Exercise Handout

PART I
1
1.1 You want to test a hypothesis to determine whether the average GMAT score for all applicants is at most 520.
What is the most appropriate alternative hypothesis?
1.2 Last year a small accounting firm paid each of its 5 clerks $22,000, 2 junior accountants $50,000 each, and the
firm’s owner $270,000.
The median value is $...................
1.3 Based on the following time series, estimate sales volume for year 2013.
Year 2007 2008 2009 2010 2011 2012
Sales 20 22 24 25 26 28
1.4 Fuel conscious consumer is considering buying one of four economy model cars. He estimates that 80% of his
mileage will be in city driving and the rest in highway mileage. The city and highway EPA mileage estimates for
the four models are shown in the payoff table.
Mileage Estimates (mpg)
Model City Highway
A 21 27
B 18 24
C 19 34
D 22 26
1.4 Convert the above payoff table to opportunity loss table. What is the minimum expected opportunity loss?
1.5 A sequence plot of 5 years of monthly data is shown below. Which of the following best describes the plot?
 random
 random plus seasonal
 seasonal
 straight-line trend
 cycle plus seasonal

1.6 Consider 3 Bernoulli trials with success probability p = 0.3. What is the chance of observing two successes?
1.7 The times that passengers at a busy railway station have to wait to buy tickets during the rush hour follow a normal
distribution with a mean of 2.55 minutes and a standard deviation of 1.50 minutes. What is the probability that a
random sample of 100 passengers will, on average, have to wait more than 3 minutes?
2 You were asked by a friend to engage in flipping a coin for money. Your friend would win a dollar each time a head (H)
appeared, while you would win a dollar for each tail (T) that appeared. After 20 flips, you were down by $6. Since the coin
was provided by the friend, you began to wonder if the coin was "loaded." You want to perform a two-sided test of
hypothesis at 5% level to know whether the coin was loaded. The sequence of results is given below.
T T T H H H T H H H H H T T T H H H H H
2.1 State the null hypothesis in symbolic form.
2.2 What is the value of the test statistic?
2.3 State the decision and conclusion of the test.
3 During the first 13 weeks of the television season, the Saturday evening 8:00 p.m. to 9:00 p.m. audience proportions were
recorded as ABC 29%, CBS 28%, NBC 25%, and independents 18%. A sample of 300 homes two weeks after a Saturday
night schedule revision yielded the following viewing audience data: ABC 95 homes, CBS 70 homes, NBC 89 homes, and
independents 46 homes. Test with α = .05 to determine whether the viewing audience proportions changed.
3.1 State the null hypothesis in the context of the problem.
4 People live in a mountain region claim that many of their neighbors live past 100 years of age. A researcher wants to
perform an upper-sided test of hypothesis, at 5% level, to determine whether such longevity is directly related to the
consumption of locally grown rutabagas. The researcher randomly selects and interview 15 residents of the mountain
region. A rank of 1 has been assigned to the lowest age and to the lowest level of rutabaga consumption. The data are as
follows:
Resident 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Age Rank 6 13 5 10 8 15 2 1 14 12 3 7 11 9 4
RutabagaConsumption Rank 12 15 10 11 8 14 7 4 13 3 1 6 9 5 2
5 A researcher wants to test a hypothesis, at 5% level, to determine whether a forty-minute workouts of one of the three
different activities (Swimming, Tennis, and Cycling) three days a week will lead to a loss of weight. The data on the
number of calories burned during 40-minute workouts for three different activities cannot be assumed to be normally
distributed with equal variance.
Activity Swimming Tennis Cycling Swimming Tennis Cycling Swimming Tennis Cycling
Calories Burned 500 400 400 500 400 350 550 300 300
Page 1
This exam paper is ABAC’s property and cannot be distributed or duplicated without proper authorization.
6 The placement service for a business college has 200 applicants on file, classified according to major and degree. The
computer output is given as follows:
Based on the above contingency table, perform a Chi-Square test of independence.

6.1 State the null hypothesis.
6.2 What is the critical value? ( = 0.05)
6.3 Compute the expected frequency E21.
7 A regional package delivery company is considering changing from full-size vans to minivans. The company sampled
minivans from each of three manufacturers. Each minivan was driven for 5,000 miles, and the operation cost per mile was
computed. The data on operation costs, in cents per mile, for the 12 minivans cannot be assumed to be normally distributed
with equal variance. At 5% level, perform a test to determine whether there is no difference in the average operation costs
per mile for the three types of minivans. The SAS outputs are given in Appendix A.
(Several SAS outputs are given in AppendixA. Choose one of them to answer the following questions.)
8 A bank branch located in a commercial district of a city has developed an improved process for serving customers during
the noon-to-1:00 p.m. lunch period. The waiting time (defined as the time the customer enters the line until he or she
reaches the teller window) of all customers during this hour is recorded over a period of 1 week. A random sample of 15
customers is selected and the data are analyzed with a parametric method. The SAS outputs are given in Appendix A.
Perform a test of hypothesis, at 5% level, to determine whether the mean waiting time is less than 5 minutes.
9 A business school accrediting agency has developed an outcomes measure test for graduating business school students. The
test asks last-semester seniors a number of questions about topics in business and economics that they have studied during
their course work. At one school, a random sample of 13 students took the test. Included in this group were 4 marketing
majors, 4 management major, and 5 accounting majors. The data on test scores can be assumed to be normally distributed
with equal variance. At 5% level, perform a test to determine whether there is no difference in average scores among the
three academic majors.
The SAS outputs are given in Appendix A.
9.1 State the alternative hypothesis in the context of the problem.
9.2 What is the p-value?
10 A statistics professor taught two special sections of a basic course in which the 10 students in each section were considered
outstanding. She used a “traditional” method of instruction in one section and an “experiment” method in the other. At the
end of the semester she ranked the students on the basis of their performance from 1 (worst) to 20 (best). These rank
ordered data are used in the test of hypothesis to determine whether there is a significant difference in the performance of
students between the two teaching methods. The SAS outputs are given in Appendix A. ( = 0.05)
11 The advertising manager of a breakfast cereal company would like to determine whether a new package shape would
improve sales of the product. In order to test the feasibility of the new package shape, a sample of 20 equivalent stores was
selected and 10 were randomly assigned as the test market of the new package shape, while the other 10 were to continue
receiving the old package shape. The data on sales of the product can be assumed to be normally distributed. The SAS
outputs are given in Appendix A. ( = 0.05)
12 In a study concerning sex discrimination in the salary earnings of workers in a particular industry, a random sample of 15
workers is selected from a pool of employed laborers and the workers’ average monthly salaries (in $1,000) are determined,
along with their age (in years) and gender. As gender can be only male or female, this variable is a dummy variable
requiring 0, 1 coding. Suppose we arbitrarily let 1 denote male and 0 denote female. The SAS multiple regression outputs
developed from the data are given in Appendix A.
12.1 Based on the regression model of salary on age and gender, predict the salary of a male worker who is 30 year old.
12.2 Interpret the regression coefficient of the dummy variable.
12.3 Which of the independent variables is(are) significant at 5% level?
13 A social researcher is interested in surveying attitudes of high school students concerning the importance of getting a
college degree. She questions a sample of 60 high school seniors about whether they believe that a college education is
becoming more important, less important, or staying the same. She wishes to determine if the responses are equally divided
across the three categories. The SAS outputs are given in Appendix A. ( = 0.05)
Page 2
14 New representatives for ABC Company attend a brief training program before being assigned to a regional office. At the
end of such a program, each representative was ranked with respect to future sales potential. At the end of the first sales
year, their annual sales ($ thousands) were recorded. At 5% level, perform a two-sided test of hypothesis to determine
whether there is a significant relationship between annual sales and ranking in training. The SAS outputs are given in
Appendix A.
15 The following is the list of statistical methods.
(1) One-Sample t test
(2) Independent-Samples t test
(3) Wilcoxon Rank Sum Test
(4) ANOVA (The F test for equality of k population means)
(5) Kruskal Wallis Test
(6) Pearson’s Correlation
(7) Spearman’s Rank Correlation
(8) The Sign Test
(9) The F test for regression model
(10) The Chi-Square test of Independent
(11) The Chi-Square Goodness of fit Test
(12) Simple Regression
For each of the situations described below, choose the method that is the most applicable.
15.1 The director of ABC school wishes to determine whether there is a significant difference in exam performance
(Score) between day program students and evening program students.
The most appropriate nonparametric method is …………….….
15.2 A company is considering five possible names for the new product.
15.3 The personnel director at a computer software development firm is interested in determining whether an
employee’s education level has an effect on his or her job knowledge (high, average, or low).
15.4 A researcher wants to test a hypothesis to determine whether a new diet program results in a mean weight loss of
more than ten pounds in two weeks.
The most appropriate parametric method is …………….….
15.5 You want to determine whether the gas mileage (in miles per gallon) and the speed that an automobile is driven (in
miles per hour) are not linearly related.
15.6 You want to determine whether the mean drying time is the same for four different types of paint.
=========================================================
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APPENDIX A
SAS output A1 : One-Sample t Test
SAS output A3 : Wilcoxon Test
SAS output A5 : Independent-Samples t Test
Page 4
SAS output A7 : ANOVA
SAS output A9 : Kruskal Wallis Test
SAS output A10 : Kruskal Wallis test
SAS output A11 : Chi-Square Goodness of Fit
SAS output A12 : Correlation Matrix
Page 5
SAS output A14 : Regression
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NAME …………………………………….… CODE ……………….. SEC …………….
ANSWER SHEET : PART I Part I Part II Total
( 46 points: 0.8 points each) Points

