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Name Roll Number: ........................................ Semester: SEMESTER 1 Course: MBA Subject Code: MB0040 Subject Name: STATISTICS FOR MANAGEMENT Learning Centre Name: ..................................Assignment No.: 2 Date of Submission at the Learning Centre: 21ST FEBRUARY, 2011

MBA SEMESTER 1 MB0040 STATISTICS FOR MANAGEMENT- 4 Credits (Book ID: B1129) Assignment Set- 2 (60 Marks) Note: Each question carries 10 Marks. Answer all the questions
Q1. What is statistical Survey? Differentiate between Questionnaire and Schedule. Answer: Statistical survey is a scientific process of collection and analysis of numerical data. Statistical surveys are used to collect numerical information about units in a population. Surveys involve asking questions to individuals. Surveys of human populations are common in government, health, social science and Marketing sectors. A statistical survey is divided into two broad categories. 1. Planning 2. Execution Planning of a Statistical Survey The relevance and accuracy of data obtained in a survey depends upon the care exercised in planning. A properly planned investigation can lead to best results with least cost and time. The planning stage consists of the following sequence of activities. 1. Nature of the problem to be investigated should be clearly defined in an un- ambiguous manner. 2. Objectives of investigation should be stated at the outset. Objectives could be to obtain certain estimates or to establish a theory or to verify a existing statement to find relationship between characteristics etc. 3. The scope of investigation has to be made clear. It refers to area to be covered, identification of units to be studied, nature of characteristics to be observed, accuracy of measurements, analytical methods, time, cost and other resources required. 4. Whether to use data collected from primary or secondary source should be determined in advance. 5. The organization of investigation is the final step in the process. It encompasses the determination of number of investigators required, their training, supervision work needed, funds required etc. Execution of Statistical Survey Control methods should be adopted at every stage of carrying out the investigation to check the accuracy, coverage, methods of measurements, analysis and interpretation. The collected data should be edited, classified, tabulated, presented in diagrams and graphs, analyzed and interpreted. Differentiate between Questionnaire and Schedule A schedule is a form that the investigator fills himself through surveying the units or individuals. In order to get reliable information, the investigator should be well trained, tactful, unbiased and hard working.
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A questionnaire is a form sent (usually mailed) by an investigator to respondents. The respondent has to fill it and then send it back to the investigator. This method is generally adopted by research workers and other official and non-official agencies. It covers large area of investigation. It is more economical and free from investigators bias. However it results in many nonresponse situations. The respondent may be illiterate. They can provide wrong information due to wrong interpretation of questions Q 2. The table shows the data of Expenditure of a family on food, clothing, education, rent and other items. Depict the data shown in the table using Pie chart. Items Food Clothing Education Rent Others Expenditure 4300 1200 700 2000 600

Solution From the given table of expenses above, Total expenses = 4300+1200+700+2000+600 = 8800 The radii of the pie-chart circle can be calculated as = = 93.81 Lets assume 1 cm = 25 units, So the radii of circle to be drawn will be 93.81/25 = 3.75 cm. In depicting the above items in the pie chart, we calculate the size of each sector of the circle to be occupied by the various items based on corresponding expense with reference to total angle in the circle and to total expenses of all items. Let S = Where s depicts the size of each sector, R the expenditure of an item, and T the total expenditure Solutions are as follows: SFood = = Sclothing = = =(4300360)8800 175.9091 176 =(1200360)8800 49.0909 49
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Seducation = = Srent = = Sothers

=(700360)8800 28.6364 29 =(2000360)8800 81.8182 82 =(600360)8800 =24.5455 = 25

ITEMS Food Clothing Education Rent Others Total

EXPENDITURE SECTORS(SIZE) 4300 176 1200 49 700 29 2000 82 600 25 8800 360

Pie Chart representing expenditure of a family on food, clothing, education, rent and other items.

