Statistical Inference:

Hypothesis Testing
for Single
Populations

9-1
 Learning Objectives
• Understand the logic of hypothesis testing, and know how
to establish null and alternate hypotheses.
• Understand Type I and Type II errors, and know how to
solve for Type II errors.
• Know how to implement the HTAB system to test
hypotheses.
• Test hypotheses about a single population mean when s is
known.
• Test hypotheses about a single population mean when s is
unknown.
• Test hypotheses about a single population proportion.
• Test hypotheses about a single population variance.

9-2
 Types of Hypotheses
• Research Hypothesis
– a statement of what the researcher believes will
be the outcome of an experiment or a study.
• Statistical Hypotheses
– a more formal structure derived from the
research hypothesis.
• Substantive Hypotheses
– a statistically significant difference does not
imply or mean a material, substantive
difference.

9-3
 Example Research Hypotheses
• Older workers are more loyal to a company
• Companies with more than $1 billion of
assets spend a higher percentage of their
annual budget on advertising than do
companies with less than $1 billion of
assets.
• The price of scrap metal is a good indicator
of the industrial production index simx
months later.

9-4
 Statistical Hypotheses
• Two Parts
– a null hypothesis
– an alternative hypothesis
• Null Hypothesis – nothing new is
happening
• Alternative Hypothesis – something new is
happening
• Notation
– null: H0
– alternative: Ha

9-5
 Null and Alternative Hypotheses
• The Null and Alternative Hypotheses are
mutually exclusive. Only one of them can
be true.
• The Null and Alternative Hypotheses are
collectively exhaustive. They are stated to
include all possibilities. (An abbreviated
form of the null hypothesis is often used.)
• The Null Hypothesis is assumed to be true.
• The burden of proof falls on the Alternative
Hypothesis.
9-6
 Null and Alternative Hypotheses:
Example
• A manufacturer is filling 40 oz. packages
with flour.
• The company wants the package contents to
average 40 ounces.

Ho :   40 oz
Ha :   40 oz

9-7
 One-tailed and Two-tailed Tests
• One-tailed Tests

Ho :   40 Ho : P  0.18
Ha :   40 Ha : P  0.18
• Two-tailed Test

Ho:   12
Ha:   12
9-8
HTAB System to Test Hypotheses

Task 1: Task 3:
HYPOTHESIZE TAKE STATISTICAL ACTION

Task 2: Task 4:
TEST DETERMINING THE
BUSINESS IMPLICATIONS

9-9
 Steps in Testing Hypotheses
1. Establish hypotheses: state the null and
alternative hypotheses.
2. Determine the appropriate statistical test and
sampling distribution.
3. Specify the Type I error rate (
4. State the decision rule.
5. Gather sample data.
6. Calculate the value of the test statistic.
7. State the statistical conclusion.
8. Make a managerial decision.
9-10
 HTAB Paradigm – Task 1
Task 1: Hypotheses

Step 1. Establish hypotheses: state the

null and alternative hypotheses.

9-11
 HTAB Paradigm – Task 2
Task 2: Test

Step 2. Determine the appropriate

statistical test and sampling
distribution.
Step 3. Specify the Type I error rate (
Step 4. State the decision rule.
Step 5. Gather sample data.
Step 6. Calculate the value of the test
statistic.
9-12
 HTAB Paradigm – Task 3
Task 3: Take Statistical Action

Step 7. State the statistical conclusion.

9-13
 HTAB Paradigm – Task 4
Task 4: Determine the business
implications

Step 8. Make a managerial decision.

9-14
Rejection and Non Rejection Regions

Rejection Region
Rejection Region

Non Rejection Region

=40 oz

Critical Value Critical Value

9-15
 Type I and Type II Errors
• Type I Error
– Rejecting a true null hypothesis
– The probability of committing a Type I error is
called , the level of significance.

• Type II Error
– Failing to reject a false null hypothesis
– The probability of committing a Type II error is
called .

9-16
 Decision Table
for Hypothesis Testing

Null True Null False

Fail to Correct Type II error

reject null Decision ( )

Reject null Type I error Correct Decision

()

9-17
 One-tailed Tests

Ho :   40 Ho :   40
Ha :   40 Ha :   40

Rejection Region Rejection Region

Non Rejection Region Non Rejection Region

=40 oz =40 oz

Critical Value Critical Value

9-18
 Two-tailed Tests

Ho :   40 Rejection Rejection
Region Region

Ha :   40 Non Rejection Region

=12 oz

Critical Values

9-19
 CPA Net Income Example:
Two-tailed Test (Part 1)

Ho :   $74,914 
2
.025

2
.025

Ha :   $74,914
Rejection
Rejection Region
Region
Non Rejection Region
=0

Zc  196
. Zc  196
.

9-20
 CPA Net Income Example:
Two-tailed Test (Part 2)

If Z  Zc  196
. , reject Ho.
If Z  Zc  196
. , do not reject Ho.

