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ADVANCED BUSINESS MATHEMATICS

Student Guide

ABM Student Guide V1.0

Modification History

Version

Date

Revision Description

V1.0

May 2011

For Release

NCC Education Limited, 2011


All Rights Reserved
The copyright in this document is vested in NCC Education Limited. The document must not be
reproduced by any means, in whole or in part, or used for manufacturing purposes, except with the
prior written permission of NCC Education Limited and then only on condition that this notice is
included in any such reproduction.
Published by: NCC Education Limited, The Towers, Towers Business Park, Wilmslow Road,
Didsbury, Manchester M20 2EZ, UK.
Tel: +44 (0) 161 438 6200 Fax: +44 (0) 161 438 6240 Email: info@nccedu.com
http://www.nccedu.com

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CONTENTS
1.

Module Overview and Objectives .............................................................................. 7

2.

Learning Outcomes and Assessment Criteria .......................................................... 7

3.

Syllabus ....................................................................................................................... 7

4.

Related National Occupational Standards ................................................................ 9

5.

Teaching and Learning............................................................................................... 9


5.1

Lectures........................................................................................................................ 9

5.2

Tutorials ........................................................................................................................ 9

5.3

Private Study ................................................................................................................ 9

6.

Further Reading List ................................................................................................. 10

7.

Assessment .............................................................................................................. 11

Topic 1:

Introductory Management Statistics ....................................................................... 13

1.1

Learning Objectives .................................................................................................... 13

1.2

Timings ....................................................................................................................... 13

1.3

Private Study Exercises .............................................................................................. 14

1.4

Tutorial Exercises ....................................................................................................... 16

Topic 2:

Probability Distributions .......................................................................................... 19

2.1

Learning Objectives .................................................................................................... 19

2.2

Timings ....................................................................................................................... 19

2.3

Private Study Exercises .............................................................................................. 20

2.4

Tutorial Exercises ....................................................................................................... 23

Topic 3:

Inferential Statistics 1 ............................................................................................... 25

3.1

Learning Objectives .................................................................................................... 25

3.2

Timings ....................................................................................................................... 25

3.3

Private Study Exercises .............................................................................................. 26

3.4

Tutorial Exercises ....................................................................................................... 28

Topic 4:

Inferential Statistics 2 ............................................................................................... 29

4.1

Learning Objectives .................................................................................................... 29

4.2

Timings ....................................................................................................................... 29

4.3

Private Study Exercises .............................................................................................. 30

4.4

Tutorial Exercises ....................................................................................................... 31

Topic 5:

Differentiation 1 ........................................................................................................ 33

5.1

Learning Objectives .................................................................................................... 33

5.2

Timings ....................................................................................................................... 33

5.3

Private Study Exercises .............................................................................................. 34

5.4

Tutorial Exercises ....................................................................................................... 36

Topic 6:

Differentiation 2 ........................................................................................................ 37
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6.1

Learning Objectives .................................................................................................... 37

6.2

Timings ....................................................................................................................... 37

6.3

Private Study Exercises .............................................................................................. 38

6.4

Tutorial Exercises ....................................................................................................... 39

Topic 7:

Regression Analysis 1.............................................................................................. 41

7.1

Learning Objectives .................................................................................................... 41

7.2

Timings ....................................................................................................................... 41

7.3

Private Study Exercises .............................................................................................. 42

7.4

Tutorial Exercises ....................................................................................................... 44

Topic 8:

Regression Analysis 2.............................................................................................. 45

8.1

Learning Objectives .................................................................................................... 45

8.2

Timings ....................................................................................................................... 45

8.3

Private Study Exercises .............................................................................................. 46

8.4

Tutorial Exercises ....................................................................................................... 48

Topic 9:

Time Series Analysis ................................................................................................ 49

9.1

Learning Objectives .................................................................................................... 49

9.2

Timings ....................................................................................................................... 49

9.3

Private Study Exercises .............................................................................................. 50

9.4

Tutorial Exercises ....................................................................................................... 52

Topic 10:

Linear Programming................................................................................................. 55

10.1 Learning Objectives .................................................................................................... 55


10.2 Timings ....................................................................................................................... 55
10.3 Private Study Exercises .............................................................................................. 56
10.4 Tutorial Exercises ....................................................................................................... 58
Topic 11:

Linear Programming with Solver Routines ............................................................. 59

11.1 Learning Objectives .................................................................................................... 59


11.2 Timings ....................................................................................................................... 59
11.3 Private Study Exercises .............................................................................................. 60
11.4 Tutorial Exercises ....................................................................................................... 62
Topic 12:

Decision Tree Analysis............................................................................................. 63

12.1 Learning Objectives .................................................................................................... 63


12.2 Timings ....................................................................................................................... 63
12.3 Private Study Exercises .............................................................................................. 64
12.4 Tutorial Exercises ....................................................................................................... 66
Equations and Statistical Tables ................................................................................................. 67
Management Statistics ........................................................................................................ 67
Probability ........................................................................................................................... 68
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Hypothesis Testing .............................................................................................................. 69
Fitting Data .......................................................................................................................... 70
Differentiation ...................................................................................................................... 71
Time Series ......................................................................................................................... 72
Probabilities under the Normal Distribution Curve ............................................................... 73
Percentage Points of the Student Distribution ..................................................................... 75
Critical Values for the 2 Distribution.................................................................................... 76

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Overview
1.

Module Overview and Objectives

Mathematical models and data analysis are foundational within numerous disciplines of
management thought. Whether the focus is on understanding the broad economic environment,
carrying out market research, optimising the supply chain, diversifying financial risk or another area
of business practice, the requirement to be able to use analytical techniques is vital.
This module advances existing quantitative skills to a level in which students can formulate, use and
interpret mathematical models within a business context. An appreciation of the use of computer
software to support such models is also developed.

2.

Learning Outcomes and Assessment Criteria

Learning Outcomes

Assessment Criteria

The learner will be able to

The learner can

Use summary and inferential


statistics to inform business
decisions

1.1 Calculate and interpret standard scores


1.2 Use index numbers when reviewing data
1.3 Compare and contrast sampling methods and techniques
1.4 Use confidence intervals to indicate the reliability of
estimates
1.5 Apply significance testing to business hypotheses

Analyse management
decisions using optimisation
techniques

2.1 Use differentiation in marginal analysis


2.2 Formulate a linear programme
2.3 Interpret the optimal and sensitivity results from the
solution of a linear programme.

Understand and apply


approaches to business
forecasting

3.1 Use Pearson and Spearman correlation analysis


3.2 Perform a simple regression analysis
3.3 Evaluate results from a multiple regression analysis
3.4 Use time series analysis to predict future business
performance

Evaluate sequential
management decisions

4.1 Formulate a decision tree representation of a management


decision
4.2 Solve a decision tree

3.

Syllabus

Syllabus
Topic No

Title

Introductory
management
statistics

Proportion
1/12

Content
Summary statistics
Data types
Index numbers

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2

Probability
distributions

1/12

Simple probability review


Standard scores (Z-scores)
Probability distributions

Inferential statistics
1

1/12

Sampling distributions
Point estimates and confidence intervals
Introduction to hypothesis testing

Inferential statistics
2

1/12

Hypothesis testing with a sample


Sampling approaches
Two sample t-test
Significance, error types, power

Frequency data and the 2 test


5

Differentiation 1

1/12

Gradient and the derivative


Rules of differentiation

Differentiation 2

1/12

Partial differentiation
The total derivative

Regression
analysis 1

1/12

Pearson correlation
Simple linear regression
Spearman correlation

Regression
analysis 2

1/12

Multiple regression analysis


Further regression models

Time series
analysis

1/12

Preparing time series for analysis


Time series decomposition
o Additive and multiplicative models
o Centred moving averages
o Seasonal adjustment
Forecasting with time series
Exponential smoothing

10

Linear
Programming

1/12

Formulating two variable linear programme


Graphical solution of a linear programme
Sensitivity analysis

11

Linear
Programming with
Solver routines

1/12

Multiple variable linear programmes


Solving linear programmes with software
Interpreting the output
Extensions of linear programming: the integer
programme

12

Decision tree
analysis

1/12

Formulating decision trees


Solving decision trees with rollback
Posterior probabilities within decision trees
Uncertainty

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4.

Related National Occupational Standards

The UK National Occupational Standards describe the skills that professionals are expected to
demonstrate in their jobs in order to carry them out effectively. They are developed by employers
and this information can be helpful in explaining the practical skills you have covered in this module.
Related National Occupational Standards (NOS)
Sector Subject Area:
15.3 Business management
Related NOS:
BAD321 Organise and report data
BAD322 Analyse and report data
BAG127 Solve business problems
BAG128 Evaluate and solve business problems

5.

Teaching and Learning


Suggested Learning Hours

Lectures:

Tutorial:

12

Private Study:
24

114

Total:
150

The teacher-led time for this module is comprised of lectures and tutorials. You will need to bring
this Student Guide to all classes for this module. The breakdown of the hours for each topic is given
in the topic notes below. Generally, the order of study should be to complete private study work
before tutorials as your private study work will be reviewed during the tutorial.

5.1

Lectures

Your lecturer will be presenting the basic knowledge and the theoretical concepts required for the
unit during this time. He/she will use PowerPoint slides during the lecture time and you will be
expected to take notes.
You will also be encouraged to be active during this time and discuss and/or practice the concepts
covered. Lectures will include question and answer elements to promote participation and to allow
your lecturer to check whether you understand the concepts they are covering.

