
The sample proportion is denoted by p and is found by
x/n
The test statistic is computed as follows:
Assumptions in Testing a Population Proportion
using the z-Distribution
45
A random sample is chosen from the population
It is assumed that the binomial assumptions are met:
(1) the sample data collected are the result of
counts
(2) the outcome of an experiment is classified into
one of
two mutually exclusive categoriesa success
or a
failure
(3) the probability of a success is the same for each
trial
(4) the trials are independent
The test we will conduct shortly is appropriate when both
nt and n(1- t ) are at least 5
When the above conditions are met, the normal
distribution can be used as an approximation to the
binomial distribution

Test Statistic for Testing a Single Population
Proportion
46
n
p
z
) 1 ( t t
t

=
Sample proportion
Hypothesized
population proportion
Sample size
Test Statistic for Testing a Single Population Proportion
Example 1
47
Suppose prior elections in a certain state indicated it is
necessary for a candidate for governor to receive at
least 80 percent of the vote in the northern section of
the state to be elected. The incumbent governor is
interested in assessing his chances of returning to office
and plans to conduct a survey of 2,000 registered
voters in the northern section of the state.

Using the hypothesis-testing procedure, assess the
governors chances of reelection.

48
Step 1: State the null hypothesis and the alternate hypothesis
H
0
: t .80
H
1
: t < .80
(note: keyword in the problem at least)

Step 2: Select the level of significance
= 0.01 as stated in the problem

Step 3: Select the test statistic
Use Z-distribution since the assumptions are met and nt and
n(1-t) 5

Step 4: Formulate the decision rule
Reject H
0
if Z <-Z
o













Contd
49
Step 5: Make a decision and interpret the result

The computed value of z (2.80) is in the rejection region, so the null
hypothesis is rejected at the .05 level. The difference of 2.5 percentage
points between the sample percent (77.5 percent) and the hypothesized
population percent (80) is statistically significant. The evidence at this
point does not support the claim that the incumbent governor will
return to the governors mansion for another four years
Contd
Type II Error
50
Recall Type I Error, the level of significance,
denoted by the Greek letter o, is defined as
the probability of rejecting the null hypothesis
when it is actually true

Type II Error, denoted by the Greek letter ,is defined
as the probability of accepting the null hypothesis
when it is actually false

Type II Error - Example
51
A manufacturer purchases steel bars to make cotter
pins. Past experience indicates that the mean tensile
strength of all incoming shipments is 10,000 psi and
that the standard deviation, is 400 psi. In order to
make a decision about incoming shipments of steel
bars, the manufacturer set up this rule for the
quality-control inspector to follow: Take a sample
of 100 steel bars.
At the .05 significance level if the sample mean
strength falls between 9,922 psi and 10,078 psi,
accept the lot. Otherwise the lot is to be rejected.

Type I and Type II Errors Illustrated
52
Type II Error Computed
53
Type II Errors For Varying Mean Levels
54

STATISTICS FOR
MANAGEMENT
Hypothesis Testing Two Sample
Tests
Illustration
A manufacturer of personal computers has a large
number of employees from the local Spanish-
speaking community. To improve the productivity of
its workforce, it wants to increase the sensitivity of
its managers to the needs of the ethnic group. It
started by scheduling several informal question-and-
answer sessions with leaders of the Spanish-
speaking community. Later, it designed a program
involving formal classroom contact between its
managers and professional psychologists and
sociologists. The newer program is much more
expensive, and the company president wants to
know whether this expenditure has resulted in
greater sensitivity
GOALS
Conduct a test of a hypothesis about the difference
between two independent population means

Conduct a test of a hypothesis about the difference
between two population proportions

Conduct a test of a hypothesis about the mean
difference between paired or dependent
observations

Understand the difference between dependent and
independent samples
Comparing two populations Some Examples
Is there a difference in the mean value of residential real
estate sold by male agents and female agents in south
Florida?
Is there a difference in the mean number of defects
produced on the day and the afternoon shifts at Kimble
Products?
Is there a difference in the mean number of days absent
between young workers (under 21 years of age) and
older workers (more than 60 years of age) in the fast-
food industry?
Is there is a difference in the proportion of Ohio State
University graduates and University of Cincinnati
graduates who pass the state Certified Public
Accountant Examination on their first attempt?
Is there an increase in the production rate if music is
piped into the production area?
Hypothesis testing for differences between means:
Large Sample Sizes
A manpower-development statistician is asked to
determine whether the hourly wages of semiskilled
workers are the same in 2 cities. Suppose the
company wants to test the hypothesis at the 0.05
level
Data from a
sample
survey of
Hourly
wages
City Mean hourly
earnings from
sample
Standard
Deviation of
sample
Size of
sample
Apex $8.95 $.40 200
Eden 9.10 .60 175
Interpretation
The standardized difference between the 2 sample
means lies outside the acceptance region
Reject the null hypothesis of no difference between
population means