Total x 0.8 = Marks
1 1.1 Ha : ……………………… (symbolic form)
1.2 $……………………….
1.3 ……..………………….
1.4 Min EOL = ………………………
1.5     
1.6 ……………………….
1.7 ……………………….
2 2.1 H0 : ………………………………………… (symbolic form)
2.2 ………………………
2.3 Decision and Conclusion. (one sentence)
…………………………………………………………………………………………
…………………………………………………………………………………………
3 3.1 H0 : ……………………………………………………….……………………
…………………………………………………………………………………………
3.2 ……………………….
…………………………………………………………………………………………
…………………………………………………………………………………………
4 4.1 H0 : ………………………………………… (symbolic form)
4.2 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
5 5.1 H0 : ……………………………………………………….……………………
…………………………………………………………………………………………
5.2 ……………………….
…………………………………………………………………………………………
…………………………………………………………………………………………
6 6.1 H0 : ……………………………………………………….……………………
…………………………………………………………………………………………
6.2 ………………………
6.3 ………………………
7 7.1 …………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
8 8.1 H0 : ………………………………………… (symbolic form)
8.2 ………………………
9 9.1 Ha : ……………………………………………………….……………………
…………………………………………………………………………………………
9.2 ……………………….
10 10.1 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
11 11.1 H0 : ………………………………………… (symbolic form)
11.2 ………………………
12 12.1 ……………………… dollars
12.2 …………………………………………………………………………………………
…………………………………………………………………………………………
12.3 …………………………………………………
13 13.1 H0 : ……………………………………….. (symbolic form)
13.2 ……………………….
…………………………………………………………………………………………
…………………………………………………………………………………………
14 14.1 ……………………….
…………………………………………………………………………………………
…………………………………………………………………………………………
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15 15.1 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
15.2 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
15.3 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
15.4 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
15.5 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
15.6 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
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Part II : Problem 1 (5 points)
It is believed that the sales volumes of a particular product when the items are placed near the checkout counters, in
addition to their usual location, differ from the volumes when the items are placed only in their usual location. Two samples
of daily sales volumes for the items are as follows:
Location One One One One One Two Two Two Two
Location Location Location Location Location Locations Locations Locations Locations
sales 95 110 110 95 95 100 130 120 110
Perform a nonparametric test of hypothesis at 5% level of significance.
H0 : …………………………………………… (symbolic form)

Ha : ………………………………………………………………………….
………………………………………………………………………….
(The alternative hypothesis in the context of the problem)
The critical values: ……………………
The value of the test statistic:……………………….
State the decision and conclusion of the test.
……………………………………………………………………………………….…

The buyer for an appliance store must decide how many air conditioners to purchase for sale during the coming summer
months. The store manager feels that the number of air conditioners sold will be 30, 40, or 50. Each air conditioner costs
the store $240 and will be sold for $400. Any air conditioners left over at the end of the summer will be cleared out at a
price of $200. Suppose the store manager knows that in the past 10 years 30 air conditioners have been sold in 5 of those
years, 40 air conditioners have been sold in 4 of those years, and 50 air conditioners have been sold in 1 of those years.
Construct the payoff table for this decision problem if the air conditioners are purchased in lots of size 10.
1 Define the action A1: ………………………………………………………
Define the state of nature S1: ………………………………………………
2 Set up the payoff table and compute expected monetary values

States of Nature
( ) ( ) ( ) EMV
Action
Payoff Table
The maximum EMV = _________________
3 Construct the opportunity loss table and compute expected opportunity loss.
States of Nature
( ) ( ) ( ) EOL
Action
Opportunity Loss Table

The minimum EOL = _________________
4 What is the optimal action? ……………….
Page 8
Quarterly data for 2009 through 2012 are given in the following table.
Year 2009 2010 2011 2012
Quarter I II III IV I II III IV I II III IV I II III IV
Sales 30 10 5 20 25 15 10 25 25 15 10 20 30 15 10 25
Compute 4 seasonal index numbers.

Ratio to CMA ( %)
Year Q Y 4QMA CMA I II III IV
2009 I
II
III
IV
2010 I
II
III
IV
2011 I
II
III
IV
2012 I
II
III
IV
Seasonal Indexes
Part II : Problem 4 ( 6 points)