5.2

Tutorials

These are designed to deal with the questions arising from the lectures and private study sessions.
You should think carefully beforehand about any areas in which you might need additional guidance
and support and use this time to discuss these with your teacher.

5.3

Private Study

This Student Guide also contains details of the private study exercises. You are expected to
complete these exercises to improve your understanding. Your tutor will set deadlines for the
completion of this work and go over the suggested answers with you. The deadlines will usually be
before the scheduled tutorials for that topic. Some of the private study tasks may require you to work

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in a small group so you will need to plan your time carefully and ensure that you can meet with your
group members to complete the work required before the deadline.
You should also use this time to revise the content of lectures to ensure understanding and conduct
extra reading (using the supplementary textbooks or other materials available in the library or
online). You should bring any questions to the tutorial for additional guidance and support.

6.

Further Reading List

A selection of sources of further reading around the content of this module must be available in your
Accredited Partner Centres library. The following lists provide suggestions of some suitable
sources.
There are many textbooks in the business mathematics and related areas. The longer list provides
titles of those that include most of the aspects within this module. If possible it is useful to have
access to at least three different titles.
Additionally attention is drawn to useful websites in the private study sections for each of the topic
areas.
Buglear (2004), Quantitative Methods for Business - The A-Z of QM, Butterworth-Heinemann
ISBN-10: 0750658983
ISBN-13: 978-0750658980
Burton, Carol and Wall (2001), Quantitative Methods for Business and Economics, 2nd Edition,
Prentice Hall
ISBN-10: 0273655701
ISBN-13: 978-0273655701
Dewhurst (2006), Quantitative Methods for Business and Management, 2nd Edition, McGraw Hill
ISBN-10: 0077109023
ISBN-13: 978-0077109028
Lucey (2002), Quantitative Techniques, 6th Edition, Thomson Learning
ISBN-10: 1844801063
ISBN-13: 978-1844801060
Oakshott (2009), Essential Quantitative Methods for Business, Management and Finance, 4th
Edition, Palgrave McMillan
ISBN-10: 0230218180
ISBN-13: 978-0230218185
Waters (1998), A Practical Introduction to Management Science, 2nd Edition, Prentice Hall
ISBN-10: 0201178478
ISBN-13: 978-0201178470
Wisniewski (2010), Quantitative Methods for Decision Makers, 5th Edition, Prentice Hall
ISBN-10: 0273742663
ISBN-13: 978-0273742663
Neave (2011), Elementary Statistics Tables, 2nd Edition, Routledge
ISBN-10: 041556347X
ISBN-13: 978-0415563475
Short list:
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For topics 1, 2, 3, 4, 7 and 8:
Hinton (2004), Statistics Explained, 2nd Edition, Routledge
ISBN-10: 0415332850
ISBN-13: 978-0415332859
For topics 5 and 6:
Dowling (1990), Schaums Outline of Calculus for Business, Economics, and The Social Sciences,
Schaums Outlines
ISBN-10: 0070176736
ISBN-13: 978-0070176737
For topics 9, 10, 11 and 12:
Keast and Towler (2009), Rational Decision Making for Managers: An Introduction, Wiley and Sons
ISBN-10: 0470519657
ISBN-13: 978-0470519653

7.

Assessment

This module will be assessed by means of an examination worth 100% of the total mark. This
assessment will cover the learning outcomes and assessment criteria given above.

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Topic 1
Topic 1:
1.1

Introductory Management Statistics

Learning Objectives

This topic provides an overview of the key concepts of data types, summary statistics and index
numbers.
On completion of the topic, you will be able to:

Recognise nominal, ordinal, interval and ratio data types


Recognise and use mode, median, mean, range, standard deviation and coefficient of variation
Calculate Laspeyres and Paasche index numbers
Use index numbers to calculate percentage changes and deflate series

1.2

Timings

Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

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1.3

Private Study Exercises

You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
A shop records its daily sales over a one week period. Calculate the median, mean (), population
standard deviation () and coefficient of variation (CV);
148, 262, 164, 382, 246, 328, 126

Exercise 3:
Use MS Excel to check your answers to Exercise 2. Clue: look for the functions AVERAGE,
MEDIAN and STDEVP (or in Excel 2010 STDEV.P)
Exercise 4:
Calculate the Laspeyres and Paasche price indices for the following data. Take 2005 as the base
year.

year

litre of beer
price
quantity

litre of whiskey
price
quantity

litre of wine
price
quantity

2005

0.95

200

19.80

10

10.50

36

2006

0.99

150

20.39

12

11.15

48

2007

1.05

120

20.99

11

12.35

60

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Exercise 5:
Investigate the following sites;
http://go.worldbank.org/OK9RCLZQN0 (this is part of the Statistical Manual of the World Bank
Accessed 3rd March 2011)
www.usablestats.com/tutorials/basicStats (this comes from the Usable Statistics site. Accessed 3rd
March 2011)

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1.4

Tutorial Exercises

The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
The mean queuing (or waiting) time experienced by a customer with a single server is given by;
+

Where p is the mean time for the customer to be processed, a is the mean inter-arrival time between
customers, and CV are the respective coefficient of variations.
A newspaper kiosk takes on average 2 minutes to process a customer, with a standard deviation of
1 minute. A new customer arrives on average every 3 minutes with a standard deviation of 2
minutes. What is the typical time a customer waits to be served?

Exercise 2:
A price index series initially used 2001 as its base year; in 2006 the base year was updated. Link the
two series to create a single series with 2006 as the base year. Use the single series to calculate
annual percentage changes in price.
Year

Price Index (2001


base)

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

100.00
100.30
103.97
105.73
106.33
110.21

Price Index (2006


base)

100.00
105.79
113.31
121.10
130.30

Exercise 3:
Show the equivalence of the Laspeyres price index formula to the weighted price relative formula.

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Exercise 4:
The lectures introduced the Laspeyres Price Index and the Paasche Price Index. What do you think
the formulae would be for the Laspeyres Quantity Index and the Paasche Quantity Index?

Exercise 5:
Calculate the Laspeyres and Paasche quantity indices for the following data. Take 2005 as the base
year.

year

litre of beer
price
quantity

litre of whiskey
price
quantity

litre of wine
price
quantity

2005

0.95

200

19.80

10

10.50

36

2006

0.99

150

20.39

12

11.15

48

2007

1.05

120

20.99

11

12.35

60

Exercise 6:
Review of Private Study Exercises.

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Topic 2
Topic 2:
2.1

Probability Distributions

Learning Objectives

This topic provides a brief reminder of the rules of simple probability and an overview of four
important probability distributions.
On completion of the topic, you will be able to:

Recall the rules of simple probability


Use key probability distributions
o Binomial distribution
o Poisson distribution
o Exponential distribution
o Normal distribution
Calculate z-scores.

2.2

Timings

Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

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2.3

Private Study Exercises

You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
Investigate the following site.
www.usablestats.com/tutorials/basicStats2 (accessed 15th March 2011)

Exercise 3:
The economy is forecast to boom with probability 0.3, grow steadily with probability 0.5 or
experience recession with probability 0.2. The returns on each of two shares in such circumstances
are given below. Calculate the expected return (mean) and standard deviation for each share.

State
Boom
Grow
Recession

Probability
0.3
0.5
0.2

Share 1
Return
30%
5%
-20%

Share 2
Return
15%
10%
-10%

Exercise 4:
Type each of the following into a cell in Excel. Use the Excel Help facility to identify what the function
calculates.
a. =POISSON(3, 6, FALSE)
b. =POISSON(3, 6, TRUE)
c. =BINOMDIST(6, 10, 0.6, FALSE)
d. =BINOMDIST(6, 10, 0.6, FALSE)
e. =NORMSDIST(0)
f.

=NORMSDIST(-2.5)

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Exercise 5:
Use Excel to produce a normal distribution table, an example is shown over page. The table should
show P(Z z), with Z a random variable. Read z to the first decimal place from first column with the
second decimal place read along top row.
Then investigate the following sites;
http://econ.lse.ac.uk/ie/iecourse/ec220course_statstables0203.pdf (accessed 15th March 2011)
www.reading.ac.uk/ssc/publications/stats_tables.pdf (accessed 15th March 2011)

z
-3.00
-2.90
-2.80
-2.70
-2.60
-2.50
-2.40
-2.30
-2.20
-2.10
-2.00
-1.90
-1.80
-1.70
-1.60
-1.50
-1.40
-1.30
-1.20
-1.10
-1.00
-0.90
-0.80
-0.70
-0.60
-0.50
-0.40
-0.30
-0.20
-0.10
-0.00
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
2.00

0
0.0013
0.0019
0.0026
0.0035
0.0047
0.0062
0.0082
0.0107
0.0139
0.0179
0.0228
0.0287
0.0359
0.0446
0.0548
0.0668
0.0808
0.0968
0.1151
0.1357
0.1587
0.1841
0.2119
0.2420
0.2743
0.3085
0.3446
0.3821
0.4207
0.4602
0.5000
0.5000
0.5398
0.5793
0.6179
0.6554
0.6915
0.7257
0.7580
0.7881
0.8159
0.8413
0.8643
0.8849
0.9032
0.9192
0.9332
0.9452
0.9554
0.9641
0.9713
0.9772

