BST510 BUSINESS STATISTICS EXAM FEEDBACK 2014-2015

As is customary, I find myself tasked with providing feedback on the recent business
statistics examination. Rather than it been an onerous task, commenting upon minor
errors and misunderstood questions, this year it is a pleasure to say congratulations;
John Doyle and I were impressed with your performance. Can I take credit for the
teaching? Can the external examiner take credit for refining the paper? Can the
recruiters take credit for the enrolment? I suspect the answer is none of the above!
Rather, it appears that most people have worked diligently and consistently during
the semester, and this is the excellent result.

The average of 62.4% was comparable to last years group (one of our best). Grades
still ranged from 20 to 100% (one person being faultless) with 16 people scoring
above 90 but rather than them being positively skewed, this years distribution was
mildly negative, with many students scoring 60, 70 and 80 rather than 30, 40 and 50.
Moreover, the good performance was not limited to the multi-choice questions or one
easier longer question in Section B, although the box-plot calculation and drawing
may have provided a welcome foundation! While over 90% tacked the descriptive
statistics question, the choice of second question was evenly split among the other
three. The hypothesis test of the correlation coefficient had the desired effect of
encouraging students to attempt either the Normal or Binomial probability questions
and with notable success they really were straightforward if you drew the pictures!

Now Ill provide some specific comment on each of the longer questions (and multi-
choice), with discussion weighted to reflect how many people attempted each one.

Multiple-choice. Overall the multiple choice questions were done well, although
generally evidence of workings was lacking for questions that required calculations,
resulting in people scoring full marks or nothing. However, a minority treated them a
short-questions writing out explanations for each decision which obviously took a
long time but for limited gains and was unnecessary. Others chose to write out both
the question and answer, when a letter (A, B, C, or D) would suffice. Nevertheless,
pictures of the histogram were appreciated. The multiple-choice were designed to
test breadth of knowledge and it appears people still do not fully understand: (i) the
circumstances appropriate for a valid Poisson test, (ii) the impact of the missing
middle problem on the strength of the correlation coefficient, and (iii) the meaning of
a Normal distribution and associated Z-value.

Q1 = C, Q2 = B, Q3 = D, Q4 = C, Q5 = D, Q6 = A, Q7 = B, Q8 = C, Q9 = D, Q10 = A

Q11 Descriptive statistics. Generally the calculations were done well, but the
interpretation less well. In part (a) when it came to calculating quartiles, people used
the ranks instead of the values, while others had trouble interpolating between the
two ranks, in that they did not get the quarter/three-quarter weighting correct, or used
n/2 to locate the median. Having identified the correct ranks, silly mistakes were
made such as selecting the wrong row in the matrix (n=82). In part (b) calculations
of the upper and lower fences (UF, LF) are Q1 1.5 * IQR and Q3 + 1.5 * IQR, but a
few substituted the median for the quartiles instead. Drawing the box-plot was poorly
done. In particular (i) identifying the upper and lower fences - they do not necessarily
correspond to actual data points, but simply mark the territorial waters between
outliers and non-outliers; (ii) outliers (these are actual data points) were not entered
on the boxplot even when correctly spotted and discussed in the commentary; (iii)
the whiskers were often wrongly joined to the fence, or the maximum or maximum,
rather than the max or min that was not an outlying data point.

Generally, the discussion of the box-plot was OK up to a point. But rarely were very
good marks awarded for part (c). While students did note the principal features, such
as the median, IQR, range, skew and outliers, few related the boxplot to the context.
For instance, only a handful of people even used the words transport or city in their
discussion. Furthermore, while plenty mentioned that the median was 69, few said it
was 69%, and even fewer said it had something to do with level of satisfaction about
the transport system in the European city where respondents resided / lived. No-one
(I repeat no-one) wrote in plain English exactly what 69% actually meant! A good
reply might have been: in half the European cities surveyed, at least 69% of people
are satisfied with their transport system. Or, identifying the median as picking out a
typical city: In the typical European city, 69% of people are satisfied with their
transport system. Outliers could then be contrasted with the median by continuing
and in one city as many as 95% of residents surveyed were satisfied etc etc.

Part (d) has nothing to do with Chebyshev, nor Pearsons correlation coefficient. It
was about the shape of the distribution. Calculations were generally OK, but please
do retain two decimal places in your answers. However, note Pearsons skewness is
only probably negative if the lower whisker is longer than the upper whisker (dont
forget about the box), or if there are more and larger outliers to the left than to the
right all features worth mentioning as to what we might expect to find. But the only
defining feature is that the mean is less than the median.

