QUANTITATIVE METHODS

Suggested Answers
Foundation Examinations Autumn 2011


Page 1 of 8

Ans.1 (a) Let normal price = p
Therefore price during clearance sale = p - 0.2p = 0.8p

Profit during clearance sale = 0.8p * 25/125 = 0.16p
Cost = 0.8p 0.16 p = 0.64p
Profit under normal price = 0.16p + 0.2p = 0.36p

Profit % during normal sale = 0.36p / 0.64p * 100 = 56.25%

Profit % during the whole year = (56.25 * 60%) + (25 * 40%)
= 33.75% + 10% = 43.75%

(b) Let the required sales quantity be x
The revenue (R) = 30x
At the point where there would be no profit or loss, we would have:
Revenue = Cost
Hence for existing cost function we have:
30x = 15x + 9750
x(30-15) = 9750
i.e. x = 650

(c) ln3+2lnx = ln (x+2)
ln3 + lnx
2

= ln (x + 2)
ln(3x
2

) = ln (x + 2)
3x
2

= x + 2
3x
2

x 2 = 0
3x
2

3x + 3x 2 = 0
(3x +2) (x-1) = 0

i.e. x =
3
2
and x = 1

x =
3
2
is not possible since ln
3
2
does not exist, hence x = 1.


Ans.2 (a) Since it is a Geometric Progression, we would use the relation:


( )
1
1

=
r
r a
S
n


Here:

s = Summation of payments
a = Re. 1
n = 7

r = 3
1
3
=

( ) ( )
093 , 1
2
1 2187
1 3
1 3 1
7
=

= S


Since the amount obtained through alternative is less than Rs. 1,200, hence Bashir
has taken a wise decision by accepting the pocket money of Rs. 1,200.
QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Autumn 2011


Page 2 of 8

(b) Simple Interest for eight months = 120,000 x 15% x 8/12 = 12,000

Interest rate compounded monthly = i= antilog ( ) 1 P S
n
1

)
`

log log

= antilog ( ) 1 000 120 000 132
8
1

)
`

, log , log
= (antilog 005174 . 0 ) 1 = 0.011985
= 1.1985%
Annualized rate = 1.1985% x 12 = 14.382%


Ans.3 (a)
1 +
=
u
u
y

and
1 5
2
= x u

2
2
2
2
5
1 5
1 1 5
1 5
x
x
x
x
y

=
+

=



2 2
2 2 2 2
) 5 (
) 5 ( ) 1 5 ( ) 1 5 ( 5
x
x
dx
d
x x
dx
d
x
dx
dy

=



4
2 2
25
) 10 )( 1 5 ( ) 10 ( 5
x
x x x x
dx
dy
=



3 4
3 3
25
10
25
10 50 50
x x
x x x
dx
dy
=

=



Now
20
1
) 2 ( 25
10
) 2 (
3
= = = x
dx
dy


(b) Demand function = D(x) = 500 0.04x

(i) Cost function = C(x) = 0.03x
2

+ 220x + 50,000
Revenue Function = R(x) = 500x 0.04x

2


Marginal Revenue Function =
( )
x
dx
x dR
08 0 500 . =



(ii) Profit function = R(x) C(x) = Pr(x)
= 500x 0.04x
2
0.03x
2

220x 50,000
= 0.07x
2

+ 280x 50,000

Profit maximization
P(x) = 0.07x
2

+ 280x 50,000
( )
0 280 14 0 = + = x
dx
x d
.
Pr


x = 2,000

( )
14 . 0
Pr
2
=
dx
x d



Since
( )
0
Pr
2
<
dx
x d
at x = 2,000, hence the profit would be maximised at 2,000 units.