Expenditure of a Family
Others, 600

Rent, 2000

Food Clothing Food, 4300 Education Rent Others

Education, 700

Clothing, 1200

Q3. Average weight of 100 screws in box A is 10.4 gms. It is mixed with 150 screws of box B. Average weight of mixed screws is 10.9 gms. Find the average weight of screws of box B. Answer: Arithmetic Mean formula for Average Weight calculation is, , where X is the average mean, x1 and x2 are the means of sets of values with sizes n1 and n2 respectively. Average Weight of Box A (containing 100 screws) = 10.4 gm, average weight of the mixed screws is 10.9gms and Box B contains 150 screws. Hence X=10.9gms, x1=10.4gms, n1=100, n2=150 and x2=? Substituting the above data into the formula above,

, the average weight of box B

Q4. (a) Discuss the rules of Probability. (b) What is meant by Conditional Probability?

Answer (a) Probability of an event is the number that measures the chance, or likelihood, that the event will occur when the experiment is carried out. (Bruce Bowerman, R T OConnel-Applied Statistics 1997). The following are the rules of probability, i. Addition Rule The addition rule of probability states that:

Let A and B be events. Then the probability that either A or B will occur is given by: ( ) ( ) ( ) ( ). Where P(A) denotes the probability that event A will occur P(B) denotes the probability that event B will occur ( ) denotes the probability that either A or B will occur and ( ) denotes the probability that both A and B will simultaneously occur

The reasoning behind this result is illustrated in the Venn diagrams below.
A A B A B A B

The diagrams above show that when we compute P(A)+P(B), we are counting each of the sample space outcomes in AB twice. We correct for this by subtracting (AB) therefore we have ( ) ( ) ( ) ( ) ii. Mutually exclusive Mutually exclusive events cannot happen at the same time or two events are said to be mutually exclusive if they have no sample space outcomes in common. In this case, events A and B cannot occur simultaneously. P(AB)=0 For example when you roll a dice you cannot get a 1 and a 6 at the same time. When you flip a coin you can get either a head or a tail, but not both at the same time. For any two events, A and B, which are mutually exclusive if A and B are two mutually exclusive events then the probability of occurrence of either A or B is given by: ( ) ( ) ( ). More generally, if events A, B, C are mutually exclusive, then P(A or B or C or ) =P(A)+P(B)+P(C)+... iii. Complement of an event Given an event A, the complement of A is the event consisting of all sample space outcomes that do not correspond to the occurrence of A. The complement of A is denoted by P( ) denotes the probability that A will not occur. In any probability situation either event A or its complement must occur. Therefore, we have ( ) ( ) hence the probability that A will not occur is ) ( ( )

iv. Multiplication rule If A and B are two independent events then the probability of occurrence of A and B is given by: ( Q4 (b) A conditional probability is the probability that an event will occur, given that another event has already occurred The conditional probability of F given that event E has already occurred is For Independent Events conditional probability: P(F|E)=P(F). For dependent events
PF E PF E PE

( )

( )

Q5 (a) What is meant by Hypothesis Testing? Give Examples (b) Differentiate between Type-I and Type-II Errors Solution Hypothesis testing is a statistical procedure that is used to provide evidence in favour of some statement (called a hypothesis). *Applied statistics-improving business processes by Bruce &OConnel. For example hypothesis testing might be used to assess whether a population parameter such as mean, differs from a specified standard or previous value. Typically, there are two hypotheses in a hypothesis test. One hypothesis is called the null hypothesis, symbolized by H0, is a statistical hypothesis that states that there is no difference between a parameter and a specific value, or that there is no difference between two parameters. The second called the alternative hypothesis, symbolized by H1, is a statistical hypothesis that states the existence of a difference between a parameter and a specific value, or states that there is a difference between two parameters. The problem in hypothesis test is to decide whether or not the null hypothesis should be rejected in favour of the alternative hypothesis. A statistical test uses the data obtained from a sample to make a decision about whether the null hypothesis should be rejected. The numerical value obtained from a statistical test is called the test value. Example, in a standards and practices division of a television network department, one of the divisions responsibilities is to reduce the chances that advertisers will make false claims in commercials run on the network.

