NAME: SAMHITA SINHA

REGISTRATION NO.: 21PGDM069

SECTION: ‘A’ SUBJECT: QUANTITATIVE TECHNIQUES II
ASSIGNED BY: DR. POOJA SENGUPTA
COLLEGE/UNIVERSITY: INTERNATIONAL MANAGEMENT INSTITUTE -
KOLKATA
DATE: 27.12.2021

MID-TERM ASSIGNMENT

SOLUTION 1: AUDITING TAX RETURNS CASE STUDY

Let: ‘F1’ = Tax return is fraudulent.

‘F2’ = Tax return is honest.
‘E0’ = Tax return contains no expense deduction.
‘E1’ = Tax return contains one expense deduction.
‘E2’ = Tax return contains two expense deduction.

 TREE:

Fig. 1: Probability calculations using tree.

Now, from the above calculations,
P (E1) = P (F1 and E1) + P (F2 and E1)
= 0.0140 + 0.1710
= 0.1850

And,
P (F1 | E1) = {P (F1 and E1)}/ P (E1)
= 0.0140/0.1850
= 0.0757

Therefore, the required probability that the tax return for a self-employed individual with one
expense deduction that contains significant fraud is 0.0757. (Answer)

SOLUTION 2: PAR INC CASE STUDY

a.

DESCRIPTIVE STATISTICAL SUMMARIES

VALUES CURRENT NEW

     

MEAN 270.275 267.5

STANDARD DEVIATION 8.753 9.897

VARIANCE 76.615 97.949

COUNT (n) 40 40

Fig. 2: Descriptive Statistical Summaries of each golf model.

In fig. 2, each of the descriptive statistics are found by respective formula in MS Excel.
b. and c.

95% CONFIDENCE LEVEL (α = 1- 98% CONFIDENCE LEVEL (α = 1-

 
0.95 = 0.05) 0.98 = 0.02)
VALUES CURRENT NEW CURRENT NEW
STANDARD ERROR (σ/√n) 1.3840 1.5648 1.3840 1.5648
Z SCORE (Zα/2) 1.960 2.326
MARGIN OF ERROR 2.713 3.067 3.220 3.640
THE CONFIDENCE
INTERVAL FOR THE
POPULATION MEAN OF 267.562 264.433 267.055 263.860
EACH MODEL OF GOLF
BALLS (LOWER LIMIT)
THE CONFIDENCE
INTERVAL FOR THE
POPULATION MEAN OF 272.988 270.567 273.495 271.140
EACH MODEL OF GOLF
BALLS (UPPER LIMIT)

Fig. 3: 95% and 98% confidence levels for the population mean of each model of golf balls.

In fig. 2, each parameters were found by respective formulae in MS Excel. This problem is
solved by using ‘Normal Distribution’ concept.
The ‘Z-value’ at 95% and 98% confidence interval is calculated using NORM.S.INV()
function.
The confidence interval at 95% confidence level for the population mean of current model
of golf balls is [267.562, 272.98] and the population mean of new model of golf balls is
[264.433, 270.567].
The confidence interval at 98% confidence level for the population mean of current model
of golf balls is [267.055, 273.495] and the population mean of new model of golf balls is
[263.860, 271.140].

d. At 95% confidence interval, there is a 5% chance of being wrong and at 98% confidence
level there is a 2% chance of being wrong. 98% confidence interval would be wider than 95%
confidence interval. This is the comparison between the two confidence intervals.
SOLUTION 3: AIRPORT SCREENING CASE STUDY

a.
DESCRIPTIVE STATISTICS

STANDARD
  MEAN VARIANCE COUNT
DEVIATION
254989.88
HANDGUNS 2251.667 504.965 24
4
LONG GUNS 101.833 56.176 3155.710 24

EXPLOSIVES 108.178 180.187 32467.294 24

Fig. 4: Descriptive Statistics of number of handguns, long-guns and explosives

extricated after airport screening.

In fig. 4, each of the descriptive statistics for number of handguns, long-guns and explosives
are found by respective formula in MS Excel.

COMPARISON BETWEEN THEM:

MEAN: LONG GUNS < EXPLOSIVES < HANDGUNS

STANDARD DEVATION: LONG GUNS < EXPLOSIVES < HANDGUNS
VARIANCE: LONG GUNS < EXPLOSIVES < HANDGUNS
COUNT: HANDGUNS = LONG GUNS = EXPLOSIVES
 b.
3b
PERSONS ARRESTED
COMPUTATION OF INTERVAL AT
FOR GIVING WRONG
87% INTERVAL (α = 1-0.87 = 0.13)
INFORMATION
NUMBER OF SAMPLES 24
SAMPLE MEAN 60.08
STANDARD DEVIATION 44.22
STANDARD ERROR 9.03

DEGREE OF FREEDOM 23

T VALUE (Tα/2) 1.57

MARGIN OF ERROR 14.15

THE LOWER LIMITL OF 87%
CONFIDENCE INTERVAL FOR
45.93
NUMBER OF PERSONS ARRESTED
FIR GIVING FALSE INFORMATION
THE UPPER LIMIT OF 87%
CONFIDENCE INTERVAL FOR
74.24
NUMBER OF PERSONS ARRESTED
FIR GIVING FALSE INFORMATION

Fig. 5: 87% confidence level for the number of people arrested for giving false information.

In fig. 5, each parameters were found by respective formulae in MS Excel.

