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BUS216 Exam #1 Review SOLUTIONS

How to use this review: Work through these problems, using as few resources as
possible (i.e. text and notes). Make notes of where you are having difficulty as you
go! Once you have solved or worked through the problem, go to the solutions
provided and compare your work to the solutions provided. Then refer back to your
text/notes for clarification.

1. Math test anxiety can be found throughout the general population. A study of
116 seniors at a local high school was conducted. The following Frequency
Distribution was produced from the data. Complete the missing parts. Round all
values to two decimal places.

Relative Cumulative
Score Range Frequency
Frequency Frequency

Very Relaxed (10 > 19) 39 0.33 0.33


Generally Relaxed (19 > 26) 24 0.21 0.54
Some Mild Anxiety (26 > 32) 23 0.20 0.74
Anxious/Tense (32 > 36) 8 0.07 0.81
Very Anxious (36 > 50) 22 0.19 1.00

The relative frequency of 0.33 within the total study of 116 seniors, then 116 x .33 =
39, and 116 X .19 = 22, then 39 + 24 + 8 + 22 + X = 116 or 23

Then, Relative Frequency is 24/116 = .21 and 23/116 = 19.8 and 8/116 = 0.068

Finally, for Cumulative Frequency: 0.33 + 0.21 = 0.54 and then 0.54 + 0.20 = 0.74
which means that 0.74 + 0.07 = 0.81 and finally, 0.81 + 0.19 = 1.00

2. The grade point average of the students at UVA is 3.25 with a standard deviation
of 0.84 while the grade point average of students at ODU is 3.20 with a standard
deviation of 0.82. Which university shows a more dispersed grade distribution?
Why do you conclude this?

The comparison of two sets of data requires the use of the Coefficient of
Variation:

𝟎. 𝟖𝟒
𝑼𝑽𝑨 = (𝟏𝟎𝟎) = 𝟎. 𝟐𝟓𝟖𝟒𝟔 ≈ 𝟐𝟓. 𝟖𝟓%
𝟑. 𝟐𝟓

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BUS216 Exam #1 Review SOLUTIONS

𝟎. 𝟖𝟐
𝑶𝑫𝑼 = (𝟏𝟎𝟎) = 𝟎. 𝟐𝟓𝟔𝟐𝟓 ≈ 𝟐𝟓. 𝟔𝟑%
𝟑. 𝟐𝟎

The higher CV of 25.85% for grades at UVA indicates that the grades at UVA
are more dispersed than the grades at ODU.

3. According to a survey of the top 10 employers in a major city in the Midwest, a


worker spends an average of 413 minutes a day on the job. Suppose the standard
deviation is 26.8 minutes and the time spent is approximately a normal
distribution. What are the times within which approximately 99.7% of all work
days will fall?

Because we have Normal Distribution, we are able to apply the Empirical


Rule which states that 99.7% of the data in a normal distribution will fall
plus or minus three Standard Deviations from the Mean of the Distribution.

Mean = 413, Standard Deviation = 26.8

413 ± [26.8 x 3] = 413 ±80.4 minutes, making the interval 332.6 minutes and
493.4 minutes.

4. Morningstar reports that for a selected group of Mutual Funds, the average
return on investment is $2.828 on the dollar, with a Standard Deviation of
$1.213. Potential investors are interested in determining the return they can
expect on their investment, when stock prices do not follow a symmetrical
distribution. 82.75% of these returns will fall within what interval?

𝟏
𝟖𝟐. 𝟕𝟓 = 𝟏 − 𝒌𝟐 and solving for 0.1725k2 = 1 or k = 2.407
$2.828 ± [(2.407)(1.2130] =
$2.828 ±2.9205 = -$0.0925and $5.748

82.75% of the returns on the investments will be between -$0.0925 and


$5.748

5. Quality control is an important issue at ACME Company which manufactures


light bulbs. In order to conduct testing of the life hours of their light bulbs, they
randomly sampled nine light bulbs and measured how many hours they lasted.
378, 361, 350, 375, 200, 391, 375, 368, 321. What is the 65th percentile?

