Business Statistics, 4e: by Ken Black

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.
10-1
Business Statistics, 4e
by Ken Black

Chapter 10

Statistical
Inferences about
Two Populations
Discrete Distributions
10-2
Learning Objectives
Test hypotheses and construct confidence
intervals about the difference in two
population means using the Z statistic.
population means using the t statistic.
10-3
Learning Objectives
related populations.
intervals about the differences in two
population proportions.
intervals about two population variances.

10-4
Sampling Distribution of the
Difference Between Two Sample
Means
1
1
X
n
x
=

Population 1
Population 2
2
2
X
n
x
=

1 2 X X
1
X
2
X
1 2
X X
10-5
Sampling Distribution of the
Difference between Two Sample
Means
1 2 X X
1 2 X X
1 2
1
2
1
2
2
2
X X
n n
= +
o
o o
1 2
1 2
X X
=

10-6

Z Formula for the Difference
in Two Sample Means
( )
( )
Z
X X
n n
=

+
1 2
1 2
1
2
1
2
2
2

o o
n
1
> 30, n
2
> 30, and Independent Samples
10-7
Hypothesis Testing for Differences Between
Means: The Wage Example (part 1)
1 2 X X
Rejection
Region
Non Rejection Region
Critical Values
Rejection
Region
1 2
X X
025 .
2
=
o
025 .
2
=
o
H
H
o
a
:
:
1 2
1 2
0
0

=
=
10-8
Hypothesis Testing for Differences Between
. H reject not do 1.96, Z 1.96 - If
. H reject 1.96, > or Z 1.96 - < Z If
o
o
s s
Rejection
Region
Critical Values
Rejection
Region
96 . 1 =
Zc
0
96 . 1 =
Zc
025 .
2
=
o
025 .
2
=
o
10-9
Hypothesis Testing for Differences
Between Means: The Wage Example
(part 3)
Advertising Managers
74.256 57.791 71.115
96.234 65.145 67.574
89.807 96.767 59.621
93.261 77.242 62.483
103.030 67.056 69.319
74.195 64.276 35.394
75.932 74.194 86.741
80.742 65.360 57.351
39.672 73.904
45.652 54.270
93.083 59.045
63.384 68.508
164 . 264
253 . 16
700 . 70
32
2
1
1
1
1
=
=
=
=
S
S
X
n
411 . 166
900 . 12
187 . 62
34
2
2
2
2
2
=
=
=
=
S
S
X
n
Auditing Managers
69.962 77.136 43.649
55.052 66.035 63.369
57.828 54.335 59.676
63.362 42.494 54.449
37.194 83.849 46.394
99.198 67.160 71.804
61.254 37.386 72.401
73.065 59.505 56.470
48.036 72.790 67.814
60.053 71.351 71.492
66.359 58.653
61.261 63.508
10-10
Hypothesis Testing for Differences between
( ) ( )
( ) ( )
35 . 2
34
411 . 166
32
253 . 256
0 187 . 62 700 . 70
2
2
2
1
2
1
2 1
2 1
=
+

=
+

=
n
S
n
S
X X
Z

. H reject not do 1.96, Z 1.96 - If
. H reject 1.96, > or Z 1.96 - < Z If
o
o
s s
. H reject 1.96, > 2.35 = Z Since o
Rejection
Region
Critical Values
Rejection
Region
c
Z
= 2 33 .
025 .
2
=
o
0
c
Z
= 2 33 .
025 .
2
=
o
10-11
Difference Between Means: Using Excel
z-Test: Two Sample for Means
Adv Mgr Auditing Mgr
Mean 70.7001 62.187
Known Variance 264.164 166.411
Observations 32 34
Hypothesized Mean Difference 0
z 2.35
P(Z<=z) one-tail 0.0094
z Critical one-tail 1.64
P(Z<=z) two-tail 0.0189
z Critical two-tail 1.960
10-12
Demonstration Problem 10.1 (part 1)
H
H
o
a
:
:
1 2
1 2
0
0

=
<
Critical Value
Rejection
Region
o =.001
c Z
= 3 08 .
0
10-13
Demonstration Problem 10.1 (part 2)
Critical Value
Rejection
Region
o =.001
c Z
= 3 08 .
0
If Z < - 3.08, reject H .
If Z , do not reject H .
o
o > 308 .
( )
( )
( ) ( )
Z
X X
S
n
S
n
=

