STS 2003 PRACTICAL SKILLS - 1

Date:

Course Code and Title: STS 2003 / Business Statistics for Managers

Assessment Title: Practical Skills – 1

Assessment Weight: 20%

Student’s Name and ID:

Maximum Score: Student’s Score:

100 marks

Assessed Learning Outcomes:

 Analyze the probability of given business outcomes using fundamental probability concepts
for discrete and continuous probability distributions.

I hereby understand the HCT Academic Honesty Policy and confirm the work is original

Description:
This project consists of four tasks to be completed by a group of no more than four students. There are both
individual and group taska and all of these must be reported in a single report like file. The calculations and
other working need to be done in MS Excel and Megastat. The results of the working must be summarized in
the end of the report as an appendix.

Detailed feedback to the Student:

Attachments (if any): Marking rubric (for reference)

Discrete and Binomial raw data guide (use this for reference)
Academic Honesty (refer to Methaq for details of the policy and implications)

Marked by:
Date:
Data about a bank’s loans sales in three months are given below:
number
number of number number
of credit of car of
housing cards loans unpaid
loans sold closed accounts
4 50 14 7
2 25 5 15
4 15 7 7
12 65 9 12
7 35 12 15
7 65 12 3
2 25 7 7
4 10 9 12
month 4 35 12 3
1 2 25 3 3
4 35 7 7
7 35 9 25
2 50 7 15
9 35 5 15
2 65 9 7
2 50 5 12
4 35 9 12
7 35 12 25
9 15 7 25
7 35 9 12
7 65 14 3
4 35 14 15
2 10 9 12
month 9 50 5 12
2 7 10 3 15
7 50 12 25
0 35 3 25
9 10 7 12
12 50 12 15
0 10 7 12
4 10 5 12
 4 25 12 12
2 65 9 7
7 10 9 18
2 35 14 3
0 35 5 3
4 65 9 18
4 10 9 15
7 35 7 18
9 15 9 7
7 50 12 15
7 25 3 15
4 25 5 12
12 15 12 15
12 35 12 18
4 10 5 18
2 10 9 15
month 7 15 3 7
3 2 15 7 7
7 65 9 15
7 10 9 18
9 65 12 7
12 35 9 15
12 15 14 18
7 15 12 15
7 50 12 3
9 35 9 15
12 50 9 3

Use the data to complete Task 1 and 2

Task 1: Discrete Distribution (individual task) (20 Marks)
Each Team member will choose one random variable.
a. Construct the discrete probability distribution table for the chosen variable for
each month. (5 marks)
We have chosen the number of housing loan each month. From this we have
extracted the following:
Month
  1          

X 2.00 4.00 7.00 12.00 9.00  

F 6.00 6.00 4.00 1.00 1.00 18.00

P(x) 0.33 0.33 0.22 0.06 0.06 1.00

Month
  2            

X - 2.00 4.00 7.00 9.00 12.00  

F 3.00 3.00 5.00 5.00 3.00 1.00 20.00

P(x) 0.15 0.15 0.25 0.25 0.15 0.05 1.00

Month
  3            

X - 2.00 4.00 7.00 9.00 12.00  

F   2.00 2.00 8.00 3.00 5.00 20.00

P(x)   0.10 0.10 0.40 0.15 0.25 1.00

b. You must find the expected number and the standard deviation of the variable
for each month.(3+7 = 10 marks)
Month
  1          

X 2.00 4.00 7.00 12.00 9.00  

F 6.00 6.00 4.00 1.00 1.00 18.00

P(x) 0.33 0.33 0.22 0.06 0.06 1.00

 Mean 0.67 1.33 1.56 0.67 0.50 4.72
x^2 4 16 49 144 81  

x^2*p(x
) 1.33 5.33 10.89 8.00 4.50 30.06

Standardeviation 5.48

Month
  2            

X - 2.00 4.00 7.00 9.00 12.00  

F 3.00 3.00 5.00 5.00 3.00 1.00 20.00

P(x) 0.15 0.15 0.25 0.25 0.15 0.05 1.00

Mean - 0.30 1.00 1.75 1.35 0.60 5.00

x^2 0 4 16 49 81 144  

x^2*p(x
) - 0.60 4.00 12.25 12.15 7.20 36.20

Standard deviation 6.02

Month
  3            

X - 2.00 4.00 7.00 9.00 12.00  

F   2.00 2.00 8.00 3.00 5.00 20.00

P(x)   0.10 0.10 0.40 0.15 0.25 1.00

Mean   0.20 0.40 2.80 1.35 3.00 7.75

x^2 0 4 16 49 81 144  

x^2*p(x
) - 0.40 1.60 19.60 12.15 36.00 69.75

Standard deviation 8.35

c. You must write a short report on your findings (use descriptive statistics). (5
marks)

According the data that is given to us, the graph can be depicted as follows:
 9.00

