Instructors Solutions Manual - Chapter 1

Chapter 1 Solutions Develop Your Skills 1.1 1. You would have to collect these data directly from the students, by asking them. This would be difficult and time-consuming, unless you are attending a very small school. You might be able to get a list of all the students attending the school, but privacy protection laws would make this difficult. No matter how much you tried, you would probably find it impossible to locate and interview every single student (some would be absent because of illness or work commitments or because they do not attend class regularly). Some people may refuse to answer your questions. Some people may lie about their music preferences. It would be difficult to solve some of these problems. You might ask for the school's cooperation in contacting students, but it is unlikely they would comply. You could offer some kind of reward for students who participate, but this could be expensive. You could enter participants' names in a contest, with a music-related reward available. None of these approaches could guarantee that you could collect all the data, or that students would accurately report their preferences. One partial solution would be to collect data from a random sample of students, as you will see in the discussion in Section 1.2 of the text. Without a list of all students, it would be difficult to ensure that you had a truly random sample, but this approach is probably more workable than a census (that is, interviewing every student). 2. Because you need specific data on quality of bicycle components, you would need to collect primary data. Customer complaints about quality are probably the only source of secondary data that you would have. Statistics Canada has a CANSIM Table 203-0010, Survey of household spending (SHS), household spending on recreation, by province and territory, annual, which contains information on purchases of bicycles, parts and accessories. There is a U.S. trade publication called "Bicycle Retailer & Industry News", which provides information about the industry. See http://www.bicycleretailer.com/. Access is provided through the Business Source Complete database. Industry Canada provides a STAT-USA report on the bicycle industry in Canada, at http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr105431e.html. Somewhat outdated information is also available at http://www.ic.gc.ca/eic/site/sgas.nsf/eng/sg03430.html. Canadian Business magazine has a number of articles on the bicycle industry. One of the most recent describes the purchase of the Iron Horse Co. of New York by Dorel Industries (a Montreal firm). http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b1560 9913

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Instructors Solutions Manual - Chapter 1

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Although Statistics Canada takes great care in its data collection, errors do still occur, and data revisions are required. An interesting overview of GDP data quality for seven OECD countries is available at http://www.oecd.org/dataoecd/20/26/34350524.pdf You should be able to locate other information about data revisions. See also http://www.statcan.ca/english/about/policy/infousers.htm which describes Statistics Canadas policy on informing users about data quality. At least some of the secondary data sources listed in Section 1.1 should help you. If you cannot locate any secondary data, get help from a librarian.

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Develop Your Skills 1.2 6. The goal for companies is to create population data, but it is unlikely that every customer is captured in any CRM database. There are many examples of companies using CRM data. A search of the CBCA database on August 7, 2009 produced a list of 102 articles (for 2009) that contained customer relationship management as part of their citation and indexing. For example, the publication called "Direct Marketing" regularly writes about database marketing, data mining, and web analytics. See http://www.dmn.ca/index.html. 7. This is a nonstatistical sample, and could be described as a convenience sample. The restaurant presumably has diners on nights other than Friday, and none of these could be selected for the sample. The owner should not rely on the sample data to describe all of the restaurant's diners, although the sample might be useful to test reaction to a new menu item, for example. These are sample statistics, as they are based on sample data. It would be impossible to collect data from all postsecondary students. Follow the instructions for Example 1.2c. The random sample you get will be different, but here is one example of the 10 names selected randomly. AVERY MOORE EMILY MCCONNELL HARRIET COOGAN DYLAN MILES TERRY DUNCAN GEORGE BARTON JAMES BARCLAY AVA WORTH PAIGE EATON JORDAN BOCK 10. First, Calgary Transit will probably find it impossible to establish a frame for its target population, which is people with disabilities who use Calgary Transit. It will also have to carefully define what it means by people with disabilities. If this

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Instructors Solutions Manual - Chapter 1

means people in wheelchairs, then it will at least be possible to identify such riders when an interviewer visits a bus or a bus stop. However, it will be quite difficult for Calgary Transit to obtain a truly random sample of the opinions of people in wheelchairs who use Calgary Transits services. Coverage errors will be practically unavoidable. As well, if interviewers are approaching only those riders in wheelchairs, the survey respondents may be unhappy about being singled out because of their wheelchairs. They may refuse to answer the interviewers questions, leading to nonresponse errors. Interviewers will have to be trained carefully to overcome any resulting resistance of survey subjects. Because data will probably be collected on buses or at bus stops, with interviewers recording information while a bus is in motion, or possibly during bad weather at a bus stop, processing errors may occur. Finally, Calgary Transit will have to be sure that suitably qualified people are doing the analysis, to avoid estimation errors. Develop Your Skills 1.3 11. This is impossible. A price cannot decrease by more than 100% (and a 100% decrease would mean the price was 0). It is likely that the company means that the old price is 125% of the current price. So, for example, if the old price was $250, then the new price would be $200. You can see that 250/200 = 1.25 or 125%. 12. The graph with the y-axis that begins at 7,000 is misleading, because it makes the index decline at the end of 2008 look more dramatic than it actually was. While the fall in the stock market index was significant, using a y-axis that begins with zero puts it in better perspective. 13. Jane Woodsmans average grade has increased from 13.8% last semester to 16.6% this semester. The provocative language of the initial statement (astonishing progress, substantial 20%) is inappropriate. As well, the 20% figure, used as it is here, suggests something different from the facts. Janes grades did increase by 20%, but this is only 20% of the original grade of 13.8%, so it is not much of an improvement. 14. Aside from the fact that you should be suspicious of anyone who will not share the actual data with you, the local managers assurance that all is well may not be borne out by fact. Notice that the decrease claimed is in maximum wait times, not average wait times. It is entirely possible that average waiting times have increased. You need to see the data! 15. Yes. There is no distortion in how the data are represented, and the graph is clearly labelled and easy to understand. Develop Your Skills 1.4 16. No! With such an observational study, this kind of conclusion about cause and effect is not justified. There could be many factors (other than income) that explain why children in wealthier families are better off. For example, parents in wealthier

