QM assignment

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QM assignment

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QUANTITATIVE METHODS - I

Submitted to

Prof. Vishnuprasad Nagadevara

Indian Institute of Management, Bangalore

Group 9 - Section C

Manoj R

Muthuraman AL

Nikhil Darak

Pankaj Kumar

Sudheender S

1311171

1311175

1311180

1311183

1311204

PGP2013-15

Computer Assignment

1.

(Rs)

Solution

Total number of data points in sample (n) = 10000

From the sample given,

Sample mean = 1325948.88

Standard deviation of the sample (S) = 12112314.37

Total degrees of freedom = n-1=9999

As we do not know the population standard deviation, hence T distribution is

to be used.

Given that 95 % confidence hence = 0.05

We compute t/2 in this case for = 0.05 and we get the value as 1.9602

The confidence interval for the Gross output 2001-02 (Rs) is

[1325948.88 1.9602 (12112314.37 10000)]

[930708.872, 1791303.32]

2.

Define two different measures that you consider most appropriate for

measuring the performance of the units. This definition is up to you. These

can be the variables that are already in the data or new variables defined based

on the existing variables. Please explain in one paragraph why you have

selected these two measures. Remaining analysis is to be carried based on

these definitions.

The two different measures which are most appropriate to measure

performance of the units are percentage change in Gross Output and the

percentage change in the Net Worth of a firm.

The percentage change in Gross Output in 2001-02 is the ratio of change in

Gross Output from 2000-01 and 2001-02 to the Gross Output in 2000-01.

The performance of a firm can be measured by observing if the firm is

growing with respect to all the other firms by measuring the percentage

change in the Gross Output and then comparing it to the average percentage

change of all the firms.

The percentage change in Net Worth of a firm in 2001-02 is the ratio of

change in Net Worth from 2000-01 and 2001-02 to the Net Worth in 2000-01.

determine creditworthiness of a company.

a. What is the probability that a firm selected at random is a SSSBE unit?

Solution

Total numbers of firms in the sample (n) = 10000

Total number of SSSBE units in the sample data = 3409 (From the data)

Hence the probability that a firm selected at random is a SSSBE unit is

P = 3409 / 10000 = 0.3409

b. What is the probability that a firm selected at random is GOOD in

performance? (Calculate the average of the first performance measure that

you had defined in question 2 above. If the firms performance is above

this average, it considered good. If it is below average, it is considered

Bad)

Solution

The measure used for performance of units is % change in GOP in 2001-02.

In the given sample, the average % change in GOP in 2001-02 is 23.647%.

The number of firms having % change in GOP in 2001-02 higher than 23.647

are 1354.

Therefore, the probability that a firm selected at random from the sample will

be GOOD in performance is 1354/10000 = 0.1354

c. What is the probability that a firm selected is a SSSBE Unit and ALSO

GOOD in performance?

Solution

Total number of firms that are a SSSBE unit and ALSO GOOD in

performance are 439.

Therefore, the probability that a firm selected at random from the sample is a

SSSBE unit and ALSO GOOD in performance is 439/10000 = 0.0439

d. What can you say about the performance of the SSSBE units in terms of

GOOD or BAD based on the above?

Solution

From the sample data we know that:

The total number of SSSBE units = 3409.

Total number of SSSBE units that are GOOD in performance = 439

Hence the probability that a SSSBE unit is GOOD in performance is given by

439/3409=0.1287

As the probability of a SSSBE unit being GOOD in performance is very small

therefore we can say that the performance of SSSBE unit is below satisfaction.

3.

Test the null hypothesis that the population average of the variable Value of

Exports for 2001-02 = 87,300. Carry out a one sided test. Clearly state your

null and alternate hypotheses.

Solution

H0 : Average of Value of Exports for 2001-02 87300 (Null Hypothesis)

H1 : Average of Value of Exports for 2001-02 > 87300 (Alternate Hypothesis)

Total Number of Samples = 10000

Sample mean for Value of Exports for 2001-02 = 133717.5

Sample Standard deviation = 5129673.88

Total degrees of freedom = n-1=9999

As we do not know the population standard deviation, hence T distribution is

to be used.

