Estimation and Hypothesis Testing

for Two Population Parameters

Course 2
Industrial Engineering Department
Sepuluh Nopember Institute of Technology
Indonesia 2008
 Chapter Goals

After completing this chapter, you should be

able to:
 Test hypotheses or form interval estimates for
 two independent population means
 Standard deviations known

Standard deviations unknown
 two means from paired samples
 the difference between two population
proportions
 Estimation for Two Populations
Estimating two
population values

Population
means, Paired Population
independent samples proportions
samples
Examples:
Group 1 vs. Same group Proportion 1 vs.
independent before vs. after Proportion 2
Group 2 treatment
 Difference Between Two Means

Population means, Goal: Form a confidence

independent
samples
* interval for the difference
between two population
means, μ1 – μ2
σ1 and σ2 known
The point estimate for the
σ1 and σ2 unknown, difference is
n1 and n2  30
x1 – x2
σ1 and σ2 unknown,
n1 or n2 < 30
 Independent Samples
 Different data sources
Population means,
*
 Unrelated
independent  Independent
samples
 Sample selected from

one population has no

σ1 and σ2 known effect on the sample
selected from the other
population
σ1 and σ2 unknown,  Use the difference between 2
n1 and n2  30 sample means
 Use z test or pooled variance
σ1 and σ2 unknown, t test
n1 or n2 < 30
 σ1 and σ2 known

Population means, Assumptions:

independent
samples  Samples are randomly and
independently drawn
σ1 and σ2 known *  population distributions are
normal or both sample sizes
σ1 and σ2 unknown,
are  30
n1 and n2  30

σ1 and σ2 unknown,
 Population standard
deviations are known
n1 or n2 < 30
 σ1 and σ2 known
(continued)

Population means, When σ1 and σ2 are known and

independent both populations are normal or
samples both sample sizes are at least 30,
the test statistic is a z-value…

σ1 and σ2 known * …and the standard error of

x1 – x2 is
σ1 and σ2 unknown,
n1 and n2  30 2 2
σ σ2
σ1 and σ2 unknown,
σ x1  x 2  1

n1 n2
n1 or n2 < 30
 σ1 and σ2 known
(continued)

Population means,
independent The confidence interval for
samples μ1 – μ2 is:

*
x 
σ1 and σ2 known 2 2
σ σ2
1  x 2  z /2 1

σ1 and σ2 unknown, n1 n2
n1 and n2  30

σ1 and σ2 unknown,
n1 or n2 < 30
 σ1 and σ2 unknown, large samples

Population means, Assumptions:

independent  Samples are randomly and
samples
independently drawn

σ1 and σ2 known  both sample sizes

are  30
σ1 and σ2 unknown,
n1 and n2  30
*  Population standard
deviations are unknown
σ1 and σ2 unknown,
n1 or n2 < 30
 σ1 and σ2 unknown, large samples
(continued)

Population means,
independent Forming interval
samples estimates:
 use sample standard
σ1 and σ2 known
deviation s to estimate σ

σ1 and σ2 unknown,
n1 and n2  30
*  the test statistic is a z value

σ1 and σ2 unknown,
n1 or n2 < 30
 σ1 and σ2 unknown, large samples
(continued)

Population means,
independent The confidence interval for
samples μ1 – μ2 is:

σ1 and σ2 known

 
2 2
s s2
σ and σ unknown, *
x 1  x 2  z /2 1

1 2 n1 n2
n1 and n2  30

σ1 and σ2 unknown,
n1 or n2 < 30
 σ1 and σ2 unknown, small samples

Population means, Assumptions:

independent
samples  populations are normally
distributed
σ1 and σ2 known  the populations have equal
variances
σ1 and σ2 unknown,
n1 and n2  30  samples are independent

σ1 and σ2 unknown,
n1 or n2 < 30
*
 σ1 and σ2 unknown, small samples
(continued)

Population means, Forming interval

independent estimates:
samples
 The population variances
are assumed equal, so use
σ1 and σ2 known the two sample standard
deviations and pool them to
σ1 and σ2 unknown, estimate σ
n1 and n2  30
 the test statistic is a t value
σ1 and σ2 unknown,
n1 or n2 < 30
* with (n1 + n2 – 2) degrees
of freedom
 σ1 and σ2 unknown, small samples
(continued)