X   78,695  74,914
Z   2.75
s 14,530
n 112
Z = 2.75  Zc = 1.96, reject Ho

9-21
 CPA Net Income Example:
Critical Value Method (Part 1)
Ho:   $74,914 Lower
s
X  Z n
Ha:   $74,914
c c

14,530
 74,914  196
.
  112
.025 .025
2  72,223
2
Rejection
Rejection Region Upper
Region
s
Non Rejection Region
X c
   Zc
n
72,223 77,605
14,530
 74,914  196
.
112
Zc  196
. =0 Zc  196
.  77,605
9-22
 CPA Net Income Example:
Critical Value Method (Part 2)
 
.025 .025
2 2
Rejection
Rejection Region
Region
Non Rejection Region

72,223 77,605

Zc  196
. =0 Zc  196
.
If X  77,223 or X  77,605, reject Ho.
If 77,223  X  77,605, do not reject Ho.

Since X  78,695  X c
 77,605, reject Ho.
9-23
Demonstration Problem 9.1: Z Test
(Part 1)

Ho :   4.30
Ha :   4.30
Rejection
Region
=.05

Non Rejection Region

Zc  1645
. 0

9-24
 Demonstration Problem 9.1: Z Test
(Part 2)
Rejection X   4.156  4.30
Region Z   142
.
s 0.574
=.05 n 32

Non Rejection Region Z  142

.  1645
. ,
Zc  1645
. 0 do not reject H0.

If Z  1645
. , reject H0.
If Z  1645
. , do not reject H0.

9-25
Demonstration Problem 9.1: Critical
Value (Part 1)

Ho:   4.30
Rejection
Region
=.05

Ha:   4.30 Non Rejection Region

Zc  1645
. 0

Xc    Z
s
n
xc  4133
. 4.30

0.574
 4.30  ( 1645
. )
32
 4.133

9-26
Demonstration Problem 9.1: Critical
Value (Part 2)
Rejection
Region
=.05

Non Rejection Region

Zc  1645
. 0

xc  4133
. 4.30

If X  4.133, reject H0.

If X  4.133, do not reject H0.

X  4.156  4.133, do not reject H0.

9-27
 Demonstration Problem 9.1: p-Value
Method
Ho:   4.30 Rejection
Region
=.05

Ha:   4.30 Non Rejection Region

0
If p - value <  , reject Ho.
If p - value   , do not reject Ho.

X   4.156  4.30 Since p - value = .0778 >  = .05,

Z   142
. do not reject Ho.
s 0.574
n 32
P( Z  142
. ) .0778

9-28
Demonstration Problem 9.1: MINITAB

Test of mu = 4.300 vs mu < 4.300

The assumed sigma = 0.574

Variable N MEAN STDEV SE MEAN Z P VALUE

Ratings 32 4.156 0.574 0.101 -1.42 0.078

9-29
Demonstration Problem 9.1: Excel
(Part 1)

9-30
 Demonstration Problem 9.1: Excel
(Part 2)
H0:  = 4.3
Ha:  < 4.3

3 4 5 5 4 5 5 4
4 4 4 4 4 4 4 5
4 4 4 3 4 4 4 3
5 4 4 5 4 4 4 5

n= =COUNT(A4:H7)
= 0.05
Mean = =AVERAGE(A4:H7)
S= =STDEV(A4:H7)
Std Error = =B12/SQRT(B9)
Z= =(B11-B1)/B13
p-Value =NORMSDIST(B14)

9-31
 Two-tailed Test: Small Sample,
s Unknown,  = .05 (Part 1)
Weights in Pounds of a Sample of 20 Plates
22.6 22.2 23.2 27.4 24.5
27.0 26.6 28.1 26.9 24.9
26.2 25.3 23.1 24.2 26.1
25.8 30.4 28.6 23.5 23.6

X  2551
. , S = 2.1933, and n = 20

9-32
 Two-tailed Test: Small Sample,
s Unknown,  = .05 (part 2)

Ho:   25 Rejection Regions

Ha:   25 
.025

2
.025
2
Non Rejection Region
df  n  1  19 t  2.093 t  2.093
c c

Critical Values

9-33
 Two-tailed Test: Small Sample,
s Unknown,  = .05 (part 3)

Rejection Regions If t  2.093, reject Ho.

If t  2.093, do not reject Ho.

  X   2551
.  250
.
.025 .025
2 t   104
.
2 S 21933
.
Non Rejection Region
n 20
t c
 2.093 t c
 2.093

Critical Values Since t  104

.  2.093, do not reject Ho.

