Course Title: Business Statistics and Probability I

Assignment #1: What is Statistics?

Exercise #1

A manufacturer of computer chips claims that less than 10% of its products are defective. When 1000
chips were drawn from a large production, 7.5% were found to be defective.
1. What is the population of interest?
2. What is the sample?
3. What is the parameter?
4. What is the statistic?
5. Does the value 10% refer to the parameter or the statistic?
6. Is the value 7.5% a parameter or a statistic?
7. Explain briefly how the statistic can be used to make inferences about the parameter to test the
claim.
Exercise #2

Suppose you believe that, in general, graduates who majored in your subject are offered higher salaries
upon graduating than are graduates of other programs. Describe a statistical experiment that could help
test your belief.
Exercise #3

The owner of a large fleet of taxis is trying to estimate his costs for next year’s operations. One major
cost is fuel purchases. To estimate fuel purchases, the owner needs to know the total distance his taxis
will travel next year, the cost of a gallon of fuel, and the fuel mileage of his taxis. The owner has been
provided with the first two figures (distance estimate and cost of gallon of fuel). However, because of
the high cost of gasoline, the owner has recently converted his taxis to operate on propane. He has
measured and recorded the propane mileage (in miles per gallon) for 50 taxis, see the SPSS file
“Xm01-08.sav”.
1. What is the population of interest?
2. What is the parameter of the owner needs?
3. What is the sample?

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 4. What is the statistic?
5. Explain briefly how the statistic will produce the kind of information the owner wants.
Exercise #4

Determine the type of each of the following data examples.

a. The weekly closing price of the stock of Amazon.com.

b. The month of highest vacancy rate at a La Quinta motel.
c. The size of soft drink (small, medium, or large) ordered by a sample of McDonald’s
customers.
d. The number of Toyotas imported by the United States over the last 5 years.
e. The marks achieved by the students in a statistics course final exam marked out of 100.

Exercise #5

The Rathburn Manufacturing Company makes electric wiring, which it sells to contractors in the
construction industry. Approximately 900 electric contractors purchase wire from Rathburn annually.
Rathburn’s director of marketing wants to determine electric contractors’ satisfaction with Rathburn’s
wire. He developed a questionnaire that yields a satisfaction score between 10 and 50 for participant
responses. A random sample of 35 out of the 900 contractors is asked to complete a satisfaction
survey. The satisfaction scores for the 35 participants are averaged to produce a mean satisfaction
score.

1. What is the variable of interest for this study?

2. What is the population for this study?
3. What is the sample for this study?
4. What is the statistic for this study?
5. What would be a parameter for this study?

Exercise #6

The Wall Street Journal (WSJ) subscriber survey (October 13, 2003) asked 46 questions about
subscriber characteristics and interests. State whether each of the following questions provided
categorical or quantitative data and indicate the measurement scale appropriate for each.

1. What is your age?

2. Are you male or female?
3. When did you first start reading the WSJ? High school, college, early career, midcareer, late
career, or retirement?
4. How long have you been in your present job or position?

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 5. What type of vehicle are you considering for your next purchase? Nine response categories
include sedan, sports car, SUV, minivan, and so on.

Exercise #7

Classify each of the following as nominal, ordinal, interval, or ratio data.

1. The time required to produce each tire on an assembly line
2. The number of quarts of milk a family drinks in a month
3. The ranking of four machines in your plant after they have been designated as excellent, good,
satisfactory, and poor
4. The telephone area code of clients in the United States
5. The age of each of your employees
6. The dollar sales at the local pizza shop each month
7. An employee’s identification number
8. The response time of an emergency unit
Exercise #8

Classify each of the following as nominal, ordinal, interval, or ratio data.

1. The ranking of a company by Fortune 500
2. The number of tickets sold at a movie theater on any given night
3. The identification number on a questionnaire
4. Per capita income
5. The trade balance in dollars
6. Profit/loss in dollars
7. A company’s tax identification
8. The Standard & Poor’s bond ratings of cities based on the following scales:

References

1. Anderson, D. R. Sweeney, D. J. & Williams, T. A. (2011), Essentials of Statistics for Business and
Economics, 6th edition, Cengage Learning.
2. Black, K. (2010). Business Statistics for Contemporary Decision Making, 6th edition, Wiley.
3. Keller, G. (2012). Managerial Statistics. 9th edition. Cengage Learning.

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