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**Chapter 9 Statistics for Management Levin and Rubin
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1

Basics

Hypotheses based on one group A two-sample case involves comparing a parameter between two distinct groups, such as males versus females. A two-sample hypothesis test might be to analyze the difference in the mean cholesterol level between men and women. Or, to determine if the percentage of job success is different between men and women.

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Different Parameters 3 .

.Testing Hypothesis about Difference between Two Population Means (Two Sample Tests of Hypothesis) Null Hypothesis: H0: (µ1 .one-tailed test Alternate Hypothesis H1: (µ1 .µ2)=D Alternate Hypothesis H1: (µ1 .µ2) D [µ1 µ2 ] ..µ2)>D (µ1 .µ2)<D [µ1 > µ2 µ1 < µ2] . two-tailed test Test Statistics: z! ( x1 x2 ) D0 2 2 W1 W 2 n1 n2 or µ1 = µ2 or z! ( x1 x2 ) 2 2 W1 W 2 n1 n2 (replace s when not available) Rejection Region z > z or z < -z z > z /2 or z < -z /2 (two tailed test) (one tailed test) 4 .

80 Sample Standard Deviation $2.90 Sample Size 40 45 Would it be reasonable for her to conclude that there is significant difference in earning between union and nonunion nurses? Use the .Mary Jo Fitzpatric is the Vice President for Nursing Services at St. Group Union Nonunion Mean Wage $20. 5 . She decided to investigate and gathered the following sample information.25 $1. Luke s Memorial Hospital. Recently she noticed in the job posting for nurses that those that are unionised seem to offer higher wages.01 significance level.75 $19.

Example A manpower-development statistician is asked to determine whether the hourly wages of semiskilled workers are the same in two cities. The results of the survey are presented in the following table: Hourly Wage Rate 6 .

The significance level is 0. The critical values are ± 1. Step 3: 7 . a z test is appropriate.2) is in excess of 30.05 (given) H0: 1 = 2 versus H1: 1 2 Step 2: Since this is a test of the means and the degrees of freedom (n1 + n2 .Solution Step 1: This is a two-tailed test. The hypothesis is stated below.96 (from a z table).

For example: H0: 1 - 2 0. it can be non-zero. The test for a difference between parameters does not have to be zero.Step 4: Sketch the distribution. Step 5: Decide! Since the test statistic values lies within the rejection region then there is sufficient statistical evidence based on this sample to reject H0.10 versus H1: 1 - 2 > 0.10 8 . locate the critical values and the test statistic.

1 hours.8 hours.05 level of significance. The first drug was tested on a group of 90 arthri-tis sufferers and produced an average of 8. At the 0.5 hours of relief.9 hours of relief. does the second drug provide a significantly shorter period of relief? 9 . and a sample standard deviation of 2.Problem: 9-3 Two research laboratories have independently produced drugs that provide relief to arthritis sufferers. The second drug was tested on 80 arthritis sufferers. producing an average of 7. and a sample standard deviation of 1.

On the basis of these samples. A random sample of 45 female machine-tool operators found their mean wage to be $8. is it reasonable to conclude (at a = 0.84.Problem: 9-6 Notwithstanding the Equal Pay Act of 1963. A random sample of 38 male machine-tool operators found a mean hourly wage of $11. and the sample standard deviation was $1. in 1993 it still appeared that men earned more than women in similar jobs.42.31.00 more per hour than the female operators? 10 . and the sample standard de-viation was $1.38.01) that the male operators are earning over $2.

p2) D [p1 p2 ] .Alternate Hypothesis H1: (p1 .p2)>D (p1 .one-tailed test Alternate Hypothesis H1: (p1 ..p2)<D [p1 > p2 p1 < p2] .Testing Hypothesis about Difference between Two Population Proportion 1. two-tailed test 3.. Test Statistics: Rejection Region z > z /2 or z < -z /2 z > z or z < -z (one tailed test) (two tailed test) 11 .p2)=D or p1 = p2 2.Null Hypothesis: H0: (p1 .