The average semiskilled wages in these 2 cities
differ
Comparing Two Population Means
No assumptions about the shape of the populations
are required
The samples are from independent populations
The formula for computing the value of z is:


2
2
2
1
2
1
2 1
2 1
known are and if or
30 sizes sample if Use
n n
X X
z
o o
o o
+

=
>
2
2
2
1
2
1
2 1
2 1
unknown are and if and
30 sizes sample if Use
n
s
n
s
X X
z
+

=
>
o o
63
Illustration 1
The U-Scan facility was recently installed at the Byrne Road
Food-Town location. The store manager would like to know
if the mean checkout time using the standard checkout
method is longer than using the U-Scan. She gathered the
following sample information. The time is measured from
when the customer enters the line until their bags are in the
cart. Hence the time includes both waiting in line and
checking out.

Contd
Step 1: State the null and alternate hypotheses
H
0
:
S

U



H
1
:
S
>
U

Step 2: State the level of significance
The .01 significance level is stated in the problem

Step 3: Find the appropriate test statistic
Because both samples are more than 30, we can
use z-
distribution as the test statistic
Step 4: State the decision rule
Reject H
0
if Z > Z
o

Z > 2.33

Contd
Step 5: Compute the value of z and make a decision
13 . 3
064 . 0
2 . 0
100
30 . 0
50
40 . 0
3 . 5 5 . 5
2 2
2 2
= =
+

=
+

=
u
u
s
s
u s
n n
X X
z
o o
The computed value of 3.13 is larger than the
critical value of 2.33. Our decision is to reject
the null hypothesis. The difference of .20
minutes between the mean checkout time
using the standard method is too large to have
occurred by chance

We conclude the U-Scan method is faster
Contd
Two-Sample Tests about Proportions - Examples
The vice president of human resources wishes to know
whether there is a difference in the proportion of hourly
employees who miss more than 5 days of work per year at
the Atlanta and the Houston plants

General Motors is considering a new design for the Pontiac
Grand Am. The design is shown to a group of potential
buyers under 30 years of age and another group over 60
years of age. Pontiac wishes to know whether there is a
difference in the proportion of the two groups who like the
new design

A consultant to the airline industry is investigating the fear of
flying among adults. Specifically, the company wishes to
know whether there is a difference in the proportion of men
versus women who are fearful of flying
Two Sample Tests of Proportions
We investigate whether two samples came from populations
with an equal proportion of successes

The two samples are pooled using the following formula

69
The value of the test statistic is computed from the
following formula

Contd

Manelli Perfume Company recently developed a new fragrance
that it plans to market under the name Heavenly. A number of
market studies indicate that Heavenly has very good market
potential. The Sales Department at Manelli is particularly
interested in whether there is a difference in the proportions of
younger and older women who would purchase Heavenly if it
were marketed. There are two independent populations, a
population consisting of the younger women and a population
consisting of the older women. Each sampled woman will be
asked to smell Heavenly and indicate whether she likes the
fragrance well enough to purchase a bottle.
Two Sample Tests of Proportions Example 1
Step 1: State the null and alternate hypotheses.
H
0
: t
1
= t
2



H
1
: t
1
t
2

Step 2: State the level of significance.
The .05 significance level is stated in the problem.

Step 3: Find the appropriate test statistic.
We will use the z-distribution
Contd
Step 4: State the decision rule.
Reject H
0
if Z > Z
o/2
or Z < - Z
o/2

Z > 1.96 or Z < -1.96

Contd
73
Step 5: Compute the value of z and make a decision
The computed value of 2.21 is in the area of rejection. Therefore, the
null hypothesis is rejected at the .05 significance level.
We reject the null hypothesis that the proportion of young women who
would purchase Heavenly is equal to the proportion of older women
who would purchase Heavenly.
Contd
Comparing Population Means with Unknown
Population Standard Deviations (the Pooled t-test)
The t distribution is used as the test statistic if one
or more of the samples have less than 30
observations. The required assumptions are:

1. Both populations must follow the normal
distribution
2. The populations must have equal standard
deviations
3. The samples are from independent populations



Contd
Finding the value of the test statistic requires two steps

1. Pool the sample standard deviations



2. Use the pooled standard deviation in the formula


2
) 1 ( ) 1 (
2 1
2
2 2
2
1 1
2
+
+
=
n n
s n s n
s
p
|
|
.
|

\
|
+

=
2 1
2
2 1
1 1
n n
s
X X
t
p
76

Owens Lawn Care, Inc., manufactures and assembles
lawnmowers that are shipped to dealers throughout the United
States and Canada. Two different procedures have been
proposed for mounting the engine on the frame of the
lawnmower. The question is: Is there a difference in the mean
time to mount the engines on the frames of the lawnmowers?
The first procedure was developed by longtime Owens
employee Herb Welles (designated as procedure 1), and the
other procedure was developed by Owens Vice President of
Engineering William Atkins (designated as procedure 2). To
evaluate the two methods, it was decided to conduct a time and
motion study.
A sample of five employees was timed using the Welles method
and six using the Atkins method. The results, in minutes, are
shown on the right.

