FACULTY OF COMMERCE AND LAW

MASTER OF BUSINESS ADMINISTRATION

MBAZ504: STATISTICS FOR MANAGERS

November 2018

Time: 3 Hours

INSTRUCTIONS

Answer ALL questions in Section A and any THREE (3) questions from
Section B.

All questions in Section B carry equal marks.

Show all workings and give answers to 4 decimal places where

appropriate.

Graphs should be plotted on graph paper.

Candidates will be provided with Statistics List of Formulae, Statistical

Tables and graph paper.

The use of silent and non-programmable calculators is permissible

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SECTION A: Answer all questions from this section being careful to number
them A1 to A3. (40 marks)

Question A1

The table shows the prices ($) of a kilogram of economy beef in 16 randomly
selected butcheries located in Harare and Marondera.

Harare 5.00 4.65 6.30 6.20 7.00 8.00 6.40 5.80

Marondera 4.85 6.00 5.40 3.90 9.00 6.00 4.10 3.50

(a) For each town, calculate the:

i. Mean [4]

ii. Standard deviation [6]

iii. Coefficient of variation [4]

(b) State, with justification, the town in which the price of beef is:

i. Higher. [2]

ii. Less variable. [2]

Question A2

The HR manager of a certain organisation collected data from a random sample of

employees in order to study the determinants of employee salaries. The organisation
has 1000 employees. For each employee, he records monthly salary; length of
service (in months) at the organisation; gender (1 = male, 0 = female); age (years)
and whether the employee has a technical (= 1) or clerical job (= 0). The estimation
results are reported below:

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Dependent Variable: SALARY
Method: Least Squares
Date: 06/19/18 Time: 12:59
Sample: 1 30
Included observations: 30

Variable Coefficient Std. Error t-Statistic Prob.

C 651.8575 345.3017 1.887791 0.0707

SERVICE 13.42189 5.125272 2.618767 0.0148
AGE -6.710159 6.349425 -1.056814 0.3007
JOB -33.45297 89.54743 -0.373578 0.7119
GENDER 205.6455 90.26568 2.278225 0.0315

R-squared 0.432707 Mean dependent var 1838.433

Adjusted R-squared 0.341940 S.D. dependent var 291.5761
S.E. of regression 236.5292 Akaike info criterion 13.92103
Sum squared resid 1398651. Schwarz criterion 14.15456
Log likelihood -203.8155 Hannan-Quinn criter. 13.99574
F-statistic 4.767229 Durbin-Watson stat 2.028687
Prob(F-statistic) 0.005363

(a) State the sample size of the study. [2]

(b) Does it make a difference whether an employee has a technical or clerical

job? Explain your answer. [3]

(c) How much more does a male employee earn per month compared to a
female employee? [2]

(d) Interpret the slope coefficient on length of service. [3]

(e) Comment on magnitude of the adjusted R2. [3]

The regression above was rerun using only the significant independent variables.
The results are reported below:

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 Dependent Variable: SALARY
Method: Least Squares
Date: 06/19/18 Time: 13:11
Sample: 1 30
Included observations: 30

Variable Coefficient Std. Error t-Statistic Prob.

C 784.1862 316.8193 2.475184 0.0199

SERVICE 9.021247 3.106325 2.904155 0.0073
GENDER 224.4063 87.35202 2.568988 0.0160

R-squared 0.405105 Mean dependent var 1838.433

Adjusted R-squared 0.361039 S.D. dependent var 291.5761
S.E. of regression 233.0715 Akaike info criterion 13.83521
Sum squared resid 1466703. Schwarz criterion 13.97533
Log likelihood -204.5281 Hannan-Quinn criter. 13.88003
F-statistic 9.193078 Durbin-Watson stat 2.088701
Prob(F-statistic) 0.000901

(f) State the multiple regression equation to determine monthly salary based on
gender and length of service. Hence, estimate the monthly salary of a male
employee whose length of service is 120 months. [5]

(g) Comment on the change in the value of the adjusted R2. [2]

Question A3

A financial analyst wants to compare the turnover rates (%) for shares of
telecommunication companies versus other stocks. She selected 32 telecoms
companies and 49 other stocks. The mean turnover rate of telecoms stocks is 31.4%
and the standard deviation is 5.1%. For the other stocks, the mean rate was 34.9%
with a standard deviation of 6.7%. Is there a significant difference in the turnover
rates of the two types of stock? Use the 0.01 significance level. [10]

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Section B (60 marks). Answer any three questions from this section. Each
question carries 20 marks.

Question B4

The table below shows the frequency distribution of incomes of a random sample of
tobacco farmers.

Amounts ($00) 20 – 39 40 – 59 60 – 79 80 - 99
Number of farmers 9 32 25 10

(a) Use the frequency distribution to estimate the:

i. median [3]
ii. mean, and [3]
iii. standard deviation of incomes. [5]
(b) Construct a less than ogive for the data and use it to estimate the lower and
upper quartiles. [5]

(c) Draw a box and whisker plot of the data. Hence, comment on the distribution
of the incomes. [4]

Question B5

(a) The delays that are experienced at a border post by truck drivers to clear their
cargo were found to be normally distributed with mean 48hours and a
standard deviation of 6 hours. Find the probability that a driver has to wait for:

i. at least 36 hours to clear his cargo. [4]

ii. between 40 hours and 50 hours to clear his cargo. [6]

(b) A recent study by a marketing agency to determine whether there was a

relationship between the importance a store manager placed on
advertisement and the size of the store revealed the following sample
information.