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BUS216 Exam #1 Review SOLUTIONS

65
200 𝑖= (9) = 5.85 ≈ 6
321 100
After the data is sorted, the7th term
350 Is located as 375, which is the location
361 Of the 65th Percentile of the sample data
368
375
375
378
391

6. The average lateness for one of the top airline companies is 10 minutes. The
variance of the lateness measure is calculated as 9. An airplane arrived 13
minutes after the stated arrival time. Calculate the Z-score for this particular
airplane's lateness. Where would this plane’s arrival appear if shown on the
normal distribution curve?

Based on the calculation of a z score as a measure of position, the lateness for


this plane’s arrival would fall one standard deviation above the mean.

𝟏𝟑 − 𝟏𝟎
𝒛= = 𝟏
𝟑

7. Attendance at NASCAR races is generally normally distributed. Based on data


from the last two seasons, it was found that on average 102,000 people attended
the Sprint Cup race. It was also determined that attendance has a standard
deviation of 6,000. If a track is considering enlarging the grandstand, what
percentage of the races will see attendance between 108,000 and 114,000?

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BUS216 Exam #1 Review SOLUTIONS

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BUS216 Exam #1 Review SOLUTIONS

8. For a recent year, the numbers of murders in 24 selected cities are shown. A
researcher wants to analyze this data further.

248 348 74 314 297 248 72 135


270 71 226 141 390 74 328 65
366 248 298 69 127 68 159 98

In order to facilitate the analysis of the data, prepare a frequency Distribution, with
cumulative frequencies, and cumulative percent frequencies. Use 5 classes to
construct the distribution.

Murders cumulative

lower upper midpoint width frequency percent frequency percent


65 < 131 98 66 9 37.5 9 37.5
131 < 197 164 66 3 12.5 12 50.0
197 < 263 230 66 4 16.7 16 66.7
263 < 329 296 66 5 20.8 21 87.5
329 < 395 362 66 3 12.5 24 100.0
24 100.0

9. The local amusement park was interested in analyzing wait time at their most
popular roller coaster at the peak park time (2 p.m.). They selected 13 patrons
and had them get in line between 2 and 3 p.m. Each was given a stop watch to
record the time they spent in line. The times recorded were as follows (in
minutes): 118, 124, 108, 116, 99, 120, 148, 118, 119, 121, 45, 130, 118
For these waiting times, calculate the following, treating your data as a Sample:
a. Mean
b. Median
c. Mode
d. Range
e. Standard Deviation
f. Identify outliers by identifying the Inner and Outer Fences. If there
are outliers, are they mild or extreme?
g. Calculate the Pearsons Coefficient of Skewness.

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BUS216 Exam #1 Review SOLUTIONS

Waiting Times
mean 114.15
sample variance 557.97
sample standard deviation 23.62
minimum 45
maximum 148
range 103

1st quartile 116.00


median 118.00
3rd quartile 121.00
interquartile range 5.00
mode 118.00

low extremes 2
low outliers 1
high outliers 1
high extremes 1

BoxPlot

2/8/2015
19:39.04 (1)

40 60 80 100 120 140 160


Waiting Times

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BUS216 Exam #1 Review SOLUTIONS

Calculate the Inner and Outer Fences:

𝑰𝒏𝒏𝒆𝒓 𝑭𝒆𝒏𝒄𝒆𝒔: 116 − 1.5 × 5 𝑎𝑛𝑑 121 + 1.5 × 5


𝑶𝒖𝒕𝒆𝒓 𝑭𝒆𝒏𝒄𝒆𝒔: 116 − 3.0 × 5 𝑎𝑛𝑑 121 + 3.0 × 5

This gives you Inner Fences of 108.5 and 128.5 and your Outer Fences are
101 and 136. Now check your data …. you have the following outliers:
Mild: 108 and 130
Extreme: 99,45, 148

Now, calculate your Pearson’s Index of Skewness:


3(114.15 − 118)
𝑃𝑒𝑎𝑟𝑠𝑜𝑛𝑠 𝐼𝑛𝑑𝑒𝑥 𝑜𝑓 𝑆𝑘𝑒𝑤𝑛𝑒𝑠𝑠: 𝑆𝑘 = = −0.4889
23.62

It is negative, which gives you a left hand skew to the distribution. This is
supported by the Box Plot by the location of the Median to the left hand
side of the “box” which is the IQR or the middle 50% of the data. Also, if
graphed as a Histogram – you will see that the majority of the data falls
to the right , creating that elongated tail to the left of the distribution.