8.00

7.00

6.00

5.00
Mean
4.00 SD
3.00

2.00

1.00

-
1 2 3

We see that in month 1, the mean is close to 5 and the standard deviation is 5.48,
thus showing that the variables are expected to be apart by the same number. In
the second month, the mean is 5 and the standard deviation is 6. In the third month
the mean is 7.75 and the standard deviation is 8.35. we see that as the sales are
increasing for house loans, the standard deviation is also increasing by the same
proportion. The housing loans are increasing over a period of time and this shows
that the bank is flourishing.
Task 2: Binomial Distribution (Group task - All four members will work on only
one variable) (10 +20 = 30 marks)
Remember to submit your megastat output as appendix
a. Now you need to define any of the above variable as a binomial variable
(Explain how you have converted the discrete variable to binomial), and create
the binomial probability distribution for the same using megastat. (10 marks)
**The value of the probability of success can be taken as the overall probability of
all the three months.
Solution:
Let X be the Random Variable having the values 0, 1, 2, 3, 4, …..12..n. In this N and
P are the bionomial distribution with these defined parameters. Therefore we can
say that PMF is given as

P(x=x)=p(x) n pxqn-x
X
Here we have defined the parameters as follows:
X= 0,1,2,….n
q= 1-p
the value of probability of success = successful sales/ per month
=probability each month

Hence for our binomial distribution we shall the following formula each month:
Month 1:
x∼bin (n=abc, p= probability)
b. Use megastat output to find the probabilities assuming you are sampling 15
loan details. ((a-e*3 = 15) + (f = 5) =20 marks)
a. exactly 3
p(x=3)= 0.1017 (using table value)
b. at most 7
P(x≤7)
P(x=0)+P(x=1)+P(x=2)+P(x=3)+P(x=4)+P(x=5)+P(x=6)+P(x=7)
=0.002+0.013+0.045+0.102+0.106+0.0933+0.139=
=0.543
c. less than 5
P(x≤5)
P(x=0)+P(x=1)+P(x=2)+P(x=3)+P(x=4)+P(x=5)
=0.002+0.013+0.045+0.102+0.106
=0.32
d. more than 12
p(x>12)
P(x=13)+P(x=14)+P(x=15)
=0.001+0.002+0.001
= 0.004
 e. at least 8
p(≥8)
1- P(x≤7)
1-0.543
=0.46
f. the expected number and the SD of the variable.

E(x)=np

=15*0.25

= 3.75

Var(x)= npq

=15*.25*.75
=2.81

Standard deviation = 1.67

 Task 3: (Group Task) (30 marks)[(a =9 marks ) + (7 * 3 = 21 marks)]
The weight of 20 random steel rods used for construction of houses were taken
and recorded as below:
71.49 66.01 67.41 58.34 58.77 74.05 38.64 73.50 75.73 71.61
44.70 62.39 78.11 74.70 61.13 86.29 78.60 45.95 84.69 60.83

a. Construct the normal distribution of the data with ±1, ± 2, ± 3 Sigma values.
b. Use Megastat to find the probability for the weight to be more than 60Kkgs
c. Use Megastat to find the probability for the weight to be less than 97Kgs
d. Use Megastat to find the probability for the weight to be between 50 and 70 Kgs
e. Use Megastat to find the bottom 5% of the rod weights
f. Use Megastat to find the top 15% of the rod weights
g. Use Megastat to find the middle 70% of the rod weights
h. If there were 2000 rods received in a truck, how many of them would have
been less than 40 Kgs

Task 4: Application Question – Basic level (individual task) (10 marks)

Each member will Choose any one of the below to answer. NO TWO STUDENTS
WILL ANSWER THE SAME QUESTIONS. You must give clear workings and reasons.
Question - 1
It is found that the lower 7% of the investments yield a poor return. The average
investments in stocks are 475000AED in DFM with a standard deviation of
35000AED. You are planning to invest 425000AED. Will you receive a poor return
or a good return?

1)
Mean = 475000, S.D = 35000

x = 425000
By applying normal distribution:-
z = -1.43
Use the excel formula, “=NORM.S.DIST(-1.43,TRUE)” to determine the p-value.

P(z < -1.43) = 0.0764

We wil recieve a good return, because our investment lies above the lower 7% of the
investments.

Question – 2
It takes about 45 days on average to collect the outstanding payments from
dealers with a standard deviation of 12 days. The collection department has a
proposal from a company that promises to collect 90% of the outstanding in 65
days for no charge. Will you take this offer?
Mean 45
SD: 12
Using this
65-45/12 = 1.67
P(x≤ 65) = p(Z≤1.67)
From the Z Score table: 0.9525
This shows that 95.25% payments can be collected istead of 90% promised.
Therefore I shall take this offer.
Question – 3
The manufacturing process of glass requires a thickness of 45mm. the allowable
standard deviation is 7mm. any glass sheet with less than 15% values is declared
“brittle” and the top 25% is declared “tough”. You measure a random sheet to
have a thickness of 53mm, what is it classified as?

Question – 4
The average time to prepare payroll for the company is 10 days with a standard
deviation of 2.5 days. You have a new recruit for this task and she claims to have
completed the task in 3 days. Would you agree with the claim?

Mean 10
SD: 2.5
Using this
10-3/2.5 = 2.8
P(x≤ 10) = p(Z≤2.8)
From the Z Score table: 0.9928

Or 10-2(SD)
=10-5 = 5
And 10- 3(SD) = 10-7.5 = 2.5
So we prove that the value of 3 stays in between the value of 2.5 and 5. Therefore
we would accept the claim.