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 Size/Perception Important Not important
Small 40 52
Medium 106 47
Large 67 32

Use the 0.05 significance level to test whether perception on advertisement and size
of store are associated. [10]

Question B6

(a) The following data give the prices ($) and quantities (units) of two
commodities sold in 2011 and 2012:

Product 2011 2012

Price ($) Quantity Price ($) Quantity
X 30 3 000 50 1 500
Y 15 400 20 250

Using 2011 as the base period and interpreting the result in each case,
calculate the:

i. Laspeyre Quantity Index. [4]

ii. Paasche Quantity Index. [4]

iii. Fisher Quantity index. [4]

(b) Explain any four challenges that are encountered in the construction of index
numbers. [8]

Question B7

The following data give the annual sales (US$ millions) for a retail outlet for the
period 2002 to 2011.

Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sales 10 12 13 11 12 15 16 13 14 16
Index 100

(a) Construct an index number series using 2003 as the base year. [5]

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(b) Plot the index number series and comment on the trend in sales over the
period. [6]
(c) Use the sales figures to estimate the trend line equation (use the Ordinary
Least Squares method). [6]

(d) Use the trend line equation to forecast the sales for the year 2014. [3]

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 MBAZ504 STATISTICS FOR MANAGERS
LIST OF FORMULAE

1.1 Measures for Describing Ungrouped Data

1.1.1 Measures of central tendency

Median
a. if n is odd

b. if n is even.

Population mean,

Sample mean,

1.1.2 Measures of position

th

The position of the p percentile is given by:

1.1.3 Measures of dispersion

Range = highest observed value – lowest observed value

Inter-quartile range =

Sample variance

Population variance

Coefficient of variation (CV)

Coefficient of skewness, Skp

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1.2 Measures for Describing Grouped Data

1.2.1 Measures of central tendency

Mean

Median =

Mode

1.2.2 Measures of position

Lower quartile, Q1 =

Upper quartile, Q3 =

Pth percentile

1.2.3 Measures of Dispersion

Population variance

Sample variance

1.3 Discrete Probability Distributions

Expectation of a discrete random variable X

Expectation of a function of a random variable

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Expected value of a linear function of a random variable

Variance of a discrete random variable

Binomial probability distribution

for x = 0, 1, 2,… n.
If X~ B (n, p), then
E(X) = n p
Var(X) = n p (1 – p)
Poisson probability distribution

for x = 0, 1, 2, …
If X~ Po( ), then the mean and variance of X both equal to
1.4 Normal Distribution
An arbitrary normal value X is transformed to a standard normal variable Z by the
transformation

1.5 Statistical Estimation

1.5.1 Point estimators

Sample mean,

Sample variance,

Sample population proportion,

1.5.2 Confidence interval estimation
If the population standard deviation is known, a 100(1 )% confidence interval for is
given by:

If the population standard deviation is unknown and , then a 100(1 % confidence

interval for population mean is given by:

If the population standard deviation is unknown and , then a

confidence interval for is given by:

When populations variances are known, a confidence interval for is

given by:
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When populations variances are unknown and samples are large, a confidence
interval for is given by:

When populations variances are unknown and samples are small, that is ,a
confidence interval for is given by

Pooled variance

A confidence interval for the mean difference of the paired observations is given
by:

The minimum sample size necessary to ensure that the error in estimating will not
exceed a specified amount is given by:

A 100(1 % confidence interval for the population proportion is given by:

For large samples, the confidence interval estimate for is given by:

When samples are small we use the t-distribution. A confidence interval for
is given by:

The minimum sample size required to estimate the population proportion to be within a
specified amount with confidence is given by:

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1.6 Hypothesis Testing

1.6.1 Tests concerning the mean of a single population

Test statistic for testing for the mean of a single population
When is known When is unknown
Case I: n is large or small Case II: n is large
~ N(0,1) ~N(0,1)

Case III: n is small

~ t(n-1)

1.6.2 Tests concerning means of two populations

When the variances ( and ) are known, the test statistic is given by:

When variances are unknown but samples are large (both n 1 and n2 are greater than 30), the
test statistic is given by:

When variances are unknown and sample sizes are small, and assuming that populations are
normally distributed with homogeneous variance, the test statistic is:

1.6.3 Test concerning a population proportion

The test statistic for testing for a proportion of a single population is given by:

1.7 Chi-Square Tests

Expected frequency =

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 2
Test statistic, cal =

1.8 Simple Linear Regression Analysis

The least squares estimates of and are and respectively

where

and
1.9 Correlation Analysis
Pearson’s product moment correlation coefficient is given by

Spearman’s Rank Correlation Coefficient is given by

1.10 Introduction to Time Series Analysis

1.10.1 Trend Analysis
The fitted trend line is
and

1.10.2 Seasonal Analysis

Seasonal ratio

Deseasonalised Y =

1.11 Index Numbers

1.11.1 Simple Index Numbers

Simple Price Index

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Simple Quantity Index

1.11.2 Weighted Index Numbers

Laspeyre Price Index, LPI

Laspeyre Quantity Index, LQI

Paasche Price Index, PPI

Paasche Quantity Index, PQI

Fisher Price Index, FPI

Fisher Quantity Index, FQI

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