10. Forbes magazine publishes data on overseas business travel costs. The report
that the average per diem total for a traveler in London, England is $349.
Suppose that the shape of the distribution is unknown, but that 53% of the per
diem amounts are between $317 and $381. What is the value of the standard
deviation?

𝟏
𝟏− = . 𝟓𝟑 𝟎. 𝟒𝟕𝒌𝟐 = 𝟏 𝒌 = 𝟏. 𝟒𝟓𝟖
𝒌𝟐

$349 - $381 = $32.00 and $349 - $317 = $32.00

$𝟑𝟐. 𝟎𝟎
= $𝟐𝟏. 𝟗𝟒𝟕𝟖 ≈ $𝟐𝟏. 𝟗𝟓
𝟏. 𝟒𝟓𝟖

11. Refer to the following wage breakdown for a garment factory. What is the class
midpoint for the class with the greatest frequency?

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BUS216 Exam #1 Review SOLUTIONS

12. Consider the following stem and leaf plot:


Stem Leaf
1 0, 2, 5, 7
2 2, 3, 4, 8
3 0, 4, 6, 6, 9
4 5, 8, 8, 9
5 2, 7, 8

Suppose that a frequency distribution was developed from this, and there were 5
classes (10-under 20, 20-under 30, etc.). What is the cumulative frequency for the
30-under 40 class interval?

Stem Leaf Frequency Cumulative f


1 0, 2, 5, 7 4 4
2 2, 3, 4, 8 4 8
3 0, 4, 6, 6, 9 5 13
4 5, 8, 8, 9 4 17
5 2, 7, 8 3 20

13. A study of business faculty at state supported institutions in Ohio revealed that
the arithmetic mean salary for nine months is $52,000 and a standard deviation
of $3,000. The study also showed that the faculty had been employed an average
(arithmetic mean) of 15 years with a standard deviation of 4 years. How does the
relative dispersion in the distribution of salaries compare with that of the
lengths of service?

The Coefficient of Variation is used to compare the dispersion in multiple data


sets. Calculate the CV for each year, and the lower the CV – the less dispersion or
variation.
$3,000
𝑆𝑎𝑙𝑎𝑟𝑦 = (100) = 5.76%
$52,000

4
𝑌𝑒𝑎𝑟𝑠 = (100) = 26.67%
15

In this case, the conclusion is that the salaries of business faculty is less
dispersed and more consistent than the years of service, based on the CV of
5.76% for Salary as compared to the CV of 26.67% for years of service.

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BUS216 Exam #1 Review SOLUTIONS

14. Manuel Banales, Marketing Director of Plano Power Plants, Inc.’s Electrical
Division, is leading a study to assess the relative importance of product features.
Two items on a survey questionnaire distributed to 100 of Plano’s customers
asked them to rate the importance of “ease of maintenance” and “efficiency of
operation” on a scale of 1 to 10 (with 1 meaning “not important” and 10 meaning
“highly important”). His staff assembled the following statistics on these two
items.

Ease of Maintenance Efficiency of Operation


Mean 7.5 6.0
Median 8.5 5.5
Mode 9.0 4.5
Standard Deviation 1.5 2.5

What can Manuel conclude from these statistics about the shape of the two
distributions? Which is the most consistent? Support your conclusions.

Shape of the Distributions:

Ease of Maintenance: This will be skewed to the Left (negative skew) as


shown by the Pearson Index. In addition, the Median is larger than the Mean,
which drags the curve to the right, leaving excess data in the left tail,
creating a negative skew.
3(7.5 − 8.5)
𝑃𝑒𝑎𝑟𝑠𝑜𝑛𝑠 𝐼𝑛𝑑𝑒𝑥 𝑜𝑓 𝑆𝑘𝑒𝑤𝑛𝑒𝑠𝑠: 𝑆𝑘 = = −2.0
1.5
Efficiency of Operation: This will be skewed to the Right (positive skew) as
shown by the Pearson Index. In addition, the Median is smaller than the
Mean and falls to the left which allows additional data to remain in the right
side tail, creating the positive skew.
3(6.0 − 5.5)
𝑃𝑒𝑎𝑟𝑠𝑜𝑛𝑠 𝐼𝑛𝑑𝑒𝑥 𝑜𝑓 𝑆𝑘𝑒𝑤𝑛𝑒𝑠𝑠: 𝑆𝑘 = = 0.60
2.5
Consistency:

Comparing the Coefficients of Variation of the two performance measures, it


appears that Efficiency of Operation is the most consistent. This is supported
by the relative CV values of 20% versus 41.66%. The lower CV value indicates
a more consistent and less dispersed set of data.

