Name: Goutam Mandal

Roll No: 1916034

PGPEM-2019
Assignment-II

Part I Refer to “overbooking by airlines” case circulated and discussed in class with the
following modifications and additions:

a. Revenue from each ticket is Rs. 5000 + 50 *x , where x is the last 2 digits of your
PGPEM roll no.
b. Marginal (additional) cost from each additional passenger is 100 Rs.
c. Cost for overbooking (per extra booking made) is a y [ a random number that you
generate /simulate from a Normal distribution with mean 12000 and sd = 1000]
d. Capacity of flight = c = 150 + x (where x is as defined already)

Determine how many seats you should overbook, based on objective principle. [Hint:
calculate expected profit under various alternatives, and then …]

Expected Profit Vs Ticket sold

1350000

1300000

1250000
Expected Profit

1200000
Expected Profit
1150000

1100000

1050000

1000000
180 185 190 195 200 205 210 215
No of Ticket Sold

14 (198-184) Tickets should be over booked to maximize the expected Profit

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 Revenue /ticket is 5000+50x34=6700
Marginal cost per additional Passenger=100
Cost of overbooking(y)= 12000( random Number with mean 12000 & Sd=100), Considered Mean value.
Capacity of flight: C= 150+34=184
No show rate : 0.1 =p( cancellation)
Lets No of extra ticket to be sold to maximize Profit = T
Lets Total No of ticket sold =N
So, Revenue from N Ticket= 6700*N
Cost per Extra Passenger= 1200+100=12100
Profit=6700N-12100(N-184)
Expected Profit = Profit- Show off cost

No of Ticket sold Probability extra ticket(T) Profit show off cost Expected Profit
185 3.42661E-09 1 1239500 4.14619E-05 1239500
186 6.68188E-08 2 1246199.999 0.001617016 1246199.998
187 6.56366E-07 3 1252899.992 0.023826104 1252899.968
188 4.33121E-06 4 1259599.948 0.209630738 1259599.738
189 2.1603E-05 5 1266299.739 1.306981198 1266298.432
190 8.68903E-05 6 1272998.949 6.308237867 1272992.64
191 0.000293634 7 1279696.447 24.87076187 1279671.576
192 0.000857747 8 1286389.621 83.02992943 1286306.591
193 0.00221162 9 1293073.239 240.8454149 1292832.394
194 0.005114925 10 1299738.109 618.9059133 1299119.203
195 0.010747336 11 1306369.957 1430.470484 1304939.487
196 0.020732066 12 1312949.142 3010.295994 1309938.846
197 0.037040458 13 1319451.81 5826.464004 1313625.346
198 0.061753944 14 1325852.777 10461.11805 1315391.659
199 0.096705874 15 1332129.859 17552.11606 1314577.743
200 0.143075434 16 1338268.787 27699.40403 1310569.383
201 0.201037385 17 1344267.448 41353.39001 1302914.058
202 0.269568867 18 1350138.217 58712.09931 1291426.117
203 0.34647642 19 1355907.635 79654.929 1276252.706
204 0.428646069 20 1361613.383 103732.3486 1257881.034
205 0.51245911 21 1367299.245 130215.8599 1237083.385
206 0.594276603 22 1373009.253 158196.4318 1214812.821
207 0.670887528 23 1378782.261 186707.9991 1192074.262
208 0.739837361 24 1384647.968 214848.7696 1169799.198
209 0.799593883 25 1390624.914 241877.1495 1148747.765
210 0.849550335 26 1396720.441 267268.5353 1129451.906

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Part II

Q1. Q1@Page 314 The file P02_07.xlsx includes data on 204 employees at the
(fictional) company Beta Technologies. For thisproblem, consider this data set as the
populationframe.a. Using the method in this section (not StatTools),generate a
simple random sample of size 20 from this population.b. Use Stat Tools to generate
10 simple random samples of size 20 from this population.c. Calculate the
population mean, median, and standard deviation of Annual Salary. Then calculate
the sample mean, median, and standard deviation of Annual Salary for each of the
samples in parts a and b. Comment briefly on how they compare to each other and
the population measures.

100000
80000
60000
40000 Mean

20000 Standard Deviation

Median
0
y 1 r y 2 r y 3 r y 4 r y 5 r y 6 r y 7 r y 8 r y 9 y 10 rt
A on
la ar la a la a la a la a la a la a la a la a lar P a lati
ls ls ls ls ls ls ls ls ls sa u
ua nua nua nua nua nua nua nua nua ual om Pop
n Fr
An An An An An An An An An Ann

Comment: Sample Mean, Standard Deviation & Median have been calculated as shown in the above
plot, some are below the population measures, and some are above.