1
0.0013
0.0018
0.0025
0.0034
0.0045
0.0060
0.0080
0.0104
0.0136
0.0174
0.0222
0.0281
0.0351
0.0436
0.0537
0.0655
0.0793
0.0951
0.1131
0.1335
0.1562
0.1814
0.2090
0.2389
0.2709
0.3050
0.3409
0.3783
0.4168
0.4562
0.4960
0.5040
0.5438
0.5832
0.6217
0.6591
0.6950
0.7291
0.7611
0.7910
0.8186
0.8438
0.8665
0.8869
0.9049
0.9207
0.9345
0.9463
0.9564
0.9649
0.9719
0.9778

2
0.0013
0.0018
0.0024
0.0033
0.0044
0.0059
0.0078
0.0102
0.0132
0.0170
0.0217
0.0274
0.0344
0.0427
0.0526
0.0643
0.0778
0.0934
0.1112
0.1314
0.1539
0.1788
0.2061
0.2358
0.2676
0.3015
0.3372
0.3745
0.4129
0.4522
0.4920
0.5080
0.5478
0.5871
0.6255
0.6628
0.6985
0.7324
0.7642
0.7939
0.8212
0.8461
0.8686
0.8888
0.9066
0.9222
0.9357
0.9474
0.9573
0.9656
0.9726
0.9783

3
0.0012
0.0017
0.0023
0.0032
0.0043
0.0057
0.0075
0.0099
0.0129
0.0166
0.0212
0.0268
0.0336
0.0418
0.0516
0.0630
0.0764
0.0918
0.1093
0.1292
0.1515
0.1762
0.2033
0.2327
0.2643
0.2981
0.3336
0.3707
0.4090
0.4483
0.4880
0.5120
0.5517
0.5910
0.6293
0.6664
0.7019
0.7357
0.7673
0.7967
0.8238
0.8485
0.8708
0.8907
0.9082
0.9236
0.9370
0.9484
0.9582
0.9664
0.9732
0.9788

4
0.0012
0.0016
0.0023
0.0031
0.0041
0.0055
0.0073
0.0096
0.0125
0.0162
0.0207
0.0262
0.0329
0.0409
0.0505
0.0618
0.0749
0.0901
0.1075
0.1271
0.1492
0.1736
0.2005
0.2296
0.2611
0.2946
0.3300
0.3669
0.4052
0.4443
0.4840
0.5160
0.5557
0.5948
0.6331
0.6700
0.7054
0.7389
0.7704
0.7995
0.8264
0.8508
0.8729
0.8925
0.9099
0.9251
0.9382
0.9495
0.9591
0.9671
0.9738
0.9793

5
0.0011
0.0016
0.0022
0.0030
0.0040
0.0054
0.0071
0.0094
0.0122
0.0158
0.0202
0.0256
0.0322
0.0401
0.0495
0.0606
0.0735
0.0885
0.1056
0.1251
0.1469
0.1711
0.1977
0.2266
0.2578
0.2912
0.3264
0.3632
0.4013
0.4404
0.4801
0.5199
0.5596
0.5987
0.6368
0.6736
0.7088
0.7422
0.7734
0.8023
0.8289
0.8531
0.8749
0.8944
0.9115
0.9265
0.9394
0.9505
0.9599
0.9678
0.9744
0.9798

6
0.0011
0.0015
0.0021
0.0029
0.0039
0.0052
0.0069
0.0091
0.0119
0.0154
0.0197
0.0250
0.0314
0.0392
0.0485
0.0594
0.0721
0.0869
0.1038
0.1230
0.1446
0.1685
0.1949
0.2236
0.2546
0.2877
0.3228
0.3594
0.3974
0.4364
0.4761
0.5239
0.5636
0.6026
0.6406
0.6772
0.7123
0.7454
0.7764
0.8051
0.8315
0.8554
0.8770
0.8962
0.9131
0.9279
0.9406
0.9515
0.9608
0.9686
0.9750
0.9803

Page 21 of 76
ABM Student Guide V1.0

7
0.0011
0.0015
0.0021
0.0028
0.0038
0.0051
0.0068
0.0089
0.0116
0.0150
0.0192
0.0244
0.0307
0.0384
0.0475
0.0582
0.0708
0.0853
0.1020
0.1210
0.1423
0.1660
0.1922
0.2206
0.2514
0.2843
0.3192
0.3557
0.3936
0.4325
0.4721
0.5279
0.5675
0.6064
0.6443
0.6808
0.7157
0.7486
0.7794
0.8078
0.8340
0.8577
0.8790
0.8980
0.9147
0.9292
0.9418
0.9525
0.9616
0.9693
0.9756
0.9808

8
0.0010
0.0014
0.0020
0.0027
0.0037
0.0049
0.0066
0.0087
0.0113
0.0146
0.0188
0.0239
0.0301
0.0375
0.0465
0.0571
0.0694
0.0838
0.1003
0.1190
0.1401
0.1635
0.1894
0.2177
0.2483
0.2810
0.3156
0.3520
0.3897
0.4286
0.4681
0.5319
0.5714
0.6103
0.6480
0.6844
0.7190
0.7517
0.7823
0.8106
0.8365
0.8599
0.8810
0.8997
0.9162
0.9306
0.9429
0.9535
0.9625
0.9699
0.9761
0.9812

9
0.0010
0.0014
0.0019
0.0026
0.0036
0.0048
0.0064
0.0084
0.0110
0.0143
0.0183
0.0233
0.0294
0.0367
0.0455
0.0559
0.0681
0.0823
0.0985
0.1170
0.1379
0.1611
0.1867
0.2148
0.2451
0.2776
0.3121
0.3483
0.3859
0.4247
0.4641
0.5359
0.5753
0.6141
0.6517
0.6879
0.7224
0.7549
0.7852
0.8133
0.8389
0.8621
0.8830
0.9015
0.9177
0.9319
0.9441
0.9545
0.9633
0.9706
0.9767
0.9817

Title Here
2.10
2.20
2.30
2.40
2.50
2.60
2.70
2.80
2.90
3.00

0.9821
0.9861
0.9893
0.9918
0.9938
0.9953
0.9965
0.9974
0.9981
0.9987

0.9826
0.9864
0.9896
0.9920
0.9940
0.9955
0.9966
0.9975
0.9982
0.9987

0.9830
0.9868
0.9898
0.9922
0.9941
0.9956
0.9967
0.9976
0.9982
0.9987

0.9834
0.9871
0.9901
0.9925
0.9943
0.9957
0.9968
0.9977
0.9983
0.9988

0.9838
0.9875
0.9904
0.9927
0.9945
0.9959
0.9969
0.9977
0.9984
0.9988

0.9842
0.9878
0.9906
0.9929
0.9946
0.9960
0.9970
0.9978
0.9984
0.9989

0.9846
0.9881
0.9909
0.9931
0.9948
0.9961
0.9971
0.9979
0.9985
0.9989

Page 22 of 76
ABM Student Guide V1.0

0.9850
0.9884
0.9911
0.9932
0.9949
0.9962
0.9972
0.9979
0.9985
0.9989

0.9854
0.9887
0.9913
0.9934
0.9951
0.9963
0.9973
0.9980
0.9986
0.9990

0.9857
0.9890
0.9916
0.9936
0.9952
0.9964
0.9974
0.9981
0.9986
0.9990

Title Here
2.4

Tutorial Exercises

The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
A new employee sits a preliminary Health and Safety examination. The examination consists of 10
multiple choice questions, wherein each question has four possible answers from which to choose.
The pass mark is 40%. What is the probability that the employee passes by guessing only?

Exercise 2:
Clients arrive at a point of service at a rate of 20 per hour. What is the probability of exactly 20
clients arriving in a given hour? What is the probability of 20 to 25 clients arriving in a given hour?
Assuming a client has just arrived, what is the probability that the next client arrives within 2
minutes? Assuming a client has just arrived, what is the probability that the next client arrives after 4
minutes have passed? (Assume client arrivals are described by the Poisson distribution.)

Exercise 3:
A company has supplied 10,000 projection lamps. Previous data indicates that the lifetime of the
projection lamps is approximately normally distributed with mean of 6000 hours and standard
deviation of 1000 hours. How many projection lamps are expected to fail in less than 5000 hours?
How many projection lamps are expected to last more than 8000 hours?

Exercise 4:
Review of Private Study Exercises

Page 23 of 76
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Title Here

Page 24 of 76
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Topic 3
Topic 3:
3.1

Inferential Statistics 1

Learning Objectives

This topic provides an overview of introductory inferential statistics.


On completion of the topic, you will be able to:

Recognise the terms sample statistic and population parameter


Use confidence intervals to indicate the reliability of estimates
Know when approximate large sample or exact confidence intervals are appropriate

3.2

Timings

Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 25 of 76
ABM Student Guide V1.0

Title Here
3.3

Private Study Exercises

You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
A cruise ship was interested in the typical duration each client spent in the breakfast buffet. The
entry and exit times of 30 cruisers was noted. The time spent at breakfast for the 30 were:

43
35
39
34
34
33

Time (minutes) Spent Dining


35
36
25
42
28
18
43
34
38
38
41
19
39
19
36
24
40
31

30
21
27
44
29
18

Calculate an approximate 99% confidence interval for the mean breakfasting time.

Exercise 3:
A country is due to hold a referendum on a constitutional change. A market research company
asked 1,112 people whether they would vote yes or no. 667 of the people polled indicated that
they would vote yes. Calculate a 95% confidence interval for the proportion of the electorate that
will vote yes.