+
=

+
=
1 2
1 2
1
2
1
2
2
2
2 2
3352 5727 0
87 76
10 42
1100 1700

.
Since Z = -10.42 < - 3.08, reject H . o
Women
X
S
n
1
1
1
352
100
87
=
=
=
$3,
$1,
Men
X
S
n
2
2
2
727
700
76
=
=
=
$5,
$1,
10-14
Confidence Interval to Estimate
1
-
2
When
n
1
and n
2
are large and o
1
, o
2
are unknown
( ) ( )
1 2
1
2
1
2
2
2
1 2
1 2
1
2
1
2
2
2
X X
S
n
S
n
X X
S
n
S
n
Z Z + s s +
( ) ( )
Pr [ ] ob Z Z
X X
S
n
S
n
X X
S
n
S
n
1 2
1
2
1
2
2
2
1 2
1 2
1
2
1
2
2
2
1 + s s + = o
10-15
Demonstration Problem 10.2
( ) ( )
( ) ( )
1 2
1
2
1
2
2
2
1 2
1 2
1
2
1
2
2
2
2 2
1 2
2 2
1 2
2145 24 6 196
50 50
2145 24 6 196
50 50
4 42 188
346 299 346 299
X X
S
n
S
n
X X
S
n
S
n
Z Z + s s +
+ s s +
s s

. . . . . .
. .
. . . .
Re
.
.
gular
n
X
S
1
1
1
50
2145
346
=
=
=
Pr
.
.
emium
n
X
S
2
2
2
50
24 6
2 99
=
=
=
95% Confidence Z = 1.96
Pr [ . . ] . ob s s = 4 42 188 095
1 2

10-16
The t Test for Differences
in Population Means
Each of the two populations is normally
distributed.
The two samples are independent.
At least one of the samples is small, n < 30.
The values of the population variances are
unknown.
The variances of the two populations are equal.
o
1
2
= o
2
2
10-17
t Formula to Test the Difference in
Means Assuming o
1
2
= o
2
2
( )
( )
( ) ( )
t
X X
S n S n
n n n n
=

+
+
+
1 2
1 2
1
2
1 2
2
2
1 2 1 2
1 1
2
1 1

10-18
Hernandez Manufacturing Company
(part 1)
H
H
o
a
:
:
1 2
1 2
0
0

=
=
If t < - 2.060 or t > 2.060, reject H .
If - 2.060 t 2.060, do not reject H .
o
o s s
o
2
05
2
025
2 15 12 2 25
2 060
1 2
0 25 25
= =
= + = =
=
.
.
.
. ,
df
n n
t
Rejection
Region
Critical Values
Rejection
Region
o
2
025 =.
0
. ,
.
025 25
2 060
t
=
o
2
025 =.
. ,
.
025 25
2 060
t
=
10-19
(part 2)
Training Method A
56 51 45
47 52 43
42 53 52
50 42 48
47 44 44
Training Method B
59
52
53
54
57
56
55
64
53
65
53
57
1
1
1
2
15
47 73
19 495
n
X
S
=
=
=
.
.
2
2
2
2
12
565
18 273
n
X
S
=
=
=
.
.
10-20
(part 3)
Since t = -5.20 < -2.060, reject H . o
( )
( )
( ) ( )
( )
( )( ) ( )( )
t
X X
S n S n
n n n n
=

+
+
+
=

+
+
+
=
1 2
1 2
1
2
1 2
2
2
1 2 1 2
1 1
2
1 1
47 73 5650 0
19 495 14 18 273 11
15 12 2
1
15
1
12
520

. .
. .
.
If t < - 2.060 or t > 2.060, reject H .
If - 2.060 t 2.060, do not reject H .
o
o s s
10-21
MINITAB Output for Hernandez
New-Employee Training Problem
Twosample T for method A vs method B

N Mean StDev SE Mean
method A 15 47.73 4.42 1.1
method B 12 56.60 4.27 1.2

95% C.I. for mu method A - mu method B: (-12.2, -5.3)