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Q2 Q.1@Page 417 the file P09_01.xlsx contains a random sample of 100 lightbulb lifetimes.
The company that produces these lightbulbs wants to know whether it can claim that its
lightbulbs typically last more than 1000 burning hours.a. Identify the null and alternative
hypotheses for this situation. b. Can this lightbulb manufacturer claim that its lightbulbs typically
last more than 1000 hours at the 5% significance level? What about at the 1% significance level?
Explain your answers.

Parameters Value Formula Used

Sample Size 100 Given
Sample Mean 991.02 AVERAGE(Data!B2:B101)
Sample Std Dev 87.17 STDEV(Data!B2:B101)
Hypothesized Mean 1000 Given
Alternative Hypothesis >1000 Given
Standard Error of Mean 8.72 B7/SQRT(B5)
Degrees of Freedom 99 B5 - 1
t-Test Statistic -1.0304 (B6-B8)/B10
p-Value 0.8470 0.847
Null Hypoth. at 10% Don't Reject
Significance
Null Hypoth. at 5% Don't Reject
Significance
Null Hypoth. at 1% Don't Reject
Significance

a) Null hypothesis is that the mean is less than or equal to 1000,

where the alternate hypothesis is more than 1000

b) No evidence to claim the support, at 5% & 1% significance level,

as mean is less than 1000 and P value is more than 0.01 & 0.05

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Q3 . Q7@Page 330 A manufacturing company’s quality control personnel have recorded the proportion of
defective items for each of 500 monthly shipments of one of the computer components that the company
produces. The data are in the file P07_07.xlsx. The quality control department manager does not have sufficient
time to review all of these data. Rather, she would like to examine the proportions of defective items for a
sample of these shipments. For this problem, you can assume that the population is the data from the 500
shipments. a. Use Excel to generate a simple random sample of size 25 from the data. b. Calculate a point
estimate of the population mean from the sample selected in part a. What is the sampling error, that is, by how
much does the sample mean miss the population mean? c. Calculate a good approximation for the standard error
of the mean. d. Repeat parts b and c after generating a simple random sample of size 50 from the population. Is
this estimate bound to be more accurate than the one in part b? Is its standard error bound to be smaller than the
one in part c?

Random Sample Proportio

Part a. Size Shipment n
25 99 0.43
257 0.85
121 0.3
138 0.53
124 0.47
52 0.45
363 0.82
54 0.62
437 0.8
454 0.66
485 0.07
369 0.84
44 0.81
283 0.85
329 0.25
106 0.52
208 0.24
269 0.77
48 0.25
436 0.68
33 0.72
403 0
132 0.86
197 0.16
Part b Parameter 25 0.39 Formula Used
Sample mean 0.5336 AVERAGE(I2:I26)
Population mean 0.50252 AVERAGE(B2:B501)
Sampling error 0.03108 I27-I28
Part c StErr of mean 0.0539904 STDEV(I2:I26)/

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 SQRT(25)

Q4 Q1@Page 341 Calculate the following probabilities using Excel. (If you have Excel 2010, we
suggest using its new functions.) a. P(t10 _ 1.75), where t10 has a t distribution with 10 degrees of
freedom. b. P(t100 _ 1.75), where t100 has a t distribution with 100 degrees of freedom. How do you
explain the difference between this result and the one obtained in part a? c. P(Z _ 1.75), where Z is a
standard normal random variable. Compare this result to the results obtained in parts a and b. How
do you explain the differences in these probabilities? d. P(t20 _0.80), where t20 has a t distribution
with 20 degrees of freedom. e. P(t3 _0.80), where t3 has a t distribution with 3 degrees of
freedom. How do you explain the difference between this result and the result obtained in part d?

Q. No Condition Probabilities Formula used Remarks

a) P(t10>=1.75) 0.05534 TDIST(1.75,10,1)

b) P(t100>=1.75 0.04159 TDIST(1.75,100,1) Higher the degree of freedom

) lower the variance, so smaller the
variance

c) P(Z>=1.75) 0.04006 1-
NORMSDIST(1.75)

d) P(t20<= - 0.21656 TDIST(0.8,20,1) Because of the symmetry of 't'

0.80) distribution, left-hand tails and
right hand tails can be calculated in
same way

e) P(t3<= -0.80) 0.24110 TDIST(0.8,3,1)

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Q5. Q7@Page347 The manager of a local fast-food restaurant is interested in improving the service
provided to customers who use the restaurant’s drive-up window. As a first step in this process, the manager
asks an assistant to record the time (in seconds) it takes to serve a large number of customers at the final window
in the facility’s drive-up system. The file P08_07.xlsx contains a random sample of 200 service times during the
busiest hour of the day. a. Identify the relevant population. b. Construct and interpret a 95% confidence interval
for the mean service time of all customers arriving during the busiest hour of the day at this fast-food operation.
c. If the manager wants to improve service, at least during the busiest time of day, does this confidence interval
provide useful information? What useful information does it not provide?