Q12 Normal & Poisson. A sizeable minority chose this question, and performed
well. Part (a) was a relatively straightforward Normal distribution question identify
the proportion of patients waiting between 10 and 13 weeks for a surgery. However,
there was some confusion with people not subtracting the probabilities associated
with the two areas from one, but from each other which a simple picture identifying
the critical regions would have resolved. Sadly it was omitted. Likewise, as Normal
tables are reported to two decimal places, so should calculated Z values, but some
people decided on 1 place. Part (b) required identifying how many weeks at most
90% of patients must wait for surgery. This problem required identifying the Z-value
and working backwards. It was similar to the pizza delivery rather than light-bulb
guarantee scenario, with the critical area being the 10% in upper-tail (not lower-tail)
of the Z distribution. Part (c) was a simple Poisson distribution problem asking what
was the chance of more than one patient arriving at A&E in the next 15 minutes with
information unusually given about mu (the long-run arrive) for the corresponding
time-period. Thus, mu was 3 as stated in the paper, not 0.2 (3/15) or 5 (15/3) which
related to patients arriving in a 1 minute or 25 minute window respectively. Thank
the external examiner for this simplification but it caused a few problems for students
who didnt believe it could be so straight-forward, including a telephone-call from one
of the invigilators to see if there was typographical error on the paper!

Q13 Correlation & Regression. Part (a) asked people to comment on the
scatterplot showing the satisfaction and trust ratings across 27 European cities. The
cities are the units of analysis. Data values showed the proportion of respondents /
residents surveyed who endorsed the question. Notice values ranged from 0 to 100
and not 0.01 to 1.00; this would be important for forecast accuracy in part (d). In
addition to a general description of the data, I expected a discussion about whether
the relationship was (i) linear, (ii) presence of outliers, (iii) clustering of values. While,
these features were often spotted, few explained their relevance to the assumptions
behind correlation and regression. Part (b) was a hypothesis test which most people
wanted to avoid given the quality of the answers which in many cases did not go
beyond identifying the critical value was tables. Better answers set up a null and
alternative hypothesis against which to test, but few fully understood the idea of
statistical significance and what they really had found. Part (c) the calculation of the
regression coefficients was very well done most people can clearly substitute
numbers into formula! Interestingly n proved to be a source of contention with
some suggesting 25 (rather than 27), while others used 10 (from the seminar) or 7
(from my lecture notes). Finally, part (d) asked you to predict the satisfaction rating
for a new city, based on a trust rating of 30 and 60%. A careful look at the scatterplot
and likewise column totals for sum of X (1751) and sum of Y (1430) would show that
X= 30 and 60 and not 0.3 and 0.6 respectively. Those who substituted in values of
0.3 and 0.6 would have predicted a nonsensical negative value for their answers.
Finally, a discussion of the overall forecast accuracy required commenting on the
goodness of fit (correlation squared), and relative accuracy - were predictions within
or beyond the available data range?

Q14 Binomial & Normal. This was the highest scoring of the long questions and
people showed good understanding of the area. Part (a) was a simple Binomial
problem, identifying that chance that two or fewer bottles could have an illegible data
stamp (n=12). The calculations were generally handled very well, but there were two
minor errors (i) P(X = 1): when 0.1is raised to a power zero = 1 and not 0.1; (ii) the
chance of more than two requires subtracting P(X = 0) + P(X = 1) and P(X = 2) from
1 but some forgot about the last term, so determined the chance P(X >1). This was
the banker guaranteeing 45%. Parts (b) and (c) were a bit more challenging and
required a discussion of how and when to approximate the Binomial distribution with
the Normal curve. Generally this was done well, with guidelines correctly identified
big n, np > 5 and n(1-p) > 5. However, the role of the continuity correction factor
which is used when a discrete distribution (Binomial) is measured via a continuous
distribution (Normal) was lacking in some. There were also some creative but time-
consuming alternatives answers, with several people directly applying the Binomial,
even though there were 96 trials and this calculation had to be repeated 8 times [P(X
< 7)]. Others with prior statistical knowledge explained why it was appropriate to
approximate the Binomial with the Poisson (mu = 9.6). I didnt see that one coming!

