Applications of Chi square distribution

1.Chi-square test of goodness of fit

2.chi-square test for independence of attributes
3.To test if the population has a specified value of the variance
4.To test the equality of several population proportions.
Yatess correction
correction for the discreteness of the data that is made in the chi-square test when the number
of cases in any class is small and there is one degree of freedom.

Uses of t-Test
1.It is used to test whether a specific values is the population mean when the given sample is a
small sample and population s.d. is not known
2.It is also used to test the significance of difference between the means of two populations based
on to small samples of sizes n1 and n2 when the s.d. of the population are not known and also the
samples drawn are independent.
3.It is also used to test the significance of difference between the means of paired observations.
ANOVA
Analysis of variance (ANOVA) is a collection of statistical models used to analyze the differences
among group means and their associated procedures.
It is used to compare the means of more than two samples.
A hypothesis is a speculation or theory, based on insufficient evidence, that lends itself to further
testing and experimentation.
A null hypothesis is a type of hypothesis used in statistics that proposes that no statistical
significance exists in a set of given observations. The null hypothesis attempts to show that no
variation exists between variables or that a single variable is no different than its mean.
It is the hypothesis that the researcher is trying to disprove.
The null hypothesis, denoted by H0
An alternative hypothesis states that there is statistical significance between two variables.
The alternative hypothesis is the hypothesis that the researcher is trying to prove.
The alternative hypothesis, denoted by H1 or Ha
A point estimate of a population parameter is a single value of a statistic. For example, the sample
mean x is a point estimate of the population mean .
A t-test helps you compare whether two groups have different average values (for example,
whether men and women have different average heights).
Statistical inference broadly classified into two
1.Theory of Estimation
2.Testing of hypothesis
1.Theory of Estimation was divided into two groups
1.point estimation
A sample statistic is used to provide an estimation of the population parameter.
2.interval estimation
Probable range is specified within which the true value of the parameter might be expected to lie.
The Role of Probability Distribution in Business Management
Scenario Analysis
Probability distributions can be used to create scenario analyses. A scenario analysis uses
probability distributions to create several, theoretically distinct possibilities for the outcome of a
particular course of action or future event.
Sales Forecasting
One practical use for probability distributions and scenario analysis in business is to predict future
levels of sales. It is essentially impossible to predict the precise value of a future sales level;
however, businesses still need to be able to plan for future events.
Risk Evaluation
In addition to predicting future sales levels, probability distribution can be a useful tool for
evaluating risk.
Characteristics of good sample
REPRESENTIVES: A sample is a subset of the populatin or universe. The sample must be
representatives of the universe. Therefore, the researcher must select the sample members who
have the the characteristics of the universe. For example, when a research is undertaken to study
job satisfaction in police force; then the sample members must be the police personls belonging to
different levels in the police force
FOCUS ON OBJECTIVES: The sample size must be selected depending upon the research
objectives. For instance, if a research is undertaken to find out the impact of inflation on the poor
then the sample size would be larger, as there are more poor households in India. (In 2008, there
were about 147 million households of poor people in India yearly income of less than Rs.
90,000).
FLEXIBILITY: The sample size should not be rigidly followed. The sample size can be modified
depending upon the circumstances. For instance, the sample size may be reduced, if sufficient
information is already available or if there is a limitation of time and funds. However, sample size
may be increased, if proper information is not available from the current sample.

METHOD OF SAMPLING: The researcher must select proper method of sampling. The sampling
methods are broadly divided into two groups probability methods and non-probability methods.
Certain methods require less time to complete data collection. For instance, convenience sampling
require less time to collect data. Therefore, the researcher may select convenience method, if there
are limitation of time.
PROPER SELECTION OF SAMPLE UNIT: The sample unit must be appropriate. The universe
comprises of the elements, and each element can be further divided into units. For instance, if a
study is conducted to study job satisfaction among bank employees, then bank employees comprise
the universe. The element of universe may comprise of bank employees / manager in rural banks,
and in urban banks. The sample unit may include male and female employees, junior or senior
employees depending upon the type of research, researcher must select proper sampling of unit(s)
to conduct the research activity.
PROPER SAMPLING FRAME: The researcher should select proper sampling frame to collect
information .sampling frame is an instrument to obtain addresses or such other information about
various element of the universe. The sampling frame may include telephone directories, register
of member in an organization, etc . Before selection of sampling frame, the researcher must answer
the following qts:
Does it adequately cover the universe?
Does it represent each and every unit?
IS the sample frame up-dated?

