Probability and Statistics

Statistical Inference:
Statistical inference are the conclusions made
about the unknown value of the parameter of a
population using limited information
contained in an observed sample taken from it
at random.
Statistical inference is divided into two major
areas
1)Estimation of parameters 2)Testing of Hypothesis
 Hypothesis Testing

Hypothesis Testing: can be used to

determine whether a statement about
the value of a population parameter
should or should not be rejected.
The null hypothesis, denoted by H0 , is a
tentative assumption about a population
parameter.

The alternative hypothesis, denoted by Ha, is

the opposite of what is stated in the null
hypothesis.

The hypothesis testing procedure uses data

from a sample to test the two competing
statements indicated by H0 and Ha.
 Developing Null and Alternative
Hypotheses
Alternative Hypothesis as a Research Hypothesis
Example#1:
A new teaching method is developed that is believed to be
better than the current method.

Alternative Hypothesis:
The new teaching method is better.

Null Hypothesis:
The new method is no better than the old method.
 Developing Null and Alternative
Hypotheses
Alternative Hypothesis as a Research Hypothesis
Example#2:
A new sales force bonus plan is developed in an attempt
to increase sales.

Alternative Hypothesis:
The new bonus plan will increase sales.

Null Hypothesis:
The new bonus plan will not increase sales.
 Developing Null and Alternative
Hypotheses
Alternative Hypothesis as a Research Hypothesis
Example#3:
A new drug is developed with the goal of lowering blood
pressure more than the existing drug.

Alternative Hypothesis:
The new drug lowers blood pressure more than the existing
drug.

Null Hypothesis:
The new drug does not lower blood pressure more than the
existing drug.
 Summary of Forms for Null and Alternative
Hypotheses
 The equality part of the hypotheses always appears
in the null hypothesis.
 In general, a hypothesis test about the value of a
population mean must take one of the following
three forms (where is the hypothesized value of the
population mean).
 Sign of equality always be in Null hypothesis.
≥ ≤ =
< > ≠

One-tailed One-tailed Two-tailed

(lower-tail) (upper-tail)
 Steps of Hypothesis Testing

Step 1. Develop the null and alternative

hypotheses.
Step 2. Specify the level of significance a.
Step 3. Collect the sample data and compute the
value of the test statistic.
Step 4. Use the level of significance a to
determine the critical value and the rejection rule.
Step 5. Use the value of the test statistic and the
rejection rule to determine whether to reject H0.
Step 6. Conclusion.
 Hypothesis Testing
One Tail Hypothesis Testing: Following two forms
are considered to be appropriate for one tail test:

Lower Tail Test Upper tail Test

H0: μ ≥ μ0 H0: μ ≤ μ0

Ha: μ < μ0 Ha: μ > μ0

 Hypothesis Testing
Example 1: The label on a large can of Nestle coffee states
that the can contains 3 pounds of coffee. Punjab Food
Authority consider as long as the population mean filling
weight is at least 3 pounds per can, the rights of consumers
will be protected. Thus, the Punjab Food Authority
interprets the label information on a can of coffee as a
claim by Nestle that the population mean filling weight is
at least 3 pounds per can. How the Punjab Food Authority
can check the claim of Nestle?
Suppose a sample of 36 cans of coffee is selected and the
sample mean ‘= 2.92 pounds and standard deviation of
population 0.18 pounds. (Level of Significance 1%).
 Hypothesis Testing
Step 1: Define an appropriate hypothesis Test.
(Lower Tail or Upper Tail Test)
Lower Tail Test is appropriate because right of
consumer will be protected if the filling is equal or
greater than 3 pounds. So

: μ ≥ 3 (as we know from question that = 3).

:μ<3
Step 2: Define Level of Significance: we set a level
of significant equal to 1%. It mean α = 0.01.

Step 3. Test statistic

Z=

= = 0.03

Z=

Z = -2.67
Step 4. Use the level of significance a to
determine the critical value and the rejection
rule.

For lower tail test, we have to find the table

value of Z from negative table. It is similar as
we find it in normal distribution. = = -2.33.

Step 5. Use the value of the test statistic and the

rejection rule to determine whether to reject H0.
we will reject H0 if <
-2.67 < -2.33
Step 6: Conclusion:

-2.67 < -2.33 (larger value with negative sign

is smaller in reality. As ‘-2’ is smaller than ‘-
1’.
So, reject , it implies that population mean is
less than 3. Right of the consumers are not
protected.

(Note: also called value of test statistic and

also called critical value).
 Hypothesis Testing
One Tail Hypothesis Testing: Following two forms
are considered to be appropriate for one tail test:

Lower Tail Test Upper tail Test

H0: μ ≥ μ0 H0: μ ≤ μ0

Ha: μ < μ0 Ha: μ > μ0

Lecturer: Muhammad Zakria Awan 16

 Example
A teacher claims that the mean score of
students in his class is greater than 82 with a
standard deviation of 20. If a sample of 81
students was selected with a mean score of 90
then check if there is enough evidence to
support this claim at a 0.05 significance level.

Lecturer: Muhammad Zakria Awan 17

 Solution

Lecturer: Muhammad Zakria Awan 18

 Solution
Step 4. Use the level of significance a to determine
the critical value and the rejection rule.

From the z table the critical value at =

From the z table the critical value at = 1.645

Step 5. Use the value of the test statistic and the rejection rule to
determine whether to reject H0.
we will reject H0 if >
3.6 > 1.645
Lecturer: Muhammad Zakria Awan 19
 Solution
As 3.6 > 1.645 thus, the null hypothesis is
rejected and it is concluded that there is
enough evidence to support the teacher's
claim.

Lecturer: Muhammad Zakria Awan 20