To see how this might be done, suppose that a company wishes to advertise a claim (say our product lasts for ten years) and suppose the network has reasons to doubt that claim is true. The network assumes for the sake of argument that the claim is not valid. This assumption is called the null hypothesis. The statement that the claim is valid is called the alternative hypothesis or research hypothesis. The network uses the policy that says it will run the commercial only if the company making the claim provides sufficient sample evidence to reject the null hypothesis that the claim is not true in favour of the alternate hypothesis that the claim is valid. In hypothesis testing, we must state the assumed or hypothesized value of the population parameter before we begin sampling. Suppose we want to test the hypothesis that the population mean is equal to 500. We would symbolize it as follows and read it, The null hypothesis is that the population mean = 500 written as Ho: = 500.
The term null hypothesis arises from earlier agricultural and medical applications of statistics. In order to test the effectiveness of a new fertilizer or drug, the tested hypothesis (the null hypothesis) was that it had no effect, that is, there was no difference between treated and untreated samples. If we use a hypothesized value of a population mean in a problem, we would represent it symbolically as H0. this is read. The hypothesized value of the population mean. If our sample results fail to support the null hypothesis, we must conclude that something else is true. Whenever we reject the hypothesis, the conclusion we do accept is called the alternative hypothesis and is symbolized H1 For the null hypothesis H0: = 200 we will consider three alternative hypotheses as: H1: 200 (population mean is not equal to 200) H1: > 200 (population mean greater than 200) H1: < 200 (population mean less than 200) Example , assume that a manufacturer of light bulbs wants to produce bulbs with a mean life of = H0:= 1,000 hours. If the lifetime is shorter, he will lose customers to his competitions; if the lifetime

is longer, he will have a very high production cost because the filaments will be excessively thick. In order to see whether his production process is working properly, he takes a sample of the output to test the hypothesis Ho; = 1,000. Because he does not want to deviate significantly from 1,000 hours in either direction, the appropriate alternative hypothesis is H1: 1,000 and he uses a two-tailed test. That is,
he rejects the null hypothesis if the mean life of bulbs in the sample is either too far above 1,000 hours or too far below 1,000 hours. (b) Differentiate between Type-I and Type-II Errors

If we reject Ho when it is true, this is Type I error If we do not reject ho when it is false, this is Type II error.
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Under some circumstances one is preferred to the other. The following are some conditions under which one is preferred to the other.
Type I error is preferred Suppose that making a Type I error (rejecting a null hypothesis when it is true) involves the time and trouble of reworking a batch of chemicals that should have been accepted. At the same time, making a Type II error (accepting a null hypothesis when it is false) means taking a chance that an entire group of users of this chemical compound will be poisoned. Obviously, the management of this company will prefer a Type I error to a Type II error and, as a result, will set very high levels of significance in its testing. Type II error is preferred Suppose, on the other hand, that making a Type I error involves disassembling an entire engine at the factory, but making a Type II error involves relatively inexpensive warranty repairs by the dealers. Then the manufacturer is more likely to prefer a Type II error and will set lower significance levels in its testing.

Q6 From the following table, calculate Laspyres Index Number, Paasches Index Number, Fishers Price Index Number and Dorbish & Bowleys Index Number taking 2008 as the base year. 2008 2009 Commodity Price (Rs)per kg A B C D E 6 2 4 10 8 Quantity in Kg 50 100 60 30 40 price 10 2 6 12 12 Quantity in Kg 56 120 60 24 36

Commodity

A B C D E

2008 2009 Price Quantity Price Quantity P0 q0 P1 q1 P1qo P0q0 P1q1 P0q1 6 50 10 56 500 300 560 2 100 2 120 200 200 240 4 60 6 60 360 240 360 10 30 12 24 360 300 288 8 40 12 36 480 320 432 P1qo= Poqo= P1q1= Poq1= 1900 1360 1880 1344

336 240 240 240 288

solution

1. Laspeyres Method

= 139.71%
2. Paasches Method

= 139.88%

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3. Dorbish & Bowleys method

( = 139.80%

4. Fishers ideal index Number

= = 1.397934100 139.79%
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