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Business Statistics
Level 3
Model Answers
Series 2 2012 (3009)
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(2)
Model Answers
(3)
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ASE3009/2/12/MA
Page 1 of 18
QUESTION 1
A company wishes to estimate a regression line for the relationship between sales and advertising.
To arrive at its decision regarding the best model to use the company calculates three correlation
coefficients.
(a)
(i)
The sales in any month depend on that months advertising with r = 0.15
(ii)
The sales in any month depend on 50% of the previous months advertising
and 50% of that months advertising with r = 0.66
(iii)
The sales in any month depend on the previous months advertising with r = 0.94
Interpret each of the above correlation coefficients and state which of the suggested models you would
chose as the basis for predicting sales. Justify your answer.
(5 marks)
The advertising and sales figures for the last twelve months is shown in the following table.
Month
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Advertising
00
20
22
36
45
26
35
80
65
36
72
29
35
Sales
000
33
45
47
65
89
37
55
117
85
49
105
38
(b)
Using your conclusions from part (a) estimate the least squares regression line for
the above data.
(10 marks)
(c)
Estimate the level of sales in May 2012 when advertising in April 2012 is 85,000 and May 2012
90,000. Comment on the likely accuracy of your answer.
(5 marks)
(Total 20 marks)
ASE3009/2/12/MA
Page 2 of 18
(i)
(ii)
(iii)
The best model to use is the sales in any month depend on the previous
months advertising as the coefficient of correlation is 0.94
(b)
n xy x y
y bx
n x x
732
466
= 12.818 (12.82)
1.268
11
11
y = 12.818 +1.268x
(c)
Given the value of the coefficient of correlation the estimate could be considered
to be accurate, however the level of advertising is outside the range of the data on
which the regression equation is based (extrapolation) which reduces the likelihood
of accuracy.
3x1
2
4x1
1m 1 ft 1 cao
1m 1cao
1 cao
1m 1ft 1cao
2
1cao
ASE3009/2/12/MA
Page 3 of 18
QUESTION 2
The average weight of a paperback book is 650 grams with a standard deviation of 50 grams. An
internet bookshop usually receives orders for three books at a time. Assume the weight of the books is
normally distributed.
(a)
The weight of the packaging for three books is normally distributed with mean 200 grams and standard
deviation of 20 grams.
(b)
Find the probability that an order for three books and its packaging weighs more than
2250 grams.
(4 marks)
The companys delivery contract charges 2.75 for all deliveries which weigh 2250 grams and below and
3.50 for deliveries which weigh more than 2250 grams.
(c)
(i)
3 sd 2 =
3 50 2 =
7500 = 86.6
x x 1900 1950
=
= 0.58 (0.6), table p = 0.726
86.6
sd
x x 1975 1950
=
= 0.29 (0.3), table p = 0.618
86.6
sd
1m 1ft
(iii)
z=
(c)
1cao
1cao
sd 12 sd 22 =
86.6 2 20 2 = 88.9
x x 2250 2150
=
= 1.1, table p = 0.864 answer = 1 - 0.864 = 0.136
88.9
sd
ASE3009/2/12/MA
1m
1cao
(b)
1m 1ft 1cao
1m 1ft 1 cao
1m 1cao
Page 4 of 18
1cao
1ft 1cao
1m 1ft 1 cao
QUESTION 3
(a)
A company advertises its job vacancies in the newspapers and through an internet recruitment site.
A random sample of vacancies showed the response rate from the two media.
Job
Newspapers
37
45
36
57
29
21
46
89
Internet site
43
42
45
61
36
26
45
102
(b)
Test whether the mean is higher from the internet site than the newspapers.
(12 marks)
(c)
State the alternative hypothesis if you had carried out a two tail test and the conclusions
you would come to.
(4 marks)
(Total 20 marks)
ASE3009/2/12/MA
Page 5 of 18
The standard error of the mean is the standard deviation of the distribution of
the means when samples of a given size are taken from a population.
2x2
It equals se
Null hypothesis: There is no difference in the mean response of the two media.
Alternative hypothesis: The internet site provides a greater mean response.
1cao
1cao
1 cao
1cao
Job
Newspapers
37
45
36
57
29
21
46
89
Internet site
43
42
45
61
36
26
45
102
Difference d
-6
-9
-4
-7
-5
-13
d2
d d
36
81
16
49
25
64
16
1 169
Total
d 1cao
2
d or
-40
d d
1cao
386
d d
d = 40/8 = 5 sdd =
z=
n 1
36
64
186
186
= 5.16
7
d 0
50
=
= -2.74
sd d
5.16
n
1m 1cao
Conclusions: Reject the null hypothesis at the 0.05 significance level. The internet site
provides a greater response rate. Accept the null hypothesis at the 0.01 significance level.