Page 26 of 76
ABM Student Guide V1.0

Title Here
Exercise 4:
Use Excel to produce a table of percentage points of the Student t-distribution.
1

5.00%

2.50%

1.00%

0.50%

2 10.00%
90.00%

5.00%
95.00%

2.00%
98.00%

1.00%
99.00%

= n-1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

6.3138 12.7062 31.8205 63.6567


2.9200
4.3027
6.9646
9.9248
2.3534
3.1824
4.5407
5.8409
2.1318
2.7764
3.7469
4.6041
2.0150
2.5706
3.3649
4.0321
1.9432
2.4469
3.1427
3.7074
1.8946
2.3646
2.9980
3.4995
1.8595
2.3060
2.8965
3.3554
1.8331
2.2622
2.8214
3.2498
1.8125
2.2281
2.7638
3.1693
1.7959
2.2010
2.7181
3.1058
1.7823
2.1788
2.6810
3.0545
1.7709
2.1604
2.6503
3.0123
1.7613
2.1448
2.6245
2.9768
1.7531
2.1314
2.6025
2.9467
1.7459
2.1199
2.5835
2.9208
1.7396
2.1098
2.5669
2.8982
1.7341
2.1009
2.5524
2.8784
1.7291
2.0930
2.5395
2.8609
1.7247
2.0860
2.5280
2.8453

Exercise 5:
Investigate the following site (sections 1 to 4 and 10).
http://davidmlane.com/hyperstat/confidence_intervals.html (accessed 21st March 2011)

Page 27 of 76
ABM Student Guide V1.0

Title Here
3.4

Tutorial Exercises

The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
The mean time taken for 20 workers to each complete a similar task was found to be 1 hour 12
minutes. The sample standard deviation was calculated as 14 minutes 20 seconds. Assuming the
data is taken from a normally distributed population calculate an exact 99% CI of the mean.

Exercise 2:
Using the people in your tutorial group calculate 95% and 99% confidence intervals for the height of
a human. State any assumptions you make.

Exercise 3:
Review of Private Study Exercises.

Page 28 of 76
ABM Student Guide V1.0

Topic 4
Topic 4:
4.1

Inferential Statistics 2

Learning Objectives

This topic provides an overview of using inferential statistics in hypothesis testing.


On completion of the topic, you will be able to:

Perform a single sample t-test of the mean


Perform a two sample t-test
Interpret significance probabilities
Perform a chi-squared goodness of fit test

4.2

Timings

Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 29 of 76
ABM Student Guide V1.0

Title Here
4.3

Private Study Exercises

You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
A company will consider opening a new branch of its restaurant chain within a town if the mean
amount spent per head when dining out is greater than 30. A lower figure would not match the
companys offering. One Saturday evening, market researchers successfully questioned 16 people
who had dined out in the town and found a sample mean of 32.50 and sample standard deviation
of 4.76. Test the following hypotheses at the 5% significant level.
H0: 30
H1: > 30

Exercise 3:
A fair trading investigation is being carried out in the European Union. As a first step the selling price
(before tax) of a particular car model is being compared in two member countries. The following data
have been collected:
Country 1:

22 cars, sample mean 14,500 euros, sample standard deviation 725 euros

Country 2:

18 cars, sample mean 14,000 euros, sample standard deviation 550 euros

The null hypothesis is that the mean selling price is equivalent in both countries. Test the null
hypothesis at the 1% and 5% significance levels.

Exercise 4:
Study and critique the following website;
www.usablestats.com/tutorials/twoSamplet (accessed 11th April 2011)
Study the hypothesis testing material at http://stattek.com;
http://stattrek.com/Lesson5/HypothesisTesting.aspx (accessed 11th April 2011)

Page 30 of 76
ABM Student Guide V1.0

Title Here
4.4

Tutorial Exercises

The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
A software call centre wishes to improve its efficiency in solving clients questions.
Eight workers were selected at random to undertake additional training. Before and after training the
performance of the workers was monitored. Calculate the mean number of solved problems per day,
before and after training. Test the following hypotheses at the 5% significant level;
H0: Mean increase in performance 0
H1: Mean increase in performance > 0
solved problems per day
before training
following training
Worker 1
Worker 2
Worker 3
Worker 4
Worker 5
Worker 6
Worker 7
Worker 8

50
63
57
45
40
62
64
53

55
66
58
49
38
67
69
50

Exercise 2:

Label

Market research questioned 1085 managers about their preferred fashion brand and their career
level. Are these associated?

Fashion Brand 1
Fashion Brand 2
Other

Career Level
Trainee
Junior
Middle
245
93
30
221
110
77
185
122
2

Exercise 3:
Review of Private Study Exercises.

Page 31 of 76
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Title Here

Page 32 of 76
ABM Student Guide V1.0

Topic 5
Topic 5:
5.1

Differentiation 1

Learning Objectives

This topic provides an overview of gradient, the definition of the derivative and the rules of
differentiation.
On completion of the topic, you will be able to:

Find the derivatives of variables raised to a power


Use the rules of differentiation
Relate differentiation to optimization
o Obtain the economic order quantity formula

5.2

Timings

Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 33 of 76
ABM Student Guide V1.0

5.3

Private Study Exercises

You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
For each case differentiate y with respect to x.
a.

= 2 b. = 5 4 c. = 2 2 d. =

f. =

Ad

e. =

+ B + K where A, d, B and K are constants.

1
+

+7

Exercise 3:
Watch the following video from the http://mathcentre.ac.uk site;
(accessed 7th March 2011)

http://mathcentre.ac.uk/video/1086/

Exercise 4:
For each case differentiate y with respect to x.
a.

= 2 (3 2 + 2) b. = 2 c.

e. = (2 + 5)10

f. =

2 ++1

d.

= ( 2 )

Exercise 5:
The following sections of the http://mathcentre.ac.uk (accessed 7th March 2011) site provide useful
material for further practice.
http://mathcentre.ac.uk/resources/Refresher%20Booklets/basic%20diff%20refresh1Emathcentre/fin
al0203-ltsn-basicdiff.pdf
http://mathcentre.ac.uk/video/426/
Page 34 of 76
ABM Student Guide V1.0

http://mathcentre.ac.uk/resources/uploaded/mc-ty-diffxtothen-2009-1.pdf
http://mathcentre.ac.uk/video/425/
http://mathcentre.ac.uk/resources/uploaded/mc-ty-firstppls-2009-1.pdf
http://mathcentre.ac.uk/video/411/
http://mathcentre.ac.uk/resources/uploaded/mc-ty-maxmin-2009-1.pdf
There is much other helpful material on the http://mathcentre.ac.uk site.

Page 35 of 76
ABM Student Guide V1.0

5.4

Tutorial Exercises

The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
EdTec Ltd sells basic oscilloscopes to educational customers. A combined project by the marketing
and operations team has identified the following expressions to represent demand and total cost
curves (in GBP).
price = 5000 4

total cost = 5000 + 3000

Write down an expression for the annual profit, and show this on a graph. Differentiate profit to
determine the annual quantity, x, that EdTec produce to maximise profit? What is that profit?

Exercise 2:
Assume that average revenue has a downward sloping linear curve;
= c k,

Where c and k are constants and the variable x is the quantity of goods sold. Use differentiation to
show that the marginal revenue curve, MR, is downward sloping with twice the gradient of the AR
curve.

Exercise 3:
Review of Private Study Exercises.

Page 36 of 76
ABM Student Guide V1.0

Topic 6
Topic 6:
6.1

Differentiation 2

Learning Objectives

This topic provides an overview of partial differentiation and, briefly the total differential.
On completion of the topic, you will be able to:

Carry out partial differentiation


Relate partial differentiation to optimization
Calculate partial point elasticities
Recognise the total differential

6.2

Timings

Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 37 of 76
ABM Student Guide V1.0

6.3

Private Study Exercises

You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
For each case find the partial derivatives of z with respect to x and y.
a. = a 2 + b + c + d 2
b. = e2+3

c. =

(+)2
(3+)

Exercise 3:
For each case find the partial derivatives of z with respect to x and y.
a. = 2 + 2 10 10 + 50

b. = 2 + 2 + 10 10 + 50

c. = 2 2 + 10 + 10 + 50

Find the values of x and y such that both partial derivatives are zero. Use Excel to produce 3D
surface plots of each case, and interpret the result.

Exercise 4:
The following sites (accessed 11th March 2011) provide useful material for further practice.
www.metalproject.co.uk/METAL/Resources/Films/Differential_equations/#film501
www.analyzemath.com/calculus.html#multivariable

Page 38 of 76
ABM Student Guide V1.0

6.4

Tutorial Exercises

The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
Use differentiation to find a relationship between marginal revenue and own price elasticity.

Exercise 2:
Use partial differentiation to find expressions for own and cross price elasticities for the demand
function;
1 = 250 81 + 52

Assuming brand 2 has a price of p2 = 80, evaluate the own price elasticity for p1 = 20, 40 and
60.

Exercise 3:
Find own and cross price elasticities for the demand function;

1 = a1 2

where a, and are constants.

Exercise 4:
A company sells a product at price P per unit, whether drop shipped or from held inventory. The
annual demand, D, for the product is known for sure. Inspired by the classic economic order quantity
model, the company has built an initial model to determine what proportion of the demand for
product, x, should be met from inventory, and the order quantity, Q. The company has collected data
for
Cd the cost of purchasing a unit of the product inclusive of drop shipping
Ci the cost of purchasing a unit of the product from a wholesaler plus shipping from inventory to
end customer
Co ordering cost
Ch annual holding cost for one unit.
The initial model for profit, , is described by the equation;

Page 39 of 76
ABM Student Guide V1.0

= PD DCi (1 )DCd

DCo Ch

By differentiating profit with respect to x and Q find expressions for the optimum fraction of demand
met from inventory and the optimum order quantity.