Test tatisti s: . i il il x1 x 2 Ö p! n1 n 2 z! ( p1 p 2 ) Ö Ö 1 1 ÖÖ ] p q[ n1 n 2 . N ull i .Testing Hypothesis about Difference between Two Population Proportion: Pooled W hen population param eters p and q are unknow n: . l l .. l i i . Re jecti R egi e tailed te st) two tailed test) 12 .

1 percent.4 percent and the standard deviation 5. Is there sufficient evidence to conclude that the proportion of male smokers higher from the proportion of female smokers when = . in percent. According to a report by the American Cancer Society. Is there a significant difference in the turnover rates of the two types of stock? 13 . A financial analyst wants to compare the turnover rates.9 percent and the standard deviation 6. In random samples of 200 males and 200 females. the mean rate was computed to be 34.7 percent. For the other stocks. She selected 32 oil-related stocks and 49 other stocks. for shares of oil related stocks versus other stocks.01? 2. 62 of the males and 54 of the females were smokers. The mean turnover of oil related stocks is 31. more men than women smoke and twice as many smokers die prematurely than nonsmokers.Example: 1.

Which system will be installed if management uses a significance level of 0. then the management of the power plant will install the expensive system. more expensive system has reduced the emission of pollutants to ac-ceptable levels 76 percent of the time. If the expensive system is significantly more effective than the inexpensive sys-tem in reducing pollutants to acceptable levels. as determined from 250 air samples.Problem: 9-22 A coal-fired power plant is considering two different systems for pollution abatement.02 in making its decision? 14 . as determined from 200 air samples. The first system has reduced the emission of pollutants to accept-able levels 68 percent of the time. The sec-ond.

Problem: 9-23 A group of clinical physicians is performing tests on patients to determine the effectiveness of a new antihypertensive drug.45 0.36 Number of Patients 120 150 15 . Group Treatment Control Proportion That Improved 0.01 level of significance. Patients with high blood pressure were randomly chosen and then randomly assigned to either the control group (which received a wellestablished antihypertensive) or the treatment group (which received the new drug). The doctors noted the per-centage of patients whose blood pressure was reduced to a normal level within 1 year. test appropriate hypotheses to determine whether the new drug is significantly more effective than the older drug in reducing high blood pressure. At the 0.

the estimated standard error is: 16 .Test for difference between Means: small sample size For small samples sizes. This estimate is: and then. a weighted average) of the variances for the two groups. we must estimate a 'pooled' estimate (a.a.k.

N u ll o t h e s is 2 . R e je c t io n R e g io n t t t t o r t -t ( o n e ta il e d te st ) -t /2 ( tw o t a ile d t e s t) /2 o r t 17 . lt e r n a ti e o t h e si s o n e t a ile d t e s t) 1: µ 1 te s t ) . o o le d E s t i at o r : s p 2 : 1= µ 2 1: µ1 µ2 or µ1 µ2 µ2 t w o -ta ile d 2 ( n 1 1) s 12 ( n 2 1 ) s 2 ! ( n 1 1) ( n 2 1 ) .Tests for Difference Between Two Means: Small Sample Size 1 . T e s t t a tis t ic s: t ! s p t ! x1 x 2 x1 x 2 WÖ x1 x 2 1 1 n1 n2 d f ! ( n1 n 2 2 ) .

M.Example: A company wishes to test when the sensitivity achieved by a new program is significantly higher than achieved under the legacy program. The following information is available from test results. Sensitivity Mean Proposed P.O. 92 84 Standard Deviation 15 19 Sample Size 12 15 18 .

708 (from a t table with 25 degrees of freedom). The significance level is 0. a t test is appropriate. The critical value is 1.Solution Step 1: This is a one-tailed test. Step 3: 19 . The hypothesis is stated below.05 (given) H0: 1 2 versus H1: 1 > 2 Step 2: Since this is a test of the means and neither n1 or n2 is in excess of 30.