Additional Details

Q11 City Living

Part A: With 82 cities, the position of Q1, Q2 and Q3 are 20.75, 41.50, and
62.25, and the corresponding data values are 59.75, 69.00 and 79.25.
Part B: To build a box-plot we need the upper and lower fences beyond
which are outliers. Here, upper fence = Q3+1.5*IQR = 108.5 (round down to
100 because these are % of residents who agree or strongly agree); lower
fence = Q1 1.5*IQR = 30.5. So two outliers below lower fence.
Part C: Discussion of key features typical value, dispersion, shape and any
outliers. The units are cities not individuals. So the median city = about 70
70% of residents were happy with the public transport services etc.
Part D: Pearsons skewness = 3*(67.37 69) / 15.74 = -0.31. Weak negative
skew distance from minimum to Md >> Md to maximum. But the box-plot
shows outliers, so mean, SD are easily distorted. Robust statistics = better.

Q12 A Medical Emergency

Part A: P(10 < X < 13) weeks for surgery. 10 weeks = Z= -1.92. 13 weeks =
Z = 0.38. So 0.0274 in the lower tail, 0.3520 in upper tail. Subtract these two
areas from 1 = 0.6206 chance of waiting 10 to 13 weeks. Remember: always
draw a picture!
Part B: Within what period of time will 90% of patients be seen? Normal
distribution in reverse. Only 0.1028% of data values lie 1.28 SD above the
mean, so Z = 1.28, mean = 12.5, SD = 1.3 and solve for X. 90% of patients
should be seen within 14.2 weeks, so could easily guarantee 15 weeks.
Part C: What is the chance of more than 1 patient arriving at A&E in the next
minute? 1 P(X = 0) P(X = 1). Poisson but no need to adjust mu = 3! 1
0.0498 0.1494 =0.8009. 80% chance of more than 1 new arrival in next min.

Q13 Correlation & Regression

Part A: Comment on the scatterplot. Non-linearities and outliers weaken the

relationship. There could be 1 (or 2) outliers cities where residents think
their neighbours can be trusted, but lower proportion of residents happy to
live. Must relate discussion back to what you see in the scatterplot.
Part B: Hypothesis test of correlation between satisfaction and trust scores =
+0.75. Ho = no relationship in the population (r <= 0). H1: there is positive
relationship people prefer living in trustworthy places. Testing at the 5%
significance level, with 25 degrees of freedom, critical value = 0.3233 (1
 tailed). As test statistic > critical value (0.75 > 0.32), we reject the null, there
is less than a 5% chance of committing a Type 1 error, rejecting the null when
it is true. So this result has not occurred because of sampling error or chance
in the population there is a positive association between these variables.
See Mick Silver, pages 103-106, for a good summary.
Part C: Calculate the regression coefficients. Slope = A / B. A = (27*95717)
(1751*1430) = 80429. B = (27*116799) (1751*1751)= 87572. Slope = 0.92.
Intercept = mean Y b*mean X = 1430/27 0.92*(1751/27) = -6.70.
Part D: Determine a new citys Satisfied rating when its Trust rating is (i) 30%
and (ii) 60%. If X = 30, Y = 20.9; if X = 60, Y = 48.5, so 21% and 49% of
residents would be happy to live there. Check goodness of fit = confidence
in all forecasts. Check if within or beyond the range of actual data for X.

Q14 Illegible Data stamps

Part A: This is a binomial problem as there are two possible outcomes and
trails are independent. Could discuss reasonableness of assumptions. Here,
n = 12 and p =0.1. P(X = 1) = 0.3766, P(more than 2 with illegible stamps) = 1
P(X = 0) P(X = 1) P(X = 2) = 1 0.2824 0.3766 0.2301. So, 11%
chance of more than 2 illegible stamps in a box of 12 bottles.
Part B: This soft drinks being sold by the case, n = 96. Again binomial but
with large factorials (96!), so we approximate it with the Normal curve, as long
as np > 5 and n(1-p) > 5. Guidelines easily satisfied here. Recall, binomial
distributions are symmetrical if p=0.5, and less like a staircase as n rises.
Part C: Chance of a case containing seven or fewer bottles with illegible date
stamps? Binomial: mean = 9.6 (np) and SD = 2.94. Apply a continuity
correction factor, Z = (7.5 9.2) / 2.94 = -0.71. P(Z < -0.71) = 0.2389 (by
symmetry) area in lower tail. Remember to always draw a picture to identify
the shaded area! It takes seconds, but avoids getting the wrong area.