MSc in Management

SMM882 Quantitative Methods for Business

9th August 2011

14:00-16:30

Instructions to students:
Please answer ALL FOUR questions and indicate clearly which answer belongs to which
question. Please motivate all your answers by using appropriate explanations; an answer (e.g.,
the p-value is 0.13), even if it is correct, will be awarded zero marks without an explanation of
how you obtained the answer or why you think it is correct.
This examination paper consists of 13 printed pages: the title page, the examination questions (6
pages), a formula sheet (Appendix 1; 1 page), the standard normal distribution table (Appendix
2; 2 pages), and the t distribution table (Appendix 3; 3 pages).
Materials:
Number of answer booklets to be provided: 1
Calculator types that are permitted: Casio FX-83 GT+, Casio FX-85 GT+, Casio FX-83 MS,
Casio FX-83 ES, Casio FX-85 MS, and Casio FX-85 ES. All other calculators are strictly
prohibited.
Dictionaries are not permitted.
The examination paper may NOT be removed from the examination room.

Examiner: Dr Hans TW Frankort

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Question 1 (25 marks)

For your dissertation, you obtained data on the number of calls answered by ten random call
center employees during a typical day at work. The results are as follows:

16

25

23

16

14

12

15

29

28

26

a. Give the mean, median, and mode for these ten data points.
(5 marks)
The sample standard deviation is (approximately) 6.42.
b. Give the 90% confidence interval for the number of calls answered by these ten
employees.
(5 marks)
c. What does this confidence interval tell us about the average number of calls
answered by employees within the overall population of call center employees?
(5 marks)
You would like to draw a random sample of employees so that the probability that the sample
mean is within plus or minus one unit of the population mean equals 0.99.
d. What is the minimum sample size that will satisfy this criterion? Assume that the
population standard deviation equals 5.46.
(5 marks)
Eventually, you obtained data on the number of calls answered during a typical day at work by
all 7,459 call center employees worldwide. You find that the mean number of calls answered
during a typical day at work is significantly smaller than the median. The median is in turn
smaller than the mode.
e. Does the number of calls answered by these call center employees during a typical
day at work follow a normal distribution? If not, what is the shape of the distribution?
(5 marks)

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Question 2 (25 marks)

A global construction firm is interested in understanding the age profile of its construction
employees visiting a General Practitioner for back injuries. The responsible health and safety
executive expects that the average age of such employees is at least 35 years.
a. Formulate the null and alternative hypotheses that can be used to test this
expectation.
(5 marks)
He subsequently draws a random sample of 50 employees visiting a General Practitioner for
back injuries and he obtains a sample mean age of 35.78 and a sample standard deviation of
4.6.
b. Using the p-value to assess significance against = 0.05, should the null hypothesis
be rejected?
(5 marks)
c. If you drew a smaller sample, would you be more or less likely to reject the null
hypothesis?
(5 marks)
d. Using a 90% confidence interval to conduct the hypothesis test, should the null
hypothesis be rejected?
(5 marks)
e. If became larger, would you be more or less likely to reject the null hypothesis?
(5 marks)

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Question 3 (20 marks)

You work as process optimization executive for Grapple, a software development firm, and you
have decided to analyze the time (in days) it takes to develop a new app for Grapples
youPhone. Based on historical data, the developers provide you with some information. For
example, the time T that it takes to develop a new app will follow a normal distribution with
unknown mean and standard deviation. And 60% of all apps take at least 5 days to develop,
while 60% of all apps take at most 8 days to develop.
a. What is the average time T (in days) that it takes to develop a new app? And what is
its standard deviation?
(5 marks)
Grapple wishes to incentivize its developers to speed up the app development process. To this
end, it decides that the developers involved in the apps that took at most 4 days to develop will
be eligible for a financial reward. And the developers involved in the apps that took more than 10
days to develop will have to perform a process review, highlighting where improvements could
be made. Grapple produced 10,000 apps this year.
b. What percentage of all apps will be finished within 4 days? And how many apps will
have to undergo a process review this year?
(5 marks)
You decide to investigate the empirical validity of the average time T (in days) that it takes to
develop a new app, which you tentatively obtained under (a). To do so, you draw a random
sample of 60 apps and observe that the average time it takes to develop a new app is 6.9 days.
c. Using the p-value to assess significance against = 0.01, does the appropriate test
statistic suggest that the null hypothesis should be rejected?
(5 marks)
d. How would your conclusion change if you used a 95% confidence interval instead?
Please give the 95% confidence interval to illustrate your answer.
(5 marks)

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Question 4 (30 marks)