Population means, The pooled standard

independent deviation is
samples

σ1 and σ2 known

sp 
 n1  1 s
1
2
  n2  1 s2
2

σ1 and σ2 unknown, n1  n2  2
n1 and n2  30

σ1 and σ2 unknown,
n1 or n2 < 30
*
 σ1 and σ2 unknown, small samples
(continued)

Population means, The confidence interval for

independent μ1 – μ2 is:
samples

σ1 and σ2 known x 1 
 x 2  t /2 sp
1 1

n1 n2
σ1 and σ2 unknown,
n1 and n2  30 Where t/2 has (n1 + n2 – 2) d.f.,

*
and
σ1 and σ2 unknown,
sp 
 n1  1 s12   n2  1 s2 2
n1 or n2 < 30 n1  n2  2
 Paired Samples

Tests Means of 2 Related Populations

Paired  Paired or matched samples
samples  Repeated measures (before/after)
 Use difference between paired values:
d = x 1 - x2
 Eliminates Variation Among Subjects
 Assumptions:
 Both Populations Are Normally Distributed

 Or, if Not Normal, use large samples

 Paired Differences
The ith paired difference is di , where
Paired di = x1i - x2i
samples
n
The point estimate for
the population mean
d i
d i 1
paired difference is d : n

n
The sample standard
deviation is  i
(d  d) 2

sd  i 1
n 1
n is the number of pairs in the paired sample
 Paired Differences
(continued)

Paired The confidence interval for d is

samples
sd
d  t /2
n
n
Where t/2 has  i
(d  d) 2

n - 1 d.f. and sd is: sd  i1

n 1
n is the number of pairs in the paired sample
 Hypothesis Tests for the Difference
Between Two Means

 Testing Hypotheses about μ1 – μ2

 Use the same situations discussed already:

 Standard deviations known or unknown
 Sample sizes  30 or not  30
 Hypothesis Tests for
Two Population Proportions
Two Population Means, Independent Samples

Lower tail test: Upper tail test: Two-tailed test:

H0: μ1  μ2 H0: μ1 ≤ μ2 H0: μ1 = μ2

HA: μ1 < μ2 HA: μ1 > μ2 HA: μ1 ≠ μ2
i.e., i.e., i.e.,
H0: μ1 – μ2  0 H0: μ1 – μ2 ≤ 0 H0: μ1 – μ2 = 0
HA: μ1 – μ2 < 0 HA: μ1 – μ2 > 0 HA: μ1 – μ2 ≠ 0
 Hypothesis tests for μ1 – μ2

Population means, independent samples

σ1 and σ2 known Use a z test statistic

Use s to estimate unknown
σ1 and σ2 unknown, σ , approximate with a z
n1 and n2  30 test statistic

σ1 and σ2 unknown, Use s to estimate unknown

n1 or n2 < 30 σ , use a t test statistic and
pooled standard deviation
 σ1 and σ2 known

Population means,
independent The test statistic for
samples μ1 – μ2 is:

σ1 and σ2 known * z
 x 1 
 x 2   μ1  μ2 
2 2
σ1 and σ2 unknown, σ σ2
n1 and n2  30
1

n1 n2
σ1 and σ2 unknown,
n1 or n2 < 30
 σ1 and σ2 unknown, large samples

Population means,
independent The test statistic for
samples μ1 – μ2 is:

σ1 and σ2 known
z
 x 1 
 x 2   μ1  μ2 
σ1 and σ2 unknown,
n1 and n2  30
* s

1
2
s2
2

n1 n2
σ1 and σ2 unknown,
n1 or n2 < 30
 σ1 and σ2 unknown, small samples

The test statistic for

Population means,
independent μ1 – μ2 is:

 
samples
x 1  x 2   μ1  μ 2 
σ1 and σ2 known
t
1 1
sp 
σ1 and σ2 unknown, n1 n 2
n1 and n2  30
Where t/2 has (n1 + n2 – 2) d.f.,

σ1 and σ2 unknown,
n1 or n2 < 30
* and
sp 
 n1  1 s12   n2  1 s2 2
n1  n2  2
 Hypothesis tests for μ1 – μ2

Two Population Means, Independent Samples

Lower tail test: Upper tail test: Two-tailed test:
H0: μ1 – μ2  0 H0: μ1 – μ2 ≤ 0 H0: μ1 – μ2 = 0
HA: μ1 – μ2 < 0 HA: μ1 – μ2 > 0 HA: μ1 – μ2 ≠ 0

