Question 1

The following table gives the number of good and defective parts produced by each of the three
shifts in a factory. Is there any association between the shift and the quality of the parts
produced? Use a 0.05 level of significance

Shift Good Defective Total

Day 900 130 1030
Evening 700 170 870
Night 400 200 600
Total 2000 500 2500

Question 2
An accountant wants to test the hypothesis tha the proportion of incorrect transactions at four
client account is about the same. A random sample of 80 transactions of one client reveals that
21 are incorrect; for the second client the number is 25 out of 100; for the third client the
number is 30 out of 90 sampled and for the fourth, 40 are incorrect out of a sample of 110.
Conduct the test at alpha= 0.05
Solution
H0: There is no association between shift and the quality of parts produced
H1: There is an association between the shift and quality of parts

Shift Good Defective Total Expected

Day 824 206 1030
Evening 696 174 870
Night 480 480 600
Total 2000 500 2500

Shift Good Defective Total (Observed)

Day 900 130 1030
Evening 700 170 870
Night 400 200 600
Total 2000 500 2500

1.003845E-46
Thus p< 0.05, Thus reject H0
Inference: There is significant association between the shift and quality of parts

Solution 2
Ho: p1=p2=p3=p4
H1: All proportions are not the same
p1= proportion of incorrect transaction for 1st client
p2= proportion of incorrect transaction for 2nd client
p3= proportion of incorrect transaction for 3rd client
p4= proportion of incorrect transaction for 4th client

Transactions Client 1 Client 2 Client 3 Client 4 Total (Observed)

Incorrect
transactions 21 25 30 40 116
Correct
transactions 59 75 60 70 264
Total 80 100 90 110 380

Transactions Client 1 Client 2 Client 3 Client 4 Total (Expected)

Incorrect
transactions 24.4210526 30.52632 27.47368 33.57895 116
Correct
transactions 55.5789474 69.47368 62.52632 76.42105 264
Total 80 100 90 110 380

0.2375167266
Since p> 0.05 (0.2375), There is not much evidence to reject the null
hypothesis
Therefore, there is no significant difference in the proportion of
incorrect transactions for the four clients
 Question 1
Consider the data on the quantity demanded and the price of a
commadity over a ten-year period as given in the following
table

Year Demand Price

1996 100 5
1997 75 7

1998 80 6
1999 70 6
2000 50 8
2001 65 7
2002 90 5
2003 100 4
2004 110 3
2005 60 9

1. Estimate the correlation coefficient between the quantity

demanded and interpret the same
2. Estimate the linear regression equation of demand and
intrepret the same
3. Compute r2
4. Find a 95 per cent approximate prediction interval for
demand when price (x) equals 8
 Solution
Demand Price
Demand 1
Price -0.932505 1

Correlation coefficeint (r )= -0.9325

There is a strong negative correlation between
demand and price. This means that as the price of a
commodity increases, its demand decreases.

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.932505
R Square 0.869565
Adjusted R Square 0.853261
Standard Error 7.5
Observations 10

ANOVA
df SS MS F Significance F
Regression 1 3000 3000 53.33333 8.365E-05
Residual 8 450 56.25
Total 9 3450

Coefficients
Standard Error t Stat P-value Lower 95%Upper 95%Lower 95.0%Upper 95.0%
Intercept 140 8.551316 16.37175 1.952E-07 120.2806 159.7194 120.2806 159.7194
Price -10 1.369306 -7.302967 8.365E-05 -13.15763 -6.842374 -13.15763 -6.842374

demand= 140+ -10* price

When the price equals 8 the demand will be

140+ -10*8
1
Upper 95.0%