1.

Big Bazar, a chain of 130 shopping malls, has been bought out by another larger
nationwide supermarket chain. Before the deal is finalized, the larger chain wants to have
some assurance that Big Bazar will be a consistent money maker. The larger chain has
decided to look at the financial records of 25 of the Big Bazar outlets. Big Bazar claims
that each outlets profits have an approximately normal distribution with the same mean
and a standard deviation of Rs. 40 million. If the Big Bazar management is correct, then
what is the probability that the sample mean for 25 outlets will fall within Rs. 30 million
of the actual mean?

2. Safal, a tea manufacturing company is interested in determining the consumption rate of

tea per household in Delhi. The management believes that yearly consumption per
household is normally distributed with an unknown mean and standard deviation of
1.50 kg.
a) If a sample of 25 household is taken to record their consumption of tea for one year,
what is the probability that the sample mean is within 500 g of the population mean?
b) How large a sample must be in order to be 98 percent certain that the sample mean is
within 500 g of the population mean?

3. In an effort to estimate the mean amount spent per customer for dinner at a city hotel,
data were collected for a sample of 49 customers. Assume a population standard
deviation of Rs. 25.
a) At 95 per cent confidence, what is the margin of error?
b) If the sample mean is Rs. 124, what is the 95 per cent confidence interval for the
population mean?

4. The quality control department of a wire manufacturing company periodically selects a

sample of wire specimens in order to test for breaking strengths. Past experience has
shown that the breaking strengths of a certain type of wire are normally distributed with
standard deviation of 200kg. A random sample of 64 specimens gave a mean of 6200 kg.
Determine a 95 per cent confidence interval for the mean breaking strength of the
population to suggest to the quality control supervisor.

5. A random sample of boots worn by 40 combat soldiers in a desert region showed an

average life of 1.08 years with a standard deviation of 0.05. Under the standard
conditions, the boots are known to have an average life of 1.28 years. Is there reason to
assert at a level of significance of 0.05 that use in the desert causes the mean life of such
boots to decrease?

6. The average breaking strength of steel rods is specified to be 18.5 thousand kg. For this a
sample of 14 rods was tested. The mean and standard deviation obtained were 17.85 and
1.955, respectively. Test the significance of the deviation.
7. An automobile tyre manufacturer claims that the average life of a particular grade of tyre
is more than 20,000 km when used under normal conditions. A random sample of 16
tyres was tested and a mean and standard deviation of 22,000 km and 5000 km,
respectively, were computed. Assuming the life of the tyres in kilometer to be
approximately normally distributed, decide whether the manufacturers claim is valid.

8. The electric bulbs of 10 random samples from a large consignment gave the following
data:

Item Life in 000 hours

1 4.2
2 4.6
3 3.9
4 4.1
5 5.2
6 3.8
7 3.9
8 4.3
9 4.4
10 5.6
Can we accept the hypothesis that the average lifetime of the bulbs is 4000 hours.

9. To test the significance of variation in the retail prices of a commodity in three principal
cities, Mumbai, Kolkata and Delhi, four shops were chosen at random in each city and
the prices who lack confidence in their mathematical ability observed in rupees were as
follows:

Mumbai 16 8 12 14
Kolkata 14 10 10 6
Delhi 4 10 8 8
Do the data indicate that the prices in the three cities are significantly different? (Use
=0.05)

10. A study investigated the perception of corporate ethical values among individuals
specializing in marketing. Using =0.05 and the following data (higher scores indicate
higher ethical values), test for significant differences in perception among three groups.

Marketing Manager Marketing Research Advertising

6 5 6
5 5 7
4 4 6
5 4 5
6 5 6
4 4 6
11. The following calculations have been made for prices of twelve stocks (x) at the Calcutta
Stock Exchange on a certain day along with the volume of sales in thousands of shares
(y). From these calculations find the regression equation of price of stocks on the volume
of sales of shares.

x=580, y= 370, xy=11494, x2=41658, y2=17206.

12. The following data gives the experience of machine operators and their performance
ratings given by the number of good parts turned out per 100 pieces:

Operator 1 2 3 4 5 6 7 8
Experience(x 16 12 18 4 3 10 5 12
)
Performance 87 88 89 68 78 80 75 83
ratings(y)
Calculate the regression lines of performance ratings on experience and estimate the
probable performance if an operator has 7 years experience.

13. A company wants to assess the impact of R&D expenditure (Rs. in 1000s) on its annual
profit (Rs. in 1000s). The following table presents the information for the last eight
years:

Year R&D department Annual profit

1991 9 45
1992 7 42
1993 5 41
1994 10 60
1995 4 30
1996 5 34
1997 3 25
1998 2 20
Estimate the regression equation and predict the annual profit for the year 2002 for an
allocated sum of Rs. 1, 00,000 as R&D expenditure.

14. A broker for local investment firm has been studying the relationship between increase in
the price of gold(X) and her customers requests to liquidate stocks (Y). From a data set
based on 15 observations, the sample slope was found to be 2.9. If the standard error of
the regression slope coefficient is 0.18, is there reason to believe (at the 0.05 significance
level) that the slope has changed from its past value of 3.2?

15. Realtors are often interested in seeing how the appraised value of a home varies
according to the size of the home. Some data on area (in thousands of square feet) and
appraised value (in thousands of dollars) for a sample of 11 homes follow.
Area 1.1 1.5 1.6 1.6 1.4 1.3 1.1 1.7 1.9 1.5 1.3
Value 75 95 110 102 95 87 82 115 122 98 90
a) Estimate the least squares regression to predict appraised values from the size.

b) Generally realtors feel that a homes value goes up by $50,000(= 50 thousands of

dollars) for every additional 1,000 square feet in area. For this sample, does this
relationship seem to hold? Use =0.10