  /2 /2

-z z -z/2 z/2

Reject H0 if z < -z Reject H0 if z > z Reject H0 if z < -z/2
 or z > z/2
 Pooled sp t Test: Example

You’re a financial analyst for a brokerage firm. Is there a

difference in dividend yield between stocks listed on the
NYSE & NASDAQ? You collect the following data:
NYSE NASDAQ
Number 21 25
Sample mean 3.27 2.53
Sample std dev 1.30 1.16

Assuming equal variances, is

there a difference in average
yield ( = 0.05)?
 Calculating the Test Statistic
The test statistic is:

t z
 x 1 
 x 2   μ1  μ2   3.27  2.53   0
  2.040
1 1 1 1
sp  1.2256 
n1 n2 21 25

sp 
 n1  1 s12   n2  1 s2 2 
 21  11.30 2   25  11.16 2  1.2256
n1  n2  2 21  25  2
 Solution
Reject H0 Reject H0
H0: μ1 - μ2 = 0 i.e. (μ1 = μ2)
HA: μ1 - μ2 ≠ 0 i.e. (μ1 ≠ μ2)
.025 .025
 = 0.05
df = 21 + 25 - 2 = 44 -2.0154 0 2.0154 t
Critical Values: t = ± 2.0154
2.040
Test Statistic: Decision:
3.27  2.53 Reject H0 at  = 0.05
z  2.040
1 1
1.2256  Conclusion:
21 25 There is evidence of a
difference in means.
 Hypothesis Testing for
Paired Samples

The test statistic for d is

Paired
samples
d  μd
t
sd
n
n is the
number n
of pairs
in the
Where t/2 has n - 1 d.f.  i
(d  d) 2

paired and sd is: sd  i 1

sample n 1
 Hypothesis Testing for
Paired Samples
(continued)
Paired Samples

Lower tail test: Upper tail test: Two-tailed test:

H0: μd  0 H0: μd ≤ 0 H0: μd = 0

HA: μd < 0 HA: μd > 0 HA: μd ≠ 0

  /2 /2

-t t -t/2 t/2

Reject H0 if t < -t Reject H0 if t > t Reject H0 if t < -t
 or t > t
Where t has n - 1 d.f.
 Paired Samples Example
 Assume you send your salespeople to a “customer
service” training workshop. Is the training effective?
You collect the following data:

Number of Complaints: (2) - (1)  di

Salesperson Before (1) After (2) Difference, di d = n
C.B. 6 4 - 2 = -4.2
T.F. 20 6 -14
M.H. 3 2 - 1
R.K.
M.O.
0
4
0
0
0
- 4 sd 
 i
(d  d) 2

-21
n 1
 5.67
 Paired Samples: Solution
 Has the training made a difference in the number of
complaints (at the 0.01 level)?
Reject Reject
H0: μd = 0
HA: μd  0 /2
/2
 = .01 d = - 4.2 - 4.604 4.604
- 1.66
Critical Value = ± 4.604
d.f. = n - 1 = 4 Decision: Do not reject H0
(t stat is not in the reject region)
Test Statistic:
Conclusion: There is not a
d  μd  4.2  0
t   1.66 significant change in the
sd / n 5.67/ 5 number of complaints.
 Two Population Proportions

Goal: Form a confidence interval for

Population or test a hypothesis about the
proportions difference between two population
proportions, p1 – p2
Assumptions:
n1p1  5 , n1(1-p1)  5
n2p2  5 , n2(1-p2)  5

The point estimate for

the difference is p 1 – p2
 Confidence Interval for
Two Population Proportions

Population The confidence interval for

proportions
p1 – p2 is:

p 1 
 p 2  z /2
p1(1  p1 ) p 2 (1  p 2 )
n1

n2
 Hypothesis Tests for
Two Population Proportions

Population proportions

Lower tail test: Upper tail test: Two-tailed test:

H0: p1  p2 H0: p1 ≤ p2 H0: p1 = p2

HA: p1 < p2 HA: p1 > p2 HA: p1 ≠ p2
i.e., i.e., i.e.,
H0: p1 – p2  0 H0: p1 – p2 ≤ 0 H0: p1 – p2 = 0
HA: p1 – p2 < 0 HA: p1 – p2 > 0 HA: p1 – p2 ≠ 0
 Two Population Proportions
Since we begin by assuming the null
hypothesis is true, we assume p1 = p2
Population
proportions and pool the two p estimates
The pooled estimate for the
overall proportion is:

n1p1  n2 p 2 x1  x 2
p 
n1  n2 n1  n2
where x1 and x2 are the numbers from
samples 1 and 2 with the characteristic of interest
 Two Population Proportions
(continued)