From the problem, it can be observed that the provided data fits well to use ‘T - Distribution’
concept of interval. This is because both the condition – (1) The number of samples is less
than 30 and (2) The population standard deviation is also unknown, had to be found out.
The ‘T-value’ at 87% confidence interval is calculated using T.INV.2T() function.
The 87% confidence level for the number of people arrested for giving false information is
[45.93, 74.24].
 c.

3C
COMPUTATION OF INTERVAL
LONG
AT 97% INTERVAL (α = 1-0.97 = HANDGUNS
GUNS
0.03)
STANDARD ERROR 103.076 11.467
DEGREE OF FREEDOM 23 23
T VALUE (Tα/2) 2.313
MARGIN OF ERROR 238.438 26.525
THE LOWER LIMITL OF 97%
CONFIDENCE INTERVAL FOR
NUMBER OF PERSONS 2013.229 75.308
ARRESTED FIR GIVING FALSE
INFORMATION
THE UPPER LIMITL OF 97%
CONFIDENCE INTERVAL FOR
NUMBER OF PERSONS 2490.104 128.359
ARRESTED FIR GIVING FALSE
INFORMATION

Fig. 6: 97% and 98% confidence levels for average number of each handguns and long-guns.

In fig. 6, each parameters were found by respective formulae in MS Excel.

From the problem, it can be observed that the provided data fits well to use ‘T - Distribution’
concept of interval. This is because both the condition – (1) The number of samples is less
than 30 and (2) The population standard deviation is also unknown, had to be found out.
The ‘T-value’ at 87% confidence interval is calculated using T.INV.2T() function.
The 97% confidence level for the number of people arrested for average number of
handguns is [2013.229, 2490.104].
The 97% confidence level for the number of people arrested for average number of long
guns is [75.308, 128.359].
SOLUTION 4: DRIVING IN INCLEMENT WEATHER

 Construction of a 97% confidence interval for the proportion of people who “always”
choose to drive in inclement weather:

PEOPLE WHO ALWAYS CHOOSE TO DRIVE IN INCLEMENT

WEATHER
     
Probability of number of people who
"always" choose to drive in inclement 0.1311  
weather (Ps)
Probability of number of people who
"sometimes" or "never" choose to 0.8689  
drive in inclement weather (Qs)
Number of samples (n) 61  
Z Score at 97% confidence interval (α
2.1701  
= 1-0.97 = 0.03)
STANDARD ERROR 0.0432  
MARGIN OF ERROR 0.0938  
CONFIDENCE LEVEL FOR THE
PERCENTGE =
PROPORTION OF PEOPLE WHO
0.0374 0.0374*100 =
"ALWAYS" CHOOSE TO DRIVE IN
3.74%
INCLEMENT WEATHER (LOWER LIMIT)
CONFIDENCE LEVEL FOR THE
PERCENTGE =
PROPORTION OF PEOPLE WHO
0.2249 0.2249*100 =
"ALWAYS" CHOOSE TO DRIVE IN
22.49%
INCLEMENT WEATHER (UPPER LIMIT)

Fig. 7: 97% confidence level for the proportion of people who “always” choose to drive in
inclement weather.

In fig. 7, each parameters were found by respective formulae in MS Excel.

From the problem, it is observed that we need to find the proportions of the number of
people who “always” choose to drive in the inclined weather and also of the number of
people who “never” choose to drive in the inclined weather. This is done using the Z-Test
of proportion.
The ‘Z-value’ at 97% confidence interval is calculated using NORM.S.INV() function.
The 97% confidence level for the number of people who “never” choose to drive in the
inclined weather is [0.0374, 0.2249], i.e., 3.74% and 22.49% respectively.
  Construction of a 97% confidence interval for the proportion of people who “never”
choose to drive in inclement weather:

PEOPLE WHO NEVER CHOOSE TO DRIVE IN INCLEMENT WEATHER

     

Probability of number of people who "never" choose to

0.2787  
drive in inclement weather (Ps)

Probability of number of people who "sometimes" or

0.7213  
"always" choose to drive in inclement weather (Qs)

Number of samples (n) 61  

Z Score at 97% confidence interval (α = 1-0.97 = 0.03) 2.1701  

STANDARD ERROR 0.0574  

MARGIN OF ERROR 0.1246  

CONFIDENCE LEVEL FOR THE PROPORTION OF PEOPLE

PERCENTGE =
WHO "NEVER" CHOOSE TO DRIVE IN INCLEMENT 0.1541
0.1541*100 = 15.41%
WEATHER (LOWER LIMIT)

CONFIDENCE LEVEL FOR THE PROPORTION OF PEOPLE

PERCENTGE =
WHO "NEVER" CHOOSE TO DRIVE IN INCLEMENT 0.4033
0.4033*100 = 40.33%
WEATHER (UPPER LIMIT)

Fig. 8: 97% confidence level for the proportion of people who “never” choose to drive in
inclement weather.

In fig. 8, each parameters were found by respective formulae in MS Excel.

From the problem, it is observed that we need to find the proportions of the number of
people who “always” choose to drive in the inclined weather and also of the number of
people who “never” choose to drive in the inclined weather. This is done using the Z-Test
of proportion.
The ‘Z-value’ at 97% confidence interval is calculated using NORM.S.INV() function.
The 97% confidence level for the number of people who “never” choose to drive in the
inclined weather is [0.1541, 0.4033], i.e., 15.41% and 40.33% respectively.

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