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Instructors Solutions Manual - Chapter 1

families may have more confidence, and this may provide a very positive environment in which children flourish. 17. No. Even if the study was randomized (no information is provided), it would not be legitimate to make this conclusion. While taller men are more likely to be married, we cannot conclude that they are more likely to be married because they are taller. There could be many other factors at work. 18. It may be that the diary system contributed to increased sales. Because the data compares the same people before and after use of the diary system, there is some support for this conclusion. However, notice that only poor performers were selected for the trial. These people may have worked harder simply because it was clear their poor performance had been noticed. 19. If you had compared the sales performance of a randomly-selected group of salespeople (not only poor performers), you would be able to come to a stronger conclusion about the diary systems impact on increased sales. 20. There may be a cause-and-effect relationship here, but any conclusions should be made cautiously. For example, hotter weather or a nearby fair for children could have increased foot traffic (and sales) during the period. Develop Your Skills 1.5 21.a. In this case, the national manager of quality control probably has a good grasp of statistical approaches. While you should still strive for clarity and simplicity, you can include more of the technical work in the body of the report. Printouts of computer-based analysis would be included in the appendix. b. While human resources professionals probably have some understanding of statistical analysis, they are less likely to understand the details. In this case, you should write your report with a minimum of statistical jargon. The body of your report should contain key results, but the details of your analysis should be saved for the appendix. c. In this case, you can assume no statistical expertise in your readers. While you should still report on how your analysis was conducted, and how you arrived at your conclusions, you probably would not send this part of the report to your customers. The report you send your boss should be easily understandable to everyone. The challenge here will be to make your conclusions easy to understand, while not oversimplifying, or suggesting that your results are stronger than they actually are. 22. It is incorrect to suggest that study of a random sample proves anything. This statement is much more definitive than can be justified. As well, the study was done on past customers, and may not apply to future customers. Nevertheless, such a study could be persuasive about what segment of the market the company should focus on.

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Instructors Solutions Manual - Chapter 1

23. The average amount of paint in a random sample of 30 cans was 3.012 litres, compared with the target level of 3 litres. This sample mean is within control chart limits, indicating no need to adjust the paint filling line. 24. Analysis of output for a random sample of 50 workers showed an increase in worker output from 52 units per hour, on average, to 56 units per hour after the training. This evidence is sufficient to suggest that the worker output increased after training. This may mean that the training caused the increase in output, but this can be determined only after an examination of the circumstances, to determine if there were other possible causes of the increase in output. 25. In fact, some studies have shown that there is a positive relationship between height and income (that is, taller people tend to have higher incomes). However, all such studies must be observational (there is no ethical way to control height!), and so the cause-and-effect conclusion suggested here is not valid. The statement could be rewritten as follows: A study has shown a strong positive relationship between height and income. You might even go on to discourage the unsophisticated reader from jumping to conclusions, as follows: Of course, this should not be interpreted as meaning that greater height guarantees higher income, or that you cannot earn a high income if you are short. Chapter Review Exercises 1. Collecting data usually leads to a better understanding of the question and a better decision. 2. Businesses may not have all of the data available, because it is impossible or too costly to collect. For example, it is unlikely that a business would have detailed information available about every customer. However, reliable decisions can be made on the basis of detailed information about a random sample of customers. It is generally not valid to draw conclusions about a population on the basis of a convenience sample. Because there is no way to estimate the probability of any particular element of the population being selected for a convenience sample, we cannot control or estimate the probability of error. Students often use their average grade to summarize their performance in a semester. Decision-makers may not be statisticians. Statistical analysis is powerful only if it is communicated so that those making the decision can understand the story the data are telling. One of the difficulties with gathering data through personal interviews is that those being surveyed are sometimes charmed by the interviewer. This sometimes results in interviewees acting to please the interviewer, rather than providing honest or informed responses to questions. Respondents can also be misled by the interviewer, as Rick Mercer so successfully illustrates in the Talking to Americans segments.