The following table gives the distribution of Scholastic Aptitude Test (SAT) scores for a random sample of 200 college
students. Test at 5% level of significance that the SAT scores are normally distributed with  = 500 and  = 100.
SAT Score Frequency  i E  n  i i
250 to less than 350 10
H0 : ……………………………………………………………..…………….……
……………………………………………………………..…………….……
Ha : ……………………………………………………………….……………..…
……………………………………………………………..…………….……
The critical value: ……………………
………………………………………………………………………………………..
………………………………………………………………………………………..
State the decision and conclusion of the test.
………………………………………………………………………………………..
………………………………………………………………………………………..
………………………………………………………………………………………..
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PART I
1
1.1 A real estate investor is considering three investments: an apartment building, a strip mall, and an office building.
Returns from each investment alternative depend on future population growth. The investor has developed three
growth scenarios showing the revenue (in thousand dollars) from each investment alternative along with their
probabilities of occurrence. This information is shown in the following table:
Population Growth
Slow Average High
(.20) (.30) (.50)
Apartment -75 10 150
Mall 15 30 75
Office -200 50 100
1.1.1 Convert the payoff table to opportunity loss table and find the minimum expected opportunity loss.
1.1.2 What is the best decision based on the expected-value criterion?
1.2 A sequence plot of several years of monthly data is shown below. Which of the following best describes the plot?
 random
 random plus seasonal
 seasonal
 straight-line trend
 trend plus seasonal
1.3 A manufacturer of flashlight batteries took a sample of 6 batteries from a day’s production and burned them
continuously until they failed. The numbers of hours they burned are 340, 425, 310, 540, 260, 450.
Compute the mean, standard deviation, and median.
 Mean = 387.5, SD = 94.06, Median = 382.5
 Mean = 387.5, SD = 94.06, Median = 340
 Mean = 94.06, SD = 387.5, Median = 425
 Mean = 540, SD = 94.06, Median = 387.5
 Mean = 103.04, SD = 94.06, Median = 450
1.4 Consider 4 Bernoulli trials with success probability p = 0.4. What is the chance of observing three successes?
1.5 Based on the following time series data, what is the predicted value for 2013, using a linear trend?
Year Production Year Production
2005 4 2009 11
2006 8 2010 9
2007 5 2011 11
2008 8 2012 14
1.6 The scores on an examination are normally distributed with mean µ = 70 and standard deviation  = 8. Suppose
that the instructor decides to assign letter grades according to the following scheme.
Score Grade
Less than 58 F
58 to 66 D
66 to 74 C
74 to 82 B
82 and above A
Find the percentage of students in “F Grade” category.
2 A shipment of assorted nuts is labeled as having 45% walnuts, 20% of hazelnuts, 20% almonds, and 15% pistachios. By
randomly picking several scoops of nuts from this shipment, an inspector finds the following counts.
Walnuts Hazelnuts Almonds Pistachios Total
Counts 65 55 35 45 200
Could these finding be a strong basis for an accusation of mislabeling? ( = .05)
2.2 Compute the value of the test statistic.
3 A high school science teacher decided to give a series of lectures on current events. To determine if the lectures had any
effect on student awareness of current events, an exam was given to the class before the lectures, and a similar exam was
given after the lectures. The scores are as follows:
Student 1 2 3 4 5 6 7 8 9
After Lecture 107 115 120 78 83 58 71 89 77
Before Lecture 111 110 93 75 88 56 75 73 83
Use a 0.05 level of significance to test the claim that the lectures made no difference against the claim that the lectures did
make some difference.
Page 10
4 A math instructor has two classes in advanced calculus. There are six students in Class 1 and seven students in Class 2. The
instructor uses a programmed textbook in Class 1 and a conventional textbook in Class 2. At the end of the semester, in
order to determine if the type of text employed influences student performance, he ranks the 13 students in the two classes
with respect to math ability. The rankings of the students in the two classes follow: Class 1: 1,3, 5, 7, 11, 13; Class 2:
2,4,6,8,9, 10, 12 (assume the lower the rank the better the student).( = .05)
5 A market researcher wishes to assess consumers’ preference among three different colors available on a household kitchen
appliance. The preferences on color were observed from a random sample of 147 recent sales. The data were analyzed and
the SAS computer outputs are given in Appendix A.
Test the null hypothesis, at  = .05, that all colors are equally popular.
5.1 The raw data are measured on ……………. scale of measurement.
5.2 State the alternative hypothesis in the context of the problem.
6 A random sample of six households with an income level below $30,000 was asked to record the number of hours per week
someone in the household was watching TV. Another sample of six households with income level at or above $30,000 was
asked to record the same information.
The data were analyzed and the SAS computer outputs are given in Appendix A.
At 5% level, perform a parametric test to determine whether there is a significant difference in the average number of hours
households in two income categories watch TV.
7 ABC University has been approached by Wilson Sporting Goods. Wilson has developed a football designed specifically for
practice sessions. Wilson would like to claim the ball will last for 500 practice hours before it needs to be replaced. Wilson
has supplied six balls for use during spring and fall practice. The data have been gathered on the time used before the ball
must be replaced. The data were analyzed and the SAS computer outputs are given in Appendix A.
At 5% level of significance, perform a lower-sided test to determine whether there is anything wrong with Wilson claiming
that the ball will last 500 hours.
8 A consumer-advocacy group wants to compare four different brands of flashlight batteries. Each brand is to be tested
five times. Twenty flashlights are randomly selected and divided into four groups of five flashlights each. Then each
group of flashlights uses a different brand of batteries. The lifetimes of the batteries to the nearest hours are analyzed
using a nonparametric method. The SAS outputs are given in Appendix A. ( = .05)
9 Many states are considering lowering the blood-alcohol level at which a driver is designated as driving under the influence
of alcohol. An investigator for a legislative committee designed the following test to study the effect of alcohol on reaction
time. Ten participants consumed a specified amount of alcohol. Another group of ten participants consumed the same
amount of a nonalcoholic drink, a placebo. The two groups did not know whether they were receiving alcohol or the
placebo. The twenty participants’ average reaction times (in seconds) to a series of simulated driving situations are
recorded. The histograms of the two samples show that the population distributions are highly skewed to the right. The data
were analyzed and the SAS computer outputs are given in Appendix A.
Perform an upper-sided significance test at 5% level of significant to determine whether it appears that alcohol
consumption increases reaction time.
10 Detailed interviews were conducted with over 1000 street vendors in order to study the factors influencing vendor’s
incomes. Vendors were defined as individuals working in the street, and included vendors with carts and stands on wheels
and excluded beggars, drug dealers, and prostitutes. The researchers collected data on age, hours worked per day, and
annual earnings ($). The SAS multiple regression outputs are given in Appendix A.
10.1 Based on the regression model of earning on age and hours worked per day, predict the earning of a 40-year-old
vender who works 10 hours per day.
10.2 Interpret the regression coefficient of the independent variable “Hours Worked Per Day”.
10.3 Interpret the coefficient of determination.
10.4 Which of the independent variables is(are) significant at 5% level?
11 Twelve students are ranked according to their cumulative grade point average and according to their grade point average for
psychology courses only. The researcher wishes to test a hypothesis at 5% level to know whether there is a significant
positive relationship between these two sets of ranks.
Page 11
12 A psychologist is trying to determine if there is a difference in three methods of training six-year-old children to learn a
foreign language. A random selection of 10 six-year-old children with similar backgrounds is assigned to each of three
different methods. At the end of a 6-week period, the children were given identical, standardized exams. The exams were
scored with high scores indicating a better grasp of the language. Perform the most appropriate significance test at 5% level
if the psychologist assumes that the data are normally distributed.
13 Let 1983 = base
1983 1984 1985
Item Price Quantity Price Quantity Price Quantity
Beef ( lb ) 238 50 240 52 233 54
Milk ( gal ) 105 85 112 91 113 92
Bread ( lb ) 51 30 54 28 55 28
13.1 Compute the weighted average of relative price index for 1985, using the values in 1984 as weights.
13.2 Compute the Paasche price index for 1985.
(8) The Sign Test
14.1 A consumer magazine wants to compare the mean lifetimes of ballpoint pens of three different types.
14.2 A researcher wants to test the claim that the mean lifetime of car engines of a particular type is greater than
220,000 miles.
14.3 You want to test a hypothesis in order to determine whether the height (inch) of females depends on their age
(from 5 to 18 years).
14.4 An advertising agency asks a group of men to shave with one shaver for a while and then to shave with another.
The advertising agency wants to determine which shaver is perceived to give a closer shave. The most appropriate
nonparametric method is …………
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APPENDIX A
Page 13
Page 14
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Page 15

Total x 0.8 = Marks
1 1.1.1 Min EOL = ………………………
1.1.2 ……………………….
1.2     
1.3     
1.4 ……..………………….
1.5 ……………………….
1.6 ……………………….%
2 2.1 H0 : ………………………………………………….… (symbolic form)
2.2 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
3 3.1 H0 : ………………………………………… (symbolic form)
3.2 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
4 4.1 H0 : ………………………………………… (symbolic form)
4.2 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
5 5.1  nominal  ordinal  interval  ratio
5.2 Ha : ……………………………………………………….……………………
…………………………………………………………………………………………
5.3 ……………………….
6 6.1 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
7 7.1 H0 : ………………………………………… (symbolic form)
7.2 ………………………
8 8.1 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
9 9.1 H0 :  Alcohol ________  Placebo =, , , , >, < (symbolic form)
9.2 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
10 10.1 ……………………… dollars
10.2 …………………………………………………………………………………………
…………………………………………………………………………………………
10.3 …………………………………………………………………………………………
…………………………………………………………………………………………
10.4 …………………………………………………
11 11.1 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
12 12.1 H0 : ……………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
12.2 ………………………
13 13.1 ………………………
13.2 ……………………….
14 14.1 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
14.2 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
14.3 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
14.4 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Page 16
The manager of ABC Company wants to study computer usage of three departments within the company (A, B, C). A
random sample of four jobs from each department in the past week is selected. The processing time (in seconds) for each
job is recorded as follows:
Department A B C A B C A B C A B C
Processing Time (in Seconds) 12 4 2 7 13 5 11 10 3 9 14 1
The manager cannot assume that these processing times are normally distributed with equal variance. Use a nonparametric
method to test a hypothesis to determine whether there is no difference in the means processing time of the three
departments. ( = 0.05)
H0 : …………………………………………… (symbolic form)
Ha : At least ………………………………………………………………………….
…………………………………………………………………………………..
………………………………………………………………………………………….
………………………………………………………………………………………….
State the decision and conclusion.
…………………………………………………………………………………….……
…………………………………………………………………………………….……
In a survey, 200 adults were each asked whether they preferred talk or music radio. The results, broken down by socio-
economic class were:
Talk Music
AB 16 24
C1C2 27 43
DE 41 49
Does this set of data suggest there is significant association between socio-economic class and listening preference at 5 %
level of significance?
H0 : ……………………………………………………………..…………….……
Ha : ……………………………………………………………….……………..…
The critical value : ……………………
………………………………………………………………………………………….
………………………………………………………………………………………….
……………………………………………………………………………………….…
The amounts of gas (in thousands of gigawatt hours) sold to domestic consumers by a regional energy company over four
years were:
Quarter Winter Spring Summer Autumn
2009 30 10 5 20
2010 25 15 10 25
2011 25 15 10 20
2012 30 15 10 25
Compute the seasonal indexes.
Ratio to CMA ( %)
Year Q Y 4QMA CMA Winter Spring Summer Autumn
2009 Winter
Spring
Summer
Autumn
2010 Winter
Spring
Summer
Autumn
2011 Winter
Spring
Summer
Autumn
2012 Winter
Spring
Summer
Autumn
Seasonal Indexes
The adjusting factor =
Page 17
The owner of a magazine stand is trying to decide how many copies of Business Monthly to stock. He purchases copies for
$0.90 and sells them for $2.5 each. If he has old magazines at the end of the month, they can be sent back to the publisher
for $0.35 per magazine. The demand distribution for the magazine is given below:
Number of magazines 45 50 55 60
Probability 0.20 0.25 0.25 0.30
Using purchase levels equal to possible demand levels, determine the number of magazines to be purchased for sale at the
newsstand.
1 Construct a payoff table, indicating all actions, states of nature, probabilities, payoffs, and EMV.
(2 marks)
45 50 55 60
( ) ( ) ( ) ( ) EMV
45
50
55
60
Payoff Table
The Maximum EMV = …………………… (1 marks)
2 Convert the payoff table to opportunity loss table. (1 marks)
45 50 55 60
( ) ( ) ( ) ( ) EOL
45
50
55
60
Oportunity Loss Table
The Minimum EOL = …………………… (1 marks)
Determine the optimal order quantity……………………. (1 marks)

