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BUSINESS STATISTICS

T statistics
Students Pocket money(Rs.) Problem definition: we have
1 2500 chosen to approximate the
2 1500 pocket money of 15 students
3 1700 of our college because this
4 1000 was the most suitable
5 1500 measurement of t statistics
6 600 and was the most reliable
7 800 data that could be collected
8 700 from the college
9 2000 We have surveyed 15 people
10 800 about the pocket money they
11 1500 get. The average of it was
12 2500 1000. Use a 5% level of
13 2000 significance to determine if
14 4000 the average is more than
15 3500 what is quoted.
Scale of Data – ratio
Sampling – convenient
α- .05(because the sources of the collected data is reliable, so we did not assume a higher
level of error rate)
Justification for tool used –because the sample size is less than 30 so we use the t statistics
STEP 1: H0 : µ = 1000 (average of pocket money of 15 people is 1000)
Ha : µ>1000(average of pocket money is greater than 1000)
STEP 2 : The appropriate statistical test is
t = [ - µ]/(s/√ n)
STEP 3: α- .05
STEP 4: df = n-1
= 15 – 1
= 14.
One tail test
tc = t.05,14 = 1.761
decision is to reject the null hypothesis if the observed t statistics is greater than 1.761.
Step 5: data is as follows:
Sample standard deviation is calculated as follows:

Students Pocket money ( Rs. ) X


x- x(bar)
1 2500
2500 528049.29
2 1500
1500 74709.29
3 1700 1700 5377.29
4 1000 1000 598039.29
5 1500 1500 74709.29
6 600 600 1376703.29
7 800 800 947371.29

8 700 700 1152037.29

9 2000 2000 51379.29


800 947371.29
10 800
1500 74709.29
11 1500
2500 528049.29
12 2500
2000 51379.29
13 2000 4000 4958059.29
14 4000 3500 2981389.29
15 3500 ϵX = 26600 total= 14349333.96
 n= 15
= 26600/15
= 1773.33
 s= √ [(x- x(bar))^2/n-1]
= √ (14349333.96/14)
= 1012.399
 STEP 6: t = x(bar)- µ/ (s/√n)
= 1773.33 – 1000)/(1012.399/√15)
= 773.33/261.400
= 2.96
 STEP 7: tobserved > tcricitcal
2.96>1.761
Hence, null hypothesis is rejected.
 STEP 8: Business Implication: from the data gathered we could conclude
that the average pocket money of students of our college is greater than
1000.
Chi square proportion
A total of ­­­ 45 people are surveyed and asked if they are affected by
recession. We expect that the 60% of population says that recession has
affected them. We wish to disprove the outcome and say that more than
60% favor this. Out of 45 people, 32 said that recession has affected
them.
Problem definition ­ In this time of recession, we would like to know
about the number of people who are affected by recession. Only 60% said
that they are affected by recession. We took a sample of 45 people from
our college, out of which 32 said that recession had affected them.
Because the number of classifications is 2 so we will use chi square
proportion
Scale of Data – Nominal
Sampling – convenient Sampling
α= .05
Justification for tool used –out of a total of 45 only 32 answered
according to our expectations so we need to apply the population
proportion using CHI SQUARE GOODNESS­OF­FIT TEST.
STEP 1: H0: p= .60 (population proportion is 60%)
Ha: p> .60 (population proportion is more than 60%)

STEP 2: The appropriate statistical test is CHI SQUARE GOODNESS­OF­FIT TEST.


χ= [ϵ (f0­fe) ^2]/fe
fo fe
STEP 3: α= .05
Recession 32 27
affected
STEP 4: k­1
Recession not 13 18
2­1= 1 affected
χ ^ 2c = χ^2 .05,1 = 3.841
STEP 5: Data already gathered.
STEP 6: X^2 = [ϵ(fo­fe)^2]/fe
= [ (32­27)^2/27] + [ (13­18)^2/18]
= 2.315

STEP 7: χ^2observed < χ^2critical


Hence hypothesis fail to reject.

STEP 8 : Business Implication: by the data gathered we could conclude that more than
60% people in our college are affected by recession, so we would also like to know the
further affects of recession and would also like to know the cure of the same
Mann-Whitney U test(large)
Do the Vodafone users have less monthly spending Reliance(R) Vodafone(VF)
on their mobiles as compared to reliance users? To
50 150
test this we have selected 2 groups of people: one
who use Vodafone and other who uses reliance. Use 100 130
the data and determine whether Vodafone users spend 111 250
less on their mobiles than reliance customers. α= .05
121 222

 Problem identification-if we were the management 500 345

of reliance(RIM) company so we would be interested 350 551


in knowing the reason of falling of our sales as
450 345
compared to that of vodafone (VF)customers. We
would also be interested in knowing that why are the 600 650

customers more interested in spending on VF and not 300 700


on reliance?
333 850
 Scale- ratio which is later converted to ordinal on
333 222
ranking
 Sampling – convenient 123

 α= .05
Justification for tool used – because the population is large (greater than 10) and the two
samples are independent of each other, so we are using the MANN – WHITNEY U TEST
(LARGE)
Step1: H0:monthly expenditure of both groups, on mobile, is equal.
Ha: monthly expenditure of both groups, on mobile, is not equal.
Step 2: large sample Mann-Whitney U test is appropriate.
Step 3: alpha=0.05
Step 4:if the p value of sample statistics is < 0.05, decision is to
reject the null hypothesis
value Rank group value Rank group

50 1 R 333 12.5 R

100 2 R 345 14.5 VF

111 3 R 345 14.5 VF

121 4 R 350 16 R

123 5 VF 450 17 R

130 6 VF 500 18 R

150 7 VF 551 19 VF

222 8.5 VF 600 20 R

222 8.5 VF 650 21 VF

250 10 VF 700 22 VF

300 11 R 850 23 VF

333 12.5 R
Step 5:Solving for U, µu, σu
U = n1*n2+ n1 (n1+1)/2 – w1
=81
µu = (n1*n2)/2
= (11*12)/2
= 66
σu= √[ n1*n2(n1+n2+1)/12]
= 16.24
Step6: : Observed z value is:
z= (U- µu)/ σu
= (81-66)/16.24
= .9236
Step 7: p value associated is 0.3212.
FINAL P VALUE = 0.5-0.3212
=0.1788
0.1788>0.05, hence the null hypothesis is accepted.
Step8:the monthly expenditure of both the groups is not equal, hence we need to
find out the shortcomings in the company’s policies, procedure, tarrif vouchers
offered, talk time provided. Because people are spending less on our company this
will thereby reduce the customer base of company, so we need to keep in pace
with the offers given by our competitors as well.