Jubail Industrial College

Department of General Studies

SEM 441 HOMEWORK # 2

COURSE TITLE: Statistical Methods for Management II COURSE CODE: MATH 118
STUDENT’S NAME: DUE DATE: 16-12-2022
STUDENT’S ID No.: STUDENT’S SCORE:
SECTION: MAX. POSSIBLE SCORE: 5

Question # 1.
Examine the three samples obtained independently from three populations:
Item Group 1 Group 2 Group 3 Group 4
1 20.9 28.2 17.8 21.2
2 27.2 26.2 15.9 23.9
3 26.6 21.6 18.4 19.5
4 22.1 29.7 20.2 17.4
5 25.3 30.3 14.1
6 30.1 25.9
7 23.8

a. Based on the computations for the within- and between-sample variation, develop the ANOVA table and test the
appropriate null hypothesis using α = 0.05
b. If warranted, use the Turkey-Kramer procedure to determine which populations have different means. Use α = 0.05

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Question # 2.
Employers want to know which days of the week employees are absent in a five-day work week. Most employers would
like to believe that employees are absent equally during the week. Suppose a random sample of 60 managers were asked on
which day of the week they had the highest number of employee absences. The results were distributed as in (Table). For
the population of employees, do the days for the highest number of absences occur with equal frequencies during a five-day
work week? Test at a 5% significance level.

Days Mon Tue Wed Thu Fri

No. of Absences 15 12 9 9 15

a. What are the appropriate null and alternative hypothesis to be tested?

b. Based on the null and alternative hypotheses stated in part a, determine the expected frequencies for each set-up time
category.
c. Compute the test statistic and carry out the hypothesis test.

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Question # 3.
The following table classifies a stock’s price change as up, down, or no change for both today’s and yesterday’s prices.
Price changes were examined for 100 days. A financial theory states that stock process follow what is called a “random
walk”. This means, in part, that the price change today for a stock must be independent of yesterday’s price change. Test
the hypothesis that daily stock price changes for this stock are independent. Let  = 0.05

Price Change Previous Day

Price Change Today
Up No Change Down
Up 14 16 12
No Change 6 8 6
Down 16 14 8

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Question # 4.
Cushing supply makes component parts used in the automobile industry. For some, shipping workers have been inspecting
10 parts from every day’s production before shipping. If two or more of the parts are defective, they do a complete inspection
on the day’s parts to sort the defective from the good parts. If they find one or fewer, they go ahead and ship the parts
without further analysis. The contract calls for at most 10% of the parts to be defective. At issue is whether Cushing
managers can evaluate this sampling plan using a binomial distribution with n = 10 and π = 0.10. Use a chi-square goodness-
of-fit test to determine if the data come from the binomial distribution.

O Binomial Probability
Defects
Observed defects n = 10, π = 0.10
0 30 0.3487
1 40 0.3874
2 20 0.1937
3 and more 10 0.0702
Total 100

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Question # 5.

A car dealer wants to investigate how the price of one of its car models depreciates with age. A sample of eight cars of this
model has been collected. The following represents the age (in years) and price (in thousands of Riyals) of these cars:
Age (x) 8 3 6 9 2 5 6 3
Price (y) 3 16 8 6 24 7 5 15

a. Construct a scatter plot for these data. What, if any, relationship appears to exist between the two variables?
b. Compute the linear regression model based on the sample data. Interpret the slope and intercept coefficients.
c. Determine the coefficient of determination and discuss what its value tells you about the two variables.
d. Construct and interpret a 95% confidence interval estimate for the regression slop coefficient.
(Sb1 = 3.14)(t = 1.9432)

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Question # 6.

A regional retailer would like to determine variation in average monthly store sales can, in part, be explained by the size of
the store measured in square feet. A random sample of 21 stores was selected and the store size and average monthly sales
were compound. Given the following results

n = 12, Σx = 55, Σy = 4855, Σx2 = 329, y2 = 2240687 and Σxy = 26091;

a. Find the correlation coefficient between the store size and average monthly sales.
b. Using a level of significance of α = 0.01, test to determine whether there is a positive linear relationship between store
size and average monthly sales.

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Question # 7.
A random sample of 50 high school students from a Seattle high school is selected and each student’s scores on a
standardized mathematics examination and a standardized English examination are recorded. Suppose the correlation
coefficient for the two examination scores is 0.75.

a. Provide an explanation of the sample correlation coefficient in this context.

b. Using a level of significance of = 0.01, test to determine whether there is a positive linear relationship between
mathematics scores and English scores for high school students at the Seattle high school.

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Question # 8.

A study was recently performed by the American Automobile Association model to explain variation in Environmental
Protection Agency (EPA) mileage rating of new cars. At one stage of the analysis, the estimate of the model took the
following form:
𝑦̂ = 34.20 − 0.003𝑥1 + 4.5𝑥2
Where:
𝑥1 = Vehicle weight
1, 𝑖𝑓 𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑡𝑟𝑎𝑛𝑠𝑚𝑖𝑠𝑠𝑖𝑜𝑛
𝑥2 = {
0, 𝑖𝑓 𝑎𝑢𝑡𝑜𝑚𝑎𝑡𝑖𝑐 𝑡𝑟𝑎𝑛𝑠𝑚𝑖𝑠𝑠𝑖𝑜𝑛
a. Interpret the regression coefficient for variable 𝑥1 and 𝑥2
b. Present an estimate of a model that would predict the average EPA mileage rating for an automobile with standard
transmission as a function of the vehicle’s weight.
c. Cadillac’s STS-V with automobile transmission weight approximately 3973 pounds, provide an estimate of the
average highway mileage you would expect to obtain from this model.

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Question # 9.

In working for a local retail store, you have developed the following estimated multiple regression model with two
independent variables.
df SS MS F Significance F F Critical
Regression 2 1775.125 887.562 19.071 0.001 4.737
Residual 7 325.775 46.539
Total 9 2100.900

Coefficient Standard Error t Stat P-value

Intercept 5.045 8.698 0.58 0.580
x1 -0.051 0.241 -0.212 0.838
x2 0.888 0.148 6.019 0.001

a. State the appropriate null and alternative hypotheses.

b. What is the regression model associated with this data?

c. Is the model statistically significant?

d. How much of the variation in the dependent variable can be explained by the model?

e. Are all of the independent variables in the model significant? If not, which are not and how can you tell?

f. What is the estimated sales if the x1 is 0.2 and x2 is 5?

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Question # 10.

Gallup Construction and Paving, a company whose primary business is constructing homes in planned communities in the
Upper Midwest. Suppose the company has kept a record of the relative costs of labor and materials in its market areas for
the last 6 years.
These data are as follows:

Year Hourly Wages Average Material Cost (SR)

2015 30.10 66500
2016 31.70 70600
2017 34.00 71200
2018 35.10 72500
2019 34.90 73400
2020 34.20 74000

a. Using 2015 as the base year, construct a separate index for each component in the construction of a house.
b. Determine the actual percentage growth in the average material cost between the year 2019 and year 2020.

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