Exercise 5:
Review of Private Study Exercises.

Page 40 of 76
ABM Student Guide V1.0

Topic 7
Topic 7:
7.1

Regression Analysis 1

Learning Objectives

This topic provides an overview of simple linear regression and correlation.


On completion of the topic, you will be able to:

Understand a straight line fit to bivariate data


Calculate and interpret Pearsons correlation coefficient
Calculate and interpret Spearmans correlation coefficient

7.2

Timings

Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 41 of 76
ABM Student Guide V1.0

7.3

Private Study Exercises

You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
A hand car wash service has been monitoring its daily demand as it has changed price. Calculate
the simple linear regression line and the Pearson correlation coefficient.
Price per Wash
5.00
5.50
6.00
6.50
7.00

Number Cars
105
113
99
94
87

Exercise 3:
a. An advertising company decides which adverts to place in particular magazines. To aid this
decision the company studies the response of subjects to adverts. One study examines the
relationship between subject age and response. For one advert design, the results of a very
small pilot study are below. Calculate the rank coefficient of correlation.
Person
Anastasia
Beryl
Cheryl
Deborah
Elizabeth

Age Band
15-29
25-34
35-44
45-54
>54

Attitude
very good
neither good nor poor
good
very poor
poor

b. A separate study for another advert resulted in the following data. Calculate the rank
coefficient of correlation.
Person
Alan
Bertie
Christopher
Dennie
Eric
Frank

Age Band
15-29
25-34
35-44
25-34
45-54
>54
Page 42 of 76

ABM Student Guide V1.0

Attitude
very good
neither good nor poor
good
good
poor
poor

Exercise 4:
Calculate the simple regression line and the coefficient of determination for each of the following
four data sets (Anscombe, 1973). Describe your findings.
Set A
x
10
8
13
9
11
14
6
4
12
7
5

Set B
y
8.04
6.95
7.58
8.81
8.33
9.96
7.24
4.26
10.84
4.82
5.68

x
10
8
13
9
11
14
6
4
12
7
5

Set C
y
9.14
8.14
8.74
8.77
9.26
8.1
6.13
3.1
9.13
7.26
4.74

x
10
8
13
9
11
14
6
4
12
7
5

Set D
y
7.46
6.77
12.74
7.11
7.81
8.84
6.08
5.39
8.15
6.42
5.73

x
8
8
8
8
8
8
8
19
8
8
8

y
6.58
5.76
7.71
8.84
8.47
7.04
5.25
12.5
5.56
7.91
6.89

Reference:
Anscombe, FJ. (1973). Graphs in Statistical Analysis The American Statistician 27(1),17-21.

Exercise 5:
Investigate the Excel function TREND.
Investigate the Excel options for adding trend lines to scatter graphs. (First produce a scatter graph.
Excel 2010: Single click on scatter graph. Drop down menu from Chart tools / Layout / Trendline.
Excel 2003: Single click on scatter graph. Chart / Add Trendline.)

Exercise 6:
Study the following pages at http://stattrek.com
http://stattrek.com/AP-Statistics-1/Correlation.aspx (accessed 9th April 2011)
http://stattrek.com/AP-Statistics-1/Regression.aspx (accessed 9th April 2011)

Page 43 of 76
ABM Student Guide V1.0

7.4

Tutorial Exercises

The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
Use differentiation to minimise the SSE and so derive the simple regression formulae for the
gradient m and the intercept c.
Suggested Answer:

Exercise 2:
Show that the total variation can be expressed as the sum of unexplained and explained variation.

Exercise 3:
Review of Private Study Exercises.

Page 44 of 76
ABM Student Guide V1.0

Topic 8

Topic 8:
8.1

Regression Analysis 2

Learning Objectives

This topic provides an overview of multiple regression and its extension with dummy variables. The
topic is set at a level suitable for a future general manager, rather than a statistician or
econometrician.
On completion of the topic, you will be able to:

Evaluate results from regression analysis


Interpret results from regression analysis
Recognize the possibility to extend regression analysis

8.2

Timings

Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 45 of 76
ABM Student Guide V1.0

8.3

Private Study Exercises

You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
Data has been collected for advertised house prices in regions over a city.
Property
1
2
3
4
5
6
7
8
9
10
11
12

Price
507
488
314
231
280
503
288
418
291
356
342
490

Area
156
167
104
73
110
210
95
164
121
155
178
200

Land School
1690
3
888
1
759
3
792
4
630
2
655
1
1000
2
902
2
1185
3
780
1
600
3
1234
1

Region
R1
R1
R1
R1
R2
R2
R2
R2
R3
R3
R3
R3

Give an expected value for the advertised house price of a property with the following
characteristics: Area = 150, Land = 850, School = 1.5 and Region = R3. Explain your answer
carefully.

Exercise 3:
Plastic Sheds Ltd. wish to develop a demand function for their acrylic garden sheds. Develop the
demand function based on the data below. All other things being equal, what would be the effect of
a 100 decrease in the price of the competitor product?
Quarterly
Quantity
1990

Own
Price
()
750

Competitor
Price ()

Median
Income ()

860

18025

Page 46 of 76
ABM Student Guide V1.0

1960
2090
2080
2030
2100
2110
2170
2160
2090
2100
2190

600
840
790
660
830
730
850
760
600
630
740

730
820
770
730
870
700
790
690
630
690
680

18151
18278
18406
18535
18665
18796
18928
19060
19193
19327
19462

Exercise 4:
Two alternative presentations of multiple regression are at;
www.statsoft.com/textbook/multiple-regression (accessed 14th April 2011)
http://davidmlane.com/hyperstat/prediction.html (accessed 14th April 2011)
A more advanced presentation can be found out;
http://simon.cs.vt.edu/SoSci/converted/MRegression/ (accessed 14th April 2011)

Page 47 of 76
ABM Student Guide V1.0

8.4

Tutorial Exercises

The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
A healthcare service provider calculates a performance index in a way mandated by government.
Each staff member within the organization is classed as either Supervisory or Frontline. As a
consultant you have been asked to develop a model relating the performance index to the numbers
of Supervisory and Frontline staff. You have been provided with data from 10 of the service
providers centres.
Centre
A
B
C
D
E
F
G
H
I
J

Performance
Index
36
34
28
37
46
45
30
57
40
57

Supervisory
Staff
310
388
240
359
723
470
471
657
510
677

Frontline
Staff
7010
4405
3501
3619
3098
5136
1260
4517
4319
5104

Exercise 2:
For the set of data investigated in Exercise 1, create a third variable FxS by multiplying the number
of Frontline and Supervisory staff for each case. Construct two more regression models. For the
first include the variables Frontline and FxS, for the second include Supervisory and FxS.

Exercise 3:
Review of Private Study Exercises.

Page 48 of 76
ABM Student Guide V1.0

Topic 9
Topic 9:
9.1

Time Series Analysis

Learning Objectives

This topic provides an overview of time series analysis, with particular focus on decomposition and a
brief introduction to exponential smoothing.
On completion of the topic, you will be able to:

Understand calendar, inflation and population adjustments


Deseasonalise data using additive or multiplicative decomposition.
Apply simple exponential smoothing.

9.2

Timings

Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 49 of 76
ABM Student Guide V1.0

9.3

Private Study Exercises

You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
A fruit stall operates at the exit of a London tube station. Its sales figures are given below.

Day 1
Day 2
Day 3
Day 4

08:30 to 11:30
218.00
212.00
200.00
193.00

11:30 to 14:30
112.00
116.00
115.00
92.00

14:30 to 17:30
59.00
66.00
67.00
55.00

Use a 3 point moving average to smooth the data. Plot the time series, Y, and the trend, T. On a
separate graph plot Y-T. Calculate appropriate seasonal adjustments.

Exercise 3:
Over the past four years the hotel zone of a popular Latin American tourist destination has been
increasing its number of rooms. During this period of change the local tourism office has tracked
occupancy rates. Extract the trend-cycle and seasonality adjustments from the data. (Use CMA4
and multiplicative decomposition). Plot and discuss any graphs that you think are relevant. What
other data would be useful to characterise quantitative changes in the hotel zone?

2007

2008

Q1

Y (Occupancy Rate %)
86

Q2

85

Q3

83

Q4

91

Q1

87

Q2

77

Q3

78

Q4

89

Page 50 of 76
ABM Student Guide V1.0

2009

2010

Q1

79

Q2

67

Q3

78

Q4

78

Q1

73

Q2

69

Q3

59

Q4

73

Exercise 4:
Study the following sites.
The Australian Bureau of Statistics (www.abs.gov.au) discusses time series decomposition and the
importance of seasonality. In particular the section The Basics is a useful read at:
www.abs.gov.au/Ausstats/abs@.nsf/7d12b0f6763c78caca257061001cc588/af6b411c65fbe6b8ca25
71090080a510!OpenDocument accessed 2nd April 2011.
A brief overview of exponential smoothing is given in the Engineering Statistics Handbook of NIST,
an agency of the US Department of Commerce, at:
www.itl.nist.gov/div898/handbook/pmc/section4/pmc431.htm

Page 51 of 76
ABM Student Guide V1.0

9.4

Tutorial Exercises

The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
The number of rats captured in a grain store are summarised below. Use simple exponential
smoothing with = 0.2 and = 0.7 to forecast the number of rats that will be caught in week 7.
Week
week 1
week 2
week 3
week 4
week 5
week 6

Rats
216
224
217
233
245
229

Exercise 2:
Calculate the mean squared error (MSE) and the Mean Absolute Error (MAE) for the sales data and
forecast figures below.
Sales
January
2910
February
2990
March
2837
April
3015
May
3069
June
2996
July
3268
August
3580
September
3236
October
3308

Forecast 1
2910
2910
2926
2908
2929
2957
2965
3026
3137
3157

Forecast 2
2910
2910
2958
2885
2963
3027
3008
3164
3414
3307

Page 52 of 76
ABM Student Guide V1.0

Exercise 3:
Locate an inflation adjusted House Price Index, such as that available from the UKs Nationwide
building society, www.nationwide.co.uk/hpi/historical.htm. Investigate your time series using Excel
and, for example a 12 point Centred Moving Average.