For business schools, it is important to understand how study behavior affects students exam
marks. For example, Guess Business School regularly analyzes the relationships between exam
marks and a range of study behaviors. Recently, it gathered data on the marks obtained by 52
students in the resit exam of one of its core modules, and on two study behaviors plus students
marks in the original exam. Table 1 shows the variables created to analyze these data.
Table 1. The four variables as used in the analysis
Variable

Explanation

Resit_mark

Resit mark of a student, on a scale from 0 to 100

Tutorials

0 (student attended no tutorials) or

1 (student attended at least one tutorial)

Email_office

0 (student did not ask questions by email / in an office meeting) or

1 (student asked questions by email / in an office meeting)

Original_mark

Original mark of a student, on a scale from 0 to 49

Table 2 shows descriptive statistics for these four variables, plus the correlations among them.
Table 2. Means, standard deviations, and correlations
Standard
Variable
Mean
1.
2.
deviation
61.96
15.50
1.00
1. Resit_mark
0.52
0.50
0.43
1.00
2. Tutorials
0.44
0.50
0.40
0.24
3. Email_office
23.46
11.54
0.54
0.56
4. Original_mark

3.

1.00
0.01

a. How many students attended at least one tutorial? And how many students asked
questions by email or in an office meeting?
(5 marks)
b. Students with a lower Original_mark might be more likely to attend tutorials and ask
questions by email or in an office meeting. Does Table 2 support this expectation?
(5 marks)
To explore in more depth the possible determinants of students Resit_mark, Guess Business
School estimated two regression equations using the least squares method as follows:
(1) Resit_mark = 0 + 1(Tutorials) + 2(Email_office)
(2) Resit_mark = 0 + 1(Tutorials) + 2(Email_office) + 3(Original_mark)
Table 3 shows the results of the OLS estimation of equation (1).
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Table 3. Estimated regression equation of Resit_mark versus Tutorials and Email_office

Adjusted R-square
0.25
Dependent variable:

Resit_mark

F(2, 49)

Sig.
9.39

0.000

52.01
10.89
9.71

(constant)
Tutorials
Email_office

Std. Error
2.96
3.84
3.87

c. Using 95% confidence intervals, interpret 1 and 2 in this estimated regression

equation.
(5 marks)
Guess Business School would like to use the results in Table 3 to obtain the predicted
Resit_mark for four categories of students:
i.
ii.
iii.
iv.

Students that neither attended tutorials nor asked questions by email / in an office meeting
Students that attended tutorials, but did not ask questions by email / in an office meeting
Students that did not attend tutorials, but did ask questions by email / in an office meeting
Students that both attended tutorials and asked questions by email / in an office meeting
d. Using Table 3, give the predicted Resit_mark for all four student categories.
(5 marks)

Table 4 shows the results of the OLS estimation of equation (2).

Table 4. Estimated regression equation of Resit_mark versus Tutorials, Email_office, and
Original_mark
Adjusted R-square
0.41
Dependent variable:

Resit_mark

F(3, 48)

Sig.
12.98

(constant)
Tutorials
Email_office
Original_mark

0.000

40.00
1.73
11.66
0.68
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Std. Error
4.07
4.14
3.45
0.18

e. Based on the information in Table 4, what are the t-values for the intercept
(constant), Tutorials, Email_office, and Original_mark? Which of the four are
significant at or beyond = 0.01?
(5 marks)
f.

Again give the predicted Resit_mark for student categories i, ii, iii, and iv, but now
base your answer on the estimates as shown in Table 4. Assume that for all four
categories, the Original_mark equals the mean Original_mark.
(5 marks)

****** END OF EXAMINATION PAPER ******

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Appendix 1: Formula Sheet

E ( X ) = xp(x)

nN

s XY =

rXY =

z=

(x

x )( y i y )

XY =

(x
=

X =

z=

x)

(x

X )( y i Y )
N

XY
XY

x 0

t n p 1 =

x 0

s= s

N n s
N 1 n

x z / 2 X

adjR 2 = 1 (1 R 2 )

X =

N n
N 1 n

VIF ( X j ) =

1
1 R 2j

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bi 0

(x
=

X =

x t n p1, / 2 X

n 1
n p 1

t n p 1 =

n 1

IQR = Q3 Q1

XY =

n 1

s XY
s X sY

Var ( X ) = ( x ) p ( x)

s
n

= 2

X =

Appendix 2: Cumulative Probabilities for the Standard Normal Distribution (2 pages!)

Table continued on p. 10

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10 out of 13

Appendix 3: t Distribution (3 pages!)

Table continued on p. 12
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Table continued on p. 13

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