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Mb0040 Statistics for Management Assign Set-2

Mb0040 Statistics for Management Assign Set-2

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Published by Ali Asharaf Khan
Master of Business Administration-MBA Semester 1 Set - II
Master of Business Administration-MBA Semester 1 Set - II

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Published by: Ali Asharaf Khan on Dec 11, 2010
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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

Ques.1 What do you mean by Statistical Survey? Differentiate between “Questionnaire” and “Schedule”. Ans:

Statistical Survey

A Statistical Survey is a scientific process of collection and analysis of numerical data. 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” 1. Very often information is collected through Questionnaires. The questionnaires are filled by of questions pertaining to the investigation. They are sent to the respondents with a covering letter soliciting cooperation by giving correct information and mailing it back. The objectives of investigation are explained in the covering letter together with assurance for keeping information provided by them as confidential.
Information can be collected through schedules filled by investigator through personal contact. In order to get reliable information, the investigator should be well trained, tactful, unbiased and hard working. 2. 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 investigator’s bias. However it results in many “non-response” situations. The respondent may be illiterate. They can provide wrong information due to wrong interpretation of questions. The information used for the investigation of the current problem and obtained from the data collected and used by some other agency or person before for his investigation is known a secondary data.

3. Success of Questionnaire method of collection of data depends mainly on proper drafting of
the questionnaire. Following general principle are considered. i. The number of questions should be less. ii. Lengthy questions should be avoided. iii. Answers to them should be short.

They are available in published or unpublished form. In published form they are available in research papers, news papers, magazines, government publication, international publication, websites etc. They are collected for a different purpose. Therefore care should be exercised while making use of it. Their accuracy, reliability, objectives and scope should be examined thoroughly before use.

Ques2. The table shows the data of Expenditure of a family on food, clothing, education, rent and other items.

Items Food Clothing Education Rent Others

Expenditure 4300 1200 700 2000 600

Depict the data shown in the table using Pie chart.

Ans: Pie chart of Expenditure of a family on food, clothing, education, rent and other items.

Ques3. 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 . Ans: _ _ Given X1 = 10.4, n1 = 100 X = 10.9 _
X =? , n2=150

n1 X1 + n2 X2 We know X1 = n1 + n2 100 x 10.4 + 150 X2 = 10.9 100 + 150

1040 + 150 X2 = 10.9 x 250 = 2725 150 X2 = 2725 – 1040 = 1685 X2 = 1685 / 150 =11.23 gms.

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Ques4. (a) Discuss the rules of “Probability”. (b) What is meant by “Conditional Probability”?




Probability is a numerical measure which indicates the chance of occurrence of an event “A”. It is denoted by P(A). It is the ratio between the favorable outcomes to an event “A” (m) to the total outcomes of the experiment (n). In other words

P (A) = m / n Rules of Probability
a) Addition Rule i) If A and B are any two events then the probability of the occurrence of either A or B is given by P (A U B) = P (A) + P (B) – P (A B) ii) If A and B are two mutually exclusive events then the probability of occurrence of either A or B is given by P (A U B) = P (A) + P (B) iii) If A, B and C are any three events then the probability of occurrence of either A or B or C is given by P (A U B U C) = P (A) + P (B) + P(C) – P (A B) – P (B C) – P (A C) + P (A B C) iv) If A1, A2, A3………An are “n” mutually exclusive and exhaustive events then the probability of occurrence of at least one of them is given by P (A1 U A2 U……..U an) = P (A1) + P (A2) +……. + P (An). In terms of Venn diagram i), ii) and iii) can be represented as follows.

Managers very often come across with situations where they have to take decision about implementing either course of action A or course of action B or the course of action C. Sometimes they have to take decisions regarding the implementation of both A and B. For example a sales manager may like to know the probability that he will exceed the target for product A or product B. Sometimes he would like to know the probability that sales of product A and B will exceed the target. The first type of probability is answered by addition rule. The second type of probability is answered by multiplication rule. b) Multiplication Rule i) If A and B are two independent events then the probability of occurrence of A and B is given by P (A u B) = P (A) P (B) (2) Conditional Probability Sometimes we wish to know the probability that the price of a particular petroleum product will rise, given that the finance minister has risen the petrol price. Such probabilities are known as conditional probability. Thus the conditional probability of occurrence of an event “A” given that the event “B” has already occurred is denoted by P (A / B). Here A and B are dependent events. Therefore we have the following rules. If A and B are dependent events then the probability of occurrence of A and B is given by P (A n B) = P (A) = P (B) It follows that) P (A/B) = P (A n B) / P (B) P (B/A) = P (A n B) / P (A) P (B/A) P (A/B)

Ques5. (a) What is meant by “Hypothesis Testing”? Give Examples (b) Differentiate between “Type-I” and “Type-II” Errors
Ans: (A) Testing Hypothesis

Null and Alternate hypothesis In hypothesis testing, we must state the assumed or hypothesized value of the population parameter before we begin sampling. The assumption we wish to test is called the null hypothesis and is symbolized by Ho. 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: µ = 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 µ 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 (“H sub-one”). For the null hypothesis H0: µ = 200 We will consider three alternative hypotheses as: H1: µ ≠ 200 (population mean is not equal to 200) H1: µ > 200 (population mean greater than 200) H1: µ < 200 (population mean less than 200) Example 1: Assume that a manufacturer of light bulbs wants to produce bulbs with a mean life of µ = µHo = 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; µ = 1,000. Because he does not want to deviate significantly from 1,000 hours in either direction, the appropriate alternative hypothesis is H1: µ ≠ 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
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 to get low β s.

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.

Ques6. From the following table, calculate Laspyres Index Number, Paasches Index Number, Fisher s Price Index Number and Dorbish & Bowley s Index Number taking 2008 as the base year.

2008 Commodity Price (Rs.) Per Kg 6 2 4 10 8

Quantity in Kg

Price (Rs.) Per Kg 10 2 6 12 12


50 100 60 30 40

2009 Quantity in Kg 56 120 60 24 36


2008 Commodity A B C D E P0 6 2 4 10 8 Q0 50 100 60 30 40 P1 10 2 6 12 12

2009 Q1 56 120 60 24 36 P1Q0 500 200 360 360 480 1900 P1Q1 560 240 360 288 432 1880 P0Q0 300 200 240 300 320 1360 P0Q1 336 240 240 240 288 1344

∑P1Q0=1900 ∑P1Q1=1880 ∑P0Q0=1360 ∑P0Q1=1344

(A) Laspyres Index Number =∑P1Q0 / ∑P1Q1 x 100 =1900 / 1880 x 100 = 1.0106 x 100
= 101.06 Ans. (B) Paasches Index Number

=∑P1Q1 / ∑P0Q1 x 100
=1880 /1344 x 100 =1.3988 x 100 =138.88 Ans.


∑P1Q0 x ∑P1Q1 / ∑P0Q0 x ∑P0Q1

(C) Fisher

s Price Index Number
X 100


1900 x 1880 / 1360 x 1344 X 100


1.9542 x 100

= 1.3979 x 100 = 139.79 Ans. (D) Dorbish & Bowley s Index Number


∑P1Q0 / ∑P0Q0 + ∑P1Q1 / ∑P0Q1 x 100

= 1900 / 1360 + 1880 / 1344 x 100


2.795 x 100

= 1.6718 x 100 = 167.18 Ans.

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