Exercise 4:
Review of Private Study Exercises.

Page 53 of 76
ABM Student Guide V1.0

Page 54 of 76
ABM Student Guide V1.0

Topic 10
Topic 10: Linear Programming
10.1 Learning Objectives
This topic provides an overview of Linear Programming, with a particular focus on graphical solution
of a 2 variable problem.
On completion of the topic, you will be able to:

Recognize the concept of constrained optimisation


Formulate a two variable linear programme
Find a graphical solution to a two variable linear programme
Appreciate the process of sensitivity analysis

10.2 Timings
Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 55 of 76
ABM Student Guide V1.0

10.3 Private Study Exercises


You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
Solve the following simultaneous equations;
a. Y = 5, 6X + 7Y = 210
b. Y = 5, 7X + 15Y = 525
c. 7X + 15Y = 525, 5X + 28Y = 700
d. 6X + 7Y = 210, 5X + 28Y = 700

Exercise 3:
Minimise: cost = 9X + 3Y
Subject to the following constraints:
Constraint 1: Y 5
Constraint 2: 6X +7Y 210
Constraint 3: 7X +15Y 525
Constraint 4: 5X +28Y 700
Constraint 5: X, Y 0
Which constraints are binding and which are non-binding?

Exercise 4:
Use the web to find and study some presentations of the graphical solution of linear programming
problems. For example:

Page 56 of 76
ABM Student Guide V1.0

www.purplemath.com/modules/linprog.htm accessed 4th April 2011.


www.msubillings.edu/BusinessFaculty/Harris/LP_Problem1.htm accessed 4th April 2011.

Page 57 of 76
ABM Student Guide V1.0

10.4 Tutorial Exercises


The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
Maximise: profit = 39X + 42Y
Subject to the following constraints:
Constraint 1: Y 5
Constraint 2: 6X +7Y 210
Constraint 3: 7X +15Y 525
Constraint 4: 5X +28Y 700
Constraint 5: X, Y 0
Which constraints are binding and which are non-binding?

Exercise 2:
For the previous exercise what happens if constraint 1 is relaxed to Y 4? What is the shadow price
of constraint 1? For what increases and decreases of constraint 1 is this shadow price valid?

Exercise 3:
Review of Private Study Exercises.

Page 58 of 76
ABM Student Guide V1.0

Topic 11
Topic 11: Linear Programming with Solver Routines
11.1 Learning Objectives
This topic provides an overview of Linear Programming with the Excel Solver.
On completion of the topic, you will be able to:

To formulate an LP for solution with a Solver


Interpret LP output
o Binding and non-binding constraints
o Allowed increases and decreases
o Shadow price
Recognise extensions to LP e.g. integer programming.

11.2 Timings
Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 59 of 76
ABM Student Guide V1.0

11.3 Private Study Exercises


You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
You are required to prepare a 3 slide presentation on the following problem. The presentation
should include; (i) the problem expressed as an objective function and constraint inequalities and,
(ii) a management discussion of the Answer and Sensitivity Reports. (First solve the problem without
integer constraints so that Answer and Sensitivity Reports can be obtained. After this you might
choose to solve the problem with integer constraints).
The small and independent company, Bedroom Furniture Factory manufactures five items of
bedroom furniture. Each month the company decides how many of each item to manufacture based
on three sets of constraints: upstream material supply, in factory process and downstream demand.
The companys monthly labour costs are known and fixed. The contribution for each type of unit of
furniture is known.
Profit Information:
Fixed Labour Costs: 55,000
Furniture
Item
Wardrobe
Ottoman
Drawers
Dressing table
Chair

Contribution
(Selling price Material Costs)
190
370
250
310
100

Upstream (monthly supply side constraints):

Material
Lumber
Fabric

Monthly
Availability
10 m3
422 m2

wardrobe
0.03
0

Required per Unit Manufactured


ottoman
drawers
d. table
0.01
0.02
0.015
3
0
0

Page 60 of 76
ABM Student Guide V1.0

chair
0.005
1

Internal Process Constraints (monthly):

Process
Shaping
Plane&sand
Spray
Wash&trim
Assemble
Pack

Hours
Available
300
300
200
102
1000
150

wardrobe
0.4
0.5
0.5
0
1
0.1

Hours Required per Unit Manufactured


ottoman
drawers
d. table
0.4
0.5
0.3
0.1
0.5
0.2
0.8
0.5
0.1
0.3
0
0
1.5
0.5
1.5
0.1
0.5
0.1

Downstream (demand side constraints):


Unit
Wardrobe
Ottoman
Drawers
D. table
Chair

Monthly
Demand
200
50
250
100
290

Exercise 3:
Browse the following websites:
www.solver.com/optimization.htm accessed 5th April 2011.
www.cheresources.com/refinery_planning_optimization.shtml accessed 5th April 2011.

Page 61 of 76
ABM Student Guide V1.0

chair
0.3
0.2
0.1
0.3
0.5
0.15

11.4 Tutorial Exercises


The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
A company is in the fortunate position of having six projects available with positive Net Present
Value. Sadly the company has a current year capital ration of 4m. All other things being equal
which projects should the company fund? [Tip: assume the projects are indivisible and use the
binary constraint in Excels Solver.]
Project
A
B
C
D
E
F

Required Current Year Investment


2
3
2
1
2
3

Net Present Value


3.94
7.24
4.08
3.07
7.53
3.35

Exercise 2:
A company has two production centres P1 and P2. It has four distribution centres D1, D2, D3 and D4.
Production centre P1 has a weekly production volume of up to 15,000 units. Production centre P2
has a weekly production volume of up to 25,000 units. Each week the company decides what
quantity of units to ship from each production centre to each distribution centre, based on the weekly
requirement at each distribution centre, Q, and of the costs of shipping one unit, C:

P1
P2

D1
Q11
Q21

D2
Q12
Q22

D3
Q13
Q23

D4
Q14
Q24

P1
P2

D1
C11
C21

D2
C12
C22

D3
C13
C23

D4
C14
C24

Where,
C11 = 0.12, C12 = 0.15, C13 = 0.20, C14 = 0.10, C21 = 0.25, C22 = 0.20, C23 = 0.15, C24 =
0.15,
Next weeks requirements for the four distribution centres are; 10,000 for D1, 5200 for D2, 7500 for
D3, 13,800 for D4. How many units should each of the production centres produce and ship to each
of the distribution centres?

Exercise 3:
Review of Private Study Exercises.

Page 62 of 76
ABM Student Guide V1.0

Topic 12
Topic 12: Decision Tree Analysis
12.1 Learning Objectives
This topic provides an overview of decision tree analysis.
On completion of the topic, you will be able to:

Represent a sequential management decision with a tree diagram


Use rollback to solve a decision tree and to inform a management decision
Understand the difference between a priori and a posteriori probabilities
Recognise 1st, 2nd and 3rd order uncertainty.

12.2 Timings
Lectures:

1 hour

Private Study:

9.5 hours

Tutorials:

2 hours

Page 63 of 76
ABM Student Guide V1.0

12.3 Private Study Exercises


You should spend approximately 9.5 hours on the Private Study for this topic. You should use this
time to complete the exercises below as directed by your lecturer and to review the contents of this
topic.

Exercise 1:
Review the lecture material for this topic and discuss any confusion you have with other students.
List the points for which you remain uncertain and raise these in the tutorial. [You must still attempt
the other exercises below and take your answers to the tutorials.]

Exercise 2:
Rollback the following decision tree assuming that the numbers represent a positive flow variable
such as profit, revenues or net present value.

Exercise 3:
Rollback the decision tree from exercise 2, but now assume that the numbers represent a negative
flow variable such as losses or costs. Comment on your answer.

Exercise 4:
A clothing retailer is due to open a new store in a city in which it is not yet represented. From
previous experience the retailer knows that 70% of new store openings are profitable within the first
year, whilst 30% are not. The company contracts a market research organisation to improve these
estimates before opening the new store. The market research organisation estimates the reliability
of its survey procedure as follows. If the new store is going to be profitable within the first year then
the survey will be positive 50% of the time, neutral 30% of the time and negative 20% of the time. If

Page 64 of 76
ABM Student Guide V1.0

the store is not going to be profitable in the first year the survey will be positive 30% of the time,
neutral 30% of the time and negative 40% of the time. Calculate the posterior probabilities for the
stores first year profitability.