T-Test mu method A = mu method B (vs not =): T = -5.20
P=0.0000 DF = 25
Both use Pooled StDev = 4.35
10-22
EXCEL Output for Hernandez
New-Employee Training Problem
t-Test: Two-Sample Assuming Equal Variances
Variable 1 Variable 2
Mean 4 7.73 56.5
Variance 19.495 18.27
Observations 15 12
Pooled Variance 18.957
df 25
t Stat - 5.20
P(T<=t) one-tail 1.12E-05
t Critical one-tail 1.71
P(T<=t) two-tail 2.23E-05
t Critical two-tail 2.06
10-23
Confidence Interval to Estimate
1
-
2
with Small Samples and o
1
2
= o
2
2
( )
( ) ( )
1 2
1
2
1 2
2
2
1 2 1 2
1 2
1 1
2
1 1
2
X X
S n S n
n n n n
n n
t
where df

+
+
+
= +
10-24
Dependent Samples
Before and After
Measurements on
the same
individual
Studies of twins
Studies of spouses
Individual
1
2
3
4
5
6
7
Before
32
11
21
17
30
38
14
After
39
15
35
13
41
39
22
10-25
Formulas for Dependent Samples
t
d D
n
df n
n
d
S
=

=
=
1
number of pairs
d = sample difference in pairs
D = mean population difference
= standard deviation of sample difference
d = mean sample difference
d
S
( )
( )
d
d
n
n
n
n
d
S
d d
d
d
=
=
2
2
2
1
1
10-26
P/E Ratios for Nine Randomly Selected
Companies
Company 2001 P/E Ratio 2002 P/E Ratio
1 8.9 12.7
2 38.1 45.4
3 43.0 10.0
4 34.0 27.2
5 34.5 22.8
6 15.2 24.1
7 20.3 32.3
8 19.9 40.1
9 61.9 106.5
10-27
Hypothesis Testing with Dependent
Samples: P/E Ratios for Nine Companies
H D
H D
o
a
:
:
=
=
0
0
. H reject not do 3.355, t 3.355 - If
. H reject 3.355, > or t 3.355 - < t If
o
o
s s
355 . 3
8 1 9 1
01 .
6 , 005 .
=
= = =
=
t
n df
o
Rejection
Region
Critical Value
0
355 . 3
11 , 01 .
=
t
o
2
005 =.
355 . 3
11 , 01 .
=
t
Rejection
Region
o
2
005 =.
10-28
Company
2001 P/E
Ratio
2002 P/E
Ratio d
1 8.9 12.7 -3.8
2 38.1 45.4 -7.3
3 43.0 10.0 33.0
4 34.0 27.2 6.8
5 34.5 22.8 11.7
6 15.2 24.1 -8.9
7 20.3 32.3 -12.0
8 19.9 40.1 -20.2
9 61.9 106.5 -44.6
10-29
70 . 0
9
599 . 21
0 033 . 5
599 . 21
033 . 5
=

=
=
=
t
d
S
d
o H reject not do , 355 3 70 . 0 355 3 . t = - . - Since s s
10-30
t-Test: Paired Two Sample for Means

2001 P/E
Ratio
2002 P/E
Ratio
Mean 30.64 35.68
Variance 268.1 837.5
Observations 9 9
Pearson Correlation 0.674
df 8
t Stat -0.7
P(T<=t) one-tail 0.252
t Critical one-tail 1.86
P(T<=t) two-tail 0.504
t Critical two-tail 2.306
10-31
Samples: Demonstration Problem 10.5
Individual
1
2
3
4
5
6
7
Before
32
11
21
17
30
38
14
After
39
15
35
13
41
39
22
d
-7
-4
-14
4
-11
-1
-8
10-32
H D
H D
o
a
:
:
s
>
0
0
. H reject not do -1.943, t If
. H reject 1.943, - t If
o
o
>
<
943 . 1
6 1 7 1
05 .
6 , 05 .
=
= = =
=
t
n df
o
Rejection
Region
Critical Value
0
943 . 1
6 , 05 .
=
t
05 . = o
10-33
54 . 2
7
0945 . 6
0 857 . 5
0945 . 6
857 . 5
=

