INDIAN INSTITUTE OF MANAGEMENT, LUCKNOW

MID - TERl\1 EXAMINATION

Course : Quantitative Analysis for Management - II Mnx. Murks : 35
Tenn II ; PGP - I (2020-2021) Time: 90 minutes
Date : December I 4, 2020

Instructions :
• In each question (or part), if needed, write down clearly the assumptions you are making
and/or results that you are making use of, otherwise marks will be deducted.
• Parts of the same question are to be answered together.
• You are supposed to carry calculator in the Examination hall.
• Do not use lead pencil to answer the questions.
• Do not leave any blank page in between two answers.
• Answer all the questions. Questions carry equal marks.
J..\
I. An ice cream manufacturing company claims that it sells ice creams in packs of1.QQ_grams.
The production manager periodically checks on the basis of a sample study whether the
average weight of packs is actually 500 grams or it is less. A sample of 64 pac~ reveals that
the standard deviation of the weight of packs is _40 s\:ams. Based on her'"past experience, the
production manager decides that come!llly c~ot j~stify the claim of selling the packs of
500 grams if the sample average is 49Q_'grams or less.

(a) Determine the probability that the manager concludes that the company's claim is no
longer valid, that is, average weight of ice cream packs drops below 500 grams when
actually company's claim is true. - --

(b) What is the probability that production manager concludes that company is justified in
its claim when actually the average weight of ice cream packs is 475 grams?

2. Shirley Mendez is the manager of quality assurance for Green Valley Foods Inc., a packer
of frozen vegetable products. Shirley wants to be sure that the variation of package weights
is small so that the company does not produce a large proportion of packages that are under
the stated package weight. She has been asked to work out upper and lower limits for the
ratio of the sample variance divided by the population variance for a random sample of size
twenty. The limits are such that the probability for the ratio is below the lower limit is 0.025
and that the probability for the ratio is above the upper limit is also 0 .025 .

Compute the interval estimate for the ratio of sample variance divided by the population
variance.

3. A market research group wishes to estimate the average number of customers visiting a
super market in the month of December 2020. The group wants that its estimated value
should be within 5% of the actual value with a probability of 0.95. The earlier studies
indicated that the coefficient of variation of the number of customers visiting the
supennarket in the given month was 24%. The per day cost of coll ection of data is Rs 125/-

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(i) Calculate the cost involved in estimating the required value.

(ii) If the group decides to settle for an estimate with a probability of 0.90, how much
reduction in cost can be achieved?

4. A manufacturer of screws has noticed that, on an average, 2% of the screws produced are
defective. A random sample of 400 screws is examined for the proportion of defective screws.
What is the probability that the proportion of defective screws in the sample is between 0.01
and0.03?

5. A process that produces bottles of shampoo, when operating correctly, produces bottles whose
contents weigh, on average, 20 ounces. A random sample of bottles from a single production
run yielded the following content weights (in ounces):

21.4, 19.7, 19.7, 20.6, 20.8, 20.1, 19.7,

20.3, 20.9

Test the hypothesis that the process is operating correctly against a two-sided alternative at 5%
level of significance. ·