Exercise 5:
A company employs a large number of salespeople. You have been offered the job of travelling
salesperson and can choose whether to work in Region 1, Region 2 or Region 3. You will be paid
based on your performance. Of the existing salespeople with greater than median pay 30% are in
Region 1, 40% are in Region 2. Of the existing salespeople earning less than median pay 40% are
in Region 2 and 40% are in Region 3. In which Region would you choose to work and why?

Exercise 6:
Read the following articles;
Coopersmith E, Dean G, McVean J and Storaune E (2000) Making Decisions in the Oil and Gas
Industry Oilfield Review 12(4), p2-9.
Available at www.slb.com/resources/publications/oilfield_review/en/2000/or2000_win.aspx accessed
1st April 2011.
Bryant I, Malinverno A, Prange M, Gonfalin M, Moffat J, Swager D, Theys P and Verga F. (2002)
Understanding Uncertainty Oilfield Review 14(3) p2-15
Available at www.slb.com/resources/publications/oilfield_review/en/2002/or2002_aut.aspx accessed
1st April 2011.

Page 65 of 76
ABM Student Guide V1.0

12.4 Tutorial Exercises


The tutorials for this topic will last for 2 hours. You can expect to spend some of this time discussing
your answers to the Private Study exercises with your lecturer and other students. Your lecturer will
then direct you on completing the tasks below.

Exercise 1:
A manager is deciding whether to undertake a detailed seismic survey prior to drilling a well. The
alternative to drilling the well is to sell the rights to the tract. Based on existing information, the
probability that the well is dry is 0.3 hence the probability that the well is rich is 0.7.
Seismic surveys improve knowledge of the tract but do not provide perfect knowledge.
The probability of a positive survey given that the well is actually rich is 0.5. The probability of a
neutral survey given that the well is actually rich is 0.3. The probability of a negative survey given
that the well is actually dry is 0.2.
The probability of a positive survey given that the well is actually dry is 0.3. The probability of a
neutral survey given that the well is actually dry is 0.3. The probability of a negative survey given
that the well is actually dry is 0.4.
Present values have been estimated for each of the rich and dry outcomes. Present costs of a
seismic survey are known, as are present sale values for similar drilling rights.
Survey cost
Rich well
Dry well
Tract sale with no survey
Tract sale with neutral survey
Tract sale with positive survey
Tract sale with negative survey

4
100
-120
30
30
60
0

Should the manager undertake the seismic survey?

Exercise 2:
Review of Private Study Exercises.

Page 66 of 76
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Appendix
Equations and Statistical Tables
Management Statistics
Population mean and standard deviation
=

( )2

= ( )2

Population Coefficient of Variation


=

Sample mean and standard deviation


=

( )2
=
1

Sample skewness

( 1)( 2)

=1

Sample Coefficient of Variation


=

Simple Index Number


=

100
0

Laspeyres and Paasche Price Index Numbers





= 100

= 100

Laspeyres and Paasche Quantity Index Numbers


= 100

0

Page 67 of 76

ABM Student Guide V1.0

= 100

Probability

(1 or 2 ) = (1 ) + ( 2 ) (1 2 )

Theorem of Bayes
(|) =

(|)()
()

Theorem of Total Probability

() = (| )( )

Binomial Distribution B(n, p)


( = ) =
=

!
(1
!()!

)()

= (1 )

Poisson Distribution Po()


( = ) =
=

e
!
=

Exponential Distribution

() = e , 0

( < ) = 1
=

Standard Normal Distribution

() =

2
2

Page 68 of 76
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Hypothesis Testing
Distribution of sample means
=

Large sample confidence interval of the mean (n 30)


( , + ) =

, +

Large sample confidence interval of proportion (np and n(1 - p) 5)


(1 )
(1 )
( , + ) =
, +

Exact confidence interval (underlying population has normal distribution)


( , + ) =

, +

Approximate large sample test of the mean



=

Under the null hypothesis Z ~ N(0, 1), approximately.


Students one sample t-test of the mean.

=

Under the null hypothesis T ~ t (n - 1)


Independent two sample t-test
=

1
2

1
1
+
1 2

2 =

(1 1)12 +(2 1)22


1 +2 2

Under the null hypothesis T ~ t (n1 + n2 - 2)

Page 69 of 76
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Fitting Data
2 Goodness of fit test (Ei 5 for all i)
2 = =1

( )2

Under the null hypothesis 2 ~ 2 ( 1)


k is number of categories, m is number of model parameters estimated from data

2 Test of Association (Ei 5 for all i)


2 = =1

( )2

Under the null hypothesis 2 ~ 2 ( 1)( 1)


r is number of rows, c is number of columns
Simple Linear Regression
= mi + c

m =

is the least SSE straight line where;

i i

m =

c = m

n i i i i
n i2 ( i )2

The Coefficient of Determination


( )2
= =
( )2
2

The Pearson Correlation Function


R = r =

n i i i i

(n i2 ( i )2 )(n i2 ( i )2 )

Spearmans Rank Correlation (with no ties)


= 1

6 2
(2 1)

Page 70 of 76
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Differentiation
Definition
() =

( + ) ()

= lim

Standard Derivatives

= n1

= ea

1
=

=
= ea

= () = e ()
Rules of Differentiation

() + () = +

() =

()() = () + ()

()

() =

()

()

()

Elasticities of Demand
Own price
=

Cross price

1 1
1 1

12 =

1 2
2 1

Income
=

1
1

The Total Differential


= (1 + 2 + 3 +...)

1
1

1
1

2
2

2
2

3
3

3
3

+...

+...

Page 71 of 76
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Time Series
The additive decomposition model
= + +
The multiplicative decomposition model
=
Three Point Moving Average
Tn = (Yn-1 +Yn +Yn+1)
Four Point Centred Moving Average
1

= 8(2 +21 +2 +2+1 + )


Simple Exponential Smoothing
Ft+1 = Yt + (1 )Ft
Errors
=

1

=1

1
=

=1

Page 72 of 76
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Probabilities under the Normal Distribution Curve