20 .Step 4: Sketch the distribution. locate the critical values and the test statistic. Step 5: Decide! Since the test statistic values lies within the retention region then there is no sufficient statistical evidence based on this sample to reject H0.

Their responses are given in the following table. Vice Presidents Market Analysts 22.5 21.0 20.5 30.0 17.0 21 .0 25.Example: Five vice presidents and four market research analysts of a large industry were asked to estimate what they consider to be the optimal market share for the company. Do the data suggest that corporate vice presidents and market research nalysts tend to disagree when estimating their firm s optimal market share? Test at a 5% level of significance.0 27.0 17.5 20.

They also sampled 11 employees who were trained using the new method and found aver-age daily sales to be $706 and the sample standard deviation was $24.Problem: 9-8 A credit-insurance organization has developed a new high-tech method of training new sales personnel. At a = 0.84. The company sampled 16 employees who were trained the original way and found average daily sales to be $688 and the sample standard deviation was $32. can the company conclude that average daily sales have in-creased under the new plan? 22 .05.63.

does it appear that the women are more effective at generating new accounts than the men are? Number of New Accounts Female account execs 12 11 14 13 13 14 13 12 14 12 Male account execs 13 10 11 12 13 12 10 12 23 .Problem: 9-9 A large stock-brokerage firm wants to determine how successful its new ac-count executives have been at recruiting clients. After completing their training. new account execs spend several weeks calling prospective clients. trying to get the prospects to open accounts with the firm. The following data give the numbers of new accounts opened in their first 2 weeks by 10 randomly chosen female account execs and by 8 randomly chosen male ac-count execs. At a = 0.05.

lternative y othesis or µd < 0 1: µ d > 0 (one tailed test) (two-tailed test) 1: µ d ? 0 3.Paired Difference Test: Dependent Samples Paire Differe ce Test: De e e t Sa les 1. Test Statistics x Q0 t! s n 4. Null y othesis 0:µ 1 .µ 2 =µ d= 0=0 2. Rejection Region t > t or t < -t (one tailed test) t > t /2 or t < -t /2 (two tailed test) 24 .

Jeff has determined some additional ship-ping precautions that can be undertaken to prevent breakage. and he has asked the Purchasing Director to inform the suppliers of the new measures.05. the receiving clerk for a chemicalproducts distributor. Do the data indicate. Data for 8 suppliers are given below in terms of average number of broken items per shipment. including test-tubes. and flasks. that the new measures have lowered the average number of broken items? Supplier 1 Bef re After 16 14 2 12 13 3 18 12 4 7 6 5 14 9 6 19 15 7 6 8 8 17 15 25 .Problem: 9-15 Jeff Richardson. at a = 0. is faced with the continuing problem of broken glassware. petri dishes.

Problem: 9-17 Aquarius Health Club has been advertising a rigorous program for body conditioning.025 level of sig-nificance. The club claims that after 1 month in the program. the aver-age participant should be able to do eight more push-ups in 2 minutes than he or she could do at the start. articipant Before After 1 38 45 2 11 24 3 34 41 4 25 39 5 6 7 12 30 8 27 39 10 32 29 40 41 17 38 30 44 26 . Does the random sample of 10 program par-ticipants given below support the club's claim? Use the 0.

the analyst does not go through the procedures manually. This area is called the probability value or p-value So. You can 27 simply look at the p-value and decide. Minitab. etc. SPSS. they use a computer and a statistical analysis software package (such as SAS. you do not have to determine the location of the test statistic to make your decision on H0. Instead.) Instead of drawing the distribution and determining the location of the test statistic value (within the rejection or retention region). . the computer calculates the area under the normal curve in excess of the test statistic value.Another way to look at hypothesis testing (more common) In typical hypothesis testing.

You might reject H0 using = 0. and Not all people share your personal level of risk assessment.05 but someone else might use a higher/lower value.05 but someone else might retain H0 at a different level of risk. That is.Benefits Saves time since all computer statistics packages compute the p-value. you might use an alpha value of 0. 28 .

Decision rule using p-values 29 .

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