Population The test statistic for

proportions p1 – p2 is:

z
 p1 
 p 2   p1  p 2 
1 1
p (1  p)   
 n1 n2 
 Hypothesis Tests for
Two Population Proportions
Population proportions
Lower tail test: Upper tail test: Two-tailed test:
H0: p1 – p2  0 H0: p1 – p2 ≤ 0 H0: p1 – p2 = 0
HA: p1 – p2 < 0 HA: p1 – p2 > 0 HA: p1 – p2 ≠ 0

  /2 /2

-z z -z/2 z/2

Reject H0 if z < -z Reject H0 if z > z Reject H0 if z < -z
 or z > z
 Example:
Two population Proportions

Is there a significant difference between the

proportion of men and the proportion of
women who will vote Yes on Proposition A?

 In a random sample, 36 of 72 men and 31 of

50 women indicated they would vote Yes

 Test at the .05 level of significance

 Example:
Two population Proportions
(continued)
 The hypothesis test is:
H0: p1 – p2 = 0 (the two proportions are equal)
HA: p1 – p2 ≠ 0 (there is a significant difference between proportions)
 The sample proportions are:
 Men: p1 = 36/72 = .50
 Women: p2 = 31/50 = .62
 The pooled estimate for the overall proportion is:
x1  x 2 36  31 67
p    .549
n1  n2 72  50 122
 Example:
Two population Proportions
(continued)
Reject H0 Reject H0

The test statistic for p1 – p2 is:

z
p1 
 p 2   p1  p 2 
.025 .025

1 1
p (1  p)    -1.96 1.96
 n1 n2  -1.31


 .50  .62   0   1.31
 1 1  Decision: Do not reject H0
.549 (1  .549)   
 72 50  Conclusion: There is not
significant evidence of a
Critical Values = ±1.96
For  = .05 difference in proportions
who will vote yes between
men and women.
 Chapter Summary
 Compared two independent samples
 Formed confidence intervals for the differences between two
means
 Performed Z test for the differences in two means
 Performed t test for the differences in two means
 Compared two related samples (paired samples)
 Formed confidence intervals for the paired difference
 Performed paired sample t tests for the mean difference
 Compared two population proportions
 Formed confidence intervals for the difference between two
population proportions
 Performed Z-test for two population proportions
 Hypothesis Tests for
One and Two Population Variances
Course 3
Industrial Engineering Department
Sepuluh Nopember Institute of Technology
Indonesia 2008
 Chapter Goals

After completing this chapter, you should be

able to:
 Formulate and complete hypothesis tests for a single
population variance
 Find critical chi-square distribution values from the chi-
square table
 Formulate and complete hypothesis tests for the
difference between two population variances
 Use the F table to find critical F values
 Hypothesis Tests for Variances

Hypothesis Tests
for Variances

Tests for a Single Tests for Two

Population Variances Population Variances

Chi-Square test statistic F test statistic

 Single Population

Hypothesis Tests for Variances

Tests for a Single * H0: σ2 = σ02

Two tailed test
Population Variances HA: σ2 ≠ σ02
H0: σ2  σ02
Lower tail test
HA: σ2 < σ02
Chi-Square test statistic
H0: σ2 ≤ σ02
Upper tail test
HA: σ2 > σ02
 Chi-Square Test Statistic

Hypothesis Tests for Variances

The chi-squared test statistic for

a Single Population Variance is:
Tests for a Single
Population Variances (n  1)s 2
 2
2
σ
Chi-Square test statistic * where
2 = standardized chi-square variable
n = sample size
s2 = sample variance
σ2 = hypothesized variance
 The Chi-square Distribution
 The chi-square distribution is a family of
distributions, depending on degrees of freedom:
 d.f. = n - 1