The commissions for sales of new cars are reported to average $1,500 per month with a standard deviation of $300. A
sample of 500 sales representatives revealed the following distribution of commissions.
Commission($) Frequency  i E  n  i i
Less than 900 9
900 up to 1,200 63
1,200 up to 1,500 165
1,500 up to 1,800 180
1,800 up to 2,100 71
2,100 or more 12
At 5% significance level, perform a test to determine whether the commissions for sales of new cars are normally
distributed, with a mean of $1,500 and a standard deviation of $300.
H0 : ……………………………………………………………..…………….……
……………………………………………………………..…………….……
Ha : ……………………………………………………………….……………..…
……………………………………………………………..…………….……
………………………………………………………………………………………..
………………………………………………………………………………………..
………………………………………………………………………………………..
………………………………………………………………………………………..
………………………………………………………………………………………..
………………………………………………………………………………………..
Page 18
PART I
1
1.1 Based on the following set of data, find the median.
1.9 2.8 5.7 4.2 1.9 8.6 3.9 7.2
1.2 Based on the following frequency table, find the mean age.
Age range (years) 20 - 30 30 - 40 40 – 50
Frequency counts 260 348 287
1.3 The heights of 18-year-old men are approximately normally distributed, with mean 68 inches and standard
deviation 2 inches.
1.3.1 What is the probability that an 18-year-old man selected at random is between 67 and 69 inches tall?
1.3.2 If a random sample of sixteen 18-year-old men is selected, what is the probability that the mean height is
between 67 and 69 inches?
1.4 A multiple-choice examination has 10 questions. Each question has four possible answers, of which only one is
correct. The probability that by just guessing, a student will get exactly 8 correct is
8 2
 (45)   1    3 
8 2 8 2
 1  (45)   1    3   (10)   1    4 
4 4 4 4 5  5
8 2 2 8
 1  (10)   1    4   1  (90)   1    3 
8 2
 (90)   1    3 
   
5 5    
4 4  4  4
1.5 Convert the following payoff table to opportunity loss table and find the minimum EOL.
State of Nature
Alternative S1 S2
A1 60 -25
A2 -30 50
A3 80 -40
Probability 0.4 0.6
1.6 A multiple regression analysis based on 20 data points yielded the following fitted model: Yˆ  3  5 X 1  1.5 X 2
Y = Starting salary of college graduates (in thousand dollars).
X1 = GPA
X2 = 0 if Male, 1 if Female
Interpret the regression coefficient of the dummy variable.
1.7
Are any components of the above time series visible? If so, which of them?
1.8 A model of the form yˆ  a  b1 x1  b2 x 2 has been used to model y, the height in inches of young girls, where x1
is the age of the girl in years and x 2 is the weight in kilograms. Which of the following is (are) correct?
I. The coefficient “a” is in inches per year per kilogram.
II. The coefficient “ b1 ” is in inches per year.
III. The coefficient “ b2 ” is in kilograms per inch.
I  II  III  I and II  I and III
2 Two expert French chefs judged chocolate mousse made by students in a Paris cooking school. Each chef ranked the best
chocolate mousse as 1.
Student 1 2 3 4 5
Rank by Chef Pierre 4 2 3 1 5
Rank by Chef Andre 4 1 2 3 5
Use a 5% level of significance to test whether there is a positive association between ranks given by Chef Pierre and by
Chef Andre.
2.1 State the null hypothesis in words.
3 A recent national study gave the following information about declared majors of undergraduate college students:
humanities, 30%; science, 30%; business, 40%. A random sample of 100 college students from ABC University gave the
following counts regarding college majors: humanities, 20; science, 30; business, 50. Perform a test at 5% level to
determine whether the distribution of college majors for ABC students is different from the national distribution.
Page 19
4 Six sets of identical twins were randomly selected from a population of identical twins. One child was taken at random
from each pair to form an experimental group. These children participated in a program designed to promote creative
thinking. The other child from each pair was part of the control group that did not participate in the program to promote
creative thinking. At the end of the program, a creative problem-solving test was given with the results shown in the
following table:
Twin pair A B C D E F
Experimental group 53 35 12 18 33 47
Control group 39 21 5 25 21 42
Perform a two-sided nonparametric test at 5% level to determine whether the program did not promote any creative
thinking.
4.1 What is the null hypothesis in symbolic form?
5 The better-selling candies are high in calories. The following data show the calorie content from samples of M&Ms and Kit
Kat. Perform a nonparametric test to determine whether there is a significant difference in the calorie content of the two
candies. ( = 0.05)
Candy M&Ms Kit Kat M&Ms Kit Kat M&Ms Kit Kat M&Ms Kit Kat
Calorie content 230 235 240 250 255 260 210 220
6 A gambler complained about the dice. They seemed to be loaded! The dice were taken off the table and test one at a time.
One die was rolled 300 times and the outcomes were recorded. Do these data indicate that the die is unbalanced?
The SAS outputs are given in Appendix A. ( = .05)
7 How much customers buy is a direct result of how much time they spend in a store. The mean shopping time for a woman
accompanied by children in national houseware stores is 7.3 minutes. A retail research team is studying shopping habits in
the ABC Shopping Mall. The research team collects shopping times (in minutes) from a random sample of 20 women
shoppers with children in a large houseware store. At 5% level test a hypothesis to determine whether the average shopping
time for women with children in the ABC Shopping Mall is higher than the national average for this type of store. The SAS
outputs are given in Appendix A.
8 A psychologist is trying to determine if there is a difference in three methods of training six-year-old children to learn a
foreign language. A random selection of 10 six-year-old children with similar backgrounds is assigned to each of three
different methods. At the end of a 6-week period, the children were given identical, standardized exams. The exams were
scored with high scores indicating a better grasp of the language. The psychologist is unwilling to assume that these exam
scores are normally distributed with equal variance.
The SAS outputs are given in Appendix A. ( = .05)
9 Nowadays a car salesperson is as likely to be a woman as a man. A researcher for a large franchise decided to examine how
successful their saleswomen are in car sales. She randomly selected 20 of their salesmen and 15 of their saleswomen, and
recorded their commission income, in thousands of dollars, for the preceding year. At 5% level the researcher wants to
perform a two-sided nonparametric test to decide whether saleswomen on average ear the same commission as salesmen.
(Several SAS outputs are given in Appendix A. Choose one of them and answer the following questions.)
10 ABC Engineering employs a large number of engineers. A researcher wants to know whether the salaries of these engineers
are related to their education and experience. She has obtained data for a sample of 20 engineers on their yearly salary, their
undergraduate GPA (grade point average), and their number of years of experience. The results of the analysis are given in
Appendix A.
10.1 Predict the yearly salary of an engineer, who has a 3.00 undergraduate GPA and 5 years of experience.
10.2 Interpret the regression coefficient of the number of years of experience, b2.
10.3 Which independent variables is (are) significant at 5% level?
11 A researcher wants to determine whether there is a relationship between the location of an accident and the gender of the
person involved in the accident. A sample of 150 accidents reported to the police was classified by location and gender.
The results of the analysis are given in Appendix A. ( = .05)
12 A health psychologist exposes two groups of randomly selected student volunteers to a common flu virus. One group is
comprised of 10 athletes who get regular exercise and the other is made up of 10 students who do not exercise regularly.
The researcher measures the average number of days each group stays ill with a cold. The researcher assumes that these
data are normally distributed. At 5 % level of significance, perform a test of hypothesis to determine whether regular
exercise decreases the amount of time one is ill. The SAS outputs are given in APPENDIX A.
Page 20
(8) The Sign Test
13.1 A marketing manager of a toy store wants to predict the number of toys sold based upon the sale price (in dollars).
13.2 A researcher wants to test a theory about whether or not the gender of the head of the household is related to the
number of days a child is absent from school.
13.3 In their advertisements, a new diet program claims that their methods result in a mean weight loss of more than ten
pounds in two weeks.
13.4 A researcher wishes to investigate whether the tar contents (milligrams) varies among four brand of cigarettes.
13.5 Suppose you have a set of data consisting of the gender, height, weight, and age of children between 5 and 10
years old. You want to know whether you can predict the height of a child using weight, age and gender as
predictors. Which statistical test is best suited to test your hypothesis?
13.6 You wish to know whether the proportions of four populations are equal.
APPENDIX A
Page 21
Page 22
SAS output A16 : Chi-Square Test of Independence
Page 23
SAS output A17 : Chi-Square Test of Independence
================================================================
Page 24
NAME …………………………………….… CODE ……………….. SEC …………….