There is no difference in the response rate between the two media.
(c)
1m 1cao
2ft
ASE3009/2/12/MA
Page 6 of 18
2x2
QUESTION 4
A doctors surgery records the number of patients who attend per quarter over a three year period.
Patients (000)
Year/Quarter
2009
36
28
48
68
2010
44
36
56
76
2011
44
36
64
76
(a)
(b)
Find the four quarter centred moving average and the average quarterly variations
for the time series.
(10 marks)
(c)
(i)
(ii)
If a basic payment of 10.50 is made for each attendance at the surgery what
is the total expected income of the surgery for the estimated number of patients
over the first two quarters of 2012?
(6 marks)
(Total 20 marks)
ASE3009/2/12/MA
Page 7 of 18
1 axes,
scale labels
2 plots
80
Number of Patients
70
60
50
40
30
20
10
0
1
1
2
2
2009
3
3
4
4
2
3
6
7
2010
Tim e periods
2
10
2011
11
Comment: The data shows a strong quarterly variation with an upwards trend.
Patients
Moving
total 1
12
1 comment
Moving
Moving
Additive
OR
total 2 average/Trend Differences Multiplicative
Factors
36
MA/Trend = 6
28
48
180
368
46
1.04
68
188
384
48
20
1.42
44
196
400
50
-6
0.88
36
204
416
52
-16
0.69
56
212
424
53
1.06
76
212
424
53
23
1.43
44
212
432
54
-10
0.81
36
220
440
55
-19
0.65
64
220
76
1m cao
ASE3009/2/12/MA
1m 1ft
1m 1ft
1m 1ft or
Page 8 of 18
1m 1ft
Differences = 2
Year 2008
20
23
2009
-6
-16
2010
-10
-19
-16
-35
43
-8
-17.5
2.5
21.5
(c)
(i)
1m 1cao
= 55 46 = 1.29
81
1m 1cao
1m 1cao
1m 1cao
OR
OR
Multiplicative Factors
Quarter 1 Quarter 2 Quarter 3 Quarter 4
1
Year 2008
1.04
1.42
1.06
1.43
2009
0.88
0.69
2010
0.81
0.65
1.69
1.35
2.10
2.85
0.85
0.67
1.05
1.43
(c)
(i)
= 55 46 = 1.29
81
ASE3009/2/12/MA
Page 9 of 18
1m 1cao
1m 1cao
1m 1cao
1m 1cao
QUESTION 5
A company discusses with its marketing agency how it might collect information from its customers.
The agency suggests three possibilities:
(i)
(ii)
(iii)
(a)
personal interview
telephone interview
email interview.
(b)
A previous sample of 4000 customers showed that 37% of the customers held a
positive view of the company. How large a sample should be taken to be 95% certain
that the estimated results are within 3% of the views held by all customers?
(4 marks)
A survey using the sample size calculated in part (b) produces a result that 33% of customers hold a
positive view of the company.
(c)
By pooling the results of the two samples what percentage of customers hold a positive
view of the company?
(4 marks)
(Total 20 marks)
ASE3009/2/12/MA
Page 10 of 18
Personal Interview. The interviewer and respondent meet face to face to conduct
the interview.
Advantages: Social clues e.g. body language, can be obtained. Questions can be
explained. Further information can be developed from the respondent. No time delay
between question and answer.
Disadvantages: Interviewer bias or interference in the process, time taken to
transcribe the interview, cost especially if respondents are widely spread. Need to
agree a mutually agreeable time and place for the interview.
2+2
2+2
2+2
z = 1.96 d = 0.03
2
n = z /(d x(p(1-p))
(c)
1.96 1cao
1m 1ft 1cao
1m 1ft
1m 1cao
ASE3009/2/12/MA
Page 11 of 18
QUESTION 6
A company sources its products from a number of countries and records the number of items sold by
price and country.
Origin
Under 8
8 and under 12
12 and under 20
20 and over
France
70
50
30
30
Spain
110
80
40
50
USA
60
60
30
20
Australia
70
40
20
20
(a)
Ten years ago the proportions of products bought by the company from each country were.
(b)
France
Spain
USA
Australia
24%
33%
24%
19%
Test whether the origin of the products has changed over the ten year period.