Is there a difference in the mean mounting times? Use the
.10 significance level.
Comparing Population Means with Unknown
Population Standard Deviations (the Pooled t-test)
Step 1: State the null and alternate hypotheses.
H
0
:
1
=
2



H
1
:
1

2

Step 2: State the level of significance. The 0.10
significance level is stated in the problem

Step 3: Find the appropriate test statistic
Because the population standard deviations are
not
known but are assumed to be equal, we use the
pooled t-test
Contd
78
Step 4: State the decision rule
Reject H
0
if t > t
o/2,n1+n2-2
or t < - t
o/2,n1+n2-2

t > t
.05,9
or t < - t
.05,9
t > 1.833

or t < - 1.833



Contd
79
Step 5: Compute the value of t and make a decision
(a) Calculate the sample standard deviations
Contd
80
Step 5: Compute the value of t and make a decision
-0.662
The decision is not to reject
the null hypothesis, because
0.662 falls in the region
between -1.833 and 1.833


We conclude that there is no
difference in the mean times
to mount the engine on the
frame using the two
methods
Contd
81
Comparing Population Means with Unequal
Population Standard Deviations
If it is not reasonable to assume the
population standard deviations are
equal, then we compute the t-statistic
shown on the right
The sample standard deviations s
1
and
s
2
are used in place of the respective
population standard deviations
In addition, the degrees of freedom are
adjusted downward by a rather
complex approximation formula. The
effect is to reduce the number of
degrees of freedom in the test, which
will require a larger value of the test
statistic to reject the null hypothesis
82
Comparing Population Means with Unequal
Population Standard Deviations Illustration 1
Personnel in a consumer testing laboratory are evaluating the
absorbency of paper towels. They wish to compare a set of store brand
towels to a similar group of name brand ones. For each brand they dip a
ply of the paper into a tub of fluid, allow the paper to drain back into the
vat for two minutes, and then evaluate the amount of liquid the paper has
taken up from the vat.
A random sample of 9 store brand paper towels absorbed the following
amounts of liquid in milliliters
8 8 3 1 9 7 5 5 12
An independent random sample of 12 name brand towels absorbed the
following amounts of liquid in milliliters:
12 11 10 6 8 9 9 10 11 9 8 10

Use the .10 significance level and test if there is a difference in the
mean amount of liquid absorbed by the two types of paper towels
Step 1: State the null and alternate hypotheses
H
0
:
1
=
2


H
1
:
1

2
Step 2: State the level of significance
The .10 significance level is stated in the problem
Step 3: Find the appropriate test statistic
We will use unequal variances t-test
Step 4: State the decision rule
Reject H
0
if
t > t
o/2,d.f.
or t < - t
o/2,d.f.

t > t
.05,10
or t < - t
.05, 10

t > 1.812 or t < -1.812

Contd
84
Step 5: Compute the value of t and make a decision



The computed value of t is less than the lower critical value, so our
decision is to reject the null hypothesis
We conclude that the mean absorption rate for the two towels
is not the same
Contd
Two-Sample Tests of Hypothesis: Dependent Samples
Dependent samples are samples that are paired or
related in some fashion

For example:
If you wished to buy a car you would look at the
same car at two (or more) different dealerships
and compare the prices.
If you wished to measure the effectiveness of a
new diet you would weigh the dieters at the start
and at the finish of the program.




Hypothesis Testing Involving Paired Observations
Use the following test when the samples are
dependent:




t
d
s n
d
=
/
d
Where
is the mean of the differences
s
d
is the standard deviation of the differences
n is the number of pairs (differences)
Nickel Savings and Loan wishes to
compare the two companies it
uses to appraise the value of
residential homes. Nickel Savings
selected a sample of 10 residential
properties and scheduled both
firms for an appraisal. The results,
reported in $000, are shown in the
table

At the .05 significance level, can
we conclude there is a
difference in the mean appraised
values of the homes?

Hypothesis Testing Involving Paired Observations -
Example
Step 1: State the null and alternate hypotheses
H
0
:
d
= 0


H
1
:
d
0

Step 2: State the level of significance
The .05 significance level is stated in the problem

Step 3: Find the appropriate test statistic
We will use the t-test
Contd
89
Step 4: State the decision rule
Reject H
0
if
t > t
o/2, n-1
or t < - t
o/2,n-1

t > t
.025,9
or t < - t
.025, 9

t > 2.262 or t < -2.262


Contd
90
Step 5: Compute the value of t and make a decision




The computed value of t is
greater than the higher
critical value, so our
decision is to reject the null
hypothesis.

We conclude that there is
a difference in the mean
appraised values of the
homes.

Contd