Total x 0.8 = Marks
1 1.1 ………………………
1.2 ……………………….
1.3.1 ………………………
1.3.2 ………………………
1.4      
1.5 Min EOL = ……………………….
1.6 ………………………………………………………………………………………...
…………………………………………………………………………………………
…………………………………………………………………………………………
1.7  Trend  Cyclical variation  Seasonal variation  Trend and Seasonal variation  None
1.8     
2 2.1 H0 : ………………………………………………….…………………………..…..
…………………………………………………………………………………………
2.2 ………………………
3 3.1 H0 : ……………………………………………………………………………………
…………………………………………………………………………………………
3.2 ………………………
4 4.1 H0 : ………………………………………… (symbolic form)
4.2 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
5 5.1 ……………………….
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
6 6.1 H0 : …………………………………………………………….…… (symbolic form)
6.2 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
7 7.1 H0 : ………………………………………… (symbolic form)
7.2 ………………………
8 8.1 ………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
9 9.1 H0 : ………………………………………… (symbolic form)
9.2 ………………………
10 10.1 ………………………
10.2 …………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
10.3 …………………………………………
11 11.1 H0 : ………………………………………………….…………………………..…..
…………………………………………………………………………………………
11.2 ………………………
12 12.1 H0 :  Exercise  No Exercise (What is the missing symbol? , , , , ,  )
12.2 ………………………
13 13.1 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
13.2 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
13.3 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
13.4 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
13.5 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
13.6 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
------------------------------------------------------------------------------------------------------
Page 25
The number of heart attacks suffered by males and females of various age groups in a city is given by the following
contingency table.
Age Group Male Female Total
< 30 10 10 20
30 – 60 50 30 80
> 60 30 20 50
Total 90 60 150
Test at 5% level of significance the hypothesis that age and sex are independent in the occurrence of heart attacks.
H0 : ……………………………………………………………..…………….……
……………………………………………………………..…………….……
Ha : ……………………………………………………………….……………..…
……………………………………………………………..…………….……
The critical value : ……………………
……………………………………………………………………………………….
………………………………………………………………………………………….
……………………………………………………………………………………….…
…………………………………………………………………………………….……
…………………………………………………………………………………….……
A large corporation sends many of its first-level managers to an off-site supervisory skills course. Four different
management development centers offer this course, and the corporation wants to determine whether they differ in the
quality of training provided. A sample of 20 employees who attended these programs is chosen and the employees were
ranked in terms of supervisory skills. The results are as follows.
Course Supervisory Skills Rank
A 3 14 10 12 13
B 2 7 1 5 11
C 19 16 9 18 17
D 20 4 15 6 8
H0 : …………………………………………… (symbolic form)

Ha : At least………………………………………………………………………….
………………………………………………………………………………….
The critical value : …………………… ( = .05)

………………………………………………………………………………………….
……………………………………………………………………………………….…
A researcher conducts a study to evaluate whether or not the distribution of the length of time it takes migraine patients to
respond to a 100 mg. dose of an intravenously administered drug is normally distributed with  = 90 and  = 36. The
distribution of amount of time (in seconds) that elapses between the administration of the drug and cessation of a headache
for 90 migraine patients is shown below. ( = .05)
Time (in second) Frequency
i Ei  n   i
Less than 54 15
54 up to 72 9
72 up to 90 12
90 up to 108 21
108 up to 126 12
More than 126 21
H0 : ……………………………………………………………..…………….……
..……………………………………………………………………… (0.5 mark)
Ha : ……………………………………………………………….……………..…
……………………………………………………………………..… (0.5 mark)
The critical value: …………………… (1 mark)
The value of the test statistic:………………………. (3 marks)
State the decision and conclusion. (1 mark)
………………………………………………………………………………………..
Page 26
ABC Donut House serves a large variety of doughnuts, one of which is a blueberry-filled, chocolate-covered, supersized
doughnut supreme with sprinkles. This is an extra large doughnut that is meant to be shared by a whole family. Since the
dough requires so long to rise, preparation of these doughnuts begins at 4:00 in the morning, so a decision on how many to
prepare must be made long before learning how many will be needed. The cost of the ingredients and labor required to
prepare each of these doughnuts is $1. Their sale price is $3 each. Any not sold that day are sold to a local discount grocery
store for $0.50. Over the last several weeks, the number of these doughnuts sold for $3 each day has been tracked. The
results are as follows:
Number Sold 3 4 5 6
Percentage of Days 25% 20% 30% 25%
1 Construct a payoff table, indicating all actions, states of nature, probabilities, and payoffs. (3 marks)
3 4 5 6
( ) ( ) ( ) ( ) EMV
3
4
5
6
Payoff Table
The maximum EMV = _________________ (1 mark)
2 Convert the payoff table to opportunity loss table. (1 mark)
3 4 5 6
( ) ( ) ( ) ( ) EMV
3
4
5
6
Oportunity Loss Table
The Minimum EOL = …………………… (1 mark)
3 Determine how many of these doughnuts should be prepared each day. ……………………… (1 mark)
Part II : Problem 5 ( 7 Points)
YEAR Q1 Q2 Q3 Q4
2010 15 18 18 22
2011 19 22 22 26
2012 23 26 26 30
2013 27 30 30 34
Compute the seasonal indexes for the 4 quarters.
Ratio to CMA ( %)
Year Q Y 4QMA CMA Q1 Q2 Q3 Q4
2010 1
2011 1
2012 1
2013 1
Seasonal Indexes
The adjusting factor = __________________
Page 27
PART I
1
1.1 The ages of 6 randomly selected members of a club are as follows:
40, 50, 55, 60, 50, 30
Compute the sample variance.
1.2 A real estate investor is considering three investments: an apartment building, a strip mall, and an office building.
Returns from each investment alternative depend on future population growth. The investor has developed three
growth scenarios showing the revenue (in thousands of dollars) from each investment alternative along with their
probabilities of occurrence. This information is shown in the following table:
Population Growth
Alternative Slow Average High
Apartment 20 -20 -100
Mall -10 30 50
Office 10 70 100
Probability 0.2 0.3 0.5
1.2.1 Determine the minimum expected opportunity loss.
1.2.2 Determine the optimal action.
1.3 Based on the following data, compute the Spearman’s rank correlation coefficient.
X -2 -1 0 1 2
Y 4 1 0 3 5
1.4 The data given in the accompanying table are the annual sales over the 5-year period, 2011 through 2015.
Year 2011 2012 2013 2014 2015
Sales (billions of dollars) 2.7 2.9 3.0 3.4 3.6
Find the trend forecast for year 2016.
1.5 Consider 4 Bernoulli trials with success probability p = 0.2. Which of the following values is the chance of
observing no success?
 1  0.8  1  0.2  0.2  0.8  4  0.2 0.8
4 4 4 4 0 4
1.6 For a certain aptitude test, it is known from past experience that the average score is 1000 marks and the standard
deviation is 125 marks. If the test is administered to 100 randomly selected individuals, what is the probability that
the average score for this sample will be between 970 and 1030?
1.7 The following table shows the soft drink preferences of people in three age groups.
COLA ROOT BEER LEMON Total
Under 21 years of age Count 40 25 20 85
Expected Count 31.7 25.0 28.3 85.0
Between 21 and 40 Count 35 20 30 85
Expected Count 31.7 25.0 28.3 85.0
Over 40 years of age Count 20 30 35 85
Expected Count 31.7 25.0 28.3 85.0
Total Count 95 75 85 255
Expected Count 95.0 75.0 85.0 255.0
If one person is randomly selected, find the probability that the person drinks root beer given that he is over 40.
2 A sociologist is studying the age of the population in a city. Ten years ago, the population was such that 20% was under 20
years old, 15% was between 20 and 35, 30% was between 36 and 50, 25% was between 51 and 65, and 10% was over 65.
A study done this year used a random sample of 200 residents. The results are as follows:
Under 20 20 - 35 36 - 50 51 - 65 Over 65
25 25 65 65 20
At 5% level of significance, perform a test to determine whether the age distribution of the population has changed.
2.2 Compute the value of test statistic.
2.3 State the decision and conclusion.
3 A marketing consultant was hired to visit a random sample of nine sporting goods stores. Each store was part of a large
franchise of sporting goods stores. The consultant taught the managers of each store better ways to advertise and display
their goods. The net sales for 1 month before and 1 month after the consultant’s visit were recorded as follows (in
thousands of dollars):
Store 1 2 3 4 5 6 7 8 9
Before visit 57 95 50 77 43 40 45 53 62
After visit 63 101 58 81 41 38 44 51 65
At 5 % level of significance, perform a two-sided test of hypothesis to determine whether there is no difference in sales
before and after the visit of the consultant.
4 A researcher is comparing the "times to failure of a manufactured component" from two processes. The data are as follows:
Data from Process 1 4 24 5 26
Data from Process 2 15 65 25 60
It is known that these times-to-failure tend to follow exponential distributions (highly non-normal), so the researcher wants
to use a nonparametric method to analyze the data. ( = .05)
5 At ABC Company, each employee must undergo a training program before he or she is hired. A group of nine people went
through the training program and were hired to work. Rankings in performance after the training program and after one
month on the job are recorded (a rank of 1 is for best performance). Based on the SAS outputs given in APPENDIX A,
Page 28
perform a two-sided test of hypothesis to determine whether there is significant correlation between rank in the training
program and rank in performance on the job. ( = .05)
6 A study was conducted to know the effect of doing assignments in an introductory statistics course. Students in one section
received no assignments. Students in another section received assignments. The final scores of students were recorded. The
researcher is willing to assume that these exam scores are normally distributed.
The SAS outputs are given in APPENDIX A. ( = .05)
7 A mathematics instructor has two classes in advanced calculus. There are six students in Class I and seven students in Class
II. The instructor uses a programmed textbook in Class I and a conventional textbook in Class II. At the end of the
semester, in order to determine whether the type of text has an effect on student performance, the instructor ranks the 13
students in the two classes with respect to mathematics ability. The rankings of the students in the two classes are analyzed
and the SAS outputs are given in APPENDIX A. ( = .05)
7.1 What is the value of test statistic?
8 A researcher examined four methods of teaching reading by randomly assigning 24 children to one of four methods. After a
three-month instructional period, each child's reading performance was measured. Since it is known that the measure used
yields highly skewed data, scores were ranked before submitting them to SAS program for analysis and the SAS outputs
are given in APPENDIX A. ( = .05)
9 A cereal company wants to test the possible market effect of three different designs for its boxes. Independent random
samples of five markets each are selected. Each design is tried in one of the five-market groups. The numbers of cases sold
during the test period are analyzed with a parametric method and the SAS outputs are given in Appendix A. ( = 0.05)
10 In a study of 60 premarital pregnancies, a research team reported 30 such pregnancies in the lower social class, 20 in the
middle social class, and 10 in the higher social class. The researcher wants to test a hypothesis to determine whether
unwanted pregnancies are equally likely in three social classes. The SAS outputs are given in Appendix A. ( = 0.05)
11 The marketing manager of a large supermarket chain would like to determine the effect of shelf space (measured in meters)
and product placement on the sales of a brand of dog food. Placement is measured by a dummy variable, which equals 1 if
the dog food is placed at the back of the aisle, and equals 0 if placed at the front of the aisle. A random sample of 12 equal-
sized stores was selected and the SAS outputs are given in Appendix A. ( = 0.05)
11.1 Predict the weekly sales of pet food for a store with 1.6 meters of shelf space that is situated at the back of the aisle.
11.2 Interpret the coefficient of the dummy variable in the context of the problem.
11.3 If you want to test a hypothesis to determine whether there is a significant linear relationship between sales and
shelf space, what is the value of the test statistic?
11.4 State the decision and conclusion of F the test for the regression model.
(1) One-Sample t test (2) Independent-Samples t test
(3) Wilcoxon Rank Sum Test (4) ANOVA (The F test for equality of k population means)
(5) Kruskal Wallis Test (6) Pearson’s Correlation
(7) Spearman’s Rank Correlation (8) The Sign Test
(9) The F test for regression model (10) The Chi-Square test of Independent
(11) The Chi-Square Goodness of fit Test (12) Simple Regression
12.1 In the advertisements, a new diet program claims that their methods result in a mean weight loss of more than ten
pounds in two weeks. The most appropriate parametric method is …………….….
12.2 A company manager wishes to test a union leader's claim that absences occur on the different week days with the
same frequencies. The most appropriate nonparametric method is …………….….
12.3 A researcher wants to study length of time (in minutes) that it take to travel by car from a designated starting point
to a designated finishing point using three different routes. The most appropriate nonparametric test is ………
12.4 Suppose you have a set of data consisting of the gender, height, weight, and age of children between 5 and 10
years old. You want to know whether you can predict the height of a child using weight, age and gender as
predictors. The most appropriate parametric method is …………….….
12.5 A marketing analyst is studying the relationship between amount spent on television advertising and increase in
sales (in dollars). The most appropriate nonparametric test is …………….…...
12.6 A researcher wants to know whether there is a significant relationship between educational level and type of music
preferred.The most appropriate nonparametric test is …………….…...
Page 29
APPENDIX A
Page 30
Page 31
SAS output A18 : Pearson Correlation
SAS output A20 : Spearman Correlation
============================================================================================================
Page 32