=
=
=
t
d
S
d
o
c
H reject 1.943, - 2.54 - = t
t
= < Since
10-34
Confidence Intervals for Mean Difference
for Related Samples
1 =
+ s s
n df
n
t d D
n
t d
S S
d d
10-35
Difference in Number of New-House Sales
Realtor May 2001 May 2002 d
1 8 11 -3
2 19 30 -11
3 5 6 -1
4 9 13 -4
5 3 5 -2
6 0 4 -4
7 13 15 -2
8 11 17 -6
9 9 12 -3
10 5 12 -7
11 8 6 2
12 2 5 -3
13 11 10 1
14 14 22 -8
15 7 8 -1
16 12 15 -3
17 6 12 -6
18 10 10 0
27 . 3
39 . 3
=
=
S
d
d
10-36
Confidence Interval for Mean Difference
in Number of New-House Sales
16 . 1 62 . 5
23 . 2 39 . 3 23 . 2 39 . 3
18
27 . 3
898 . 2 39 . 3
18
27 . 3
898 . 2 39 . 3
898 . 2
17 1 18 1
17 , 005 .
s s
+ s s
+ s s
+ s s
=
= = =
D
D
D
n
t d D
n
t d
t
n df
S S
d d
10-37
Sampling Distribution of Differences
in Sample Proportions
For large samples
1.
2.
3. and
4. where q = 1 - p
the difference in sample proportions is normally distributed with
p
and
p
1
1
2
2
n
n
n
n
1
1
>
>
>
>
=
=

+

1
1
2
2
1 2
1
1
1
2
2
2
5
5
5
5
2
2
,
,
,

p
q
p
q
P P
P
Q
n
P
Q
n
p
p
o
10-38
Z Formula for the Difference
in Two Population Proportions
( )
( )
Z
p p
P P
P
Q
n
P
Q
n
p
p
=

+

=
=
=
=
=
=
=
=
1 2
1 2
1
1
1
2
2
2
1
2

proportion from sample 1

proportion from sample 2
size of sample 1
size of sample 2
proportion from population 1
proportion from population 2
1 -
1 -
1
2
1
2
1
1
2
2
n
n
P
P
Q
P
Q
P
10-39
Z Formula to Test the Difference
in Population Proportions
( )
( )
( )
Z
P Q
P
Q P
p p
P P
n n
X X
n n
n
p
n
p
n n
=

+
|
\
|
.
|
=
+
+
=
+
+
=
1 2
1 2
1 2
1 2
1 2
1
1
2
2
1 2
1 1
1

10-40
Testing the Difference in Population
Proportions (Demonstration Problem 10.6)
H
H
o
a
P P
P P
:
:
1 2
1 2
0
0
=
=
If Z < - 2.575 or Z > 2.575, reject H .
If - 2.575 Z 2.575, do not reject H .
o
o s s
o
2
01
2
005
2575
005
= =
=
.
.
.
.
Z
Rejection
Region
Critical Values
Rejection
Region
o
2
005 =.
0
c
Z
= 2 575 .
o
2
005 =.
c
Z
= 2 575 .
10-41
Testing the Difference in Population
Proportions (Demonstration Problem 10.6)
1
1
1
100
24
24
100
24
n
X
p
=
=
= = .
2
2
2
95
39
39
95
41
n
X
p
=
=
= = .
P
X X
n n
=
+
+
=
+
+
=
1 2
1 2
24 39
100 95
323 .
( )
( )
( )
( ) ( )
( )( )
Z
P Q
p p
P P
n n
=

+
|
\
|
.
|
=

+
|
\
|
.
|
=

=
1 2
1 2
1 2
1 1
24 41 0
323 677
1
100
1
95
17
067
2 54

. .
. .
.
.
.
Since - 2.575 Z = - 2.54 2.575, do not reject H . o s s
10-42
Confidence Interval to Estimate P
1
- P
2
( ) ( )
1 2
1 1
1
2 2
2
1 2
1 2
1 1
1
2 2
2

p p
p q
n
p q
n
P P
p p
p q
n
p q
n
Z Z + s s + +
10-43
Example Problem:
When do men shop
for groceries?
1
1
1
1 1
400
48
48
400
12
1 88
n
X
p
q p
=
=
= =
= =