(iii) Price = D(x) = 500 0.04(x)
= 500 0.04(2,000) = 420
Unit price at maximum profit is Rs. 420

QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Autumn 2011


Page 3 of 8

Ans.4 (a) x y

2
1
15 20
30 50
P
P
P
(

=


Manegerial Technical l Operationa

y
x
S
(

=
7 12 50
5 10 40


(b) Since R = PS

(

=
7 12 50
5 10 40
15 20
30 50
R


(

+ + +
+ + +
=
) 7 ( 15 ) 5 ( 20 ) 12 ( 15 ) 10 ( 20 ) 50 ( 15 ) 40 ( 20
) 7 ( 30 ) 5 ( 50 ) 12 ( 30 ) 10 ( 50 ) 50 ( 30 ) 40 ( 50



(

+ + +
+ + +
=
105 100 180 200 750 800
210 250 360 500 1500 2000



(

=
205 380 1550
460 860 3500
R

The entries in the matrix R represents the numbers of hours required by each
category of staff on each plant.

Thus, 3,500 hours are required by operational, 860 hours by technical and 460
hours by managerial on plant P1

, to provide both types of product.

Similarly 1,550 hours are required by operational, 380 hours by technical and 205
hours by managerial on plant P2

to produce both kinds of products.

























QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Autumn 2011


Page 4 of 8

Ans.5 To draw the graph based on the given inequalities, we convert these into equations
and find their x and y intercepts, as follows:

8 + y x 8 = + y x => At x = 0, y = 8 and at y = 0, x = 8
12 2 + y x 12 2 = + y x => At x =0, y = 12 and at y = 0, x = 6
10 + y x 10 = + y x => At x = 0, y = 10 and at y = 0, x = 10
0 , y x

0 = x

and 0 = y




The area bounded by the points ABCD, as highlighted above is the feasible region.
The co-ordinates of feasible region are A(8, 0), B(10, 0), C(2, 8) and D(4, 4).


Ans.6 (a) (i)
x
Mid point
(xm)
f fxm x
2
m fx
2
m
1 3 2 6 12 4 24
4 6 5 12 60 25 300
7 9 8 110 880 64 7,040
10 12 11 103 1,133 121 12,463
13 15 14 42 588 196 8,232
16 18 17 25 425 289 7,225
19 21 20 13 260 400 5,200
22 24 23 4 92 529 2,116
25 27 26 1 26 676 676
316 = f 476 , 3 =
m
fx

276 , 43
2
=
m
fx


QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Autumn 2011


Page 5 of 8


Mean = 00 . 11
316
476 , 3
= =

f
fx
m
days

Standard Deviation =
( )
1
2 2


f
f fx fx
m m
/


=
( )
00 . 4
315
316 / 476 , 3 276 , 43
2
=

days

(ii) Using Chebyshevs theorem, the value of k for given interval would be:


2
) 2 ( 2
11 19
=

= k and 2
) 2 ( 2
11 3
=

= k i.e. 2 = k


According to Chebyshevs theorem, at least 75% of the data values will be
found within two standard deviation on either side of the mean value.

Hence, if 6,000 patients are admitted to the hospital in an year, then the
number of patients staying between 3 to 19 days would be:


= 500 , 4 6000
100
75
=

(b) Using the given data we have:

Weighted Prices
Commodities PoQo P1Qo P0Q1 P1Q1
Diesel 4,500 13,500 6,000 18,000
Petrol 11,000 17,000 13,200 20,400
Kerosene 600 2,200 450 1,650
CNG 2,500 5,000 6,250 12,500
18,600 37,700 25,900 52,550


Laspeyres Price Index = 100
0 0
1

Q P
Q P
o
69 . 202 100
600 , 18
700 , 37
= =


Paasches Price Index = 100
1 0
1 1

Q P
Q P
90 . 202 100
900 , 25
550 , 52
= =


Fishers ideal Price Index = Index s Paasche Index s Laspeyre ' ' =

80 . 202 90 . 202 69 . 202 = =


Ans.7 (a)
( ) ( ) ( ) 3 2 2 = + = = x P x P x P


4
10
1
7
3
3
4
10
2
7
2
3
C
C C
C
C C
+

=
0333 . 0 3 . 0 + =
3333 . 0 =

QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Autumn 2011


Page 6 of 8


(b)
Using the relation:

