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Module 4: Inferential Statistics | BRM

1. A marketing research firm conducted a survey 10 years ago and found that the average
household income of a particular geographic region is Rs 10,000. Mr. Gupta, who has recently joined
the firm as a vice president has expressed doubts about the accuracy of the data. For verifying the
data, the firm has decided to take a random sample of 200 households that yield a sample mean (for
household income) of Rs 11,000. Assume that the population standard deviation of the household
income is Rs 1200. Verify Mr. Gupta’s doubts using the seven steps of hypothesis testing. Let α = 0.05.
(Hypothesis testing using z-test)

2. Ajathashathru & Company wants to improve sales. Past sales data indicate that the average
sale was Rs.100 per transaction. After training your sales force, recent sales data (taken from a sample
of 25 salesmen) indicates an average sale of Rs.130, with a standard deviation of Rs.15. Did the training
work? Test your hypothesis at a 5% alpha level. (T Test)

3. Figures released by the U.S. Department of Agriculture show that the average size of farms has
increased since 1940. In 1940, the mean size of a farm was 174 acres; by 1997, the average size was
471 acres. Between those years, the number of farms decreased but the amount of tillable land
remained relatively constant, so now farms are bigger. This trend might be explained, in part, by the
inability of small farms to compete with the prices and costs of large-scale operations and to produce a
level of income necessary to support the farmers’ desired standard of living. Suppose an agribusiness
researcher believes the average size of farms has now increased from the 1997 mean figure of 471
acres. To test this notion, she randomly sampled 23 farms across the United States and ascertained the
size of each farm from county records. The data she gathered follow. Use a 5% level of significance to
test her hypothesis. Assume that number of acres per farm is normally distributed in the population.

445 489 474 505 553 477 454 463 466 557 502 449

438 500 466 477 557 433 545 511 590 561 560

4. The lifetime of electric bulbs for a random sample of 10 from a large consignment gave the
following data:
Item : 1 2 3 4 5 6 7 8 9 10
Life in ‘000’ hours: 4.2 4.6 3.9 4.1 5.3 3.8 3.9 4.3 4.4 5.6

5. An experiment was conducted to compare the mean time (in days) required to recover from a
common cold for people given daily dose of 4 mg of vitamin C versus those who were not given a
vitamin supplement. Suppose that 35 people were randomly selected for each treatment category and
the mean recovery times and standard deviations for the two groups were as follows:

Vitamin C No Vitamin Supplement

Sample size 35 35
Sample mean 5.8 6.9
Sample SD 1.2 2.9
Test the hypothesis that the use of vitamin C reduces the mean time required to recover from a
common cold and its complications at the level of significance, α = 0.05.

6. You are working as a purchase manager for a company. The following information has been
supplied to you by two manufactures of electric bulbs:

Company A Company B
Mean life (in hours) 1300 1248
Standard deviation (in hours) 82 93
Sample size 100 100
Which brand of bulbs are you going to purchase if you desire to take a risk at 5%?

7. The HR manager wishes to see if there has been any change in the ability of trainees after a
specific training programme. The trainees take an aptitude test before the start of the programme and
an equivalent one after they have completed it. The scores recorded are given below. Has any change
taken place at 5 percent significance level?

Trainee : A B C D E F G H I
Score before training: 75 70 46 68 68 43 55 68 77
Score after training: 70 77 57 60 79 64 55 77 76

8. Twelve students were given intensive coaching and 5 tests were conducted in a month. The
scores of tests 1st and 5th are given below.

No. of students : 1 2 3 4 5 6 7 8 9 10 11 12
Marks in 1st test : 50 42 51 26 35 42 60 41 70 55 62 38
Marks in 5th test : 62 40 61 35 30 52 68 51 84 63 72 50

Do the data indicate any improvement in the scores obtained in the first and fifth tests?

ANOVA – ANalysis of Variance

1. To test the significance of variation in the retail prices of a commodity in three metro cities,
Mumbai, Kolkata and Delhi, four shops were chosen at random in each city and the prices observed in
rupees were as follows:
Mumbai : 16 8 12 14
Kolkata : 14 10 10 6
Delhi : 4 10 8 8
Do the data indicate that the prices in the three cities are significantly different?

2. A study was conducted to investigate the perception of corporate ethical values among
individuals specializing in marketing. Using alpha at 5% and the following data (higher scores indicate
higher ethical values), test for significant differences in perception among the three,
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Marketing Marketing Advertising

6 5 6
5 5 7

4 4 6
5 4 5

6 5 6
4 4 6

3. Kerala Traders Co. Ltd wishes to test whether its three salesmen A, B and C tend to make
sales of the same size or whether they differ in their selling ability as measured by the average size of
their sales. During last week there have been 14 sales calls – A made 5 calls. Following are the weekly
sales record of the three salesmen:

A : 300 100 300 500 0

4. There are three main brands of a certain powder. A sample of 120 packets sold is examined and
found to be allocated among four groups A, B, C and D, and brands I, IT and III as shown below:

Brand Group

A B C D

I 0 4 8 15
II 5 8 13 6
III 18 19 11 13

Is there any significant difference in brand preferences?

5. Two hundred randomly selected adults were asked whether TV shows as a whole are primarily
entertaining, educational or a waste of time (only one answer could be chosen). The respondents were
categorized by gender. Their responses are given in the following table:
Opinion
Gender Entertaining Educational Waste of time Total
Female 52 28 30 110
Male 28 12 50 90
Total 80 40 80 200
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Is this evidence convincing that there is a relationship between gender and opinion in the population of
interest?

6. A certain drug is claimed to be effective in curing colds. In an experiment on 500 persons with
cold, half of them were given the drug and half of them were given sugar pills. The patients’ reactions
to the treatment are recorded in the following table:

Consequence
Treatment Helped Reaction No effect Total
Drug 150 30 70 250
Sugar pills 130 40 80 250
Total 280 70 150 500

7. A survey of 800 families with 4 children each revealed following distribution:

No. of boys : 0 1 9 3 4
No. of girls : 4 3 2 1 0
No. of families : 32 178 290 236 64
Is this result consistent with the hypothesis that male and female births are equally probable?

8. A book has 700 pages. The no. of pages with misprints is recorded below.

No. of misprints 0 1 2 3 4 5
No. of pgs. with 616 70 10 2 1 1
misprints
Can a Poisson Distribution be fitted to this data?

9. A set of 5 coins in tossed 3200 times and the number of head appearing each time is noted as
follows:

No. of heads 0 1 2 3 4 5

Frequency 80 570 1100 900 50 50

Test the hypothesis that the coins are unbiased.

10. The demand for a particular spare part in a factory was found to vary from day to day. In a sample
study, the following information was obtained.

Day Mon Tue Wed Thu Fri Sat

No. of parts 1124 1125 1110 1120 1126 1115

Test the hypothesis that the no. of parts demanded does not depend on the day of the week.