Assume that 95 % confidence hence = 0.05

So, we compute t in this case for = 0.05 and find that the corresponding tvalue is 1.645

For carrying out a right tailed t test, the value of t= 1.645

Hence Tcritical = 1.645.

The T test statistic is given by

T calculated = (133717.5 87300) 10000/ 5129673.88

T calculated = 0.9051

As Tcritical > T calculated hence we do not reject the null hypothesis. Hence, the

average value of exports for 2001-02 is probably greater than 87300.

4.

What are the variables that could be used for determining the two measures of

performance selected by you? Explain your methodology and justify. Interpret

and explain the results.

Solution

The Two measures selected for measuring the performance of a firm are

% change in Gross Output and % change in Net Worth.

The variables used to determine the % change in Gross Output for 2001-02 are

Gross output for the year 2000-01 and Gross output for the year 2001-02.

The % change in Gross output is calculated as :

% change in GOP for 2001-02 = (GOP2001-02 GOP2000-01 )/GOP 2000-01 100%

After calculating the % change in GOP for the firms individually we can

calculate the average % change in GOP for all the firms.

In the given sample, the average % change in GOP in 2001-02 is 23.647%.

Hence for a firm if the % change in GOP in 2001-02 is greater than 23.647%

we can say that the firm is growing at a faster rate than the market.

After the analysis it was found that out of the 10000 firms only 1354 had a

higher % change in GOP in 2001-02 than 23.647%.

Hence we can interpret that some of the firms are growing at a very high rate

as compared to the others and that the distribution is left skewed.

The variables used to determine the % change in Net Worth for 2001-02 are

Net Worth for the year 2000-01 and Net Worth for the year 2001-02.

The % change in Net Worth is calculated as:

% change in NW for 2001-02 = (NW2001-02 NW2000-01 )/NW 2000-01 100%

In the given sample, the average % change in NW in 2001-02 is 23.846%.

After the analysis it was found that out of the 10000 firms only 1205 had a

higher % change in NW in 2001-02 than 23.846%.Hence we can interpret that

the net worth of only few of the firms increased above the average rate.

5.

Some male chauvinists like to think that the productivity of women employees

is significantly less than that of the male employees. Do you agree or disagree

with this? Justify your answer with appropriate analysis.

Solution

Let 1 = mean of male employees productivity

2 = mean of female employees productivity

Let us divide the sample data by the number of firms managed by male and

female in order to get the productivity of male and female.

Total number of firms managed by male (n1) = 9192

The average productivity is calculated by taking the average of the Gross

Output for the year 2001-02.

Average productivity of male employees(X1) = 1408040.81

Average productivity of female employees(X2) = 392051.65

Standard deviation of male employees productivity (S1) = 12604851.76

Standard deviation of female employees productivity (S2) = 2699562.94

In order to check whether the population standard deviation is same we need

to perform a F test. The null and alternate hypothesis for the F test are :

H0: 12 = 22

H1: 12 22

F (n1-1, n2-1) = S12/S22

Fcalculated (9191, 807) = 21.80161

F critical (9197, 801) = 1.091 (From table with = 0.05)

As Fcalculated >> Fcritical , we reject the Null Hypothesis.

Hence we have 1 2

Null hypothesis

Alternative hypothesis

H0: 1 2

H1: 1 < 2

Degrees of freedom (df)

= [(S12/n1 + S22/n2)2/ {(S12/n1)2/ (n1-1) + (S22/n2)2/ (n2-1)}]

= 5190

Tcritical (0.1, 5190) = 1.645

The T test statistic is given as

Tcalculated = ((X1-X2)-(1-2)) / (S12/n1 + S22/n2)) = 6.2643

As Tcalculated > Tcritical , it lies to the right of Tcritical , so we do not reject the Null

Hypothesis.

Hence, we agree with the statement that the women employees productivity is

considerably less than the men employees productivity.

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