( ) ( )
x n x
q p
x
n
x P

|
|
.
|

\
|
= ) (



Here p=0.4 ; q=0.6 ; n=5



(i) ( ) ( )
2 5 2
6 . 0 4 . 0
2
5
) (

|
|
.
|

\
|
= x P


= 0.3456




(ii)
P(x > 2) = 1-P(x<2)

( ) ( )

|
|
.
|

\
|
=
1
0
5
6 . 0 4 . 0
5
1
x
x x
x



( ) ( ) ( ) ( ) 0.6630 = 6 . 0 4 . 0
1
5
6 . 0 4 . 0
0
5
1
4 1 5 0
(

|
|
.
|

\
|
+
|
|
.
|

\
|
=

(iii)
( ) ( ) ( ) | | 4 5 1 4 = + = = < x x x P

( ) ( ) ( ) ( )
(

|
|
.
|

\
|
+
|
|
.
|

\
|
=
1 4 0 5
6 . 0 4 . 0
4
5
6 . 0 4 . 0
5
5
1

| | 91296 . 0 0768 . 0 01024 . 0 1 = + =


Ans.8 x (height) y (weight) xy x
2

150 60 9,000 22,500
155 63 9,765 24,025
161 67 10,787 25,921
166 70 11,620 27,556
170 72 12,240 28,900
174 74 12,876 30,276
182 76 13,832 33,124
190 78 14,820 36,100
1,348 560 94,940 228,402


(a)
Regression coefficient (y on x) =

=
2 2
) ( x x n
y x xy n
b

2
) 348 , 1 ( 402 , 228 8
560 348 , 1 940 , 94 8


= b



4589 . 0
112 , 10
640 , 4
= =



x b y a =



33 . 7
8
348 , 1
4589 . 0
8
560
=
|
.
|

\
|
= a




QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Autumn 2011


Page 7 of 8

Since bx a y + =



Hence equation of regression for weight over height will be:

x y 4589 . 0 33 . 7 + =



Interpretation
For each centimeter increase in height, weight increases by 0.4589kg.

(b) Coefficient of correlation
( )( )
( ) { } ( ) { }
2 2 2 2
y y n x x n
y x xy n
r


=

= 478 , 39
2
y


( )( ) 313600 315824 1817104 1827216
754880 759520


= r



( )( )
9784 . 0
27 . 4742
4640
22489088
4640
2224 10112
4640
= = = = r



Coefficient of determination

( ) 9573 . 0 9784 . 0
2 2
= = r



Interpretation
(i) The correlation between height and weight is highly positive.



(ii) 95.73% change in weight is on account of height while rest of the change is on
account of other factors.





Ans.9 (a)
x x x
2
) ( x x
5 -5 25
10 0 0
8 -2 4
11 1 1
12 2 4
6 -4 16
15 5 25
13 3 9
10 0 0
90 84

(i)
10
9
90
= =

=
n
x
x
Point estimate of population mean = 10 = x

(ii)
240 . 3
8
84
1
) (
2
= =

=
n
x x
s


We will use t-distribution as n < 30 and standard deviation of only sample is
available.
QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Autumn 2011


Page 8 of 8


Confidence Interval (CI) for population mean
n
s
t x
2 /
=

Here 306 . 2
025 . 0 2 /
= = t t

95% CI for population mean
9
24 . 3
306 . 2 10 =
) 49 . 2 ( 10 ) 08 . 1 )( 306 . 2 ( 10 = =
49 . 12 51 . 7 to =

Interpretation
We can say with 95% confidence that population mean lies between 7.51 and 12.49

(b) It is a two sided test
250 = =
o
H
250
1
= H
s = 18 liters; n=25; 242 = x liters

We will use t-distribution as n < 30 and standard deviation of only sample is
available.

For 24 degrees of freedom, t0.025

= + 2.064


n
s
x
= t
cal


222 . 2
25 18
250 242
t
cal
=

=

Since 2.064, t
cal
< we reject the Hypothesis i.e. manufacturer claim is not correct.

(THE END)