9-34
 MINITAB Computer Printout
for the Machine Plate Example

Test of mu = 25.000 vs mu not = 25.000

Variable N MEAN STDEV SE MEAN T P VALUE

Platewt 20 25.510 2.193 0.490 1.04 0.31

9-35
Machine Plate Example: Excel
(Part 1)

9-36
Machine Plate Example: Excel
(Part 2)
A B C D E
1 H0:  = 25
2 Ha:   25
3

4 22.6 22.2 23.2 27.4 24.5

5 27 26.6 28.1 26.9 24.9
6 26.2 25.3 23.1 24.2 26.1
7 25.8 30.4 28.6 23.5 23.6
8

9 n= =COUNT(A4:E7)
10 = 0.05
11 Mean = =AVERAGE(A4:E7)
12 S= =STDEV(A4:E7)
13 Std Error = =B12/SQRT(B9)
14 t= =(B11-B1)/B13
15 p-Value =TDIST(B14,B9-1,2)

9-37
Demonstration Problem 9.2 (Part 1)
Size in Acres of 23 Farms
445 489 474 505 553 477 545
463 466 557 502 449 438 500
466 477 557 433 545 511 590
561 560

X  498.78, S = 46.94, and n = 23

9-38
Demonstration Problem 9.2 (Part 2)

Ho :   471 Rejection Region

Ha :   471
 .05

Non Rejection Region

df  n  1  22
t  1717
c
.

Critical Value

9-39
Demonstration Problem 9.2 (Part 3)

Rejection Region If t  1717

. , reject Ho.
If t  1717
. , do not reject Ho.

 .05 X   498.78  471

t   2.84
S 46.94
Non Rejection Region n 23

t  1717
c
.

Critical Value Since t  2.84  1.717, reject Ho.

9-40
Z Test of Population Proportion

p  P n  P  5, and
Z
PQ nQ  5
n
where: p = sample proportion
P = population proportion
Q = 1-P

9-41
 Testing Hypotheses about a
Proportion: Manufacturer Example
(Part 1)
Rejection Regions

Ho : P  .08 
.05

.05
2 2
Ha : P  .08 Z c
 1645
.
Non Rejection Region
Z c
 1645
.

Critical Values

9-42
 Testing Hypotheses about a
Proportion: Manufacturer Example
(Part 2)
Rejection Regions If Z  1645
. , reject Ho.
If Z  1645
. , do not reject Ho.

33
  p  .165
.05 .05 200
2 2
Non Rejection Region p  P .165.08
 1645  1645 Z   4.43
Z c
. Z c
.
PQ (.08)(.92)
Critical Values n 200

Since Z  4.43  1645

. , reject Ho.

9-43
Demonstration Problem 9.3 (Part 1)

Ho: P .17 Rejection Region

Ha: P .17  .05

Non Rejection Region

Z c
 1645
.

Critical Value

9-44
Demonstration Problem 9.3 (Part 2)
If Z  1645
. , reject Ho.
Rejection Region If Z  1645
. , do not reject Ho.

115
 .05 p  .209
550
p  P .209.17
Non Rejection Region Z   2.44
 1645
PQ (.17)(.83)
Z c
.
n 550
Critical Value
Since Z = 2.44  1645
. , reject Ho.

9-45
 Hypothesis Test for s2:
Demonstration Problem 9.4 (Part 1)

Ho:s  25
2 df = 15

Ha:s  25
2 .05

.95

.05
0

7.26094 24.9958

9-46
 Hypothesis Test for s2:
Demonstration Problem 9.4 (Part 2)

 
2 2
df = 15 If  7.26094 or  24.9958, reject Ho.

If 7.26094    24.9958, do not reject Ho.

2

.05
.95  n  1 S 2 15 28.1

2
   16.86
s
2
25
.05

 .   .05,15  24.9958,
0 2 2

7.26094 24.9958
Since  1686
do not reject Ho.

9-47
 Solving for Type II Errors:
The Beverage Example

Ho:   12 X    Zc
s
c
n
Ha:   12 010
.
 12  ( 1645
. )
60
Rejectio  11979
.
n
=.05
Region
If X  11979
. , reject Ho.
Non Rejection Region
=0 If X  11979
. , do not reject Ho.
Zc  1645
.

9-48
Type II Error for Beverage Example
with  =11.99 oz
Reject Ho Do Not Reject Ho
Type I Correct
Error Decision
95%
=.05
Ho is True
 
Z0

Ho is False
Correct =.8023 Type II
Decision 19.77% Error
Z1
 

   9-49

X
 Type II Error for Demonstration
Problem 9.5, with =11.96 oz
Reject Ho Do Not Reject Ho
Type I Correct
Error 95% Decision
=.05
Ho is True 
Z0


Ho is False
Correct =.0708 Type II
Decision 92.92% Error

Z1


  
X
9-50
 Values and Power Values
for the Soft-Drink Example

  Power

11.999 .94 .06

11.995 .89 .11
11.990 .80 .20
11.980 .53 .47
11.970 .24 .76
11.960 .07 .93
11.950 .01 .99

9-51
Operating Characteristic Curve
for the Soft-Drink Example
1
0.9
0.8
0.7
0.6
Probability

0.5
0.4
0.3
0.2
0.1
0
11.95 11.96 11.97 11.98 11.99 12


9-52
 Power Curve
for the Soft-Drink Example
1
0.9
0.8
0.7
Probability

0.6
0.5
0.4
0.3
0.2
0.1
0
11.95 11.96 11.97 11.98 11.99 12


9-53