STDM Presentation on Sums from Levin & Rubin by

80303120004 80303120014 80303120024 80303120034 80303120044 80303120054

Problem (pg.no.272, 5.49): Maurine Lewis, an editor for a large publishing company, calculates that it requires 11 months on average to complete the publication process from manuscript to finished book, with a standard deviation of 2.4 months. She believes that normal distribution well describes the distribution of publication times. Out of 19 books she will handle this year, approximately how many will complete the process in less than one year? Analysis: She thinks that the average time required is 11 month to complete publication process from manuscript to finished book. Standard deviation observed is 2.4 months. Maurine believes that normal distribution well describes the distribution of publication times and it is used here in this problem. Total Books handled by Maurine this year will be 19. To analyze that out of 19 books handled by Maurine this year, how many will complete the process in less than one year. So between 1 to 12 months, we have to find the percentage of area under 12 months is to be found?

Steps: Step 1: To find mean Standard Deviation. Step 2: To find z value of 12 months keeping 11 as mean x = 12months = 11months = 2.4months z = x- / where z = number of standard deviations from x to the mean of this distribution x = value of the random variable =mean of the distribution = standard deviation of this distribution z = (12-11)/2.4=0.4166 standard deviation From z table, area under this z value 0.1591, add 0.5 to the value of z 0.1591+0.5 = 0.6591 Conclusion: Thus 65.91% of books can take less than 12 months to complete =65.91% of 19 = 12.5229 = 13books.

Problem (pg.no.422, 8.26): Atlas Sporting Goods has implemented a special trade promotion for its propane stove and feels that the promotion should result in a price change for the consumer. Atlas knows that before the promotion began, the average retail price of the stove was $44.95 and the standard deviation was $5.75. Atlas samples 25 of its retailers after the promotion begins and finds the mean price for the stoves is now $42.95. At a 0.02 significance level, does Atlas have reason to believe that the average retail price to the consumer has decreased? Analysis: Atlas Sporting Goods implemented special trade promotion for its propane stove and promotion should result in price change for the consumer. Before promotion began, average retail price of the stove = $44.95 and standard deviation = $5.75 After sampling 25 retailers, the find that mean price of stove is now $42.95. Significance level of testing is 0.02. To prove that average retail price has decreased or not. One tailed test of hypothesis and normal distribution z table is followed in the sum as sample size is small and standard deviation is given.

Given: n = 25 x = 42.95 = 5.75 Hypothesis: H0: = 44.95 H1 average retail price to the consumer is less or <44.95 level of significance = 0.02 If 42.95 falls in that acceptance region it will be accepted. Steps: x = H0 +- z /n Zcal = (x-H0)/(z /n) Zcal = (42.95-44.95)/ (5.75/25) = -1.739 Value of area under this z value= 0.3577 at 0.02 area critical value of =0.5-0.02=0.48 area the value of z = -2.06 as -1.739 falls under acceptance region so dont reject H0. Conclusion: Atlas Sporting Goods should not believe that price has decreased.

Problem (pg.no.423, 8.30): The average commission charged by full service brokerage firms on a sale of common stock is $144, and the standard deviation is $52. Joel Freelander has taken a random sample of 121 trades by his clients and determined that they paid an average commission of $151. At a 0.10 significance level, can Joel conclude that his clients commissions are higher than the industry average? Analysis: Average commission charged by full service brokerage firms on sale of common stock is $144. Standard Deviation = $52. Joel has taken a random sample of 121 traders by his clients and determined that average commission paid is $151. Significance level is 0.1. Joel wants to see that his clients commission is higher than industry average One tailed test of hypothesis is used Sample size is large but since standard deviation is given, so Normal test z table of hypothesis is followed.

Given: n = 121 x = 151 = $52 Hypothesis: H0: H0 = 144 H1 the commission is higher than 144 or > $151 level of significance = 0.1 Find z value x = H0 +- z / n Zcal = (x-H0)/(z /n) Zcal = (151-144)/52/ 121= 1.48 Value of z when area is 0.40 z=1.28 1.28<1.48 Conclusion: Their commissions are significantly higher than hypothesized value. So reject the H0 hypothesis.