.
.
2
2
2
2 2
480
187
187
480
39
1 61
n
X
p
q p
=
=
= =
= =

.
.
( ) ( )
( )
( )( ) ( )( )
( )
( )( ) ( )( )
1 2
1 1
1
2 2
2
1 2
1 2
1 1
1
2 2
2
1 2
1 2
1 2
1 2
12 39 2 33
12 88
400
39 61
480
12 39 2 33
12 88
400
39 61
480
27 064 27 064
334 206
334

. . .
. . . .
. . .
. . . .
. . . .
. .
Pr [ .
p p
p q
n
p q
n
P P
p p
p q
n
p q
n
P P
P P
P P
P P
Z Z
ob
+ s s + +
+ s s + +
s s +
s s
s s = . ] . 206 0 98
For a 98% level of confidence, Z = 2.33.
10-44
F Test for Two Population Variances
1
1
2 2
min
1 1
2
2
2
1
= =
= =
=
n
n
S
S
ator deno
numerator
df
df
F
u
u
10-45
F Distribution with v
1
= 10 and v
2
= 8
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.00 1.00 2.00 3.00 4.00 5.00 6.00
10-46
A Portion of the F Distribution Table
for o = 0.025
Numerator Degrees of Freedom
Denominator
Degrees of Freedom
. , , 025 9 11
F
1 2 3 4 5 6 7 8 9
1 647.79 799.48 864.15 899.60 921.83 937.11 948.20 956.64 963.28
2 38.51 39.00 39.17 39.25 39.30 39.33 39.36 39.37 39.39
3 17.44 16.04 15.44 15.10 14.88 14.73 14.62 14.54 14.47
4 12.22 10.65 9.98 9.60 9.36 9.20 9.07 8.98 8.90
5 10.01 8.43 7.76 7.39 7.15 6.98 6.85 6.76 6.68
6 8.81 7.26 6.60 6.23 5.99 5.82 5.70 5.60 5.52
7 8.07 6.54 5.89 5.52 5.29 5.12 4.99 4.90 4.82
8 7.57 6.06 5.42 5.05 4.82 4.65 4.53 4.43 4.36
9 7.21 5.71 5.08 4.72 4.48 4.32 4.20 4.10 4.03
10 6.94 5.46 4.83 4.47 4.24 4.07 3.95 3.85 3.78
11 6.72 5.26 4.63 4.28 4.04 3.88 3.76 3.66 3.59
12 6.55 5.10 4.47 4.12 3.89 3.73 3.61 3.51 3.44
10-47

Sheet Metal Example: Hypothesis Test for
Equality of Two Population Variances (Part 1)

H
H
o
a
:
:
1
2
2
2
1
2
2
2
o o
o o
=
=

.025,9,11
F
= 359 .
If
If
F < 0.28 or F > 3.59 reject H .
0.28 F do reject H .
o
o
,
. , s s 359
=
.975,11,9
.025,9,11
F
F
1
1
359
0 28
=
=
.
.
F
df
df
S
S
n
n
numerator
deno ator
=
= =
= =
1
2
2
2
1 1
2 2
1
1
u
u
min
o =
=
=
0 05
10
12
1
2
.
n
n
10-48
Sheet metal Manufacturer (Part 2)
Rejection Regions
Critical Values
. , ,
.
025 9 11
359
F
=
Non Rejection
Region
. , ,
.
975 11 9
0 28
F
=
If
If
F < 0.28 or F > 3.59 reject H .
0.28 F do reject H .
o
o
,
. , s s 359
10-49
Sheet Metal Example (Part 3)
Machine 1
22.3 21.8 22.2
21.8 21.9 21.6
22.3 22.4
21.6 22.5
Machine 2
22.0
22.1
21.8
21.9
22.2
22.0
21.7
21.9
22.0
22.1
21.9
22.1
1
1
2
10
01138
n
S
=
= .
2
2
2
12
0 0202
n
S
=
= .
F
S
S
= = =
1
2
2
2
01138
00202
563
.
.
.
. H reject 3.59, =
F
> 5.63 = F Since o
c

Business Statistics, 4e: by Ken Black

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Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

proportion from sample 1

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