Statistics and Business Analytics Department STAT 520: Foundations for Statistics

Assignment #1

Chapters 7 and 8
Due Thursday, Sep. 14, 2023 @11:59 PM

Chapter 7

Sampling and Sampling Distributions

QUESTION 1
Suppose that the average weekly earnings for employees in general automotive repair
shops is $450, and that the standard deviation for the weekly earnings for such employees
is $50. A sample of 100 such employees is selected at random.

(A) Find the mean and standard deviation of the sampling distribution of the
average weekly earnings in the sample.

(B) Find probability that the mean of the sample is less than $445.

(C) Find the probability that the mean of the sample is between $445 and $455.

(D) Find the probability that the mean of the sample is greater than $460.

(E) Explain why the assumption of normality about the distribution of the average
weekly earnings for employees was not involved in the answers to (A) through
(D).

QUESTION 2
A battery manufacturer wants to estimate the average number of defective (or dead)
batteries contained in a box shipped by the company. Production personnel at this
company have recorded the number of defective batteries found in each of the 2000
boxes shipped in the past week.

(A) What sample size would be required for the production personnel to
be approximately 95% sure that their estimate of the average number of
defective batteries per box is within 0.3 unit of the true mean? Assume that the
best estimate of the population standard deviation (σ ) is 0.9 defective batteries

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 per box.

(B) How does your answer to (A) change if the production personnel want
their estimate to be within 0.5 unit of the actual population mean? Evaluate the
tradeoff between required accuracy and sample size requirement for this case
and the case in (A).

QUESTION 3
(A) What sample size would be required for the production personnel to be
approximately 95% sure that their estimate of the average number of errors per issue is
within 4 errors of the true mean? Assume that the editor’s best estimate of the population
standard deviation ( ) is 10 errors per issue.

(B) How does your answer to (A) change if the editor wants the estimate to be within 3
errors of the actual population mean? Explain the difference in your answers to (A) and
(B).

QUESTION 4
A cannery claims that its sardine cans have a net weight of 8 oz., with a standard
deviation of 0.1 oz. You take a simple random sample of 30 cans and encounter a sample
mean of 7.85 oz. Are you inclined to believe the claim?

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 Chapter 8

Confidence Interval Estimation

QUESTION 1
Auditors of Independent Bank are interested in comparing the reported value of all 1775
customer savings account balances with their own findings regarding the actual value of
such assets. Rather than reviewing the records of each savings account at the bank, the
auditors randomly selected a sample of 100 savings account balances from the frame. The
sample mean and sample standard deviations were $505.75 and 360.95, respectively.

(A) Construct a 90% confidence interval for the total value of all savings account
balances within this bank. Assume that the population consists of all savings
account balances in the frame.

(B) Interpret the 90% confidence interval constructed in (A).

QUESTION 2
The personnel department of a large corporation wants to estimate the family dental
expenses of its employees to determine the feasibility of providing a dental insurance
plan. A random sample of 12 employees in 2004 reveals the following family dental
expenses (in dollars): 115, 370, 250, 93, 540, 225, 177, 425, 318, 182, 275, and 228. Use
SPSS for your calculations.

(A) Construct a 90% confidence interval estimate of the mean family dental
expenses for all employees of this corporation.

(B) What assumption about the population distribution must be made to answer
(A)?

(C) Interpret the 90% confidence interval constructed in (A).

(D) Suppose you used a 95% confidence interval in (A). What would be your
answer?

(E) Suppose the fourth value were 593 instead of 93. What would be your answer
to (A)? What effect does this change have on the confidence interval?

(F) Interpret the 90% confidence interval constructed in (E).

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QUESTION 3
A company employs two shifts of workers. Each shift produces a type of gasket where
the thickness is the critical dimension. The average thickness and the standard deviation
of thickness for shift 1, based on a random sample of 40 gaskets, are 10.85 mm and 0.16
mm, respectively. The similar figures for shift 2, based on a random sample of 30
gaskets, are 10.90 mm and 0.19 mm. Let be the difference in thickness between
shifts 1 and 2, and assume that the population variances are equal.
(A) Construct a 95% confidence interval for .

(B) Based on your answer to (A), are you convinced that the gaskets from shift 2 are, on
average, wider than those from shift 1? Why or why not?

QUESTION 4
A department store is interested in the average balance that is carried on its store’s credit
card. A sample of 40 accounts reveals an average balance of $1,250 and a standard
deviation of $350.
(A) Find a 95% confidence interval for the mean account balance on this store’s credit
card (the t-multiple with 39 degrees of freedom is 2.0227).

(B) What sample size would be needed to ensure that we could estimate the true mean
account balance and have only 5 chances in 100 of being off by more than $100?