Total x 0.8 = Marks
1 1.1 Variance = ………………….
1.2.1 MIN EOL = ……………………..…. thousands of dollars
1.2.2 The optimal action = ……………………….……..….
1.3 ………………………
1.4 ……………………… billions of dollars
1.5     
1.6 ………………………..
1.7 ………………………..
2 2.1 H0 : ………………………………………………………… (symbolic form)
2.2 ………………………
…………………………………………………………………………………………
3 3.1 H0 : ……………………………………………….…… (symbolic form)
3.2 ………………………
4 4.1 H0 : ……………………………………………….…… (symbolic form)
4.2 ………………………
…………………………………………………………………………………………
5 5.1 H0 : ……………………………………………….…… (symbolic form)
5.2 ………………………..
…………………………………………………………………………………………
6 6.1 ………………………
…………………………………………………………………………………………
7 7.1 ………………………
…………………………………………………………………………………………
8 8.1 ………………………
…………………………………………………………………………………………
9 9.1 H0 : ……………………………………………… (symbolic form)
9.2 ………………………
10 10.1 H0 : …………………………………………………….................... (symbolic form)
10.2 ………………………
…………………………………………………………………………………………
11 11.1 ……………………… dollars
11.2 …………………………………………………………………………………………
11.3 ………………………
…………………………………………………………………………………………
12 12.1 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.2 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.3 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.4 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.5 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.6 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
----------------------------------------------------------------------------------------------
Page 33
A researcher is doing a study to know whether there is a relationship between gender and type of movie preferred. A
random sample of 150 adults revealed the following frequency table. ( = 0.05)
Male Female
Drama 15 45
Science fiction 25 15
Comedy 20 30
H0 : ..……………………………………………………………………… (0.5 mark)

