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ASSIGNMENT ON

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.

Calculate a 95 percent confidence interval for the Gross output 2001-02


(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.

Net worth is a important determinant of value of a company and is used to


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

Total number of firms managed by female (n2) = 808


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

We assume =5%, i.e, 0.05 for doing the left-test.


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.