(8 marks)
(Total 20 marks)
ASE3009/2/12/MA
Page 12 of 18
Expected Values
53.1
27.7
27.7
0.03
0.18
0.19
0.19
111.3 82.6
43.1
43.1
0.01
0.08
0.22
1.11
67.6
50.1
26.2
26.2
0.85
1.94
0.57
1.45
59.6
44.2
23.1
23.1
1.81
0.40
0.41
0.41
71.5
1
1
Expected
values 1m
2cao
Contributions
to 2 1m 2cao
1cao
2 = 9.86
(b)
Conclusions: The calculated value of 2 is less than the critical values. There is no
association between the number of bottles sold in different price categories and the
countries of origin.
2 ft
180
280
170
150
Observed
187.2
257.4
187.2
148.2
Expected
0.28
1.98
1.58
0.02
Contributions to 2
1cao
1cao
1m
1cao
2 = 3.86
Conclusions: The calculated value of 2 is less than the critical values. The origin of
products by country has not changed.
ASE3009/2/12/MA
Page 13 of 18
2ft
QUESTION 7
The table below gives the revenues and volume of sales for four types of printer sold by a computer
supplies company in 2005 and 2010
2005
2010
Printer
Revenue (000)
Quantity (00)
Revenue (000)
Quantity (00)
Axk 47
700
14
799
17
Mxk16
1848
22
3135
33
Uxb
900
15
624
13
Imf
1520
19
910
14
(a)
Calculate:
(i)
(ii)
(iii)
the Laspeyres base year weighted price index number for 2010 based on 2005
the Paasche current year weighted price index number for 2010 based on 2005
Comment on the difference in your answers in (i) and (ii).
(10 marks)
(b)
Identify and describe five factors involved in creating a general price index such
as the Retail Price Index.
(10 marks)
(Total 20 marks)
ASE3009/2/12/MA
Page 14 of 18
p q
0
=4968
Laspeyres =
pq
1 0
pq
p q
1 0
0
Paasche =
pq
p q
1 1
=5468
p q
0 1
=5522
1m 2 cao
100 =
4703 x 100
4968
= 94.7
1m
5468 x 100
5522
= 99.0
1m
1 1
pq
=4703
1m 2cao
0 1
Comment: Both indices show a reduction in price. The Paasche by less than the
Laspeyres due to the increase in weight for item Mxk16
2x1
(b)
5x2
Prices. How the prices are collected and which prices should be collected?
Choice of goods and services. Items need to be chosen which are representative
of the whole of the consumption for the population
Base year. A starting year for the index has to be chosen which allows for reliable
comparisons in later years. The base year value = 100
Weights. How is the relative importance of the items in the index determined?
This is usually based on the proportion of annual expenditure by consumers on the
representative items.
Choice of index number. How is the price index going to be constructed? Usually
this is based on
WI
W
ASE3009/2/12/MA
Page 15 of 18
QUESTION 8
A partnership takes a random sample of the businesses it audits and records the size of the fee it
charges.
(a)
Frequency
23
36
58
48
25
10
Estimate the arithmetic mean and the standard deviation of fee charged.
(9 marks)
Three years previously a sample of 150 audit fees showed the arithmetic mean was 340.1 (000) with a
standard deviation of 159.8 (000).
(c)
Test whether the mean fee has changed over the three year period.
(8 marks)
(Total 20 marks)
ASE3009/2/12/MA
Page 16 of 18
fx
200
76100
fx
f
(b)
(c)
x x
4598950
fx
33555000
f =1cao
Mp 1cao
fx 1m
f x
1m
= 76100/200 = 380.5
x / fx2
1m 1cao
f x x
f
sd
4598950
= 151.64
200
1m 1ft 1cao
1m
= 3(380.5(000)-370.55)/151.64(000) = 0.197
1cao
1 for correct unit
1cao
Null hypothesis: There has been no change in the fee charged over the three year
period
Alternative hypothesis: There has been a change in the fee charged over the three
year period.
Two tail test for large samples Critical z values = 1.96/2.58
x1 x 2
2
1`
2
2
s
s
n1 n2
380.5 340.1
151.64 2 159.8 2
200
150
Conclusions: Reject the null hypothesis at the 0.05 level. There has been a change in the
fee charged over the three year period.
Accept the null hypothesis at the 0.01 level. There has not been a change in the fee charged
over the three year period.
ASE3009/2/12/MA
Page 17 of 18
1cao
1
1m 1ft 1cao
2ft
LEVEL 3
ASE3009/2/12/MA
Page 18 of 18
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International House
Siskin Parkway East
Middlemarch Business Park
Coventry CV3 4PE
UK
Tel. +44 (0) 8707 202909
Fax. +44 (0) 2476 516505
Email. enquiries@ediplc.com
www.ediplc.com
ASE3009/2/12/MA
Page 19 of 18