Ha : ……………………………………………………………………..… (0.5 mark)
The critical value: …………………… (0.5 mark)
The value of the test statistic:………………………. (2.5 marks)
---------------------------------------------------------------------------------------------------
A study was conducted in which samples were selected independently from four populations. The sample size from each
population was 20. The data were converted to ranks. The sum of the ranks for the data from each sample is as follows:
Sample 1 Sample 2 Sample 3 Sample 4
Sum of ranks 640 780 460 1360
At 5% level of significance, perform a hypothesis test to determine whether the populations have equal means.
H0 : ……………………………………………….…… (symbolic form) (0.5 mark)
Ha : At least………………………………………………………………………….
……………………………………………………………………… (0.5 mark)
---------------------------------------------------------------------------------------------------
The following frequency table contains the family incomes (in $1,000) for a random sample of 200 families.
Income(in $1,000) Frequency i Ei  n   i
Test at 5% level of significance to determine whether family incomes are normally distributed with  = $65,000 and  =
$10,000.
H0 : ..……………………………………………………………………… (0.5 mark)
Ha : ……………………………………………………………………..… (0.5 mark)
---------------------------------------------------------------------------------------------------
ABC Garden Center chain purchases Christmas trees from a supplier for sale during the holiday season. The trees are
purchased for $10.00 each and are sold for $25.00 each. Any trees not sold during the season can be sold for $3.00 each.
The probability of various levels of demand is as follows:
Demand (unit of trees) Probability
100 0.2
200 0.6
300 0.2
The chain can purchase trees in lots of 100, 200, or 300.
Using the expected-monetary-value criterion, determine the number of trees that the chain should purchase from the
supplier.
1 Construct a payoff table, indicating all actions, states of nature, probabilities, payoffs, and EMV. (3 marks)
100 200 300
( ) ( ) ( ) EMV
100
200
300
Payoff Table
Page 34
100 200 300
( ) ( ) ( ) EOL
100
200
300
3 What is the optimal action?
……………………………………………..…… (1 mark)
---------------------------------------------------------------------------------------------------
The amounts of gas sold to domestic consumers by a regional energy company over four years were:
Winter Spring Summer Autumn
2011 30 10 5 20
2012 25 15 10 25
2013 25 15 10 20
2014 30 15 10 25
Compute the seasonal indexes.
Ratio to CMA ( %)
Year Season Y 4QMA CMA Winter Spring Summer Autumn
2011 Winter
Spring
Summer
Autumn
2012 Winter
Spring
Summer
Autumn
2013 Winter
Spring
Summer
Autumn
2014 Winter
Spring
Summer
Autumn
Seasonal Indexes
---------------------------------------------------------------------------------------------------
Page 35
PART I
1
1.1 A fair coin is flipped 3 times. The random variable X counting the number of heads (successes) can take any of the
value x = 0, 1, 2, 3. Using Binomial probability, compute the probability P(x = 3).
1.2 A lifetime of an electronic component is known to be normally distributed with a mean of 1000 hours and a standard deviation
of 80 hours. What is the probability that a component picked at random from the production line will have a lifetime below 920
hours?
1.3 Based on the following data, find the sample median.
2 8 -7 4 -2 8 9 7
1.4 Based on the following frequency table, find the sample standard deviation.
Age range (years) 20 - 30 30 - 40 40 – 50
Frequency counts 260 348 287
1.5 Convert the following payoff table to opportunity loss table and find the minimum EOL.
State of Nature
Alternative S1 S2
A1 -60 -25
A2 -30 50
A3 80 -40
Probability 0.6 0.4
1.6 A car dealer has collected the data shown in the following table on the number of foreign and domestic cars
purchased by customers under 30 years old and 30 or above.
Type of Car Total
Foreign Domestic
Age Less than 30 Count 30 40 70
Expected Count 20.6 49.4 70.0
30 or Older Count 20 80 100
Total Count 50 120 170
If a customer is selected at random, what is the probability that he or she will purchase a domestic car?
1.7 The following figure shows quarterly data on the amount of exports from the US to the EEC from the first quarter
of 1958 to the second quarter of 1968 (42 observations).
Which of the following statements best describes the movement of the above time series data?
 random  season  season plus cycle
 straight-line trend  straight-line trend plus seasonal
1.8 “A race horse, name Runfast finishes second with a time of 1.50 minutes.”
The corresponding variable types indicated by the bold type in the above statement are respectively:
 ordinal, nominal, interval  nominal, nominal, interval  interval, ordinal, interval
 nominal, interval, interval  nominal, ordinal, interval
1.9 A multiple regression analysis based on 20 data points yielded the following fitted model: Yˆ 3  5 X 1  1.5 X 2
Y = Starting salary of college graduates (in thousand dollars).
X1 = GPA
X2 = 0 if Male, 1 if Female
Interpret the regression coefficient of the dummy variable.
2 Several years ago, a job-training program began, and a team of social workers screened the candidates for suitability for
employment. Now the screening process is being evaluated, and the actual work performance of a sample of hired
candidates has been rated. At 5% level perform a nonparametric test to determine whether there is a significant positive
relationship between the job-training scores and work-performance scores.
Job-training scores 17 15 13 11 10 9 8
Work-performance scores 75 80 90 70 76 30 50
3 Nine homemakers were asked to estimate the retail selling price of two models of refrigerators. Their estimates of selling
price are shown in the following table. Use these data and test at the 0.05 level of significance to determine whether there is
a difference between the two models in terms of homemakers’ perceptions of selling price.
Homemaker 1 2 3 4 5 6 7 8 9
Model I 650 760 740 700 590 620 700 690 500
Model II 900 720 690 850 920 800 890 920 690

Page 36
4 A die is rolled 60 times with the following results: a 1 came up 12 times, a 2 came up 8 times, a 3 came up 13 times, a 4
came up 12 times, a 5 came up 7 times, and a 6 came up 8 times. At 5% level of significance, perform a test to determine
whether the die is balanced.
5 A researcher eats at 2 fast-food places. To find out if one is faster than the other, he times to the nearest minute how long it
takes to be served a drink, a burger, and fries. The results of his last 8 visits were as follows. He knows that the data are not
from normally distributed populations. ( = 0.05)
Fast-Food Place A B B B A A B A
Time 6 3 9 10 7 4 11 5
6 A builder has built a considerable number of similar houses using the same design plan with only cosmetic changes at three
different residential areas (A, B, C). The data are three independent random samples of the selling prices (in thousands of
dollars) of these houses that sold during the past year. The researcher can assume these selling prices are normally
distributed with equal variance. Perform a test at 5% level to determine whether there is no difference in selling prices for
the three areas, on average. The SAS outputs are given in Appendix A. (Several SAS outputs are given in AppendixA. Choose one of them to answer the following questions.)
7 A researcher at a leading pharmaceutical company wants to determine whether the 3 leading brands of aspirin really
differ in the speed with which they provide relief. Volunteers were randomly assigned to use brand A, brand B, or
brand C. Each was instructed to take the recommended dosage when a headache began and to then record the number
of minutes that elapsed before they felt they were getting some relief. The researcher is unwilling t o assume that these
data are normally distributed with equal variance. The SAS outputs are given in Appendix A. ( =0.05)

7.2 State decision and conclusion of the test.
8 A children’s raincoat manufacturer wants to know whether customers prefer any special color over other colors in
children’s raincoats. He selects a random sample of 50 raincoats sold and notes the colors. The data are analyzed and the
SAS outputs are given in Appendix A. (Several SAS outputs are given in AppendixA. Choose one of them to answer the following questions.) (= .05)
9 The operations manager in a plant that manufactures stereo equipment wants to study the effect of temperature on the
failure time of a particular electronic component. She designs an experiment in which 24 of these components, all from the
same manufacturing batch, are randomly assigned to one of two level of temperature and then simultaneously activated.
The rank order of their times to failure (i.e., a rank of 1 is given to the first component to burn out) are recorded. These data
are analyzed and the SAS outputs are given in Appendix A (Several SAS outputs are given in AppendixA. Choose one of them to answer the following questions.) ( = .05)

10 ABC Filtration provides maintenance service for water-filtration system. Customers contact ABC with requests for maintenance
service on their water-filtration system. To estimate the service time and the service cost, ABC‘s managers want to predict the
repair time (in hours) necessary for each maintenance request. Repair time is believed to be related to two factors, the number of
months since the last maintenance service and the type of repair problem (mechanical or electrical). To incorporate the type of
failure into the regression model, ABC’s managers define the following dummy variable.
0 if the type of repair is mechanical
Type of repair  
1 if the type of repair is electrical
The SAS outputs are given in Appendix A. (Several SAS outputs are given in AppendixA. Choose one of them to answer the following questions.)
10.1 What is the regression equation as given by SAS?

10.2 Interpretation of the slope of the dummy variable.
10.3 Perform a test of hypothesis to determine whether the repair time is significantly different for the two types of repair. ( = .05)
What is the p-value of the test?
11 An industrial psychologist wishes to study the effects of motivation on sales in a particular firm. Of 12 new salespersons be ing
trained, 6 are to be paid at an hourly rate and 6 on a commission basis. The 12 individuals were randomly assigned to the two
groups. The industrial psychologist can assume that these sales volume (in thousands of dollars) achieved during the first mon th on
the job are normally distributed. At the 0.05 level of significance, perform a test a hypothesis to determine whether there i s evidence
that wage incentives (through commission) yield greater average sales volume.
The SAS outputs are given in Appendix A. (Several SAS outputs are given in AppendixA. Choose one of them to answer the following questions.)