P(Z < z)
z

4 z

-3.50

0.0002

0.0002

0.0002

0.0002

0.0002

0.0002

0.0002

0.0002

0.0002

0.0002

-3.40

0.0003

0.0003

0.0003

0.0003

0.0003

0.0003

0.0003

0.0003

0.0003

0.0002

-3.30

0.0005

0.0005

0.0005

0.0004

0.0004

0.0004

0.0004

0.0004

0.0004

0.0003

-3.20

0.0007

0.0007

0.0006

0.0006

0.0006

0.0006

0.0006

0.0005

0.0005

0.0005

-3.10

0.0010

0.0009

0.0009

0.0009

0.0008

0.0008

0.0008

0.0008

0.0007

0.0007

-3.00

0.0013

0.0013

0.0013

0.0012

0.0012

0.0011

0.0011

0.0011

0.0010

0.0010

-2.90

0.0019

0.0018

0.0018

0.0017

0.0016

0.0016

0.0015

0.0015

0.0014

0.0014

-2.80

0.0026

0.0025

0.0024

0.0023

0.0023

0.0022

0.0021

0.0021

0.0020

0.0019

-2.70

0.0035

0.0034

0.0033

0.0032

0.0031

0.0030

0.0029

0.0028

0.0027

0.0026

-2.60

0.0047

0.0045

0.0044

0.0043

0.0041

0.0040

0.0039

0.0038

0.0037

0.0036

-2.50

0.0062

0.0060

0.0059

0.0057

0.0055

0.0054

0.0052

0.0051

0.0049

0.0048

-2.40

0.0082

0.0080

0.0078

0.0075

0.0073

0.0071

0.0069

0.0068

0.0066

0.0064

-2.30

0.0107

0.0104

0.0102

0.0099

0.0096

0.0094

0.0091

0.0089

0.0087

0.0084

-2.20

0.0139

0.0136

0.0132

0.0129

0.0125

0.0122

0.0119

0.0116

0.0113

0.0110

-2.10

0.0179

0.0174

0.0170

0.0166

0.0162

0.0158

0.0154

0.0150

0.0146

0.0143

-2.00

0.0228

0.0222

0.0217

0.0212

0.0207

0.0202

0.0197

0.0192

0.0188

0.0183

-1.90

0.0287

0.0281

0.0274

0.0268

0.0262

0.0256

0.0250

0.0244

0.0239

0.0233

-1.80

0.0359

0.0351

0.0344

0.0336

0.0329

0.0322

0.0314

0.0307

0.0301

0.0294

-1.70

0.0446

0.0436

0.0427

0.0418

0.0409

0.0401

0.0392

0.0384

0.0375

0.0367

-1.60

0.0548

0.0537

0.0526

0.0516

0.0505

0.0495

0.0485

0.0475

0.0465

0.0455

-1.50

0.0668

0.0655

0.0643

0.0630

0.0618

0.0606

0.0594

0.0582

0.0571

0.0559

-1.40

0.0808

0.0793

0.0778

0.0764

0.0749

0.0735

0.0721

0.0708

0.0694

0.0681

-1.30

0.0968

0.0951

0.0934

0.0918

0.0901

0.0885

0.0869

0.0853

0.0838

0.0823

-1.20

0.1151

0.1131

0.1112

0.1093

0.1075

0.1056

0.1038

0.1020

0.1003

0.0985

-1.10

0.1357

0.1335

0.1314

0.1292

0.1271

0.1251

0.1230

0.1210

0.1190

0.1170

-1.00

0.1587

0.1562

0.1539

0.1515

0.1492

0.1469

0.1446

0.1423

0.1401

0.1379

-0.90

0.1841

0.1814

0.1788

0.1762

0.1736

0.1711

0.1685

0.1660

0.1635

0.1611

-0.80

0.2119

0.2090

0.2061

0.2033

0.2005

0.1977

0.1949

0.1922

0.1894

0.1867

-0.70

0.2420

0.2389

0.2358

0.2327

0.2296

0.2266

0.2236

0.2206

0.2177

0.2148

-0.60

0.2743

0.2709

0.2676

0.2643

0.2611

0.2578

0.2546

0.2514

0.2483

0.2451

-0.50

0.3085

0.3050

0.3015

0.2981

0.2946

0.2912

0.2877

0.2843

0.2810

0.2776

-0.40

0.3446

0.3409

0.3372

0.3336

0.3300

0.3264

0.3228

0.3192

0.3156

0.3121

-0.30

0.3821

0.3783

0.3745

0.3707

0.3669

0.3632

0.3594

0.3557

0.3520

0.3483

-0.20

0.4207

0.4168

0.4129

0.4090

0.4052

0.4013

0.3974

0.3936

0.3897

0.3859

-0.10

0.4602

0.4562

0.4522

0.4483

0.4443

0.4404

0.4364

0.4325

0.4286

0.4247

-0.00

0.5000

0.4960

0.4920

0.4880

0.4840

0.4801

0.4761

0.4721

0.4681

0.4641

Page 73 of 76
ABM Student Guide V1.0

0.00

0.5000

0.5040

0.5080

0.5120

0.5160

0.5199

0.5239

0.5279

0.5319

0.5359

0.10

0.5398

0.5438

0.5478

0.5517

0.5557

0.5596

0.5636

0.5675

0.5714

0.5753

0.20

0.5793

0.5832

0.5871

0.5910

0.5948

0.5987

0.6026

0.6064

0.6103

0.6141

0.30

0.6179

0.6217

0.6255

0.6293

0.6331

0.6368

0.6406

0.6443

0.6480

0.6517

0.40

0.6554

0.6591

0.6628

0.6664

0.6700

0.6736

0.6772

0.6808

0.6844

0.6879

0.50

0.6915

0.6950

0.6985

0.7019

0.7054

0.7088

0.7123

0.7157

0.7190

0.7224

0.60

0.7257

0.7291

0.7324

0.7357

0.7389

0.7422

0.7454

0.7486

0.7517

0.7549

0.70

0.7580

0.7611

0.7642

0.7673

0.7704

0.7734

0.7764

0.7794

0.7823

0.7852

0.80

0.7881

0.7910

0.7939

0.7967

0.7995

0.8023

0.8051

0.8078

0.8106

0.8133

0.90

0.8159

0.8186

0.8212

0.8238

0.8264

0.8289

0.8315

0.8340

0.8365

0.8389

1.00

0.8413

0.8438

0.8461

0.8485

0.8508

0.8531

0.8554

0.8577

0.8599

0.8621

1.10

0.8643

0.8665

0.8686

0.8708

0.8729

0.8749

0.8770

0.8790

0.8810

0.8830

1.20

0.8849

0.8869

0.8888

0.8907

0.8925

0.8944

0.8962

0.8980

0.8997

0.9015

1.30

0.9032

0.9049

0.9066

0.9082

0.9099

0.9115

0.9131

0.9147

0.9162

0.9177

1.40

0.9192

0.9207

0.9222

0.9236

0.9251

0.9265

0.9279

0.9292

0.9306

0.9319

1.50

0.9332

0.9345

0.9357

0.9370

0.9382

0.9394

0.9406

0.9418

0.9429

0.9441

1.60

0.9452

0.9463

0.9474

0.9484

0.9495

0.9505

0.9515

0.9525

0.9535

0.9545

1.70

0.9554

0.9564

0.9573

0.9582

0.9591

0.9599

0.9608

0.9616

0.9625

0.9633

1.80

0.9641

0.9649

0.9656

0.9664

0.9671

0.9678

0.9686

0.9693

0.9699

0.9706

1.90

0.9713

0.9719

0.9726

0.9732

0.9738

0.9744

0.9750

0.9756

0.9761

0.9767

2.00

0.9772

0.9778

0.9783

0.9788

0.9793

0.9798

0.9803

0.9808

0.9812

0.9817

2.10

0.9821

0.9826

0.9830

0.9834

0.9838

0.9842

0.9846

0.9850

0.9854

0.9857

2.20

0.9861

0.9864

0.9868

0.9871

0.9875

0.9878

0.9881

0.9884

0.9887

0.9890

2.30

0.9893

0.9896

0.9898

0.9901

0.9904

0.9906

0.9909

0.9911

0.9913

0.9916

2.40

0.9918

0.9920

0.9922

0.9925

0.9927

0.9929

0.9931

0.9932

0.9934

0.9936

2.50

0.9938

0.9940

0.9941

0.9943

0.9945

0.9946

0.9948

0.9949

0.9951

0.9952

2.60

0.9953

0.9955

0.9956

0.9957

0.9959

0.9960

0.9961

0.9962

0.9963

0.9964

2.70

0.9965

0.9966

0.9967

0.9968

0.9969

0.9970

0.9971

0.9972

0.9973

0.9974

2.80

0.9974

0.9975

0.9976

0.9977

0.9977

0.9978

0.9979

0.9979

0.9980

0.9981

2.90

0.9981

0.9982

0.9982

0.9983

0.9984

0.9984

0.9985

0.9985

0.9986

0.9986

3.00

0.9987

0.9987

0.9987

0.9988

0.9988

0.9989

0.9989

0.9989

0.9990

0.9990

3.10

0.9990

0.9991

0.9991

0.9991

0.9992

0.9992

0.9992

0.9992

0.9993

0.9993

3.20

0.9993

0.9993

0.9994

0.9994

0.9994

0.9994

0.9994

0.9995

0.9995

0.9995

3.30

0.9995

0.9995

0.9995

0.9996

0.9996

0.9996

0.9996

0.9996

0.9996

0.9997

3.40

0.9997

0.9997

0.9997

0.9997

0.9997

0.9997

0.9997

0.9997

0.9997

0.9998

3.50

0.9998

0.9998

0.9998

0.9998

0.9998

0.9998

0.9998

0.9998

0.9998

0.9998

Page 74 of 76
ABM Student Guide V1.0

Percentage Points of the Student Distribution

df

5.00%

10.00%

5.00%

2.00%

1.00%

90.00%

95.00%

98.00%

99.00%

6.3138

12.7062

31.8205

63.6567

2.9200

4.3027

6.9646

9.9248

2.3534

3.1824

4.5407

5.8409

2.1318

2.7764

3.7469

4.6041

2.0150

2.5706

3.3649

4.0321

1.9432

2.4469

3.1427

3.7074

1.8946

2.3646

2.9980

3.4995

1.8595

2.3060

2.8965

3.3554

1.8331

2.2622

2.8214

3.2498

10

1.8125

2.2281

2.7638

3.1693

11

1.7959

2.2010

2.7181

3.1058

12

1.7823

2.1788

2.6810

3.0545

13

1.7709

2.1604

2.6503

3.0123

14

1.7613

2.1448

2.6245

2.9768

15

1.7531

2.1314

2.6025

2.9467

16

1.7459

2.1199

2.5835

2.9208

17

1.7396

2.1098

2.5669

2.8982

18

1.7341

2.1009

2.5524

2.8784

19

1.7291

2.0930

2.5395

2.8609

20

1.7247

2.0860

2.5280

2.8453

21

1.7207

2.0796

2.5176

2.8314

22

1.7171

2.0739

2.5083

2.8188

23

1.7139

2.0687

2.4999

2.8073

24

1.7109

2.0639

2.4922

2.7969

25

1.7081

2.0595

2.4851

2.7874

26

1.7056

2.0555

2.4786

2.7787

27

1.7033

2.0518

2.4727

2.7707

28

1.7011

2.0484

2.4671

2.7633

29

1.6991

2.0452

2.4620

2.7564

30

1.6973

2.0423

2.4573

2.7500

31

1.6955

2.0395

2.4528

2.7440

32

1.6939

2.0369

2.4487

2.7385

33

1.6924

2.0345

2.4448

2.7333

34

1.6909

2.0322

2.4411

2.7284

35

1.6896

2.0301

2.4377

2.7238

36

1.6883

2.0281

2.4345

2.7195

37

1.6871

2.0262

2.4314

2.7154

38

1.6860

2.0244

2.4286

2.7116

39

1.6849

2.0227

2.4258

2.7079

40

1.6839

2.0211

2.4233

2.7045

2.50%

1.00%

0.50%

Page 75 of 76
ABM Student Guide V1.0

1
-t

1.6449

1.9600

2.3263

2.5758

Critical Values for the 2 Distribution


0.05

0.01

5.00%

1.00%

3.841

6.635

5.991

9.210

7.815

11.345

9.488

13.277

11.070

15.086

12.592

16.812

14.067

18.475

15.507

20.090

16.919

21.666

10

18.307

23.209

11

19.675

24.725

12

21.026

26.217

13

22.362

27.688

14

23.685

29.141

15

24.996

30.578

16

26.296

32.000

17

27.587

33.409

18

28.869

34.805

19

30.144

36.191

20

31.410

37.566

21

32.671

38.932

22

33.924

40.289

23

35.172

41.638

24

36.415

42.980

25

37.652

44.314

26

38.885

45.642

27

40.113

46.963

28

41.337

48.278

29

42.557

49.588

30

43.773

50.892

df

Page 76 of 76
ABM Student Guide V1.0