0 4 8 12 16 20 24 28 2 0 4 8 12 16 20 24 28 2 0 4 8 12 16 20 24 28 2

d.f. = 1 d.f. = 5 d.f. = 15

 Finding the Critical Value

 The critical value,  2

 , is found from the

chi-square table
Upper tail test:
H0: σ2 ≤ σ02
HA: σ2 > σ02


2
Do not reject H0 Reject H0
 2

 Example
 A commercial freezer must hold the selected
temperature with little variation. Specifications call
for a standard deviation of no more than 4 degrees
(or variance of 16 degrees2). A sample of 16
freezers is tested and
yields a sample variance
of s2 = 24. Test to see
whether the standard
deviation specification
is exceeded. Use
 = .05
 Finding the Critical Value
 The the chi-square table to find the critical value:
2 = 24.9958 ( = .05 and 16 – 1 = 15 d.f.)
The test statistic is:
(n  1)s (16  1)24
2
 
2
2
  22.5
σ 16
Since 22.5 < 24.9958,
do not reject H0  = .05
There is not significant
evidence at the  = .05 level 2
that the standard deviation Do not reject H0 2 Reject H0
specification is exceeded 
= 24.9958
 Lower Tail or Two Tailed
Chi-square Tests

Lower tail test: Two tail test:

H0: σ2  σ02 H0: σ2 = σ02
HA: σ2 < σ02 HA: σ2 ≠ σ02

 /2
/2

2 2
Reject Do not reject H0 Reject Do not Reject
 2
1-
reject H0
21-/2 2/2
 F Test for Difference in Two
Population Variances
Hypothesis Tests for Variances

H0: σ12 – σ22 = 0

Two tailed test
* Tests for Two
HA: σ12 – σ22 ≠ 0 Population Variances

H0: σ12 – σ22  0 Lower tail test

HA: σ12 – σ22 < 0 F test statistic

H0: σ12 – σ22 ≤ 0 Upper tail test

HA: σ12 – σ22 > 0
 F Test for Difference in Two
Population Variances
Hypothesis Tests for Variances
The F test statistic is:
2
(Place the
s Tests for Two
larger sample
variance in the F 1
2 Population Variances
numerator)
s 2

s12 = Variance of Sample 1

* F test statistic
n1 - 1 = numerator degrees of freedom

s22 = Variance of Sample 2

n2 - 1 = denominator degrees of freedom
 The F Distribution

 The F critical value is found from the F table

 The are two appropriate degrees of freedom:
numerator and denominator
s12
F 2 where df1 = n1 – 1 ; df2 = n2 – 1
s2
 In the F table,
 numerator degrees of freedom determine the row
 denominator degrees of freedom determine the column
 Finding the Critical Value
H0: σ12 – σ22  0 H0 : σ12 – σ 22 = 0
HA: σ12 – σ22 < 0 HA: σ12 – σ22 ≠ 0
H0: σ12 – σ22 ≤ 0
HA: σ12 – σ22 > 0
 /2

0 F 0 F
Do not Reject H0 Do not Reject H0
reject H0 F reject H0 F/2
 rejection region  rejection region for
for a one-tail test is a two-tailed test is

s12 s12
F  2  F F  2  F / 2
s2 s2
(when the larger sample variance in the numerator)
 F Test: An Example

You are a financial analyst for a brokerage firm. You

want to compare dividend yields between stocks listed on
the NYSE & NASDAQ. You collect the following data:
NYSE NASDAQ
Number 21 25
Mean 3.27 2.53
Std dev 1.30 1.16

Is there a difference in the

variances between the NYSE
& NASDAQ at the  = 0.05 level?
 F Test: Example Solution
 Form the hypothesis test:
H0: σ21 – σ22 = 0 (there is no difference between variances)
HA: σ21 – σ22 ≠ 0 (there is a difference between variances)

 Find the F critical value for  = .05:

 Numerator:

 df1 = n1 – 1 = 21 – 1 = 20
 Denominator:

 df2 = n2 – 1 = 25 – 1 = 24

F.05/2, 20, 24 = 2.327

 F Test: Example Solution
(continued)

 The test statistic is: H0 : σ12 – σ 22 = 0

HA: σ12 – σ22 ≠ 0
s12 1.30 2
F 2  2
 1.256
s2 1.16
/2 = .025

0
 F = 1.256 is not greater than Do not Reject H0
reject H0 F/2
the critical F value of 2.327, so
=2.327
we do not reject H0

 Conclusion: There is no evidence of a

difference in variances at  = .05
 Chapter Summary

 Performed chi-square tests for the variance

 Used the chi-square table to find chi-square
critical values
 Performed F tests for the difference between two
population variances
 Used the F table to find F critical values