1.5
𝐸𝑎𝑠𝑒 𝑜𝑓 𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 = (100) = 20%
7.5

2.5
𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 𝑜𝑓 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛 = (100) = 41.66%
6.0

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BUS216 Exam #1 Review SOLUTIONS

15. A survey of car rental agencies shows that the average cost of a car rental is
$0.32 per mile, and has a standard deviation of $0.03. The agency conducting the
survey cannot make an assumption that their data is normally distributed. They
need to know the range that will contain 75% of their data.

1 1
1− 2
= .75 .25 = 2 .25𝑘 2 = 1 𝑘 2 = 4 𝑘 = 𝟐
𝐾 𝑘

$𝟎. 𝟑𝟐 + 𝟐(𝟎. 𝟎𝟑) = $𝟎. 𝟑𝟖 𝒂𝒏𝒅 $𝟎. 𝟑𝟐 − 𝟐(𝟎. 𝟎𝟑) = $𝟎. 𝟐𝟔

16. A sample of assistant professors on the business faculty at state supported


institutions in Ohio revealed the mean income to be $72,000 per year with a
standard deviation of $3,000. If we assume normal distribution, what proportion
of the faculty earns more than $66,000 but less than $78,000? If 2,500 faculty
members were surveyed and we cannot assume normal distribution, how many
faculty members earned between $66,000 and $78,000?

17. Many retailers consider the impact of “add-on” purchases on overall sales. In
April, Green Mountain Coffee collected information on the number of customers
per day who purchased ground coffee by the pound in addition to a prepared
drink. The cumulative frequency distribution shown below is the result of that
survey. How often did fewer than 16 customers make an add-on purchase?
40

30

20

10

0
6 8 10 12 14 16 18
30% of the time fewer than 16 customers made an add-on purchase.

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BUS216 Exam #1 Review SOLUTIONS

18. A researcher has collected the waiting times for an on-line support service and
they were found to have a mean of 8.2 minutes. Four of the values are 6, 10, 7
and 12. What is the 5th value?

∑(𝑿) 𝟑𝟓 + 𝑿
𝝁= 𝟖. 𝟐 = 𝟖. 𝟐 𝒙 𝟓 = 𝟑𝟓 + 𝑿 𝟒𝟏 = 𝟑𝟓 + 𝒙 𝑿 = 𝟔
𝑵 𝟓

19. Refer to the following wage breakdown for a garment factory. What is the class
midpoint for the class with the greatest frequency?

The class with the greatest frequency is 7 > 10, which makes the midpoint: 7
+ 10 = 17 and 17/2 = 8.50

20. For a recent year, the numbers of murders in 18 selected cities are shown.

248 348 74 314 297 248


270 71 226 141 390 74
366 248 298 69 127 68

Use this data for the following questions:

(a) Mean, Median, Mode, IQR, Range, Variance and Standard Deviation
(b) Check the data for Outliers
(d) Construct a frequency Distribution of the Data using 4 classes
(e) Construct a Box Plot for the Data
(f) What would the shape of the Distribution look like if represented on a
Histogram based on a Pearson’s Coefficient?

Number of Murders

count 18
mean 215.39
sample variance 12,798.96
sample standard
deviation 113.13
minimum 68

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BUS216 Exam #1 Review SOLUTIONS

maximum 390
range 322

1st quartile 74.0


median 248.00
3rd quartile 302
interquartile range 228
mode 248.00

low outliers 0
high outliers 0

suggested interval width 65

Number of Murders cumulative


lower upper frequency percent frequency percent
68 < 133 6 33.3 6 33.3
133 < 198 1 5.6 7 38.9
198 < 263 4 22.2 11 61.1
263 < 328 4 22.2 15 83.3
328 < 393 3 16.7 18 100.0
18 100.0

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