(1) One-Sample t test (2) Independent-Samples t test
(3) Wilcoxon Rank Sum Test (4) ANOVA (The F test for equality of k population means)
(5) Kruskal Wallis Test (6) Pearson’s Correlation
(7) Spearman’s Rank Correlation (8) The Sign Test
(9) The F test for regression model (10) The Chi-Square test of Independent
(11) The Chi-Square Goodness of fit Test (12) Simple Regression
12.1 The strategic planner for the corporation believes dollars spent on advertising can to some extent be a predictor of
total sales dollars.
12.2 You want to determine whether there is evidence of a significant relationship between income (in dollars) and
year of experience.
12.3 Two different diet plans are tested to determine their effectiveness in helping people lose weight.
Page 37
12.4 A researcher wants to determine whether the means first-year earnings (in thousands of dollars) of students
with master’s degrees from 5 schools are identical.
12.5 A small soft drink bottle carries a claim on its label that the bottle contains 500 ml of soft drink. You want to
examine the validity of this claim.
12.6 A car dealer has collected the data on the number of foreign and domestic cars purchased by customers under 30
years or above 30 years. The car dealer wants to test a hypothesis to determine whether the type of car bought is
independent of age group of the buyer.
The most appropriate nonparametric test is …………….…...
12.7 The personnel department of a large industrial corporation would like to develop a model to predict the weekly
salary based upon the length of employment and age of its managerial employees.
The most appropriate parametric test is …………...
12.8 An experiment is conducted to determine whether or not a coin is biased.
The most appropriate nonparametric test is …………….…...
APPENDIX A
Page 38
Page 39
Page 40
================================================================
1 1.1 ……..……………….
1.2 …………………….….
1.3 ………………………
1.4 ………………………
1.5 MIN EOL = ……………………..…
1.6 ………………………..
1.7     
1.8     
1.9 …………………………………………………………………………………………
2 2.1 H0 : ………………………………………………………… (symbolic form)
2.2 ………………………
…………………………………………………………………………………………
3 3.1 H0 : ……………………………………………….…… (symbolic form)
3.2 ………………………
4 4.1 H0 : ……………………………………………….…… (symbolic form)
4.2 ………………………
…………………………………………………………………………………………
5 5.1 ………………………
…………………………………………………………………………………………
6 6.1 ………………………
…………………………………………………………………………………………
7 7.1 ………………………
…………………………………………………………………………………………
8 8.1 ………………………
…………………………………………………………………………………………
9 9.1 ………………………
…………………………………………………………………………………………
10 10.1 ………………………………………….…
10.2 …………………………………………………………………………………………
10.3 …………………
11 11.1 ………………………
…………………………………………………………………………………………
12 12.1 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.2 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.3 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.4 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.5 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.6 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.7 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
12.8 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
------------------------------------------------------------------------------------------------------
Page 41
A large electronic firm, which hires many handicapped workers, wants to determine whether their handicaps affect such
workers performance. The contingency table is given below. ( = 0.05)
Performance
Type of Handicap Above Average Average Below Average Total
Blind Frequency 22 O12 17 103
Expected 20.786 E12 18.304
Deaf Frequency 16 49 14 79
Expected 15.943 49.018 14.039
Other Handicap Frequency 29 93 28 150
Expected 30.27 93.072 26.657
Total Frequency 67 206 59 332
H0 : ……………………………………………………………..…………….……
Ha : ……………………………………………………………….……………..… (0.5 mark)
…………………………………………………………………………………………
…………………………………………………………………………………………
……………………………………………………………………………………….
Clean All is a new-purpose cleaner being test marketed by placing sales displays in three different locations within various supermarkets.
The number of 12-ounce bottles sold from each location of the supermarkets is reported below.
Location Sales
Near the bread 20 15 24 18
Near the beer 12 18 10 15
With other cleaners 25 28 30 32
At the 0.05 significance level, perform a nonparametric test a hypothesis to determine whether there is not significant difference in the
mean number of bottles sold at the three locations.
H0 : …………………………………………… (symbolic form) (0.5 mark)
Ha : At least………………………………………………………………………….
(The alternative hypothesis in the context of the problem) (0.5 mark)
…………………………………………………………………………………………
……………………………………………………………………………………….
The computer manufacturer reports in its advertising that the mean life of the terminal, under normal use, is 6 years, with a
standard deviation of 1 year. A sample of 300 units sold 10 years ago revealed the following distribution of the lengths of
life. At the 0.05 significance level, perform a test to determine whether the computer lives are normally distributed with  =
6 and  = 1.
Length of Life (years) Frequency  E  n 
i i i
0 up to 4 25
4 up to 5 50
5 up to 6 80
6 up to 7 70
7 up to 8 50
8 or more 25
H0 : ……………………………………………………………..…………….……
Ha : ……………………………………………………………….……………..…
………………………………………………………………………………………..
………………………………………………………………………………………..
A buyer for a large department store chain must place orders with an athletic shoe manufacturer 6 months prior to the time
the shoes will be sold in the department stores. In particular, the buyer must decide on November 1 how many pairs of the
manufacturer’s newest model of tennis shoes to order for sale during the upcoming summer season. Assume that each pair
of this new brand of tennis shoes costs the department store chain $45 per pair. Furthermore, assume that each pair of these
shoes can then be sold to the chain’s customers for $70 per pair. Any pairs of these shoes remaining unsold at the end of the
summer season will be sold in a closeout sale next fall for $35 each. The probability distribution of consumer demand for
these tennis shoes (in hundreds of pairs) during the upcoming summer season has been assessed by market research
specialists and is provided in following table. Finally, assume that the department store chain must purchase these tennis
shoes from the manufacturer in lots of 100 pairs.
Page 42
Demand (hundreds of pairs) 4 5 6 7
Probability 0.20 0.25 0.35 0.20
1 Formulate a payoff table that specifies the contribution to profit (in dollars) from the sale of the tennis shoes by
this department store chain for each possible purchase decision (in hundreds of pairs) and each outcome with
respect to consumer demand. (3 marks)
4 5 6 7
( ) ( ) ( ) ( ) EMV
4
5
6
7
Payoff Table
4 5 6 7
( ) ( ) ( ) ( ) EOL
4
5
6
7
3 What is the optimal action?
…………………………………… (1 mark)

YEAR Q1 Q2 Q3 Q4
2011 15 18 18 22
2012 19 22 22 26
2013 23 26 26 30
2014 27 30 30 34
Compute the seasonal indexes for the 4 quarters.
Ratio to CMA ( %)
Year Q Y 4QMA CMA Q1 Q2 Q3 Q4
2011 1
2012 1
2013 1
2014 1
Seasonal Indexes
Page 43
FORMULA
n 1  (n 1  n 2  1)
(1)
2
n 1n 2 (n 1  n 2  1)
(2)
12
12  R 1 2 R 2 
2
R k 2   3 ( n
(3)    ...    1)
n ( n  1 )  n 1 n2 nk 
( X  0 .5 )  0 .5n
(4) Z 
0 .5 n
6  d 2
(5) 1
n (n 2  1)
n 2
(6) t  rs 
1  r s2
R iC j
(7)
n
r c (O ij  E ij ) 2 (O ij  E ij ) 2 O ij2
(8) 
i 1 j1 E ij
 
all cells E ij

E ij
n
(O i  E i ) 2
k k
O i2
(9) i E 
i Ei
 n
i
X
( 10 )
S
n
(X 1  X 2 )
( 11 )
(n 1  1) s12  (n 2  1) s22 1 1
 
n1  n 2  2 n1 n2
n (xy)  (x )(y) y 2  ay  bxy Se

( 12 ) , Y  bX , ,
n (x 2 )  (x ) 2 n2 x 2  n ( X ) 2
n ( ty )  ( t )( y ) Y  t 
( 13 ) b  a   b  
n ( t 2 )  ( t ) 2 n n 
Page 44

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PART I

 random plus seasonal

 cycle plus seasonal

Based on the above contingency table, perform a Chi-Square test of independence.

SAS output A2 : One-Sample t Test

SAS output A3 : Wilcoxon Test

SAS output A4 : Wilcoxon Test

SAS output A5 : Independent-Samples t Test

SAS output A6 : Independent-Samples t Test

SAS output A8 : ANOVA

SAS output A9 : Kruskal Wallis Test

SAS output A10 : Kruskal Wallis test

SAS output A11 : Chi-Square Goodness of Fit

SAS output A12 : Correlation Matrix

SAS output A14 : Regression

SAS output A15 : Regression

SAS output A16 : Regression

( 46 points: 0.8 points each) Points

H0 : …………………………………………… (symbolic form)

Part II : Problem 2 (7 points)

1 Define the action A1: ………………………………………………………

Define the state of nature S1: ………………………………………………

2 Set up the payoff table and compute expected monetary values

Opportunity Loss Table

4 What is the optimal action? ……………….

Compute 4 seasonal index numbers.

Part II : Problem 4 ( 6 points)

The critical value: ……………………

The value of the test statistic:……………………….

State the decision and conclusion of the test.

 random plus seasonal

 trend plus seasonal

SAS output A2 : One-Sample t Test

SAS output A3 : Wilcoxon Test

SAS output A4 : Wilcoxon Test

SAS output A5 : ANOVA

SAS output A6 : ANOVA

SAS output A8 : Independent-Samples t Test

SAS output A9 : Kruskal Wallis Test

SAS output A10 : Kruskal Wallis test

SAS output A11 : Correlation Matrix

SAS output A12 : Correlation Matrix

SAS output A14 : Chi-Square Goodness of Fit

SAS output A15 : Regression

SAS output A16 : Regression

( 42 points: 0.8 points each) Points

The adjusting factor =

Part II : Problem 5 ( 6 points)

SAS output A2 : One-Sample t Test

SAS output A3 : One-Sample t Test

SAS output A4 : Independent-Samples t Test

SAS output A6 : Independent-Samples t Test

SAS output A7 : Wilcoxon Test

SAS output A8 : Wilcoxon Test

SAS output A9 : Wilcoxon Test

SAS output A10 : ANOVA

SAS output A12 : Kruskal Wallis Test

SAS output A13 : Kruskal Wallis test

SAS output A14 : Chi-Square Goodness of Fit

SAS output A15 : Chi-Square Goodness of Fit

SAS output A16 : Chi-Square Test of Independence

SAS output A18 : Regression

SAS output A19 : Regression