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Instructors Solutions Manual - Chapter 1

For example, Rick Mercer managed to persuade Americans to congratulate Canadians on legalizing VCRs. 7. It is possible to make reliable conclusions on the basis of 1,003 responses. The sample size may seem small, when you consider there are millions of adult Canadians who have retirement funds. However, the sample size required depends not on the size of the population, but on its variability. If all Canadians were exactly the same, a sample of one would be sufficient. The more variable Canadians are, the larger the sample size required for estimates of a desired level of accuracy. This is something you will explore more in Chapter 8. No. The applications are filled out by employers, not employees. Employers have a vested interest in portraying themselves as top employers. The sample is not representative. The Top 100 are selected from a self-selected sample. Done correctly, such a study could identify a positive relationship between height and income. However, it is not correct to suggest the study means that height is the cause of the differences in incomes, although if the study was well-designed, other causes could have been randomized. Still, the leap to evolution as the explanation is not at all justified by the study. While this may be the explanation, it is only one of many possible explanations.

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10. You collected your sample results at only one physical location at the school. Since it was near the smoking area, it is likely that your sample contained a disproportionate number of smokers. It is likely that smokers opinions about the new smoking policy would differ from nonsmokers opinions. Your sample is almost certainly not representative of the entire school community. 11. There are many examples of loyalty programs: Airmiles, Presidents Choice Financial rewards, American Express rewards, HBC rewards, PetroCanadas PetroPoints, Sears Club points, Aeroplan. Enter loyalty rewards programs into an Internet search engine, and you will find references to many such programs. 12. This is an observational study. It is not possible to draw a strong conclusion that drinking alcohol causes higher earnings. In fact, the causation may run the other way: higher income may cause more drinking (because those with higher incomes can afford to drink alcohol). The study measured income, not social networks, so the explanation provided is speculative. As well, there are other factors that could explain the differences in incomes, and these were not controlled in the study. 13. The article describes the New Coke story as "the greatest marketing disaster of all time". The research failed to uncover the attachment people felt to the original Coke. A question such as "Would you switch to the New Coke?" might have revealed how loyal customers were to the original Coke.

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Instructors Solutions Manual - Chapter 1

14. The Conference Board included the detail so that anyone reading the study could draw their own conclusions about the reliability of the data, and possible biases in the study results. 15. While the title used in the report is accurate, the percentage decrease is relatively small, and the actual number of drivers has increased. The title could easily be misunderstood. 16. The author has used Excel to generate Lotto 6/49 quick picks, but she didn't win the lottery either! 17. Of course, because your samples are randomly-selected, your samples cannot be predicted. When the author did this exercise, the sample averages were as shown in the table below. The population average is 65.0. The sample averages ranged from 60.7 to 73.7. Some were quite close to the population average, and the largest difference between a sample average and the true value was 8.7.

Average Mark from 10 Randomly-Selected Samples of Size 10 60.7 61.8 65.5 65.6 67.4 69.8 70.3 71.3 73.0 73.7

18. Again, the values you obtain cannot be predicted. These averages should be closer to the true population average, because they are based on more data (15 data points instead of 10). The author's results are shown in the table below. In general, the sample averages are closer to the true population average. The largest difference between a sample average and the true value is -6.4.

Average Mark from 10 Randomly-Selected Samples of Size 15 58.6 61.2 62.6 64.0 66.2 66.9 67.2 67.7 68.4 70.8

19. Based on the author's results for exercises 17 and 18 above (yours will be different): the average of the sample averages, when the sample size is 10, is 67.9. The average of the sample averages, when the sample size is 15, is 65.4. The average of the sample averages is closer to the true population average value when the sample size is larger. You will investigate this more in Chapter 6.

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Instructors Solutions Manual - Chapter 1

20. a. Because students are generally quite mobile, often moving from the place where they attended to school to their place of work after graduating, it may be quite difficult to contact them for the graduation employment and satisfaction measures. Some graduates will almost certainly be missed, and if their opinions differ from those surveyed, the results will not be truly representative. The same kinds of problem arise with surveys of current students. Such students are surveyed in their classes, so those who are absent on the day of the survey are missed. It could be that the opinions of those who are absent are different from the opinions of those who are present in class (for example, it could be the case that students are absent because they do not find their classes relevant to their future careers). Employers may also be missed, so the potential for coverage errors exists throughout. Of course, as with any survey, all the other nonsampling errors are possibilities: nonresponse errors, response errors, processing and estimation errors. This is a large undertaking, and so there are more possibilities for error. b. Although it could be the case that all colleges improved their services significantly between 1999-2000 and later years, this seems unlikely. There may be another explanation for the shift in the percentage of students satisfied with college services. In fact, a closer inspection reveals that about a half-dozen colleges improved their ratings quite significantly. Without more information, there is no way to know why this happened. The report uses summary measures (percentages of responses for each category, for each year) and graphs (line graphs and bar graphs) to summarize the data. In 1999-2000, an additional capstone question was included in the calculation. Since this question was not used in subsequent years, the average student satisfaction rates are not directly comparable.

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