Parameters Value Formula Used

Sample Size 200 Given Data
Sample Mean 97.19 AVERAGE(data!B2:B201)
Sample Std Dev 67.34 STDEV(data!B2:B201)
Confidence Level
(Mean) 95.0% Given Data
Degrees of Freedom 199 200-1
t value -1.971956544 T.INV((1-B9)/2,B10)
Lower Limit 87.80 B7+B11*B8/SQRT(B6)
Upper Limit 106.58 B7-B11*B8/SQRT(B6)

Set of all service times at the busiest

a) time of the day is the relevant
population

The manager can be 95% confident that

the mean service time during this
b)
busiest time of the day is between 88
sec to 107 sec

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 This information does not tell what he
should do to relive from the congestion.
c) Many options are possible such as 1)
increase server efficiency or 2) increse
the number of servers

Q 6. Q23@Page 374 The director of a university’s career development center is interested in

comparing the starting annual salaries of male and female students who recently graduated from
the university and commenced fulltime employment. The director has formed pairs of male and
female graduates with the same major and similar grade-point averages. Specifically, she has
collected a random sample of 50 such pairs and has recorded the starting annual salary of each
person. These data are provided in the file P08_23.xlsx. Find a 95% confidence interval for the
mean difference between similar male and female graduates of this university. Interpret your
result.

Parameters Value Formula Used

Sample Size 50 Given Data
Sample Mean 296.62 AVERAGE(Data!D2:D51)
Sample Std Dev 297.87 STDEV(Data!D2:D51)
Confidence Level (Mean) 95.0% Given Data
Degrees of Freedom 49 200-1
t value -2.009575237 T.INV((1-B7)/2,B8)
Lower Limit 211.96 B5+B9*B6/SQRT(B4)
Upper Limit 381.28 B5-B9*B6/SQRT(B4)

95% confidence that the difference in salarry between male and female is 211.96 to 381.28

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Q7 Q41@Page 391 The widths of 100 elevator rails have been measured. The sample mean and
standard deviation of the elevator rails are 2.05 inches and 0.01 inch. a. Find a 95% confidence
interval for the average width of an elevator rail. Do you need to assume that the widths of elevator
rails are normally distributed? b. How large a sample of elevator rails would you have to measure to
ensure that you could estimate, with 95% confidence, the average diameter of an elevator rail within
0.01 inch?

Parameter Values Formula Used Remarks

Sample size 100 Given
Sample mean 2.05 Given
Sample stdev 0.01 Given

Part a
Confidence level 95% Given
StErr of mean 0.0010 B5/SQRT(B3)
Degree of freedom 99.0000 B3-1
t-multiple 1.984 TINV(1-B8,B10)
Lower limit 2.0480 B4-B11*B9
Normality assumption is
not important because
Upper limit 2.0520 B4+B11*B9 sample size large enough

Part b
Sample Size for Mean
Confidence Level 95.00% Given
Half-length of Interval 0.01 Given
Std Dev (estimate) 0.01 Given
Sample Size 3.937116911 (B11*B19/B18)^2 Sample Size ~ 4

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Q8 Q9@Page 435 In the past, 60% of all undergraduate students enrolled at State University earned
their degrees within four years of matriculation. A random sample of 95 students from the class that
matriculated in the fall of 2006 was recently selected to test whether there has been a change in the
proportion of students who graduate within four years. Administrators found that 40 of these 95
students graduated in the spring of 2010 (i.e., four academic years after matriculation). a. Given the
sample outcome, find a 95% confidence interval for the relevant population proportion. Does this
interval estimate suggest that there has been in a change in the proportion of students who graduate
within four years? Why or why not? b. Suppose now that State University administrators want to test
the claim made by faculty that the proportion of students who graduate within four years at State
University has fallen below the historical value of 60% this year. Use this sample proportion to test
their claim. Report a p-value and interpret it.

Part
a. Parameter Value Formula Used
Null value for proportion 0.6 Given Data

Number graduated within 4

years 40 Given Data
Sample size 95 Given Data
Sample proportion 0.421 C4/C5

Confidence interval for true

proportion
Standard error of sample
proportion 0.051 SQRT(C6*(1-C6)/C5)
Confidence level 0.95 Given data
NORMSINV(C10+(1-C10)/2)
z-multiple 1.960 or from z curve
Lower limit 0.322 C6-C11*C9
Upper limit 0.520 C6+C11*C9

The confidence interval is between 0.32 to 0.52, which is below 0.6. Its means proportion has dropped

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Part b
Standard error of sample
proportion 0.0503 SQRT(C2*(1-C2)/C5)
z test statistic -3.560 (C6-C2)/C16
p value for a one-tailed test 0.000 NORMSDIST(C17)

P value is 0, means proportion has been dropped below 0.6

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