PROPER SAMPLING PLAN: t he researcher must prepare a sampling plan,which must indicate:
Sampling unit
Sampling frame
Sources of data
Methods of data collection
Resources required for data collection
Time frame to collect data, etc

GEOGRAPHIC AREA OF THE STUDY: the researcher must consider the size of the area for
selecting the sample size. For instance ,if the area coverage is large such as the entire state or
country, then the size of the sample would be large. In such situation, the researcher may adopt
multi-stage cluster sampling.
SUITABILITY : The sample size should be suitability to collect the relevant data. For instance, if
a research is conducted to find out reading habits of college student in the city of Mumbai, then
the sample would be the students from the colleges of Mumbai city, and the sample size may be
smaller. But if the research is conducted to find out the reading habits of college students in India,
then the sample would consist of students from various colleges across India, and the sample size
woukd be larger.
ECONOMY:the sample size must be economical. The sample size must be cost-effective.it should
not put extra burden on the resources .At the same time, the sample size should be such that it
facilitates proper collection of data.

1) PARAMETRIC TEST: The test in which, the population constants like mean,std deviation, std
error, correlation coefficient, proportion etc. and data tend to follow one assumed or
established distribution such as normal, binomial, poisson etc.2) NON PARAMETRIC TEST:
the test in which no constant of a population is used. Data do not follow any specific distribution
and no assumption are made in these tests. E.g. to classify good, better and best we just
allocate arbitrary numbers or marks to each category.
2) IMPORTANT CHARACTERISTICS OF A CHI SQUARE TEST This test (as a non-
parametric test) is based on frequencies and not on the parameters like mean and standard
deviation. The test is used for testing the hypothesis and is not useful for estimation. This
test can also be applied to a complex contingency table with several classes and as such is a
very useful test in research work. This test is an important non-parametric test as no rigid
assumptions are necessary in regard to the type of population, no need of parameter values
and relatively less mathematical details are involved.

3) APPLICATIONS OF A CHI SQUARE TEST.This test can be used in1) Goodness of fit of
distributions2) test of independence of attributes3) test of homogenity.
4) 11. 1) TEST OF GOODNESS OF FIT OF DISTRIBUTIONS: This test enables us to see
how well does the assumed theoretical distribution (such as Binomial distribution, Poisson
distribution or Normal distribution) fit to the observed data.The c2 test formula for goodness
of fit is: (o e) 2 2 e Where, o = observed frequency e = expected frequencyIf c2
(calculated) > c2 (tabulated), with (n-1) d.f, then null hypothesis is rejected otherwise
accepted.And if null hypothesis is accepted, then it can be concludedthat the given
distribution follows theoretical distribution.
5) 12. 2) TEST OF INDEPENDENCE OF ATTRIBUTESTest enables us to explain whether or
not two attributes are associated.For instance, we may be interested in knowing whether a
new medicine is effective in controlling fever or not, c2 test is useful.In such a situation, we
proceed with the null hypothesis that the two attributes (viz., new medicine and control of
fever) are independent which means that new medicine is not effective in controlling
fever.c2 (calculated) > c2 (tabulated) at a certain level of significancfe for given degrees of
freedom, the null hypothesis is rejected, i.e. two variables are dependent.(i.e., the new
medicine is effective in controlling the fever) and if, c2 (calculated) <c2 (tabulated) ,the null
hypothesis is accepted, i.e. 2 variables are independent.(i.e., the new medicine is not
effective in controlling the fever).when null hypothesis is rejected, it can be concluded that
there isa significant association between two attributes.
6) 13. 3) TEST OF HOMOGENITY This test can also be used to test whether the occurance
of events follow uniformity or not e.g. the admission of patients in government hospital in all
 days of week is uniform or not can be tested with the help of chi square test.c2 (calculated)
< c2 (tabulated), then null hypothesis is accepted, and it can be concluded that there is a
uniformity in the occurance of the events. (uniformity in the admission of patients through out
the week)
7) LIMITATIONS OF A CHI SQUARE TEST1) The data is from a random sample.2) This test
applied in a four fould table, will not give a reliable result with one degree of freedom if the
expected value in any cell is less than 5. in such case, Yates correction is necessry. i.e.
reduction of the mode of (o e) by half.3) Even if Yates correction, the test may be
misleading if any expected frequency is much below 5. in that case another appropriate test
should be applied.4) In contingency tables larger than 2*2, Yates correction cannot be
applied.5) Interprit this test with caution if sample total or total of values in all the cells is less
than 50.
8) 21. 6) This test tells the presence or absence of an association between the events but
doesnt measure the strength of association.7) This test doesnt indicate the cause and
effect, it only tells the probability of occurance of association by chance.8) the test is to be
applied only when the individual observations of sample are independent which means that
the occurrence of one individual observation (event) has no effect upon the occurrence of
any other observation (event) in the sample under consideration

T-test

1. Students t-test The test is used to compare samples from two different batches. It is usually
used with small (<30) samples that are normally distributed.
2. 4. There are two types of t-test: Matched pairs and independent pairs If there is some link
between the data then use the matched pairs test (eg a before and after) If there is no
link between the data then use the independent pairs test

Applications To compare the mean of a sample with population mean. To compare the mean
of one sample with the mean of another independent sample. To compare between the
values (readings) of one sample but in 2 occasions. 4